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EU blasts China over minerals trade

The European Union, the United States and Japan have complained to the World Trade Organisation saying China is limiting its export of rare earths, minerals vital to the production of high-tech goods.

China accounts for more than 90% of global production of 17 rare earth minerals that are used to make goods including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapour lights and camera lenses.

China has cut export quotas while it tries to build up its own industry to manufacture lightweight magnets and other products made with rare earths. The government also cites environmental concerns and the need to preserve scare resources.

US industry officials suggest it is an unfair trade practice, against rules established by the WTO, a group that includes China as a member.

EU trade commissioner Karel De Gucht said China's export quotas and export duties gave Chinese companies an unfair competitive advantage and must be removed. He said: "These measures hurt our producers and consumers in the EU and across the world."

President Barack Obama announced the filing of the US complaint at the White House. His administration says it is part a broader effort to crack down on unfair Chinese trading practices.

"If China would simply let the market work on its own, we'd have no objection," Mr Obama said. "But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow."

Senior administration officials said Beijing's export restrictions gave Chinese companies an advantage by giving them access to more rare earths at a cheaper price, while forcing US companies to manage with a smaller, more costly supply.

China's Commerce Ministry defended the curbs as an environmental measure but promised to abide by the WTO dispute-settlement process. It said in a statement: "The Chinese policy objective is to achieve sustainable development in order to protect resources and the environment, and this is not a trade-distorting way of protecting domestic industries."

China has about 30% of global rare earths deposits. The United States, Canada, Australia and other countries also have rare earths but most mining stopped in the 1990s as lower-cost Chinese ores came on the market.

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