China regulates its rare earth exports by quotas, duties and export pricing requirements, as well as export procedures and requirements. The WTO members have argued that the use by China of export restraints creates scarcity and causes higher prices in global markets, while providing Chinese domestic industry with a significant advantage by way of a sufficient supply, and lower and more stable prices, for the raw materials. As to the requirement issued by USA, European Union and Japan on setting experts group to solve China’s rare earth exportation, the news spokesman of Commerce Ministry- Shen Danyang responded that China had received the relative request, and repeatedly emphasized that China’s purpose on rare earth extraction, production and export management are based entirely on protecting its natural resources and the environment, with no intention to distorting trade to protect domestic industries.

Shen also said that Chinese government respected the WTO rules and performed well on WTO requests. Chinese government would seriously study the expert group’s request and settle the issue according to WTO procedures.

On March 13, 2012, USA, European Union and Japan submitted the consulting request to WTO dispute settlement mechanism on China’s export restraints policies of rare earth and other two resources. The four parties had a discussion on April 25 and 26 in Geneva. On June 27, 2012, concerning China’s export restraint on rare earth, wolfram, molybdenum, the three parties officially presented the request to set the expert group.

Previously, deputy settlement mechanism of WTO passed reports of the expert group and appellate body on “deputy case of Chinese raw material resources export restraint appealed by USA, European Union and Mexico”. It was ruled that China’s relative polices of export tariffs and quota were non-conformity to the commitment and WTO policies, and not matching the protective conditions of exhaustibility escaped clauses. Meanwhile it was ruled that the prosecution party’s expert group requirement violated the regulations on “deputy settlement rules and procedures” and rejected its accuse on the quota distribution management and export license, etc..