http://www.nytimes.com/2014/03/27/business/international/china-export-quotas-on-rare-earths-violate-law-wto-panel-says.html?_r=0
In 2010, China cut their export quota of rare earth metals, of which China is a leading world supplier. By cutting their exports by 40%, nearly 30,000 tons, the world prices for rare earth metals from China artificially rose and caused shortages of the minerals. The US, and eventually the EU, brought this to the WTO saying that since non-Chinese buyers were paying around twice as much as a Chinese buyer was, China was manipulating policy at the expense of international buyers in order to further their own home business' prosperity. The WTO ruled against China in this, stating that the Chinese's reasoning for the sanctions did not comply with WTO's rules.
This will likely have interesting economic impacts on various countries around the world. If China is cutting their exports for these minerals, then numerous countries in Africa and Latin America will feel negative economic consequences for this decision. For over a decade, China has become increasingly active in the global economy through increasing their exports to developing countries and developed countries similarly. If world prices for these rare metals increase, then it will hurt various economies that are still trying to recover from bad economic years.
ReplyDeleteIn terms of other countries, it would hurt them in some fashion economically. But how much are rare metals really affecting their economies? They can't be a huge percentage of GDP, and since they're imports, their net exports increase. With China, even if they restricted their rare metals, they still rose prices, which makes up for the lost exports. Net exports decrease, which consequently cause the exchange rate to increase.
ReplyDelete