The National Electrical Manufacturers Association (NEMA) acknowledged the recent dispute settlement panel decision of the World Trade Organization (WTO) released March 26, 2014, holding that China’s export quotas and export tariffs on rare earth elements, tungsten, and molybdenum violated the General Agreement on Tariffs and Trade, and China’s accession agreement to the WTO. The Complainants included Japan, the European Union, and the United States. According to the panel report, China had “not demonstrated that its 2012 export quota on rare earths was not applied in a manner that constitutes arbitrary or unjustifiable discrimination or a disguised restriction on international trade.” Similar conclusions were reached with respect to tungsten and molybdenum.
“NEMA supports non-discriminatory national policies toward trade in raw materials and minerals, and we believe the WTO panel’s decision is consistent with that principle,” said NEMA President and CEO Evan R. Gaddis. “NEMA understands China’s national interest in protection of its environment, but trade measures such as export quotas and export tariffs do not appear to be particularly suited to protecting the environment, while such measures do tend to support economic protectionism. We commend the efforts of the U. S. Trade Representative’s Office, the Government of Japan, and the European Union in bringing this dispute to the WTO and successfully resolving it under the auspices of the WTO’s dispute resolution process.”
Rare earth elements account for seventeen entries of the periodic table. Although rare earth elements are widely distributed in the earth’s crust, not all rare earth deposits are economically accessible. The combination of these elements together with other minerals in a given location, the economics of extraction (including environmental regulation), and processing skills and capacity vary widely, making some locations more economically favorable for mining rare earth elements than other locations. In recent decades, extraction of rare earth elements has shifted almost exclusively to China, which in recent years has accounted for 97 percent of the world’s supply of these elements.
Rare earth elements are used in a wide variety of electrical equipment, consumer electronics, information technology products, pollution control equipment, glass and optical products, aviation and automotive components, wind energy generating equipment, and chemical processing. In the electrical sector, rare earth elements are used in permanent magnet motors; fluorescent, HID, and LED lighting; magnetic resonance imaging (MRI) machines; radiation therapy equipment for cancer treatment; PET scan equipment; ceramic capacitors; and X-ray equipment.
The supply of some rare earth elements, particularly certain heavy rare earth materials, continues to be a concern that NEMA believes deserves significant attention from U.S. policymakers. While some industries are making adjustments to their technologies to reduce their use of rare earth elements, other industries may not be able to make similar adjustments in the foreseeable future. The U.S. Department of Energy has acknowledged the role that rare earth elements play in energy efficient and renewable energy technologies, and has monitored the projected availability of critical elements for these technologies.
“We need to see the supply of rare earth elements and the processing of rare earth elements more widely distributed around the world,” said Gaddis. “China has indicated that it does not expect to continue to produce rare earth elements to meet the same share of global demand in the coming decades. Policymakers, as well as industry, in the United States and around the world need to ensure that these critical materials, abundant in the earth’s crust, are no less abundant in the marketplace.”
NEMA is the association of electrical equipment and medical imaging manufacturers, founded in 1926 and headquartered in Rosslyn, Virginia. Its 400-plus member companies manufacture a diverse set of products including power transmission and distribution equipment, lighting systems, factory automation and control systems, and medical diagnostic imaging systems. Total U.S. shipments for electroindustry products exceeds $100 billion annually.
Phallan K. Davis