No need to lock horns over rare earths

Updated: 2012-03-26 14:58

By Reinhard Btikofer (China Daily)

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Rare earth minerals have caused much controversy and friction over the last few years, but the conflict resolution initiative at the World Trade Organization that the European Union, the United States and Japan started against China recently has taken the dispute to a new level.

However, there is ample reason for both sides to take a step back and reconsider the wisdom of confrontation.

I have, of course, no way of knowing how this case against China will turn out in the end. But I believe that commentators arguing that the result in the new case will be pretty much the same as an earlier case that ruled in favor of the EU, the US and Mexico in January 2012, are jumping to conclusions. And even if in two years time we find that they were right and the decision does go against China, this locking of horns might still turn out to be only a pyrrhic victory.

One very simple truth about the rare earths business is this: the West and Japan can only blame themselves for their present rare earths predicament as they took a short-term view to maximize their profits and chose to halt their exploration, mining and refining of rare earth elements in favor of purchasing them from China instead.

In the long-term, a strategy that combines diversification of sources with efficient use, recycling and substitution technologies will enable the West and Japan to overcome their dependency on the supply of rare earth elements from China. It may take a few years but it will happen. But in the meantime, cooperation would produce much better results for both sides.

The West and Japan are in a good position to offer China access to much needed sustainable mining technologies as well as to certification schemes that would help reduce illegal trading in rare earth minerals. After all, minimizing the environmental damage of rare earths mining and reigning in the illegal rare earths business are two of the main concerns of the Chinese government with regard to this sector. Sharing such technologies in exchange for reliable access to rare earths supply over the next 10-15 years would benefit both sides. So why not choose cooperation?

Besides, there are many other raw materials related policy issues that would greatly benefit from cooperation between industrialized countries, emerging economies and resource-rich developing countries.

It is an obvious weakness of the existing global governance structures that they do not provide enough transparency and opportunities to exchange views and perspectives with regards to raw materials. In the energy sector, besides the International Energy Agency, of which China is unfortunately still not a member, we have the International Energy Forum that has just recently met in Kuwait to discuss pertinent topics. Shouldn't we also strive to create a similar international raw materials forum, one focusing on industrial mass metals and high-tech metals? Yet it is hard to see, how there could be successful moves in that direction as long as some of the most important actors are mired in conflict.

Some industrialists I talk to have called such ideas blue-eyed idealism. I disagree. It's a kind of realism that we need for the 21st century. On one hand, there is always an option that increasing conflict over access to raw materials might spin out of control and contribute additional risks to the many security issues the world is facing. On the other hand, there is this great old wisdom from Winston Churchill: "It is better to jaw-jaw than to war-war."

Reinhard Btikofer is vice-chair of the Greens/EFA Group and Rapporteur on Raw Materials in the European Parliament. He sits on the Industry, Technology, Research and Energy Committee as well as the delegation for relations with the People's Republic of China.