Security of Supply of Rare Earths: a Wake-Up Call

The Chinese government has blocked exports to Japan of rare earth minerals used in products like hybrid cars, wind turbines and guided missiles. The ban was introduced following a dispute on the detention of a Chinese fishing trawler captain by Japan. Japan has been the main buyer of Chinese rare earths for many years, using them for a wide range of industrial purposes.

This is the first time that China is ultimately using the dependency of a trade partner on rare earths to wield political pressure in an international dispute. It’s unprecedented and probably illegal under WTO rules.

However, there are no guarantees that such measures will not be imposed in the future on the European Union, too. In fact a report of a special ad-hoc working group has listed rare earths as some of the truly critical raw materials for the EU.

The recent imposition of the ban by China raises important questions about the future supply of rare earths and other rare raw materials to the EU. The EU should continue its engagement with the WTO on this issue. China should be decisively discouraged from using such policy measures in the future.

UPDATE: China has denied reports it banned the export of rare earths to Japan. More information on this will probably follow in the next few days.

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