China's rare earth regulations follow WTO rules

Recent moves to strengthen China's rare earth industry regulations are in line with the rules of the WTO, an official said Wednesday.

Strengthening the regulations is intended to protect the environment and promote sustainable development, said Gao Yunhu, deputy chief of the Rare Earth Office under the Ministry of Industry and Information Technology, at a press conference.

China has given equal treatment to both domestic and foreign firms in the rare earth industry and its regulation of rare earth exports are in compliance with WTO rules, he said.

His remarks came months after the European Union, United States and Japan formally asked the WTO to settle a dispute with China over restrictions placed on exports of raw materials, including rare earth metals, in March.

Preliminary consultations for the case were held by the WTO in April, Gao said.

"We're willing to cooperate with the parties involved to solve the dispute as soon as possible," he told reporters. "At the same time, we will actively use WTO rules to defend China's legitimate rights and interests."

China is the world's largest producer of rare earth metals, a group of 17 metals vital for manufacturing products ranging from smart phones and wind turbines to electric car batteries and missiles.

The Chinese government has announced production caps, stricter environmental standards and an export quota system for rare earth metals in recent years to protect the environment and preserve the exhaustible resources.

As a rule, the WTO allows members to take necessary measures to protect their resources and environment. The organization allows export restraints if they are accompanied by simultaneous restrictions over domestic production or consumption.

Despite export controls, China has met global market demand, Gao said.

The country set an export quota of 30,200 tonnes for rare earth products in 2011, but actual exports totaled just 18,600 tonnes, meaning 40 percent of the quota was unused, he noted.

China supplies over 90 percent of rare earth products on the global market with just 23 percent of the world's total reserves, according to a government white paper on China's rare earth industry published Wednesday.

The country has "paid a heavy price" for its rare earth mining activity in the form of excessive exploitation, environmental damage, deflated prices and rampant smuggling, the paper said.