On 13 March 2012, the United States requested consultations with China with respect to China's restrictions on the export of various forms of rare earths, tungsten and molybdenum. The request refers to materials falling under but not limited to 212 eight-digit Chinese Customs Commodity Codes and over 30 measures. The request also refers to a number of Chinese published as well as unpublished measures that, operating separately or collectively, allegedly impose and administer export restrictions. These restrictions include export duties, export quotas, minimum export price requirements, export licensing requirements and additional requirements and procedures in connection with the administration of the quantitative restrictions.
The United States claims that these measures are inconsistent with:
• Articles VII, VIII, X and XI of the GATT 1994; and
• paragraphs 2(A)2, 2(C)1, 5.1, 5.2, 7.2, 8.2 and 11.3 of Part I of China's Protocol of Accession, as well as China's obligations under paragraph 1.2 of Part I of the Protocol
of Accession.
On 22 March 2012, the European Union and Japan requested to join the consultations. On 26 March 2012, Canada requested to join the consultations. Subsequently, China informed the DSB that it had accepted the requests of Canada, the European Union and Japan to join the consultations.
On 27 June 2012, the United States requested the establishment of a panel. At its meeting on 10 July 2012, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 23 July 2012, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute, DS432 and DS433. Brazil, Canada, Colombia, the European Union, India, Japan, Korea, Norway, Oman, Saudi Arabia, Chinese Taipei and Viet Nam reserved their third party rights. Subsequently, Argentina, Australia, Indonesia, Peru, Russia and Turkey reserved their third party rights. On 12 September 2012, the United States, the European Union and Japan requested the Director-General to compose the panel. On 24 September 2012, the Director-General composed the panel.
The panel held its meetings with the parties on February 26-28, 2013, and June 18-19, 2013.
On March 26, 2014, the panel issued its report. The panel found that the export quotas and export duties that China maintains on various forms of rare earths, tungsten, and molybdenum constitute a breach of WTO rules and that China failed to justify those measures as legitimate conservation measures or environmental protection measures, respectively. The panel also found that China’s imposition of prior export performance and minimum capital requirements is inconsistent with WTO rules.
On August 7, 2014, the Appellate Body issued a report affirming the panel’s findings on all significant claims. In particular, the Appellate Body confirmed that China may not seek to justify its imposition of export duties as environmental measures. The Appellate Body also confirmed, while modifying some of the panel’s original reasoning, that China had failed to demonstrate that its export quotas were justified as measures for conserving exhaustible natural resources.
On August 29, 2014, the DSB adopted the panel and Appellate Body reports. In September 2014, China announced its intention to implement the DSB recommendations and rulings in the dispute, and stated that it would need a reasonable period of time in which to do so. The United States, the European Union, Japan, and China agreed that China would have until May 2, 2015, to comply with the rulings and recommendations.
| Brief Date | Brief Description |
|---|---|
| 06/04/2014 | Opening Statement of the United States |
| 05/16/2014 | U.S. Third Participant Submission |
| 05/01/2014 | U.S. Appellee Submission |
| 04/08/2014 | U.S. Appellant Submission |
