1. MEASURES RELATED TO THE EXPORTATION OF TUNGSTEN & MOLYBDENUM
Rare earths
MEASURES RELATED TO THE EXPORTATION OF TUNGSTEN & MOLYBDENUM

2. Background

3. What are tungsten & molybdenum?
Tungsten (W): Unique element, rare metal found in earth. Highest melting and boiling point. Used in light bulb filaments, X-ray tubes, and radiation shielding.
Molybdenum (Mo): Unique element, used in structural steel, stainless steel, and other super alloys.

4. March 13, 2012 Complainants: US, EU and Japan Respondent: China
Consultations were requested regarding China's restrictions on exports of various forms of rare earths
China is a leading global producer of these materials
They are key inputs in hybrid car batteries, wind turbines, automobiles and advanced electronics
China's export restrictions have caused a short supply of the materials in international markets.

5. CHINA’S Position
Regarding materials falling under 212 Eight Digit Chinese Customs Commodity Codes and over 30 measures
Chinese published and unpublished measures operating separately or collectively that impose and administer export restrictions
Restrictions: export duties, export quotas, minimum export price requirements, export licensing requirements, and addition requirements and procedures in connection with the administration of the quantitative restrictions

6. United States’ Position
The US claims China was inconsistent with the following agreements:
GATT 1994 Articles:
VII – valuation of imports from members for customer purposes in determining liability
VIII – fair reflection of cost and not to be used as a means of protection
X – all trade measures should be transparent
XI – all need trade measures should be in the form of tarrifs
XI:1 – no prohibitions or restrictions other than duties, taxes, or other charges shall be instituted or maintained by any contracting party on the importation of any proudct of the territory of any other contracting party on on the exportation or sale for export of any product destined for the territory of any other contract party
X:3(a) – requires all WTO members adminster all laws, regulations, rulings and judicial decisions in a unifrom, impartial and reasonable manner

7. Main issue

8. What violations occurred?
GATT Art. XI, "General Elimination of Quantitative Restrictions"
"No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party."

9. China Ascension protocol
China shall publish on a regular basis the following in the official journal referred to in paragraph 2(C)2 of this Protocol:
by product, the list of all organizations, including those organizations delegated such authority by the national authorities, that are responsible for authorizing or approving imports or exports, whether through grant of licence or other approval;
procedures and criteria for obtaining such import or export licenses or other approvals, and the conditions for deciding whether they should be granted;
a list of all products, by tariff number, that are subject to tendering requirements, including information on products subject to such tendering requirements and any changes, pursuant to the Agreement on Import Licensing Procedures;
a list of all goods and technologies whose import or export are restricted or prohibited; these goods shall also be notified to the Committee on Import Licensing;
(b) China shall notify the WTO of all licensing and quota requirements remaining in effect after accession, listed separately by HS tariff line and with the quantities associated with the restriction, if any, and the justification for maintaining the restriction or its scheduled date of termination.

10. What violations occurred?
2010: China pushed global rare-earth prices sharply higher, when it slashed its export quota on the 17 elements by 40% from the preceding year.
China's restriction of rare earths was claimed to have the intention of protecting natural resources and achieving sustainable economic development
China has said it was an effort to clean up a highly polluting domestic rare-earth mining industry.
The Obama administration described the move as a “wake-up call.”
Complainants claimed that that the restrictions were designed to provide Chinese industries that produce goods with protected access to the rare earths
China's export restraint gave China the ability to significantly affect global supply and pricing
The export of these rare earths violated China's Accession Protocol

11. Decision

12. August 29, 2014
Dispute Settlement Body ruled in favor of the US, EU, and Japan
Export quotas were not justified under the exception GATT Art. XX(g)
“relating to the conservation of exhaustible natural resources”
The panel found that China’s export quotas were designed to achieve industrial policy goals, not conservation
China had restricted the export of various rare earths
Export restrictions were done through export duties, export quotas, and limitations on the enterprise permitted to export rare earths.

13. The panel findings appealed by china
China contends that the panel did not interpret GATT Article GATT Art. XX(g) correctly
China says the panel acted inconsistently with Article 11 of the DSU
- “in finding that China’s export quotas do not relate to conservation with the Article XX(g)”
Under Article 11 China raises three allegations:
The panel’s treatment of the evidence
Allegations of a “double standard” in the panels application of Article XX(g) to the facts of the case
Allegations of incoherent reasoning

14. Findings and conclusion by the appellate body
Appellate body finds that the panel did not interpret Article XX(g) correctly
Appellate body finds that those interpretation do not rise to the level of committing a legal error in the application of Article XX(g)
Appellate body finds that the panel did comply with it’s duty under Article 11 of the DSU
Appellate body upholds panel’s finding that China’s export quotas were designed to achieve industrial policy goals, not conservation

15. China’s response
On 20 may 2015, China informed the DSB of the removal of all restrictions that were inconsistent with WTO rules.
DSB found that China had fully implemented the DSB recommendations and rulings
The United States says that China did not implemented the DSB recommendations and rulings

16. How to resolve

17. Monitoring
The mining and refining of rare earths should be monitored for manipulation
At the Bali Ministerial Conference in 2013:
WTO developed a Monitoring Mechanism on special and differential treatment (S&D) provisions which give developing countries special rights in multilateral trading rules.
Proposal of the Monitoring Mechanism was submitted by the African Group in 2002
Until recent years China produced about 93% of the world’s rare earths.
China’s share of global rare-earth output has fallen to around 86% as other producers increased up supply.
China’s exports now frequently are under the maximum level of the quotas

18. Transparency
This particular case deals with the Chinese government’s lack of transparency
For China to be a player in global trade, it has to play by the rules
No one is exempt

19. observations The words: vague, broad, in general were used a lot
The WTO needs to revise or review it’s rules to not fall on technical issues
The WTO has to close all provisions that are up to different interpretations