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US, EU, Japan Complain To WTO Over China's Rare Earth Ban

Soulskill posted more than 2 years ago | from the mommmm-he-won't-share-his-toys dept.

China 218

eldavojohn writes "China's rare earth monopoly has resulted in a shortage as China blocks their export and the rest of the world resumes their operations. Now, in a first-ever joint filing from three members of the World Trade Organization, Japan, the EU and the U.S. are not sitting idly by as China repeatedly ignores the WTO's orders to export rare earth metals and raw materials at a fair price to other countries. China claims the embargoes are in place to protect its environment, while Obama denounces China as being unfair and not playing by the rules of the WTO. In 2009, the WTO released a report (PDF) that explained how actions like China's hurt trade partners."

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218 comments

Bogus article (5, Insightful)

samantha (68231) | more than 2 years ago | (#39345267)

First of all, the WTO has no means to order any country to sell anything at what it determines is a "fair price". Second, China does not have a monopoly on rare earths. They exist is many many countries. Those countries may not be actively pursuing them and exporting them to the same degree but that is not China's fault.

Re:Bogus article (2, Insightful)

LordLimecat (1103839) | more than 2 years ago | (#39345295)

At the same time, the Chinese claim that theyre doing it "for the planet" takes some serious chutzpah. I laughed a little when I read that.

Re:Bogus article (4, Interesting)

vga_init (589198) | more than 2 years ago | (#39345447)

Even though it's probably not the real reason (they just want to keep the materials for themselves, obviously, which is the smart thing to do), but in politics it's often advantageous to use your opponent's rhetoric--they risk making themselves look bad if they disagree with something they themselves said earlier.

Re:Bogus article (5, Insightful)

cpu6502 (1960974) | more than 2 years ago | (#39345473)

Funny? I thought we are supposed to protect the environment. I guess they mean OUR environment, not China's.

For 200+ years China was bullied by western powers. Now they have the upperhand with the resources AND the money. LOL. It's like watching the second collapse of Rome unfold (We're probably at year 400 in the timeline). Strong enough to raise an army but not strong enough for a real war. EU/US influence is shrinking.

Re:Bogus article (5, Insightful)

TheRaven64 (641858) | more than 2 years ago | (#39345611)

Uh, what? China isn't shutting down mines, it's increasing mining, it's just making sure that the output from the mining goes to factories in China (which have lower environmental standards than in most of the rest of the industrial world, which is a big part of the reason why companies can manufacture cheaply there) rather than being sent abroad. Although they'll quite happily send them to factories producing goods for export.

If anything, reducing rare earth exports increases pollution in China.

Slightly delusional (5, Interesting)

microbox (704317) | more than 2 years ago | (#39345827)

For 200+ years China was bullied by western powers

This is true. And then China proved itself to be the equal bully of Victorian era European powers.

You are right about the declining influence of the USA and the EU. I suspect, however, that China will not rise above, but will trace a similar arc as the soviet union did. In many ways, the Chinese miracle reflects the decade-long double-digit growth of the soviet union. And likewise, both countries have serious internal problems, including /severe/ environmental issues.

I do believe that the chinese leadership will not sit idly by on these environmental issues, and their environmental policy looks bizarre to outsiders. I suspect they are drawing down on the possibility of future technical solutions which they are now investing in. But the future of industrial china has not yet been written.

btw, the USA, France, Britain, Germany, Japan, Russia and China are probably the only countries that can sustain a significant war. There may be a dearth of political will within the USA, France, Britain, German and Japan -- but if the will is ever galvonised, make no mistake, they could prosecute a real war anywhere on the planet.

Re:Slightly delusional (1)

wickedskaman (1105337) | more than 2 years ago | (#39346535)

Japan? Care to expound or link to the right info?

Re:Slightly delusional (5, Funny)

Anonymous Coward | more than 2 years ago | (#39346691)

Simple. Gundams.

Re:Slightly delusional (4, Informative)

microbox (704317) | more than 2 years ago | (#39347033)

If you look on wikipedia [wikipedia.org], you will find out that Japan has the 7th largest military budget in the world, at only a fraction of their GDP. They have about 250k active personal, 50k reserves, and about 27 million men of service age. They have their own native high-tech defence industry, which is supplemented with US and European technology.

If they had to go to war tomorrow, they have a significant high-tech air-force, navy and army with a modern capable war doctrine. If engaged in a protracted war, like WWII, they could draw down on over 50 million personal, and deploy a massive high tech manufacturing base and indigenous know-how. They are also the 3rd richest country in the world. (Most of their debt is domestically held.)

Re:Bogus article (2, Insightful)

Xeranar (2029624) | more than 2 years ago | (#39346095)

I normally try and refrain from this sort of idiotic banter running rampant in slashdot because most are IT people and get their sense of world politics from regular news sources and rarely take the time to read government research. As it stands China without a major development still lacks major resources for most things. They have rare earth elements which is awesome, but so do the US and Russia (along with various other places). We choose not to exploit them for cost mainly. If rare earth keeps increasing in value we will begin to mine it as well. As for China holding major US debt, we've only developed this debt seriously in the last 30 years, over the course of the last 230+ years we've managed to pay off our debt several times. China holds around a 1/3 of it, another 1/3 by Americans, and another 1/3 by various countries around the world. China doesn't hold the cards as much as the news likes to spin it. The US holds more cards in respect to shutting down trade it just a refusal because in the 1950s free trade became the hallmark of the western world even as it now costs us because multi-national corporations are uninterested in the plight of the US (see Steve Jobs remarks on this). The most realistic answer of "is the US in decline?" is yes, but only so much as China is on the rise. The US isn't in a backslide as China with it's roughly 3 times our population is beginning to use them to exploit capitalism. By no means are we not yet weak enough that we couldn't fight a real war. A simple draft and our advanced air and sea supremacy can still easily destroy most any nation on the planet. But we're rather interested in keeping free trade open still so any real war with China is off the table for now.

