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China's move to control exports of rare earth has provoked accusations of unfair trading practices
RARE earth products are in the news again, this time not only in Malaysia but also in the international press.
United States President Barack Obama's launching of the new Trade Enforcement Unit (TEU) signals a downturn in relations with China as the unit has ostensibly been set up to further the demands of American producers for rare earth, which happen to be a crucial component in the manufacture of things like flat-screen TVs, handphones and other consumer goods that have become the rage the world over.
But China -- which produces more than 90 per cent of the rare earth in the world -- has imposed a quota on how much it exports to other manufacturing countries.
This week, the US, European Union and Japan have brought the matter up to the World Trade Organisation (WTO) and accused China of unfair trading practices.
That the Chinese are apprehensive about the move is hardly a surprise, for it marks a significant shift in the tone and tenor of its trade relations with other developed nations. That the Chinese may be somewhat annoyed by all this talk of unfair trading practices is also understandable if we were to look at how the concept of fair trade has been applied to China over the past two centuries.
In the 19th century, "free trade" meant that China was forced to open its markets to the import of opium, which led to widespread opium addiction among the population, debilitating its economy and people, and was the catalyst to the so-called "opium wars" of the 19th century.
Today, in the name of "free trade" China is being compelled to open up its economy again -- so that it may sell its rare earth to other more powerful trading nations. Which brings us to the question of politics or, specifically, the politics of free trade and the environment.
It is ironic to note that, on the one hand, the developed countries of the world bemoan the fact that Asian nations like China are producing and consuming more than ever. A decade ago, there was much alarmist talk of the new economies of China and India consuming too much, as Chinese and Indian consumers bought more air-conditioners, fridges, TVs, cars, etc.
It was argued that if every Chinese or Indian family had a car, TV and microwave, then the environmental cost to the world would be catastrophic: the ozone layer would be destroyed, global warming would ensue and billions would die.
Yet it beggars belief that developed nations can lecture Asians not to consume the same products that their own citizens enjoy; as if Asians are not entitled to some creature comforts after all. What, then, would be the ideal scenario?
An exotic Asia covered with palm trees and pristine beaches for tourists from the developed world to enjoy, while the natives give them foot massages by the pool?
Then there is all the talk of the environmental cost of rare earth production, and the claim that it will be deleterious to the environment. Here again the hypocrisy and double standards of some developed countries come into bold relief.
On the one hand, they deplore the environmental risks of rare earth production, but on the other hand, have no problems buying rare earth as long as they are produced somewhere else.
Environmental non-governmental organisations in the developed world have criticised rare earth production, yet have done little to convince their own Western citizens to stop consuming the same products that contain rare earth. Presumably, their media campaigns also use the same technology that depends on rare earth as well.
It is difficult not to be cynical when we look at present-day developments and the clumsy attempts to teach the Chinese how to run their economy and to dictate to China what it can and cannot sell.
China's desire to keep as much rare earth to itself is understandable as it seeks to gain and keep a leverage on the production of hi-tech products that have become necessities in the developed world. If some of the oil-producing states had shown similar prudence and long-term thinking in their export of oil and gas, they, too, may have the same leverage that China enjoys today.
As for the developed countries that are trying to muscle into China's management of its resources, they ought to perhaps reflect a little on the peculiarities of the situation they find themselves in at the moment. China's economic advance is due to a combination of factors that include long-term economic planning and some degree of discipline.
Remember, China is still an oil and gas dependent country, yet it has managed to develop despite its dependency. The developed nations may want to learn a thing or two here, rather than start on another lecture tour about the benefits of free trade that is never free in the first place. And how would the leaders of America and Europe feel if China were to take their government to the WTO on trade issues that are not in their favour?