CHICAGO - A trade case filed late last week by the United Steelworkers union against an array of Chinese policies and practices that the union says threaten the future of America's alternative and renewable energy sector makes the country's restrictions of access to rare earth materials a top complaint.
Export restrictions imposed by China on rare earths are "a clear violation" of commitments made by China when it joined the World Trade Organization in 2001, the USW said in an executive summary of the 5,800-page petition under Section 301 of U.S. trade law filed with the office of the US Trade Representative - just in time to make it an issue ahead of the US mid-term elections.
The union said that China uses export quotas, taxes and licensing procedures to restrict exports of the mineral to users in the US and other countries. These restrictions raise prices for manufacturers outside of China, lower prices for manufacturers inside China and create incentives to shift production to China to produce needed supplies.
"Indeed government officials in China have stated explicitly that the purpose of their export restraints on these minerals is to spur investment in downstream processing of such minerals within China instead of other countries," the summary notes and points out that China has clamped down on the export of rare earth minerals particularly hard recently by cutting its 2010 export quota for the minerals to about half 2009's level.
"When China joined the WTO, it committed to eliminate export quotas and export taxes on all but a select list of products," the union's summary said and added that rare earth minerals and other green technology inputs addressed in the petition were not included on that list. "Thus, quotas, taxes and other restriction on exports of these materials directly violate WTO rules," the union said.
The petition notes that dozens of green technologies, including solar panels, wind turbines, advanced batteries and energy efficient lighting, depend on raw materials derived from rare earth elements and other minerals. "In many cases there are no substitutes for these minerals in green technology applications, due to their unique physical and chemical properties," the petition summary said.
The union noted that China produces more than 90% of the world's supply of the materials while the US currently produces no rare earth materials. The "last processing facility for such materials was purchased by the Chinese and its equipment shipped to China years ago," the USW said.
After rare earths access restrictions, the union also claims violations by China on prohibited subsidies contingent on export performance or domestic content, discrimination against imported goods and foreign firms, technology transfer requirements for foreign investors and trade-distorting domestic subsidies.
"Green jobs are key to our future," Leo W. Gerard, international president of the USW, said in announcing the trade case. "Right now, China is taking every possible step - many of them illegal under international trade laws - to ensure that it will control that sector. America can't afford to cede more of its manufacturing base to China."
Under the law, the Obama administration has 45 days from the date of filing to determine whether to accept the petition for further action. The administration will be required to respond by Oct. 24, the union said. Mid-term election day is Nov. 2.