At 9:00 PM Beijing Time on March 26, the World Trade Organization (WTO) released the preliminary findings of an expert panel report regarding the dispute between the United States, the European Union, and Japan against China’s export management measures for rare earths, tungsten, and molybdenum. The report concluded that China's export tax and quota restrictions on these critical materials violated WTO rules. While the panel acknowledged China’s environmental and resource protection efforts, it ruled that the methods used were inconsistent with WTO commitments. Experts have raised concerns about the fairness of the ruling, arguing that it pressures China to abandon its export controls, which are aimed at protecting both its environment and strategic resources. Instead, the decision may force China to adopt more costly and less efficient alternatives. Meanwhile, the U.S. and EU, which maintain some of the strictest export control systems globally, remain largely unchallenged under the same framework. The case, initiated in March 2012, marked one of the most significant trade disputes involving China's raw material policies. The WTO established an expert panel in July 2012, and the recent report confirmed that China's export management measures for the targeted products were not in line with WTO regulations. However, the panel did recognize China’s legitimate environmental and resource protection goals. This ruling is not entirely unexpected, as similar cases have already led to the removal of export quotas for nine other raw materials. Analysts believe this could set a precedent, potentially weakening China’s ability to manage its strategic resources effectively. According to Yang Guohua, deputy director of the Ministry of Commerce’s Treaty Law Department, the case will soon move to a second instance, with the final ruling expected in three to four months. The government is currently evaluating whether to appeal. China has long been the world’s primary supplier of rare earths, providing over 90% of global supply. However, the environmental costs of mining have been severe, prompting the government to implement stricter controls. In 2010, China reduced its rare earth export quota by 40%, causing alarm among developed nations reliant on these materials for high-tech industries such as electric vehicles, solar panels, and smartphones. While Western countries have criticized China’s export restrictions, they have also relied heavily on Chinese rare earths. Experts argue that their selective criticism ignores the environmental damage caused by unregulated mining in China. The current export quota system was seen as a necessary measure to prevent overexploitation and ensure sustainable development. In response to the WTO ruling, China is exploring alternative strategies to protect its resources while complying with international trade rules. These include imposing total mining caps or increasing resource taxes. Additionally, the country has taken steps to regulate the rare earth industry, cracking down on illegal mining operations and enforcing stricter environmental standards. Looking ahead, experts warn that the rare earth dispute is just the beginning. As other strategic resources come under scrutiny, China must prepare at a strategic level and review its current policies to avoid being “given the handle” in future trade battles. As Tu Xinquan from the China WTO Research Institute noted, the challenge lies in balancing resource protection with compliance with global trade norms. China is also considering retaliatory measures, such as examining the possibility of restricting exports of crude oil or natural gas to the U.S., based on WTO rules. This suggests a broader strategy to defend its interests in an increasingly competitive global trade landscape.

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