China's rare earth supply crimp plan ruled to be illegal The World Trade Organisation (WTO) has ruled in favour of the EU, US and Japan in their dispute against what they described as China’s unfair rare earth export rules. The WTO agreed to begin the investigation back in 2012 after complaints from the three that China was trying to push up prices and restrict exports by imposing …
OPEC regularly control extraction and thus sale. you dont find it amusing that bulk maintenance happens when demand increases? Prices shoot up then fail to drop appreciably when demand decreases.
De Beers would be a better example of a cartel operating in a similar fashion, although much less in recent years ironically because other countries decided to move outside the de beers cartel enmasse thus weakening the position of the cartel. This has pretty much worked.
..and I think that's the difference as far as this technical WTO ruling goes. OPEC control the extraction, they don't extract a load and then only sell the majority of it to their own countries while limiting the supply to the rest of us.
So, I would agree that it's not quite the same kind of "crime".
"they don't extract a load and then only sell the majority of it to their own countries while limiting the supply to the rest of us"
It is near enough the same thing. They do restrict exports, under the guise of limiting production. OPEC sets "production" quotas but these cannot be enforced, so domestic demand in the key producer states is served by unrestrained, untaxed, and indeed often subsidised oil. As a result per capita domestic use is incredibly high, and where they have domestic oil consuming export industries (not that many and mainly petro-chemical) these are hugely advantaged. The production limits merely hit exports, but so long as that keeps prices high it balances the huge public spending programmes that would otherwise bankrupt these countries.
So the outcome is similar enough, and it is deliberately anti-competitive. But what sanctions can you impose on a group of countries who have their hands on the swing production assets in world energy? There's too many to fight (and that policy hasn't worked out so well anyway), and starting a trade war through WTO requires you to throttle their food imports. The US might persuade its farmers not to export food to Saudi in return for more subsidies, but Is (eg) Brazil going to restrict food exports to Saudi to keep Americans driving gas guzzlers? I think not. Then you've pissed OPEC off and achieved nothing.
Forget OPEC, what about the USA?
It's illegal under US law to export Oil or Gas. Since the success of fracking in the USA, this means that US home industries do not have to fear Russian or Middle-East "supply problems", while rendering Europe impotent to stand up to Russia over Syria or Crimea for fear of having our gas supplies turned off.
A conspiracy theorist would say that US foreign policy is intended to destroy EU competitiors while making it easy to lay all blame on Russia or Saudi.
As for REEs, China has sown the seeds of destruction of its own REE industry. Because they forced prices so high, there are now a large number of non-Chinese REE extraction projects coming on line, and the world is headed for oversupply. Because REEs are not actually rare (unlike oil, which is! )
...In a statement, the EU claimed the ruling shows that “the sovereign right of a country over its natural resources does not allow it to control international markets or the global distribution of raw materials”....
Indeed.
Ask the Yanks about Helium trading...
Once again now: Rare Earths Aren't Rare
You can extract REEs from just about any clay. China has some of the clay minerals that are rather richer is REEs than most. It also has, or had, a culture that permitted the pollution that is caused by the cheapest methods of REE extraction, that would be forbidden in the USA or EU. (And yes, extraction is hard, and that's why refined REEs are quite expensive. Unrefined REEs or lefotover REEs are cheap enough to put in disposable lighters as "flints".)
Helium is present in natural gas (it's generated in the earth by radioactive decay and gets trapped along with the methane. Most is not separated and goes up a chimney along with the CO2). It'll run out when the gas does. Methinks shortage of methane fuel will be a bigger problem than shortage of Helium ... if we haven't suffered a global warming catastrophe before then.
"unless there are any teeth to WTO rulings"
Don't knock them! The WTO rulings can be ignored, but they in effect permit retaliation by other countries, which usually impose duties on imports from the transgressor.
China is a major importer and exporter of both commodities and finished products. So WTO rulings are important because its economy is dependent upon exports of stuff including furniture and kids toys. A WTO ruling permits other countries to exercise measures against China, and adding a 15% levy to any single category of imports could be a fairly heavy hit - for example the US imports $20bn of shoes a year from China. The US also runs a $300bn trade deficit with China - it has less to lose than the Chinese do, and if the Chinese tried to escalate they lose more than the Americans. Moreover, a serious trade dispute makes other countries look better bets, and once production moves out of China is won't come back (which could be good, for places like Thailand and Indonesia).
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Of course an country is free to decide who to sell goods to. However, if a country voluntarily signs up to the WTO, then they have to abide by the rules. If China wishes to be able to sell goods and services into other markets without undue discrimination by using WTO rules, then it is obliged to work within them.
Some of the rules involve not seeking to create an artificial advantage to local industries by attempting to monopolise local raw materials. Applying arbitrary quotas which apply only to exports of raw materials falls under this. Indeed this does affect the US as well, as they are unable, under WTO rules, to prevent the export of their cheap "fracked" gas, and some US gas terminal ports are being refitted for export.
