Revisiting Obama’s speech in 2012 on WTO Lawsuit against China’s Rare Earth Regulation
In August of this year (2014), the World Trade Organization (WTO) announced that it would uphold its ruling for DS 431 (China — Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum). For those who are not familiar with the case, DS 431 was brought to the WTO in 2012 by the United States, the European Union and Japan to challenge China’s restrictions on exports of rare earths and two other types of critical minerals. The WTO panel ruled against China in March 2014. China soon appealed the panel reports on all three critical minerals (It should be noted though that China did not appeal any of the final conclusions of the panel report, only on limited aspects of the reasoning of the panel and certain intermediate findings of the panel report). This August announcement by the WTO means that China has lost the appeal to the ruling, and would have to implement the recommendations laid out in the panel report to ease its restrictions on exports of these critical minerals.
While it took two years (still normal length of time for WTO disputes) for the Panel at WTO to reach a decision, many industry observers in China had correctly predicted that China would lose the case, and state policies would have to be altered. It is unclear right now what policy measures the Chinese authority would implement to respect its WTO obligations.
When the DS 431 case was announced in 2012, U.S. President Obama actually delivered a short speech on the issue at the White House, in which he succinctly summarized the case and the implications for the U.S. manufacturing.
Obama’s speech on China’s rare earth monopoly:
It’s rather rare to see the U.S. president make a speech on one single WTO case, considering how many WTO lawsuits the U.S. has been part of in the past. I would like to highlight a few sentences in his speech:
““American manufacturers need to have access to rare earth materials which China supplies…being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing.”
It is valid to say that the strategic values of the rare earth elements, especially their value to the development of clean energy, have been recognized by the U.S. federal government. The Obama administration has defined clean energy as a guiding principle of U.S. energy policy, so this WTO case is a continuation of his administration’s commitment to long-term U.S. energy security and energy development.
On the other hand, such a high-profile presidential speech on a single WTO case may have less to do with the use of the elements themselves, but more to do with the timing of the lawsuit – summer of 2012 was the height of the presidential election year. Politically it made sense for Obama to act “strong” towards China, a rising contender in global order, to gain more public support for his re-election. By highlighting the rare earth trade case, Obama sent out a strong message of protecting U.S. business interests, one area in which the Democratic administration has often been criticized by Republicans as taking a weak stance on matters of foreign trade.
Thus in just one single case, we see the interplay between politics at the domestic and the international levels.