EU pushes China to address ‘alarming' rare earth export controls
The request was made during a meeting between the sides' top commerce officials in Paris on Tuesday. It comes as sectors across Europe raise the alarm about a shortage of rare earths, which are used to manufacture hi-tech goods ranging from electric cars and smartphones to military tanks and aircraft.
'I informed my Chinese counterpart about the alarming situation in the European car industry, but I would say industry as such because clearly rare earths and permanent magnets are absolutely essential for industrial production,' Maros Sefcovic said on Wednesday, briefing reporters a day after his meeting with Chinese Commerce Minister Wang Wentao.
Around 90 per cent of the world's supply of rare earth minerals comes from China, which introduced export controls on their shipments in April in retaliation to US President Donald Trump's 'reciprocal' tariffs.
Rare earths consist of 17 elements. On April 4, Beijing added seven of these – dysprosium, gadolinium, lutetium, samarium, scandium, terbium and yttrium – to its export control list, plus several rare earth magnets, two days after Trump announced 'reciprocal tariffs', meaning licenses are now required for their export.
While such restrictions were ostensibly intended to punish the US, firms around the world have been caught in the crossfire. Business chambers and industry groups have urged European governments to push for a solution, as mineral stocks run low and some areas of production grind to a halt.
European companies have complained that China's commerce ministry seemed incapable of handling the voluminous requests, with licenses being issued slowly and on a piecemeal basis.
'Some applicants are asked for sensitive information that might compromise their intellectual property so they're reluctant to hand that over, but they need to if they want to get approval,' Adam Dunnett, secretary general at the EU Chamber of Commerce in China, said.
The chamber has held 'emergency meetings' with Chinese authorities in recent days after an outpouring of anxiety from across European industry.
'I haven't seen anything of this magnitude for a long time,' Dunnett said of the level of concern among EU businesses.
Sefcovic said that the two sides had compared figures on the number of applications versus the licenses issued.
The figures did not match, Sefcovic said, adding that the EU would supply Beijing with 'all the data and would cover all the companies which are now in an extremely difficult situation'.
Sefcovic suggested that Beijing could simplify its system, which now screens all requests for 'dual use' applications, meaning the rare earths could go towards military production.
'Some of the car companies are already announcing that if this issue is not addressed, there might be huge production difficulties in a short period of time,' Sefcovic said.
'His information was a little bit different, and therefore we agreed that he would clarify this as soon as possible, and that we would also address the propositions I made yesterday, and this was that our strong preference here,' he added.
The EU's proposals include 'not to cover ... civilian production by this very complex system', Sefcovic said.
The bloc would also like to see a 'general application ... to cover it once a year for the whole production', eliminating the need for cumbersome repeat applications.
Sefcovic said the EU wanted the changes to avoid 'huge paperwork delays and stress, which this presents for our industry and for our companies.
'We agree that we will come back to this issue relatively soon.'
Also on Wednesday, the EU named 13 projects it would initiate beyond its borders to help improve its self-sufficiency in rare earths and critical minerals.
'The export bans reinforce our will to diversify and perhaps even strengthen the relevance of our focus on reducing dependencies,' Stephane Sejourne, the European Commission's head of industrial strategy, said in announcing the projects in Brussels.
Two projects will cover rare earth minerals in Malawi and South Africa, while others focus on various raw materials in Britain, Canada, Greenland, Kazakhstan, Madagascar, Norway, Serbia, Ukraine, Zambia, Brazil and New Caledonia, a French overseas territory.
The rare earth crisis adds another complication to already tense EU-China trade ties.
Earlier this week, the bloc's member states voted to exclude Chinese companies from its lucrative medical devices procurement market after Beijing refused to open its tenders to the EU.
In a bid to crack down on a deluge of small packages from Chinese e-tailers Temu and Shein, Brussels plans to add a surcharge of €2 (US$2.28) to small parcels imported.
The EU also remains frustrated over Beijing's refusal to acknowledge state subsidies that it claims are leading to market-distorting industrial overcapacity.
China, on the other hand, claims that Europe's moves to target its exporters are against the rules of global trade. - SOUTH CHINA MORNING POST
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