Note this doesn't mean that there has to be a free for all which means any resource can be plundered without consideration to the environment, but what it does mean is that a country can't discriminate in favour of its own industry. Of course, it's all vastly complex in practice, but that's the basis of the principle.
"It might not allow one country to control affairs outside its own borders, but surely it gives the country the right to decide who it sells to and at what price*?"
If I were your employer, I'd show you the door for a comment like that, because it says you don't understand, and are not likely to honor, any of that paper you signed as a condition of your employment, such as NDA's,
When a country joins the WTO, they give up a whole bunch of "rights", such as the one you describe, and they gain the reduction of tariffs into a whole bunch of other WTO member markets. And as the WTO ruling says, once you mine a material and remove it from the ground, it enters the WTO ruled international marketplace. That WTO ruled international marketplace basically says that if someone has the cash at the going price, you have to sell to them. You can't give preferential (or discriminatory) treatment or pricing based on things like whether they are a domestic customer vs WTO member customer. It really is that simple.
I don't see what everyone is so worked up about. Controlling the ebb and flow of natural resources and manipulation of the markets for those resources is a major part of the economy for any country that has desirable natural resources. If you're reading this then your government is doing no differently than China. Don't like the prices (country) gives you for (resource)? You come off your prices for (resource) and we'll work something out. 'What's that you say? You don't have any control of those prices? In that case, fuck off. Come back when you'll do to the businesses of your countrymen what you want us to do to ours'.
It's cool like that. You get to decide how much you like, or dislike someone. For those who don't know the details of how that works please see 'Installing a dictator for fun and profit: Iran' occasionally you'll find academic versions called '40 years in pursuit of Democracy - A step by step guide to destroying a Democratic nation and paving the way for takeover by religious fundamentalists'.
The Canadians even get in on the action. Sandpaper (really), diamonds, oil, oh so soft gloves made from baby seals, maple syrup (really), water, electricity, dimensional lumber, engineered wood construction materials, isotopes for medical equipment, Tim Hortons, etc... If the Canadians are cool with manipulating global commodities pricing the you can rest assured knowing it's not viewed as 'evil capitalism'.
Here in the US we do it with all kinds of stuff: Tritium, Helium, 128oz sodas (with $1 refills), bourbon, Tennessee Whiskey, corn, cotton, flax, peanuts, peanut based products, GMO 'stuff', rough cut hardwoods, pecans, almonds, raisins, etc.
In merry England the practice goes back centuries. Hello Mr Chinaman. Have you and our kids had any opium today? No!?!? Soldier, execute this man. Coal, the letter 'u', they tried trees for a while, but burned them all, tea, salt, wretched TV shows (some good ones as well), tobacco, ships, etc. In what must be the biggest bunch of shit politics and class warfare, the asshats in Sheffield single handedly made places like Pittsburgh, PA extremely wealthy and provided the opportunity for people like me to exist (thanks) by being greedy. The Sheffield steel industry is, without a doubt, the most corrupt and useless bunch of dicks on Earth. I wouldn't buy anything from a warehouse in Sheffield if they were paying me $1M per ton to do it. Fuck you Sheffield.
Arguably, the manipulation of resources and markets in these ways is good for everyone. Those same clowns in Sheffield made the search for affordable aluminum a global technology race and that worked out well. The capstone on our Washington Monument is aluminum and at the time it was considered decadent, wasteful and distasteful and now even the worst beers come in aluminum cans.
If you're really upset by 'unfair pricing' put an army together and let's get to work. You do know that's what armies are for right? Capturing 'land' is a stupid thing. Capturing the stuff in the land is what it has always been about. Everything you want is right there, and it's free too! Go get it. Alternatively, just suck it up and know that this is the nature of the world. Your turn will come back up and I can absofuckingloutely guarantee nobody will be bitching when it's their turn again.
When the US is on the losing side of a trade arbitration it simply ignores the decision.
Witness the argument with Canada over hardwood shingles (wooden roofing tiles) and softwood lumber (2x4's) - they simply blackmailed Canada into doing a quickie bilateral agreement - Britain has signed those, ask Blunkett, so UK perps (alleged) can get deported to the US for trial.
GM had a rare metals operation once, but it sold it off - with US government blessing - to /drumroll/ the Chinese!
Don't know why the Japanese are complaining - they have an exclusive on a mining hole in Northern VietNam whereby they ship all their rare stuff back to Japan for refining.
At this very moment the US is bashing VietNam over the head with threats to block the ever popular Tiger Shrimp business with a surcharge ... unless the VNese bend over and submit to yet another bilateral agreement.
I think we should block McBarf and Starbuck (where the hookers hang out) operations until the States gets the message. Back off, Bully!
Your penultimate paragraph points up a common failing of Socialists trying to practice Capitalism. In the 1950s, during one of the coldest winters in North America, John L Lewis, Communist head of the United Mine Workers union, called a strike by coalminers. He believed that the consumers in America were tied to their coal furnaces. What actually happened was that well over 90% of consumers immediately converted to natural gas, bottle gas or heating oil. Lewis' plan should have been examined as history when the PRCs big brains thought this up.
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