Updates to this story
Officials from the EU warned today they were keeping a close eye on the situation of China’s restrictions on rare earths exports.
The EU said at a conference with the World Trade Organisation in Berlin that it was watching China’s actions for possible legal implications, Reuters reports.
When Frank Hoffmeister, a top aide of European trade chief Karel De Gucht, was asked whether the EU planned legal action against China over the reported export restrictions, he responded: "It is clear we are monitoring the situation quite closely. We need to have clear facts.”
Meanwhile, the head of the WTO, Pacal Lamy, stressed that global trade talks needed to restart if the world wanted to escape the uncertainty surrounding rare earths supply.
He added that there was a need for better international trade rules in resource sectors.
The news followed Germany announcing that the market for rare earths, used to manufacture all kinds of high-tech products such as computers and mobile phones, had become “critical”. And there are fears that China, responsible for producing 97% of the world’s supply of rare earths, plans to slap more restrictions on exports.
Various countries, including Japan, have been growing very nervous about China's monopoly in the market, and have started looking for new suppliers or rare earths. The US has called the situation a potential threat to the US economy and national security.
German Economy Minister Rainer Bruederle described his country as being "severely affected when it comes to energy resources and ... rare earths which are growing scarce."
"When speculation is rife, you lose the foundation in the economy," he added. "And that is detrimental for the producing industries. Pricing frameworks must remain on our agenda."
Meanwhile, a former WTO judged has said China may be not be in the best position to defend its export restrictions on rare earths.
According to Bloomberg, James Bacchus suggested today that China signed pledges that it would only tax or limit exports from a list of specific raw materials when it joined the WTO in 2001 - and that WTO rules prohibited export quotas.