A panel of The World Trade Organization (WTO) concluded on Wednesday that China has broken the rules of global commerce "by restricting the export of rare earth elements and other metals crucial to modern manufacturing," The New York Times reported. These earth elements include tungsten and molybdenum.
The conclusion opens the possibility that Beijng will face trade sanctions from the United States... European Union and Japan," The New York Times also reported.
The panel said that "China's export quotas were designed to achieve [its] policy goals," rather than to protect the environment.
According to estimates, China produces more than nine-tenths of the global supply of metals, "which are essentially to different modern applications, like for smart-phones, high-tech magnets, wind turbines and industrial catalysts."
"Prices soared in 2010 after Beijng cut export quotas by about 40 percent, to just over 30,000 tons, saying the restrictions were necessary because mining rare earths creates many environmental hazards," The New York Times also reported.
The Chinese Commerce Ministry responded sharply to the panel's decision, saying it expressed "regret" at the ruling. The country's regulatory measures "are perfectly consistent with the objective of sustainable development promoted by the WTO," it argued.
China also said the export quotas were justified under trade rules.
China joined the WTO in 2001 and has often been criticized for its continual breach of ethics when it comes to the protocols of international trade agreements.
Beijing said that it "is currently assessing the panel report and will follow the WTO. settlement procedures to settle the dispute," The New York Times also reported.
The U.S. and European officials, meanwhile, hailed the ruling.
"China cannot use export restrictions to protect its own industries to give them a helping hand on the global market at the expense of foreign competitors," said Karel De Gucht, the European trade commissioner.
The U.S. filed the case in March 2012, and the European Union and Japan soon joined them soon thereafter.
China argued that the export quotas were justified under trade rules.
These measures tally with the goals of sustainable development, as advocated by the WTO and are conducive to the coordinated development of resources and the environment, according to news reports.
Beijing has said it will continue to enhance its management of resources under WTO rules, in order to preserve fair competition, according to a Chinese official.
Beijing now has about two months to appeal the case.
" China's trading partners are wary about their vulnerability, a weakness highlighted in 2010 by China's decision to block exports of rare earths to Japan in the middle of a dispute over the ownership of uninhabited islands in the East China Sea," as reported in The New York Times.
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