Abstract

This paper presents recent development regarding China's export restrictions on raw materials, which brought a strong response from Japan, the U.S. and the EU under the annual Transitional Review Mechanism (TRM) in the WTO. China is a dominant producer of various kinds of raw materials. China produces more than 90% of the world's rare-earths. For this reason, it is vital for major consumers such as Japan, the U.S. and the EU to secure a stable supply of these materials from China. However, China has recently been strengthening export restrictions on raw materials. The measures taken for this purpose include export quotas and export taxes.In 2007, this issue was discussed intensively under the TRM in the WTO. Japan, the US and the EU respectively expressed concern about China's export restrictions on raw materials. They also raised a lot of questions in conjunction with the consistency of China's policy with the WTO rules. China has provided some information, but the three parties still regards China's response as insufficient.Having described the above discussion in the WTO, this paper attempts to investigate whether or not China's policy is consistent with WTO rules. Also, the paper takes a look at the global demand for raw materials to consider why the three parties have particular concern about China's export restrictions. Lastly, the actions we need to take are presented. Mining development, recycling, and R&D activities for material substitution are essential to ensure a stable supply of raw materials.

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