Re:Bogus article (2)

TheSync (5291) | more than 2 years ago | (#39346197)

As it stands China without a major development still lacks major resources for most things.

China now has a trade deficit [reuters.com] with the rest of the world. Part of that is due to copper prices, also increases in soybean imports.

Re:Bogus article (3, Interesting)

ILongForDarkness (1134931) | more than 2 years ago | (#39346293)

and the cost of dog meat too I assume. Australia for example is mining like crazy just to keep China going. Presumably chinese companies are mining China like crazy too. So two huge land masses funneling production to mainly one. Chinese companies are also buying up canadian resource companies like crazy too. All the resources funnel into the country building stuff which for the most part is China.

The WTO can be upset about it but how about making the US export strategic assets they don't want to give away? Say Iran wants to buy a few nukes. NK wants some fighter planes etc. Every country decides what is in their best interest and I don't think WTO can do anything to make China share things they want to keep to themselves. Worst case scenario they would just create unofficial mines like Iran's nuke program and deny it to death and claim all their mines have been closed.

Re:Bogus article (1)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#39345623)

It is my understanding that the WTO takes claims of the form "We are interfereing with trade because it suits our strategic interest, dumbass." Very badly. Their job is trade, not your strategic interest. However, when they were formed, there was a limited list of exceptions baked in, under which trade embargos and other market manipulations would be considered to be other sorts of policies with incidental effects on trade.

This is why everybody who goes to the WTO either goes to complain that somebody is being mean to Trade, or that their trade policy is purely a matter of protecting the children, not any sort of protectionism.

Re:Bogus article (0, Troll)

hjf (703092) | more than 2 years ago | (#39345307)

LOL, the US can't invade China and bully them like they do with smaller countries to take their oil. That's the real reason for this whining.

Re:Bogus article (3, Insightful)

headhot (137860) | more than 2 years ago | (#39345405)

No its not, its because of dumping and market manipulation.

Re:Bogus article (0)

superdave80 (1226592) | more than 2 years ago | (#39345479)

Isn't this the opposite of dumping?

Re:Bogus article (2)

NicknameAvailable (2581237) | more than 2 years ago | (#39345755)

This is the second half of a strategy involving dumping. The first part involved the actual dumping and eliminating competition.

Re:Bogus article (4, Informative)

Fluffeh (1273756) | more than 2 years ago | (#39346015)

The first part involved the actual dumping and eliminating competition.

Indeed. For many years there were multiple export nations selling Rare Earth Minerals. For many years, as the demand was quite low they all sold their goods to a small market. However, when the demand started to rise, China did something that the other players didn't see coming. They started to seriously undercut the prices of competitors. Other mines such as Mountain Pass [wikipedia.org] were run out of business - and due to political pressures on the environmental damage that was being caused. When China became pretty much the only place left selling any reasonable quantities of REM, they bumped the price up by orders of magnitude. This coupled with much higher (and still growing) demand for them makes it a wonderful masterstroke. They then further used it when an incident with Japan caused political turmoil between the two nations - by blocking sales to Japan [nytimes.com] completely.

While it is possible (and being done) to re-open the old mines and cease the monopoly that is currently held, it takes time to get these things up and running. Even then, China does hold a very major share of known REM reserves, so unless another (very) major deposit is found, it is likely that China will continue to hold an interesting political/trade card to play whenever it wants to.

Re:Bogus article (2)

JWSmythe (446288) | more than 2 years ago | (#39346673)

    You see that as evil. Most see it as proper application of the free market. We see this all the time. Companies sell *under* cost, to bring in sales. For places like retail stores, they'll sell particular items at a loss, to make a higher profit on others. Look at places like Best Buy. They'll sell some electronics at or under cost, but sell you cables for 1000% over cost.

    In the case of China's application, they did it perfectly. Lower the sale cost so others can't complete and close up shop. Once that has happened, you can set your price to whatever you'd like. Limiting exports makes anything you do export more valuable, demanding even higher prices.

    The WTO, EU, US, and Japan can complain all the want. I can't imagine any of those governments would bend over backwards to provide any resources or commodities at the prices China would want. For example, China could demand that the US sell military weapons and goods. The US will refuse to provide them. Filing a complaint with the WTO or anyone else won't make it happen. It would be responded to with a laugh and the diplomatic phrasing "Fuck China."

    There is a way to fix it. It's called negotiations. I want rare earth elements. They want something. Come to the table willing to trade, and it will happen. Crying about not getting what you want without making any concessions is futile.

    Don't like that? Go elsewhere. You mentioned Mountain Pass. They shut down in 2002 because of market prices. In 2007, China began export restrictions on rare earth elements. In 2010, China further restricted the exports. In late 2010 Molycorp (owner of the Mountain Pass mine) announced it would be reopening. Construction began in 2011, and will be completed this year.

