President Obama is bringing China before the WTO claiming that it is artificially limiting the export of critical rare earth elements – elements necessary for nearly all modern electronics and numerous other fields including weapons systems and green energy technologies. Because China controls 95 to 97 percent of the market in rare earths, exports of the minerals are necessary for manufacturers outside of China. China admits that they have limited rare earth exports but argues that the restrictions are justified for environmental reasons under the WTO. In addition China argues that domestic demand precludes it from exporting more than its established quota. It’s certainly true that China’s domestic demand for rare earths has grown – in part because by artificially limiting rare earth exports in prior years when there was definitely a surplus, many downstream users of rare earths, unable to pay escalating prices, moved their factories to China where prices were less and the needed elements more abundant.
Whatever the merits (or lack of) of the President’s action, one is tempted to admonish him with Matthew 7:5 (New International Version 1984) “You hypocrite, first take the plank out of your own eye and then you will see clearly to remove the speck from your brother’s eye.” While China has fostered mining for rare earths, in 2002 environmental restrictions shut down the last operating rare earth mine in the U.S. and it was only recently allowed to reopen after spending $100s of millions on environmental and technological upgrades – money not spent producing ore. In addition, the Obama administration is actively closing hundreds of millions of mineral-filled acres of public lands to production. Every ton of rare earths placed off limits in the U.S., puts China more and more in the catbird seat.
Rather than going hat in hand to China, or crying “I’m gonna tell, you’re not playing fair,” let’s get our own house in order and remove regulatory barriers to domestic production of rare earth elements via mining on public lands.