November 23, 2011

Posted by Dan Houton

In today’s global and complex supply chain, businesses are challenged at times in securing materials and products needed for their produced goods.  One of the more important challenges auto parts suppliers and other key industries face today is availability and price of rare earth elements (REE).     

China currently controls 97 percent of the world’s REE mine production and 50 percent of reserves and has been employing export and production policies that have driven up world prices of rare earth metals in recent years.  A similar approach has been used by China with a number of raw materials important to many businesses which resulted in the U.S. and other countries filing a case against China at the World Trade Organization (WTO).  A WTO decision this summer agreed with the U.S. position and a final appeal decision expected in early 2012 that upholds the U.S. position could add more pressure on the United States Trade Representative (USTR) to file a rare earth case against China.       

MEMA, on behalf of one of its affiliate associations, the Original Equipment Suppliers Association (OESA), sent a letter to USTR Ron Kirk on November 4, urging him to take a strong position against China’s rare earth policies at the U.S.-China Joint Commission on Commerce & Trade annual meeting held on November 20-21.  “While fully aware that there are many pressing issues relating to U.S.-China trade, MEMA joins other key sectors in the belief that rare earth elements should be a priority in the U.S.-China dialogue,” the letter stated.  In the coming weeks, OESA will be conducting a member survey to determine to what extent China’s policies are disrupting the supply of rare earths. 

Attention has also turned to reestablishing a once-robust domestic U.S. rare earth production

industry with a number of bills having been introduced in Congress to assist this effort as well as cooperating with foreign allies to secure new REE sources outside of China.  Conservation of and alternatives to rare earth metals are also being explored.