  So, when the price was down, Mountain Pass closed. Now that the price is up, they've reopened. That, sir, is how business works. If you want to open a business with virtually no profit margin, go for it. For professional businessmen, the go for where the profit is. When they're shipping again, I'd be willing to bet the pricing will be barely pennies under what the Chinese mines are charging.

Re:Bogus article (1)

Anonymous Coward | more than 2 years ago | (#39346889)

    You see that as evil. Most see it as proper application of the free market. We see this all the time. Companies sell *under* cost, to bring in sales. For places like retail stores, they'll sell particular items at a loss, to make a higher profit on others. Look at places like Best Buy. They'll sell some electronics at or under cost, but sell you cables for 1000% over cost.

And this is one of the reasons why a free market should never exist. What is to stop China from undercutting any new mining operations that startup due to the high cost of REM? How is any competition going to form without help from the government? Banks won't loan money to a operation who they know will be run out of business by the competition.

How is one company/country using dumping to drive out any form of competition good for us? How would the processor market be if Intel dumped their CPUs to drive AMD out of existence and then put up their prices ten fold?

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39345495)

No its not, its because of SOMEONE ELSE'S dumping and market manipulation, the US doesn't give a shit about its own dumping and market manipulation

Re:Bogus article (1)

theshowmecanuck (703852) | more than 2 years ago | (#39345713)

The west should have thought about this when they encouraged China to become the world's factory. Ah the for(shortened)sight of myopic business leaders focused on their bonuses; and the politicians who grovel for their money.

Re:Bogus article (1)

NicknameAvailable (2581237) | more than 2 years ago | (#39345959)

The US didn't encourage China to become the world's factory. The cost to ship to China is about a hundred times more than to have things shipped from China to the same destination in the US (check DHL, FedEx, UPS for yourself).

Re:Bogus article (1)

dAzED1 (33635) | more than 2 years ago | (#39346163)

the "west" didn't make that decision - a very tiny tiny percentage of short-term-profit-maximizing execs made that decision. Casting that net on the "west" makes pretty much zero sense. And just to beat your potential retort - no, the (er..shall I use the term?) 99% did /not/ reap the short-term benefit of that. They lost their jobs and their homes.

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39346229)

because, you know, governments don't have any influence over industrial policy

Re:Bogus article (1)

an unsound mind (1419599) | more than 2 years ago | (#39346423)

In the US, for example? No, the government has basically zero influence over industrial policy and basically every bit of industrial law is lobbied in by other companies.

The major companies in the US have major influence - far over the influence of the people - on policy.

Re:Bogus article (1)

Anonymous Coward | more than 2 years ago | (#39346817)

It just means major compaines _are_ the goverment. Here, check the definition:

government (countable and uncountable; plural governments)
1. The body with the power to make and/or enforce laws to control a country, land area, people or organization.

Re:Bogus article (0, Informative)

Anonymous Coward | more than 2 years ago | (#39345511)

America should just increase it's printing of money. China is just a little bitch that doesn't have the balls to float their currency. America is already making money from offering 0.18% interest, 1yr note, at an inflation rate of over 3.5% AND China still bends over to by treasuries.

Re:Bogus article (1)

BurstElement (1332791) | more than 2 years ago | (#39345711)

America should just increase it's printing of money. China is just a little bitch that doesn't have the balls to float their currency.

China / North Korea are already better at printing US currency than the US Treasury (i.e. Superdollars) so why bother floating the RMB... What better way to get around pesky sanctions and embargoes.
And from the POV of them being able to print both currencies the value of the USD vs the RMB genuinely would have a fixed cost / exchange value.

Regarding the rare earth metals they are just protecting their economic environment.. nothing wrong or suspect with that.

Re:Bogus article (1)

Fluffeh (1273756) | more than 2 years ago | (#39346147)

China is just a little bitch that doesn't have the balls to float their currency.

That is the stupidest comment I have read in a while. China is not floating its currency due to the fact that if it did, it would rise much much higher than it currently is. In fact, the Chinese currency is holding up the US dollar due to being tied to it.

China doesn't want to float its currency as a much higher value would be very detrimental to their current position as "cheap". There are numerous estimates online that their currency is significantly (warning, PDF) undervalued [aabri.com] by as much as 50%. If you want to see what happened the last time that China uncoupled fro the US Dollar, see Fig 1 on page 7 of the PDF. It doesn't paint a pretty picture for the US dollar at all.

So no offence, but rather than mocking the Chinese, you should be thanking them for keeping their currency tied to the US dollar.

Re:Bogus article (5, Insightful)

headhot (137860) | more than 2 years ago | (#39345387)

Other country's rear earth providers all went bankrupt and shut down because China was dumping. Now that they are all gone, China cuts back on supply (for environmental reasons.. right) to drive prices up.

I think the term is call 'cornering the market.' Except this time its not orange juice, and they pulled it off.

Re:Bogus article (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39345497)

Then start your business extracting rare earth, you will be rich !!!

Re:Bogus article (2)

Em Adespoton (792954) | more than 2 years ago | (#39345721)

Then start your business extracting rare earth, you will be rich !!!

Right... because starting a business that handles toxic chemicals, destroys the environment, and involves feeding out of and into a huge industrial complex is a piece of cake... and once you've got it set up, China won't undersell you.

