China Restarts Rare Earth Shipments to Japan

HONG KONG — China resumed exports of crucial minerals to Japan on Friday for the first time in almost two months, Japanese government officials and an industry executive said.

Chinese customs agents were not only processing the paperwork for shipments of the minerals, known as rare earths, but were also allowing dock workers to load containers of rare earths on ships bound for Japan on Friday afternoon, the Japanese officials and the executive said.

“Everything is flowing,” said the rare earth industry executive, who insisted on anonymity because of lingering diplomatic sensitivity about the Chinese embargo, which Beijing had never announced or formally acknowledged.

But an official at another company said that delays persisted for its shipments, a difficulty that suggested not all export restrictions had been lifted.

Although China had allowed shipments of the minerals to resume to the United States and Europe after a brief suspension in late October, deliveries to Japan had remained suspended — even after Chinese custom agents had started processing the shipping paperwork a few weeks ago.

But Japan’s ministry of economy, trade and industry said Friday that 16 of 27 companies that imported rare earth minerals from China had reported in a survey over the last three days that their ability to buy them had improved.

Tsutomu Murasaki, director of the trade ministry’s nonferrous metals division, said Friday that some loading of ships with rare earths had begun, after China gave customs approval Wednesday, Reuters reported from Tokyo.

Akihiro Ohata, Japan’s trade minister, said that the improvement was consistent with assurances he had received during a meeting last weekend in Yokohama with Zhang Ping, the chairman of China’s National Development and Reform Commission.

China produces 95 percent of the world’s rare earths and half of its exports of these minerals go to Japan, which uses them in its high-tech manufacturing industries.

Rare earths are vital to the production of a wide range of industrial products, including automobiles, glass, oil refining, computers, smartphones, wind turbines and flat-screen televisions. The military needs them for missiles, sonar systems and the range finders of tanks.

Officials at the General Administration of Customs in Beijing declined to accept questions over the telephone on Friday about rare earth policy, saying that any questions would have to be faxed. When questions were faxed, officials did not respond.

China’s decision to resume shipments to Japan may be more than simply a sign of warming relations between Beijing and Tokyo.

Many factories in China assemble products that require high-tech components from Japan that use rare earths. Some of these factories, which employ large numbers of workers in China, have begun running low on components as Japanese suppliers ran short on some of the more obscure rare earths needed to manufacture them, two rare earth industry executives said.

Electronics industries have been affected, particularly camera manufacturers, leading to a desperate scramble for raw materials that has even included buying tons of obscure rare earth compounds from corporate stockpiles in Europe and airlifting them to Japan.

All 32 of the authorized rare earth exporters in China have refused to increase their shipments to other countries during the unannounced ban on shipments to Japan, making it difficult for Japanese traders to obtain supplies indirectly.

As a result of the blocked shipments, some rare earths now cost up to 10 times as much outside China as inside; the Chinese government has started a vigorous campaign to prevent this from leading to smuggling.

Chinese customs officials abruptly halted the processing of paperwork for shipments bound for Japan on Sept. 21. The shipments were halted during an acrimonious dispute over Japan’s detention of a Chinese fishing trawler that rammed two Japanese coast guard vessels two weeks earlier near islands long controlled by Japan but claimed by China.

Japan quickly released the captain after China engaged in what Japanese officials described as economic warfare. Government officials in Japan reportedly have said that Japanese companies had rare earth stockpiles that could last through March. But there are 17 different rare earth elements that in turn are processed into a wide range of chemicals that are hard to replace and are produced at different levels of purity. Making sure that every Japanese company had enough of every chemical compound of the correct purity for its manufacturing applications has become more difficult as the Chinese interruption in shipments has dragged on.

Chinese customs officials halted some shipments of raw rare earths to the United States and Europe from Oct. 18 to 28, after the Obama administration opened an investigation into whether China was violating international free trade rules with its green energy policies, including China’s restrictions on rare earth exports. But the United States in particular mostly buys processed rare earth materials from China and Japan, and was little affected.

The resumption of shipments may not last long. China has cut its rare earth export quotas by 40 percent this year, to 30,300 tons. Industry executives estimate that only 3,000 to 4,000 tons worth of quota remain to be exercised this year, which means that shipments could stop again in several weeks and not resume until quotas are issued for 2011.

The Chinese government did not issue initial 2010 quotas until Dec. 31, 2009, but it has hinted that it will act sooner this year so as to allow time for exporters to make logistical arrangements for shipments to resume in early January.

China briefly resumed the processing of customs paperwork for rare earth exports three weeks ago, a day before a meeting in Hanoi of top Chinese and Vietnamese officials. But when that meeting went poorly, Chinese port officials prevented containers from being actually loaded aboard vessels regardless of whether the customs forms had been completed.

Room for Debate: Can the U.S. Compete on Rare Earths?

What Development Round?

The global trade talks that began in 2001 in Doha, Qatar, were sold as the “development round,” a chance to give the poorest countries a leg up by making it easier for them to sell their goods around the world. Six years later the development round looks like every other trade round — with the rules being written to benefit the rich nations and now also the big developing countries.

After their umpteenth seizure, the negotiations seem to have revived now, with Brazil, South Africa and India insisting that they are committed to a deal and the United States and Europe sounding positive. We would not bet on it, but there could be an agreement before the end of 2008.

This is better than failure — which could produce a snap-back to protectionism and spur more regional trade pacts aimed at shutting others out. For all their limitations, the Doha talks would reduce agricultural tariffs and subsidies and reduce barriers to industrial imports; all have hamstrung exporters around the world.

But for the poorest countries — those without competitive export sectors — the gains are likely to be meager. An analysis by the Carnegie Endowment for International Peace concluded that under the best circumstances, rich countries could gain more than $30 billion a year from a successful conclusion of the Doha round, about $30 a head. Middle-income countries, places like Brazil and South Africa, could gain up to $20 billion, or about $6 per capita. Poor countries would gain at most $5 billion — which amounts to $2 a head.

The poorest countries would gain mainly from having the rich countries reduce or eliminate subsidies and drop import barriers to a few key agricultural products. That would allow them to sell their cotton at competitive rates around the world. They would also gain if the rich countries followed through on their pledge to provide duty- and quota-free access for 97 percent of all their exports. But, as ever, there are caveats.

Rich countries have tentatively agreed to cut export and domestic subsidies for agriculture, but how deep and with what exceptions has yet to be defined. The offer of duty- and quota-free access to rich-country markets excludes the sectors in which the poorest countries are most competitive, notably textiles, because of resistance from competing exporters.

The poorest countries don’t have to make concessions. But they do face costs. Net food importers would see prices rise as the rich countries reduced or eliminated subsidies. A global deal would mean that these countries could lose the preferential access deals they now have with some rich-country markets.

The package for the poorest should be improved. At the very least, the duty- and quota-free access to markets in industrial countries should be extended to cover more of the poor countries’ most competitive exports, starting with textiles. Middle-income countries should also offer equivalent open access for exports from the least developed. And rich countries should tightly limit any exceptional subsidies and protections for agricultural products, like sugar and cotton, that poor countries can export.

There were good reasons to dedicate this round of trade talks to promoting development, including the self-interest of the rich. In 1999, protesters stormed a trade meeting in Seattle, vowing to stop the march of globalization. And the terrorist attacks in 2001 were a potent reminder that there is no possibility of insulating this country from the rest of the world. If the big countries fail to deliver a package that provides real benefits to the poorest nations, the so-called development round will be exposed as a mere tactical ploy.

Date: 2016-01-14; view: 631