The market for high-tech goods — everything from iPads to missiles — is booming, but it seems as if manufacturers may soon have trouble procuring the raw materials necessary to produce them.
On July 5, in a decision widely hailed by the international community as a victory for international commerce, the WTO ruled that China’s repeated curbing on exporting metals used in production violated their terms of accession as well as the 1994 General Agreement on Tariffs and Trade (GATT). The ruling was in response to a complaint filed by the U.S., Mexico, and EU in 2009, expressing that China’s limiting of certain raw material exports put foreign markets at a severe disadvantage compared to China’s domestic market.
The ruling seems to give the U.S. and Europe a mandate to follow up with a crackdown on China’s export limits of 17 rare earth elements widely used in high-tech manufacturing. China has attempted to defend its export limits on environmentalist grounds, citing the toll of mineral extraction on China’s already ravaged land. However, the WTO aptly rejected the defense: environmentalism calls for curtailing of production, not exportation of minerals.
Invalid as China’s defense may be in terms of export limitations, no one can deny that their natural reserves are indeed being exhausted. According to Xinhua News, China’s state-run newspaper, the reserve has fallen from 85% of the world’s total new minerals in the 1990s to about one-third of the world’s total deposits today. The larger problem at hand is how to break the Chinese monopoly over these high-demand rare earth metals. The answer? We need to start looking elsewhere.
China currently corners the world market by providing 97% of its rare earths. However, it is quite an open secret that the rareness of their rare earths is severely overrated — there are a number of deposits sitting untapped in Africa, Australia, and Greenland. The catch here, of course, is that the metals typically used in high-tech manufacturing are of very specific concentrations. Also, taking advantage of these long-neglected deposits may take much time and capital and harm the environment (although the latter does not seem to have stopped China). Nonetheless, it is clear that these deposits do exist; we have simply neglected to take advantage of them.
In fact, Japanese scientists recently found high concentrations of rare earths in the Pacific Ocean floor. According to Tokyo University Professor Yasuhiro Kato, just one square kilometer could provide for one-fifth of the world’s annual consumption. The extraction method of choice would be acid-leaching. Understandably, the idea already has its critics, who contend that the slag left over after the silt is processed would be an environmental hazard wherever it is dumped. However, efforts such as these still speak to the ever-growing market demand for these raw materials.
Meanwhile, several nations have also been exploring ways of recycling metals, and items like old batteries, washing machines, cell phones, presenting an even more environmentally friendly way of addressing the impending rare earths shortage. This could also bolster our independence from China when it comes to raw materials.
These solutions are far off and slow-moving at best, which is precisely why we need to see this WTO ruling not only as a triumph of open door commerce over the evils of protectionism in an international partnership, but a call to finally start digging up the natural resources that have been sitting right under our noses. At the end of the day, with the WTO taking such a strong stance against China, Beijing will probably lose their predicted appeal. And unless China wants to face economic sanctions involving the complainant nations, it will eventually back down.
But the fruit of this WTO saga should be more than just a mandate to slap China on the wrist; it should be the beginnings of a solution to an international problem of sustainability. Even China’s bottomless pits of natural resources will eventually be depleted, and if we are to build an alternative resource plentiful enough to compete and allow those resources to replenish, time is of the essence.
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