Sputnik: How serious is the current US economic dependence on Chinese rare earth metals?
Mark Saxon: Approximately 80% of REE imported by US comes from China. US does not produce any REE.
Sputnik: Could Chinese companies fully cut their exports, or charge a much lower price within China than they are charging outside the country?
Mark Saxon: Quotas and tariffs were previously used by China to restrict the export of REE as raw materials. This was tested with the WTO and China was found to be in breach. China removed quotas in 2015. China could again claim to restrict supply citing environmental reasons, or REE production companies could elect to only sell within their own vertically integrated supply chains and not seek external markets.
Mark Saxon: Australia is the only country currently mining significant amounts of REE, with processing/separation completed in Malaysia, France or Estonia. There are significant resources in numerous regions including Russia, Canada, Nordics, Africa, however all projects require significant investment to begin production.
Sputnik: Which US companies need to search for alternatives?
Mark Saxon: Automotive industry is likely to be the largest customers by value.
Sputnik: This isn't the first time that China has used rare earth metals in a trade conflict. Last time (2014-2015) it was the WTO that prevented the practice. Could the WTO have a say in this potential trade conflict?
Mark Saxon: At the moment it is only a threat of restrictions. If restrictions become real, and a party raises the issue with the WTO, they could again find against China. However this would be a very slow process.
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Mark Saxon: In other areas of trade, yes. US does not have any capacity to purchase REE from other regions, so they would be unlikely to use REE as a trade issue.
Sputnik: Does China have other means to impact the American economy?
Mark Saxon: Yes, but not a field of expertise, so no comments.
The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.
