′China will become a net importer of rare earths′ | Business| Economy and finance news from a German perspective | DW | 04.02.2013
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'China will become a net importer of rare earths'

China and the EU are locked in a trade row over rare earths, chemical elements essential for manufacturing cell phones. DW discussed the dispute with Reinhard Bütikofer, member of the EU Parliament's Energy Committee.

DW: Mr. Bütikofer, a row over natural resources with China has escalated in the past couple months. The EU, together with the US and Japan, has filed a complaint with the World Trade Organization (WTO). What will come of that complaint?

Bütikofer: The case remains under adjudication. I would assume that a decision will be made over the course of this year. It would be foolhardy to speculate about a result right now. Even if the US, Europe and Japan are successful, I would assume that the case will be appealed, so we probably won't know before 2014 what the legal situation is.

What are the concrete allegations against China?

I'm not among those who think that the EU's approach is particularly clever. The accusations are related in particular to the export restriction that China has implemented for rare earths. More precisely put: When China joined the World Trade Organization, it promised not to implement exactly this kind of export restriction, and now Beijing is no longer honoring that promise. I am not competent to judge the merits of the case. My perspective is a political one. I fear that if the EU wins at the WTO, that it will be a hollow victory. I believe that we have to change our strategy to one of cooperation.

At the moment, it looks as if the EU and China are on two different sides of the issue. But the forecasts suggest that China will become a net importer of rare earths. In this respect, one can certainly imagine that - with the appropriate efforts - both sides could reach common ground.

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China has a monopoly on rare earth production. Talk is of 97 percent. So who should China import from?

At the moment, China is absolutely in the leading position. But new rare earth deposits are being found in many different countries around the world: Vietnam, Mongolia, Kazakhstan, Namibia, Canada, Australia and the US. There are also deposits in Europe - in Greenland, for example. These rare earths are not rare at all. Only about 30 to 35 percent of the world's deposits are found in China. Other countries just haven't moved forward with extraction up until now, for a host of different reasons. But now they are moving forward.

That means that the situation is not as dire as it has been made out to be? Rare earths are neither rare nor scare?

Rare earths are currently scarce. Above all, the so-called "heavy" rare earths are not discovered so often. But geologically speaking, they are not scarce. And we are not at all in a situation where we can be blackmailed - where we either have to confront the Chinese or simply do what Beijing wants us to do. There are opportunities for diversification. There are technological possibilities that would allow us to use rare earths more efficiently. There are recycling strategies that were never considered in the past.

The Chinese, for their part, have a big problem with the extraction of rare earths, because there are a lot of negative environmental effects. To put it dramatically, it's really an environmental mess. The Europeans and Japanese have a lot of technology that could help the Chinese overcome these difficulties. In this respect, both sides could be quite useful to each other.

The governance of raw materials on the international level also has to be reformed. It's no longer just a few industrialized countries that have a demand for these materials. The regulatory framework needs to reflect the reality that more and more countries are developing their own industries. And Europe could seize the initiative there with China and with a few African countries.

Do you think Europe and Japan should help China develop its extraction technology, instead of suing Beijing?

The Japanese have already offered that. I believe that it's the right path. Naturally, such business has to be based on reciprocity. China could provide Europe with a secure supply of rare earths for the next 15 years and receive technological know-how in exchange.

Are there already discussions about such an arrangement?

There's even a working group that has been set up between Europe and China to discuss such questions. But unfortunately, the working group has - to my knowledge - never met, because the daily agenda could not be agreed upon due to some sort of diplomatic dispute.

Reinhard Bütikofer was the federal chairman of Germany's Alliance 90/The Greens. Since 2009, he has been a representative in the European Parliament and a member of the Energy Committee. He's been chairman of the European Green Party since 2012.

Interview: Zhang Danhong / slk

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