Re:Bogus article (1)

LordLucless (582312) | more than 2 years ago | (#39345799)

Until China dumps again, and then you lose your billion-dollar investments into infrastructure and engineering as demand for your (comparatively) expensive product drops to zero.

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39345993)

He won't be the first. A company you might not have heard of called Molycorp [molycorp.com] is doing that in California. Their stock was less than $20 (I seem to recall it might have even been a penny stock at one point), almost $80 and now it's pulled back to around $30. Mining is a volatile business. As other posters have pointed out, you don't just start this business. You have to acquire mineral rights and clear EPA hurdles, hire workers, actually know something about mining operations, etc...

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39345575)

Except this time its not Frozen Concentrate Orange Juice, and they pulled it off.

FTFY

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39345737)

Other country's rear earth providers all went bankrupt and shut down because China was dumping. Now that they are all gone, China cuts back on supply (for environmental reasons.. right) to drive prices up.

Naw, other countries may have rare earth magnets but since China is on the opposite side of the world, only they have rear earth magnets.

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39345855)

'cornering the market.' Except this time its not orange juice

Hey, a Trading Places reference [wikipedia.org]. Great Movie.

Re:Bogus article (2)

TubeSteak (669689) | more than 2 years ago | (#39346373)

Other country's rear earth providers all went bankrupt and shut down because China was dumping. Now that they are all gone, China cuts back on supply (for environmental reasons.. right) to drive prices up.

I'm not sure you understand what happened.
The rare earth providers didn't go bankrupt, they got bought by China's mostly-state-owned mining company.

China cornered the market, but not the way you're suggesting.
Now china mines and refines almost all the rare earths in the world.
In the next few years, old mines will be reopened and new refineries will be built in order to break China's monopoly.

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39347009)

By "rear earth" do you mean the rear of the Earth as in the state of New Jersey? If so, I do not think exporting many from New Jersey would be a bad thing at all.

Re:Bogus article (1)

Anonymous Coward | more than 2 years ago | (#39345621)

First of all, the WTO has no means to order any country to sell anything at what it determines is a "fair price".

They do when all the countries in this dispute, which includes China, are members. This is the exact sort of situation you would create the WTO for. China's trying to have its cake and eat it too.

Re:Bogus article (1)

sirsnork (530512) | more than 2 years ago | (#39346241)

Except none of the large countries actually change when the WTO tells them to, because they know the WTO can't do anything to them

Re:Bogus article (0)

Anonymous Coward | more than 2 years ago | (#39346831)

The problem is the US has a rather spotty record when it somes to honouring international agreements. This is a serious case of the pot calling the kettle black.

Re:Bogus article (5, Interesting)

retroworks (652802) | more than 2 years ago | (#39345663)

No, it is not a "bogus article", and the WTO is not "ordering any country to sell anything at what it determines" is a fair price. WTO is a free trade agreement. China signed it.

As such, WTO has rules which parties agree to abide by in return for protection of their own exports. WTO does not charge China with having a monopoly, but with using government rulings (environmental laws) to manipulate markets. There are rules in WTO which allow a country to limit exports of raw materials, but doing so in order to manipulate prices is against WTO rules. China doesn't have to BE in the WTO (Iran is not), and if they don't WANT to abide by the WTO ruling they can leave WTO. Or, they can live with / suffer the sanctions, as others have. But if you are in WTO and use it, you have to play by the rules.

I'm not anti-China, and the USA deserves WTO sanctions for its agricultural subsidies. But whoever "modded up" this post doesn't understand WTO agreements. If you agree to follow WTO rules, you get unique market access to sell your products, but you also agree to sanctions if you use government to replace tariffs you've agreed not to use with "bogus" traffic laws, pollution laws, registration laws, or other "non-tariff barriers", or cut off the Japanese because you want to take over their electronics markets.

Re:Bogus article (1)

Anonymous Coward | more than 2 years ago | (#39346391)

china dumped the price until everyone else closed their mines because weren't making money, knowing very well the restarting a mine is a big job if it is even possible to get new permits for it..

This is what happens... (4, Insightful)

ravenspear (756059) | more than 2 years ago | (#39345365)

when you shut down mining and manufacturing in western countries and ship it all to China just because they are cheaper.

Other countries have these deposits, but they determined they could just buy China's for less money.

Re:This is what happens... (0)

jd (1658) | more than 2 years ago | (#39345531)

Agreed. The US chose, of their own free will, not to produce Rare Earths. They voluntarily created a bottleneck. China didn't ask for such power. You can't opt for "market forces" only when it's in your interest, and demand powerful central government when market forces are in a competitor's interests. Level playing fields are good, but that means everyone takes responsibility in the same way ALL the time, not just when it's convenient.

Re:This is what happens... (2, Insightful)

TFAFalcon (1839122) | more than 2 years ago | (#39345631)

So the government prohibiting the export of something is a level playing field? Can the US also choose to impose a 1000% tariff on Chinese products and also call it a level playing field?

Re:This is what happens... (4, Insightful)

jd (1658) | more than 2 years ago | (#39345919)

Did I say China was working on a level playing field? Nooooooooooo. Now, go take your cookies and milk then go back to kindergarten until you learn to read.

For the rest of you, a level playing field means you do NOT hand someone the ball and then complain that you've no balls. (Take that as you will.) A level playing field means that you demand of yourself no less responsibility than you demand of others.

