Brussels and China continue to discuss rare earth metals

A conversation between Chinese and European representatives about the trade in rare earth metals did not yield much concrete results on Friday, according to a statement issued on Saturday by a spokesperson for the European Commission. Both sides agreed to “continue discussions” about European companies’ access to rare earth metals, seventeen raw materials that are crucial for many industries and whose extraction and trade China dominates.

That country imposed strict rules on the granting of export licenses for seven of these substances in April, as part of the trade war with the United States that flared up this year. In early October, China further expanded those restrictions to five more earth metals, shortly after the United States added a number of Chinese chip companies to its sanctions lists.

The restrictions sometimes cause companies major problems. For example, some car manufacturers have had to temporarily (partly) halt their production due to a shortage of these raw materials.

On Thursday, US President Donald Trump and his Chinese counterpart Xi Jinping met during a summit in South Korea. Afterwards it was announced that the new measures from October would be temporarily suspended in exchange for a relaxation of a number of American measures.

This suspension is also good news for European companies: on Friday it became clear that the adjustment does not only apply to Americans.

Countermeasures

But with the suspension of the most recent measures, those from April are not yet off the table, and the European Union has “no positive experiences with this,” European Commissioner Maros Sefcovic (Trade) said in a press interview in Rome on Friday. According to him, only half of the applications for export licenses are processed properly, and that puts a heavy burden on the production capacities of European companies.

News agency reported on Friday Bloomberg based on anonymous sources about measures that the European Commission would keep in reserve if a deal with China on the earth metals were not to be reached. One option would then be to introduce some kind of exchange obligation: some Chinese companies must bring rare earth metals with them if they want to import certain goods into the EU.

Another idea would be to introduce export restrictions on certain goods and services on which China depends. The European member states would first have to support such plans.

China’s Ambassador to France Deng Li said last week in the South China Morning Post that the EU could make China more favorable if the export restrictions around ASML become less strict.

The Dutch company, which makes high-quality chip machines, has been imposed strict export regulations for China by both the Netherlands and the US. Because the US supplies parts for the machines, the country has that power.

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