China, Minerals Export, Raw and Rare Earth Materials: A Perfect Storm for World Trade Organization Dispute Settlement

• Published date: 01 April 2013
• Author: Geert Van Calster
• DOI: http://doi.org/10.1111/reel.12023
• Date: 01 April 2013

Case Note

China, Minerals Export, Raw and Rare Earth

Materials: A Perfect Storm for World Trade

Organization Dispute Settlement

Geert Van Calster

In China – Raw Materials, the World Trade Organiza-

tion (WTO) Panel and Appellate body firmly restrict

the application of General Agreement on Tariffs

and Trade Article XX’s ‘conservation of exhaustible

natural resources’ to ecological considerations. This

has an immediate impact on China’s policy with

respect to raw materials (including rare earth ele-

ments). It also impacts on any future challenge of the

Organization of the Petroleum Exporting Countries

under the WTO.

INTRODUCTION

Domestic regulatory autonomy issues1run as a core

theme through much of the recent dispute settlement at

the World Trade Organization (WTO).2Some of these

address old chestnuts with a sprinkling of new issues:

here, the long-running tuna-dolphin dispute between

the United States and Mexico comes to mind, with the

novel aspects of WTO disciplines under the Agreement

on Technical Barriers to Trade, rather than just the

General Agreement on Tariffs and Trade (GATT).

Others address radically new concerns, such as the

investment-related issues under the Ontario feed-in-

tariff scheme,3or the ‘public morals’ exception in

EU – Seal Products.4

China – Raw Materials5was triggered by China’s regu-

latory behaviour vis-à-vis the export of minerals (and is

one of those cases where lawyers wished they had paid

more attention in chemistry classes). Complaints origi-

nated, inter alia, in the United States and the European

Union (EU) with respect to various forms of bauxite,6

coke,7fluorspar,8magnesium,9manganese,10 silicon

carbide,11 silicon metal,12 yellow phosphorus13 and

zinc.14 These raw materials may not all be rare to the

extent described by the rare earth minerals case below,

but China’s grip on most worldwide markets concern-

ing these commodities is nevertheless very tight.

Hard on the heels of the China – Raw Materials case is

the China – Rare Earths case,15 which was triggered by

three separate complaints by the United States, the EU

and Japan concerning a de facto Chinese monopoly on

rare earth minerals, also known as REMs or REEs (rare

earth elements). China – Rare Earths is likely to raise

similar issues to China – Raw Materials, except that

the minerals under consideration in the former truly

1That is, the discretion entrusted to members of international free

trade agreements to pursue non-trade related goals. For a status quo,

see G. Van Calster, International and EU Trade Law: The Environ-

mental Challenge (Cameron May, 2000).

2See also the contributions in G. Van Calster and D. Prévost (eds.),

Research Handbook on Environment, Health and the WTO (Edward

Elgar, 2013).

3WTO DS 19 December 2012, Canada – Certain Measures Affecting

the Renewable Energy Sector, WT/412/R; WT/426/R. The ‘domestic

content’ elements of this dispute, however, are less novel.

4WTO DS369, European Communities – Certain Measures Prohib-

iting the Importation and Marketing of Seal Products, introduced on

25 September 2007; WTO DS400, European Communities – Certain

Measures Prohibiting the Importation and Marketing of Seal Prod-

ucts, introduced on 2 November 2009. Also Norway f‌iled a case

against the EU. See WTO DS401, European Communities – Certain

Measures Prohibiting the Importation and Marketing of Seal Prod-

ucts, introduced on 5 November 2009.

5WTO DS 5 July 2011, China – Measures Related to the Exportation

of Various Raw Materials, WT/DS395/R (‘Panel Report’); WTO AB 30

January 2012, China – Measures Related to the Exportation of

Various Raw Materials, WT/DS395/AB/R (‘AB Report’).

6The main ore source for aluminium.

7Derived from bituminus coal and used, among other things, in steel

smelting.

8Or ‘f‌luorite’, used in smelting.

9Relatively abundant on earth and used as an alloy agent.

10 Used in stainless steel, but also in a variety of nanotechnological

applications, such as revolutionary batteries, which have even made

it into modern f‌iction – see, e.g., K.J. Garnett, Nano (Kindle edition,

2011).

11 Very rare and used in high-voltage micro- and nano-electronics.

12 An abundant material that, nonetheless, is very high in demand and

used widely in new applications, such as photovoltaic cells.

13 Also known as plain phosphorus, and used mainly in agriculture as

fertilization. The EU in particular is a big importer. See M. de Ridder,

S. de Jong, J. Polchar and S. Lingemann, Risk and Opportunities in

the Global Phosphate Rock Market (The Hague Centre for Strategic

Studies, 2012).

14 Used as alloy in batteries, as well as in biochemistry and the health

and cosmetics sectors.

15 WTO DS431, DS432, DS433, China – Measures Related to the

Exportation of Rare Earths, Tungsten and Molybdenum, introduced

on 13 March 2012.

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Review of European Community & International Environmental Law

RECIEL 22 (1) 2013. ISSN 0962-8797

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