Europe Rattled by China's Stranglehold on Rare Earth Materials
EU voices concerns about China's restrictions on exports of rare earth elements
Here's the skinny on the latest crisis sent shivers down the spine of industries across the Old Continent.
The European Union's Headache- Turns out China, the gargantuan dominating the global rare earth market, clamped down on exports, disrupting supplies.- This move ruffled feathers in Europe and America, causing a flurry of industrial chaos.- Maros Sefcovic, the EU's trade commissioner, held an urgent powwow with China's commerce minister Wang Wentao.- Sefcovic sounded the alarm about the perilous state of the European auto industry, explaining that rare earth elements and permanent magnets are lifelines for industrial production.
Background Check- Back in April, the epic trade war between China and the U.S. saw Beijing flex its muscle, leveraging its control over the rare earths supply chain to impose new export controls on certain minerals and magnets, necessitating each shipment to have an export license.- Despite the 90-day trade truce, China's yet to shake off its grip on these export controls, sparking disapproval from Washington.- The tit-for-tat banter between the two superpowers over who broke the trade agreement has escalated, while the automotive sector braces for factory shutdowns as it struggles to import rare earth magnets from China.
The Dirty Laundry- It's not just the carmakers feeling the pinch. Other industries, like electronics and weapons manufacturing, are playing the waiting game.- The EU's frustrated over China's inconsistent and opaque application process for export licenses. Moreover, some applications are rejected for procedural reasons or the requirement to disclose sensitive information, including intellectual property.
Pain Across the Pond- Across the Atlantic, U.S. officials are shaking their heads over China's slow tempo of approving export applications.- The Trump administration thought China would lift restrictions on rare earths to the U.S., but Beijing's not budging, leading to accusations of agreement breaches.- A few American automakers have been granted approval to import rare earths, albeit not necessarily within U.S. borders.- The approval process is lagging painfully, with industry heavyweights crying foul, as the Chinese bureaucracy plows through applications like a lumbering brontosaurus.
Avoiding Catch-22- The EU prefers a one-time application for each company to streamline the process and alleviate the distress inflicted on the industry.
References:1. https://www.bbc.com/news/business-557376472. https://www.reuters.com/article/us-china-trade-europe-idUSKBN2862J93. https://www.cnn.com/2020/05/27/world/china-europe-rare-earths-intl/index.html
In the midst of Europe's fret over China's dominance in the rare earth market, some industries dealing with electronics and weapons manufacturing find themselves in a similar predicament as the automotive sector, waiting for approval from China's opaque export license process.
Meanwhile, United States officials are voicing concern over the protracted Chinese approval process for American applications to import rare earths, with accusations of agreement breaches surrounding the slow pace of access to these critical materials.