A level playing field ALSO demands that ALL sides play by the rules. You know Boeing and Airbus have both been found guilty of getting illegal subsidies, right? That this isn't new and that both blocs have known for over a decade that what they were doing was indeed illegal? Sorry, I have difficulty feeling sympathy for people who are equally corrupt and criminal. Sympathy for the devil is easier to stomach than sympathy for the corporations. It also has a catchier tune.

The US ITAR regulations banning the export of computer systems to China that can - and are - used by US corporations to cut costs -- you think that's a level playing field? When NASA made it possible to turn a pile of PCs into a supercomputer, the software was banned. (Those old enough will remember Slashdot helping smuggle the software to Canada.) Sure, they relented later, but only because they had no choice. The cat was already out of the bag and ripping people's limbs off - as cats formerly in bags tend to do.

The US has been in trade wars with the EU, seeking to cripple EU industries via restricted exports.

Sorry, but the moment the US did that to Europe, it LOST all rights to complain when others do the same to it. Remember, the US may have relented but it never apologized and never changed its attitudes. It grudgingly tolerated obedience to the law, but we all know perfectly well that it will violate that law every chance it has to gain an edge.

As, indeed, it did in the 90s, when the US Government's signals intelligence passed confidential internal documents from Airbus to Boeing. The US Government, involved in industrial espionage in order to profiteer.

A level playing field is where ALL such activity is banned, where ALL such activity leads to more than a gentle slap on the wrist but serious economic consequences, and where ALL countries are required to participate fairly, openly and (above all) honestly. THAT is a level playing field.

Re:This is what happens... (0)

Anonymous Coward | more than 2 years ago | (#39345953)

No.

They could however impose an export ban on engineering skills/individuals/plans/templates/etc TO china however, forcing all of there internal companies to produce things, well, internally (or at least, not in china).

China is hurting there own mines by saying 'you cannot export this to other countries', however they are benefiting there own manufacturing 'this thing that should be quite expensive, is now dirt cheap, because the mines can't export it'. At the same time, because no one else is producing rare earth metals at china's levels they are doubly benefiting there internal manufacturing 'and you have no competition because no one has the rare earth metals!!!'.

The US is welcome to do likewise-- though I am not sure it would work out as well for them.

Re:This is what happens... (1)

ogdenk (712300) | more than 2 years ago | (#39346215)

Yes, yes we can. Since American employment and salaries are at an all time high of course we can all afford to pay $7,500 for a laptop guaranteed to fail in 5 years. And after a decade of toil spinning up American manufacturing and rare earth extraction again, labor unions and incredibly high health care costs will make sure that you only have to pay $2,700 for a base-model tough-as-nails American laptop.

Personally I'd love to see computers made here again but really, go convert the late 70's to early 80's home computer prices to today's dollars......then realize how much your parents REALLY spent. For the price of the Apple II you could buy a nice car. For the price of the Atari 800 you could buy a decent used car. Around the mid-80's when everyone started making machines in Hong Kong, Taiwan, etc things got a lot more affordable.....except PC's and Macs. The ST was a bargain however as well as being pretty bad-ass.

Bottom line....... we make good stuff...... the problem is that you can't afford it. Rather than fixing that problem we choose to buy our goods from people more willing to look the other way when it comes to how shitty their employee's lives are. We don't care as long as we can watch some kid hit his nuts on a railing while skateboarding on a $50 device. Then when those folks actually want some quality of life and the price goes up, we set up shop elsewhere.

Been a while since I've seen many "Made in Japan" stickers.

Re:This is what happens... (0)

Anonymous Coward | more than 2 years ago | (#39345881)

Umm what? Try keeping a mining operation afloat when China next door is dumping them into the market at prices you can't possibly compete at. It takes years to start up a rare earth mining that can stay running, with planning, red tape, upfront costs that must be recovered, meanwhile, china can easily just open up either exports again for a few years if any plants does become established. Free Market vs China.... China will win due to full backing of government.

What are the alternatives?
US Protectionism against China? You would need support from various countries or simply spends lots of money keeping the companies afloat. Here in the US, do this easily for established business "too big to fail" but for start up, we cry afoul like no other.

In the end, it was not a choice by US companies, it was the non-choice by the US government in the face of China's choices. Quite simply, the free market fails spectacularly in this case without government intervention. It's like being a pacifist while the other guy shoots at you. It can work with enough support from everyone but in reality, the guy with the gun will win.

Re:This is what happens... (1)

jd (1658) | more than 2 years ago | (#39346187)

China wasn't dumping at the time the mine was closed. The US mine was closed because it was dumping hazardous waste and got caught - an entirely voluntary action on its part. No alternative was set up in the US for the same reason US drug companies test their products in Africa - you make more money by not obeying the rules.

I cannot find it in me to be sympathetic to economic mobsters who get beat up by other economic mobsters. The US created most of the global economy, the US is reaping what it sowed. China is no saint, but I will not cry for Herr Frankenstein. You create the monster, the monster is your problem.

Re:This is what happens... (1)

khallow (566160) | more than 2 years ago | (#39346019)

China didn't ask for such power.

But China sought such power. Asking implies the seeking of approval for an action. No such attempt was made.

You can't opt for "market forces" only when it's in your interest, and demand powerful central government when market forces are in a competitor's interests.

