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WTO says China's rare earths export controls violate international rules, US applauds

Amar Toor, @amartoo
07.06.11
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China's monopolistic approach to the rare earths market is in violation of international trade regulations, according to a new ruling from the WTO. The verdict, issued yesterday, covers exports of nine minerals -- including zinc, manganese and magnesium -- that are used to produce a wide variety of smartphones, tablets and other gadgets. China, which controls about 95-percent of the world's rare earth supply, had previously argued that its export restrictions were needed to prevent overproduction and to conserve natural resources, but the WTO determined that the country was "unable to demonstrate" these environmental benefits. The investigation was originally spurred 18 months ago, after the US and other countries complained that China's quotas and tariffs unfairly favored domestic manufacturers, while distorting global prices. Experts expect Beijing to appeal the ruling, but this extra international pressure, combined with shifting supply chains and newfound deposits, may bring about the changes many have been calling for. If it doesn't, we'll all be stuck with corn phones.

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