The US, the European Union (EU), and Japan have taken China to task for restricting the trade of rare earth minerals. In a statement on fair trade, President Obama said that the US was bringing a trade case against China, aided by Japan and the US's European allies.
Obama couched the action with the World Trade Organization (WTO) in terms of America's manufacturing robustness, or rather, in terms of its lack of robustness, because rare earth materials are needed by US manufacturers to produce a variety of technology-based products, such as batteries for cell phones and hybrid cars.
President Obama announces a World Trade Organization action to enforce U.S. trade rights with China regarding rare earths and other materials, March 13, 2012. (Source: Official White House photo by Pete Souza)
"We want our companies building those products right here in America," said Obama. "But to do that, American manufacturers need to have access to rare earth materials -- which China supplies. Now, if China would simply let the market work on its own, we’d have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow. Being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing. We've got to take control of our energy future, and we can’t let that energy industry take root in some other country because they were allowed to break the rules."
The nearly identical requests for consultation from all three entities formally initiate a dispute within the WTO. The disputes are followed by consultations, which are discussions under the WTO's dispute settlement system. The expectation is that the parties will find a solution without having to resort to litigation. But if consultations fail to resolve the dispute after 60 days, the initiators of the complaint may request a panel's judgment.
The reason China is doing so well against the rest of the world is due to their middle class being much lower than the rest of the world. As they catch up Competition will depend on inventiveness. By that point they cannot pass the USA without carrying us along their own level otherwise Jobs will start moving to the US. Also Many say that china's growing economy is bad news for the world when in reality It's just good news for the whole world. Now another billion members of earth are capable of demanding more material goods from the world economy. I can only see this helping the world economy. The problem is not their middle class getting better. The issue is the way china disregards international agreements to benefit its own people. If china maintains a free market, and they protect IP then this recession will be short lived. Yes when a large nation like china enters the free market this is expected to happen. I wish this was controlled to a degree, but in the long run every one will benefit.
Conclusion is that their middleclass cannot surpass the middle class of US or Europe. Regardless of how much they try. The only way they can do this is through war. The free market dictates this.
Paumanok Publications, I agree that we should also be looking to find another source of supply rather than let our electronics industry be held hostage. But meanwhile, I think we should also be using the process that's been set up to deal with such disputes such as this one. What's the point of entering into a trading agreement if you don't plan to keep to the terms of the contract?
ervin0072002, I'm not sure what you mean by an EU/US "larger market share." Of what? Whatever it is, it probably won't be larger for long. China either has or is acquiring/growing the largest markets in many areas: automobiles, oil, you name it. In fact, PetroChina just announced that it's become the world's biggest publicly traded oil producer, ahead of Exxon:
http://www.bbc.co.uk/news/business-17556938. The population statistics driving China's growth and appetite for materials and control of resources show that China's middle class is growing rapidly and the US's is declining rapidly, since class is determined by jobs, and we've shipped those jobs over there. Estimates vary, but one says that by 2030 China's middle class will be 4x that of the US and nearly 4x of Europe's. That's only 18 years away. Meanwhile the US and Europe have aging populations overall, not just considering the size and characteristics of their middle classes.
Withholding shipments after a fishing dispute is a good example of the have my cake and eat it too attitude China has shown in several international situations. This is not a cooperative spirit, or the attitude of an adult negotiating with other adults. The WTO rules and conventions China had agreed to did not change--China's decision to comply with them changed. Yet they want to be taken seriously and treated with respect in the international arena.
China has been waging a trade war against us for decades and we have been to timid and/or stupid to do anything about it. Running to the WTO begging for help is for babies. Real sovereign nations don't ask anyone's permission to defend themselves.
The very best choice would be to come up with an alternative to the rare earth elments so that we did not need them. I realize that would be a challenge but it would also probably lead to cost reductions, and a way to be less dependant on those countries that choose to take advantage of us. Then they can eat their precious metals and other rare earths. That would be the very best solution.
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