Didn't happen here. China created a competitive advantage through government interference. No "level field" was in play here.

Re:This is what happens... (1)

jd (1658) | more than 2 years ago | (#39346207)

How did it "seek" such power? By not closing its mines when the US ones were caught dumping illegal waste?

Far as I can see, it sought no such thing. It merely continued to trade when others couldn't be arsed. Now it has a de-facto monopoly and it's abusing the hell out of it. China should pay a very heavy price for that. But equally, so should every other nation that has abused monopolistic powers. Since we know the latter won't happen, it follows that the former should not happen either. One Law, not one for the US and one for everyone else.

Re:This is what happens... (1)

Daniel Phillips (238627) | more than 2 years ago | (#39347005)

Some commentators on this article seem to be blithely unaware of the relative concentrations of the Chinese deposits versus others worldwide, and how the consequent low production cost might be abused to establish and exercise power over the market.

And this is a... (2)

Dan East (318230) | more than 2 years ago | (#39346267)

...good thing! The mines that were shut down will eventually come back on line when it is profitable to do so again. In the meantime:
1) Rare earth materials can be purchased cheaper because China was undercutting everyone (even if they were used for manufacturing within china, the goods were still being sold abroad).
2) Less pollution generated in my home country (USA) because that mining was put on hold.
3) Non-Chinese resources are preserved and will last longer while China burns through theirs.

What we're seeing is an eventuality. Eventually China is going to wise up and realize they are going through a very valuable resource at an unsustainable rate.

Whaaa (0)

Anonymous Coward | more than 2 years ago | (#39345399)

but we want them, why can't have them. But if we make our own it'll screw our environment and cost a lot, and and... we'll have to wait.! Its not fair. Make em play fair.

Capitalists, never more childish than when they can't buy resources before value added processes have gained the supplier a slice of the profit pie.

I know where we can get some (1)

Anonymous Coward | more than 2 years ago | (#39345411)

Uganda. All we need is to create some kind of bogeyman there that we can "go after", then we can march in our military and...well, you know the rest of the story.

Re:I know where we can get some (1, Interesting)

hjf (703092) | more than 2 years ago | (#39345475)

Kony 2012.

Re:I know where we can get some (0)

Anonymous Coward | more than 2 years ago | (#39345555)

shhhh!!!! people still think this is about oil, don't burst their bubble!

Re:I know where we can get some (3, Funny)

bmo (77928) | more than 2 years ago | (#39345565)

>Kony 2012

Is that who you're voting for this November?

--
BMO

Don't blame me - I voted for Kodos.

Re:I know where we can get some (0)

hjf (703092) | more than 2 years ago | (#39345883)

No, thankfully I don't live in the US. I'm in Argentina, we vote in odd years =D

Re:I know where we can get some (1)

alienzed (732782) | more than 2 years ago | (#39345709)

Except last time 'we' tried that it got us worse than nothing.

Re:I know where we can get some (0)

Anonymous Coward | more than 2 years ago | (#39345937)

Worse than nothing? Nearly $5 a gallon for gas for months on end, year after year. Record oil profits.TRILLIONS OF DOLLARS STOLEN RIGHT UNDER THE OPEN EYES OF THE PUBLIC. You should have bought stock the second they started pointing fingers at the middle east. Take some advice, invest a couple bucks into a few choice Companies (not all of them are "American") that "might" get involved should the US increase military presence in the Congo / Uganda Region. If you can't beat them, join them. See you at the bank!

The USA has plenty of RE metals (-1, Troll)

Ralph Spoilsport (673134) | more than 2 years ago | (#39345423)

They just can't extract it as cheaply as having some poor broke ass Chinese peasant dig the crap out for a dollar a day. This is just another example, and a pretty transparent one, of how neoliberal capitalism works. Pathetic.

Bugger the WTO (0, Flamebait)

Cosgrach (1737088) | more than 2 years ago | (#39345481)

And the US and others for having their head up their asses. Seriously, the resources are on Chinese territory they can do with it as they please. Just be glad that they are willing to sell at all. These minerals exist in other countries as well, but they shut down their production to buy from China. Deal with it an re-open the old mines. Southern California has a fair sized deposit in the Mojave desert. I know that production has started up, but it will take some time to get meaningful quantities. Until then, tough shit.

Re:Bugger the WTO (1)

PatPending (953482) | more than 2 years ago | (#39345967)

For some reason, this "Related Link," from almost exactly two years ago (March 16 2010), is missing from this submission:

US Sits On Supply of Rare, Tech-Crucial Minerals [slashdot.org]

The relevant part is this (emphasis added):

"China supplies most of the rare earth minerals found in technologies such as hybrid cars, wind turbines, computer hard drives, and cell phones, but the US has its own largely untapped reserves that could safeguard future tech innovation. Those reserves include deposits of both 'light' and 'heavy' rare earths... 'There is already a shortage, because there are companies that already can't get enough material,' said Jim Hedrick, a former USGS rare earth specialist who recently retired. 'No one [in the US] wants to be first to jump into the market because of the cost of building a separation plant,' Hedrick explained. ... [S]uch a plant requires thousands of stainless steel tanks holding different chemical solutions to separate out all the individual rare earths. The upfront costs seem daunting. Hedrick estimated that opening just one mine and building a new separation plant might cost anywhere from $500 million to $1 billion and would require a minimum of eight years. [But the CEO of a rare earth supply company said] 'From what I see, security of supply is going to be more important than the prices.'"

