WTO Rules Against China On Rare Earth Minerals Quota – But Does It Matter?

October 30, 2013  |  No Comments  |  by Nicole àBeckett  |  Blog

The WTO ruled against China today, challenging the practice of limiting exports of rare earth minerals – raw materials that are crucial to the development of much of today’s technologies including smartphones, solar panels and defense systems. In 2010, China placed harsh, limiting quotas on exports of the minerals.

Although China controls 95% of the world’s production of rare earth minerals, global demand has sharply decreased since 2010. China only exported 52% of the quota last year according to the Wall Street Journal.

The move by the WTO is seen as mostly symbolic. However, the ruling may push China to re-organize the industry and root out the rare earth black market. Illegal production and trade began as a by-product of the quotas and served to depress global prices. Will the ruling then aid in adding costs to production or will it enable more producers to enter the market and normalize prices? To be seen.

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