In the Spring 2011 edition of The Climate Report, we reported how companies that manufacture green technology products face a growing challenge in securing sufficient quantities of a critical category of raw material, known as rare earth metals. China currently produces approximately 97 percent of the world's supply of rare earth metals and has in recent years limited the export of these green-technology dependent resources. On July 5, 2011, the World Trade Organization issued a ruling that provides some hope to non-Chinese manufacturers dependent on rare earth metals.
Responding to challenges filed in 2009 by the United States, the European Union, and Mexico, the WTO found China's high export customs and actual limits on the export of mineral resources to be contrary to the WTO's rules. China had attempted to rely on Article XX of the General Agreement on Tariffs and Trade 1994, which generally permits countries to impose duties and quotas for reasons that include environmental protection and conservation of exhaustible natural resources. However, the WTO panel was unable to find how the challenged Chinese restrictions helped to address either of these issues. China is expected to appeal the ruling.
Although this WTO ruling does not specifically address rare earth metals, the restrictions placed by China on exports of rare earth metals are no different than those that were the subject of the ruling. Bringing some hope to green technology manufacturers, China announced the day after the WTO ruling that its Ministry of Commerce will study its rare earth export regime in light of the WTO's rules.