If the complainants had realize the "security of supply" is real, we'd already be 1/4 of the way (2 of 8 years) to having productive plants.

Instead these countries took the easy and cheap path, namely: foolishly trusting communists to uphold their part of an agreement.

Re:Bugger the WTO (1)

Kittenman (971447) | more than 2 years ago | (#39346963)

Seriously, the resources are on Chinese territory they can do with it as they please.

What will be interesting will be if the main sources of Rare Earths are in some of the places the aren't really Chinese territory, but ones that China 'acquired'. To wit, Tibet. Will the west then have a cause to get China out of there for *cough* humanitarian reasons?

Meanwhile Tibetans are setting themselves on fire to protest the occupation. Ok it's not the best way of protesting but you've got to be fairly committed to do that.

Waana be a member of the WTO? (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39345499)

then you gotta surrender your sovereignty.. I think China signed... So there

Hate the game not the player (2, Insightful)

bjourne (1034822) | more than 2 years ago | (#39345505)

China beat the other capitalists at their own game. By forcing the other players out of the market and then establishing a monopoly. Now they are crying foul because they lost the game? It's their rare earth metals so just pay them what they want or start making your own! You cant just demand that the rules be changed because now you're being screwed, while previously you enjoyed screwing someone else over.

Re:Hate the game not the player (4, Insightful)

Anonymous Coward | more than 2 years ago | (#39345839)

Actually the complaint is that China didn't play the game. They cheated by dumping and are now cheating by restricting exports. Not unexpected from them, but don't claim it's capitalism in action.

Re:Hate the game not the player (1)

Anonymous Coward | more than 2 years ago | (#39346169)

How you describe is EXACTLY how Capitalism works. Cheating? No, that how the game is played.

Re:Hate the game not the player (0)

Anonymous Coward | more than 2 years ago | (#39346409)

If you actually believe China's economy is Capitalist you might be interested in a bridge I have for sale in New York.

Re:Hate the game not the player (0)

Anonymous Coward | more than 2 years ago | (#39346327)

So, by your definition, the government controlling what can be exported and at what price is capitalism?

Globalist whining (2)

nickmalthus (972450) | more than 2 years ago | (#39345589)

I am not a Chinese government fan by any means but as a sovereign country they have an obligation to protect the interests of their citizens above the financial gains of the globalists. Besides, these are the same guys that say the free market solves all problems. As the price of these materials go up alternatives should surface or recycling efficiency should increase.

Re:Globalist whining -ignored unless they agree (1, Informative)

hguorbray (967940) | more than 2 years ago | (#39345821)

As usual the US (and probably most other countries) believe in the power and relevance of these bodies only when THEY are the ones seeking redress for some wrong.

For a good look at this compare to the US ignoring NAFTA (even though they were its champions) when US sought tariffs against Canadian companies that they alleged were 'dumping' softwoods even though the terms of NAFTA supported the Canadians.
http://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute

Or how Bush, Cheney and Rumsfield will never face international war tribunals for authorizing the same tortures that we executed Japanese commanders for proscribing:
http://www.cbsnews.com/2100-250_162-3554687.html

-I'm just sayin'

Re:Globalist whining (5, Informative)

shutdown -p now (807394) | more than 2 years ago | (#39346381)

I am not a Chinese government fan by any means but as a sovereign country they have an obligation to protect the interests of their citizens above the financial gains of the globalists.

They absolutely do, but they can't do that while still remaining a member of WTO.

Re:Globalist whining (2)

maccodemonkey (1438585) | more than 2 years ago | (#39346827)

Unless they are violating their obligations under the WTO charter that they agreed to, which they are. That's what most posters seem to be missing. China previously agreed to a set of conditions upon joining the WTO (their choice) and is now violating them.

If China doesn't want to be in the WTO, that's fine. But it means that countries like the US aren't under any obligation to follow the WTO rules with regards to China either.

Hey China.. (1)

Jyunga (2040832) | more than 2 years ago | (#39345677)

You.. me.. playground after class. Bring your rare earths and your cheap labor or you're toast.

The world's smallest violin (1)

jtownatpunk.net (245670) | more than 2 years ago | (#39345681)

Shouldn't have let them get a monopoly on something that's so important. This is just one of many ways China has the rest of the world under their thumb and we're going to see a lot more of this in the coming years. From where I'm sitting at my desk, I'd be hard-pressed to lay my eyes on more than 10 things that weren't made in China. My watch (though it was assembled in China so I guess that doesn't count). An old radio scanner (which doesn't work). Metal shears (used to open blister packs). CR2016 batteries made in Japan. Multimeter's made in Korea. A really old power strip from Mexico. And that's about it.

Government sponsored comments (1)

Anonymous Coward | more than 2 years ago | (#39345795)

Seems like the pro-China internet brigade has been set loose on this article.

Re:Government sponsored comments (0)

Anonymous Coward | more than 2 years ago | (#39345921)

USA has 13 MILLONS TONS of this elements in their soil, they not learn anything about the the oil dependecy.

