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Rare Earths Stand Is Asked of G-20

An unusually broad coalition of business groups in North America, Europe and Asia has sent a letter to the heads of state of the Group of 20 major economies, asking them to make a commitment at their meeting this month in Seoul that trade in crucial rare earths will not be interrupted because of industrial policies or political disputes.

Terbium: a rare earth element
Source: wikimedia
Terbium: a rare earth element

The range of countries and industries whose business groups signed the letter underscores the level of worry in corporations around the world about recent export restrictions placed on rare earths by China, which mines 95 percent of such materials. The minerals processed from them are needed for products and processes like cellphones, cars, clean energy and the production of missiles and sonar.

Some of the business groups signing the letter, like the U.S. Chamber of Commerce, also signed a letter last winter asking that the Chinese government not discriminate in favor of domestic companies in the purchase of high-technology equipment.

But the letter on rare earths was also signed by business groups that had previously been wary of challenging an increasingly wealthy China, including the business federations of Germany and France and the Nippon Keidanren, the broad grouping of big Japanese corporations that has historically been extremely cautious on China issues.

The letter was dated Wednesday but not publicly released. It was obtained from an official at one of the business groups that signed it.

The Chinese government has collected export taxes of 15 percent to 25 percent on rare earths for years and has further restricted exports in the past two years with reductions in export quotas. When China joined the World Trade Organization in 2001, it agreed to refrain from imposing export taxes and quotas.

The Chinese government completely halted exports of raw rare earths to Japan on Sept. 21 during a dispute over Japan’s detention of a Chinese fishing trawler and its crew, and it expanded that interruption in shipments to all countries, notably the United States and those in Europe, on Oct. 18. Chinese customs officials gave permission Oct. 28 for a resumption in shipments, but they have allowed some shipments to leave ports while continuing to block other shipments, industry officials said.

Chinese officials have denied that they issued any official ban on rare earths exports and contend that export quotas and taxes are needed to conserve scarce supplies and protect the environment, which W.T.O. rules allow. Western trade lawyers say that China would have a hard time winning the conservation case if another country challenged its policies before a W.T.O. tribunal because China shows little sign of limiting its own soaring consumption of rare earths.

China has pursued an industrial policy in recent years of requiring companies to move factories to China so as to have access to rare earths. The letter from the business groups objected to that, asking that the G-20 leaders and their governments commit themselves to “refrain from export taxes, quotas or other market-distorting measures on rare earth elements that restrict global supply and unnecessarily contribute to price volatility, including through respect for the rules of the World Trade Organization and commitments resulting from its members’ accession protocols.”

The letter also called for the G-20 leaders and governments to “renounce interference with commercial sale of rare earth elements, domestically or internationally, to advance industrial policy or political objectives.”

Among the 37 groups signing the letter were the Alliance of Automobile Manufacturers, the American Petroleum Institute, the Business Roundtable, the Consumer Electronics Association, the National Association of Manufacturers, the U.S. Magnetic Materials Association, the Brazil-U.S. Business Council, Business Europe, the Canadian Chamber of Commerce, the Federation of Korean Industries and the Japan Electronics and Information Technology Industries Association.

The German government said two weeks ago that it would raise the issue of rare earths at the G-20 meeting this month. Chinese officials have given no direct response on how they would respond to pressure at the gathering, but officials from the Commerce Ministry and the Ministry of Industry and Information Technology have repeatedly rebuffed complaints about Chinese policies in recent weeks by saying that their policies were aimed at reining in a heavily polluting industry.

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