EU asks WTO to arbitrate in China 'rare earths' row

What are rare earths and why do they matter?

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The European Union has asked the World Trade Organisation (WTO) to arbitrate in a row about China's export restrictions on "rare earth" minerals.

Talks between China and the EU, along with the US and Japan, failed to resolve the dispute in April.

China, which produces 97% of the world's rare earths, could now face litigation from the WTO.

Minerals such as lutetium and scandium are important in the manufacture of products such as mobile phones.

"China's restrictions on rare earths and other products are a violation of China's WTO commitments and continue to significantly distort global markets, creating a disadvantage for our companies," said EU trade commissioner Karel De Gucht.

"We regret that we are left with no other choice but to solve this through litigation."

In addition to rare earths, the complaint covers tungsten and molybendum.

The EU, US and Japan complained to the WTO in earlier in the year, saying that China's increased export duties and reduced export quotas were unfairly benefiting its own companies.

Beijing says that its restrictions are needed to protect the environment, conserve supplies and meet domestic demand.

The first stage in the dispute process was to hold formal talks at the WTO in Geneva.

Since those failed, the next stage will be for the WTO to set up a dispute settlement panel.

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