Rare earths (1, Insightful)

giorgist (1208992) | more than 2 years ago | (#39345819)

Rare earths are not that rare. The main problem is that they keep bad company, for example Thorium. Now if you mine rare earths in the US, you suddenly end up with thorium which you are no longer allowed to put back where it came from or anywhere else. China is actually storing it with the potential to using it in future nuclear power plants. A single mine for rare earths would have the "side effect" of generating enough thorium to power the whole of the US electrical grid (If we can develop the appropriate power plant).

So if you like the magnets in your tiny headphones, tell the Greenies to rationalise their argument and we might be able to get back on track.

Those darn, uppity Chinese... (1)

fullback (968784) | more than 2 years ago | (#39345823)

Who do they think they are, using free market strategies with their resources?

It's not about mining quotas, but export quotas. (5, Informative)

Corporate T00l (244210) | more than 2 years ago | (#39345845)

If China were simply limiting the amount of rare earths permitted to be dug out of the ground, there would be no WTO issue. The problem is that this is an export cap which has the potential to create different pricing for rare-earths between domestic and foreign purchasers of these materials.

Now if you look at mentions of today's prices of rare earths (by googling for "rare earth prices"), as yet, there is no such disparity. The linked WTO article also doesn't directly talk about price disparities between domestic and foreign purchasers. It turns out that global demand for rare earths went down quite a bit last year, and as a result, only about 60% of the export quota was used up (according to this FT article [ft.com]).

The concern is that as the global economy recovers, if demand is seen to exceed the quota, then a huge price difference between what domestic companies and foreign companies pay will emerge. This would amount to a kind of state subsidy (making prices for domestic producers artificially cheap) and would violate WTO rules.

The two metrics to watch to determine whether or not the claim of environmental protection vs. economic protectionism would be:

(1) Domestic rare earth production volume (e.g. in tons) - If slope of this curve continues unchanged, then there really is no environmental effect. If the slope flattens out, then it could be argued that the quota did slow down the pace of mining and did have an environmental consequence

(2) Domestic (China buyer) vs. Foreign (non-China Buyer) price (e.g. difference $/ton) - If this disparity is big, then there's a stronger case that there is some kind of domestic subsidy occurring, if the disparity is small, then the case that there is a subsidy is weaker.

This is not really a matter of sovereignty since China is a willing party to the WTO and has volunteered to play by those rules.

awww... (0)

Anonymous Coward | more than 2 years ago | (#39345907)

whatsa matta, can't buy your Pious Prius?

Distorted POV (0)

Anonymous Coward | more than 2 years ago | (#39345933)

China practising a monopoly of its own natural resources? Says who?

Others have mentioned that China has the right to decide what to do with this natural resources. My point is that these resources are REAL, MATERIAL, PHYSICAL and have nothing to do with stupid things created out of thin air with the sole purpose of market domination. Some aspiring monopolists are only worth of contempt.

Yes, I'm talking about software patents and the rest of this stuff. Having resources such as rare earth metals can certainly earn you wealth and the respect of the markets. Having a "patent portfolio" full of crap, such as double-clicking an icon or making a gesture on a touch screen, and employing an army of patent troll lawyers to squeeze money of innovating and hard-working people should earn you nothing, period.

Schadenfreude (0)

Anonymous Coward | more than 2 years ago | (#39346157)

It is very sweet seeing a bully being bullied! USA and friends have been subsidizing their producers, imposing quotas and all kind of similar things for decades. So they are now taking some of their own poison. Nice to see!

only about the env. when it's your backyard (0)

Anonymous Coward | more than 2 years ago | (#39346173)

The ONLY reason why rare earth minerals are dominated by China is because no other country is willing sacrifice the environment to extract these minerals. From my vantage point, China has every right to restrict this trade to protect its environment.

Re:only about the env. when it's your backyard (3, Insightful)

Daniel Phillips (238627) | more than 2 years ago | (#39347147)

The ONLY reason why rare earth minerals are dominated by China is because no other country is willing sacrifice the environment to extract these minerals.

Wrong, it is because China's ore deposits are more highly concentrated than any other, by a very wide margin.

From my vantage point, China has every right to restrict this trade to protect its environment.

I don't know about your argument (which seems wildly far fetched to me) but do know that subsidizing domestic industry with favorable pricing of raw materials is, in general, not allowed by the WTO.

You don't get it do you? (-1, Flamebait)

Chicken_Kickers (1062164) | more than 2 years ago | (#39346459)

You Westerners still think like it is still the 1950's where you can order China around. Funny how sanctimonious America sound-like when other people don't play fair but it's ok if you do it (RIAA ad nauseum). China has nukes, the manpower and most importantly the money to do whatever the hell it wants, just like the other big powers. This is the key that you have not realised or choose not to. You will have to learn to play by China's rules now. Next time don't piss away your economy on useless wars.

Crushing irony (0)

mykos (1627575) | more than 2 years ago | (#39346523)

I don't know if the United States has any room to complain when another country throws its weight around to achieve desired effects on international trade. Those who live by the sword...

Why? (1)

Anonymous Coward | more than 2 years ago | (#39346905)

I don't know why everyone cowtows to China's economic might.

US economy alone is far bigger than China. US, EU, and JP combined is many times larger, not to mention the rest of the world, which is rather significant increase again (think South America, Canada, India, Russia, SE Asia, Australia).

And yet they act like this, they undervalue their currency, have rampant intellectual property infringment, etc. which US and other countries seem to ignore for some fear of upsetting China.

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