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Balancing Benefit and Burden in National Security: Rare Earth Metal Export Restrictions

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International trade has become a crucial variable of our nation’s national security.[1]  By monitoring international trade regulations and implications, for example, the United States can accurately assess certain risks to economic national security.[2]  Due to low environmental and safety standards, China currently monopolizes the rare earth metal (REM) market, exporting approximately 90% of the international supply.[3]  REMs are comprised of twelve metals that line the bottom of the periodic table, and the elements have a wide variety of industrial and commercial usage.[4]  When China cutback on REM exports in late 2010, the Obama Administration – predictably – wanted to formally address whether Chinese export policies complied with international fair trade guidelines.[5]  On March 13, 2012, the United States, in conjunction with Japan and the European Union, filed Requests for Consultations with the World Trade Organization (WTO) on the REM matter.[6]  In late October 2013, the WTO Dispute Settlement Body held that China had violated the General Agreement on Tariffs and Trade (GATT 1994), and were enjoined from continuing in current export restrictions.[7]  Using the WTO’s ruling as a lens, this article will briefly discuss how REM export restrictions impact more than just U.S. economic national security, but rather a variety of U.S. national security platforms.

REM supply and demand intimately affects national defense mechanisms.  From missile guidance control to mine detection, REMs play an intricate role in modern warfare.[8]  REM availability contributes significantly to the U.S. military’s continuing stability.[9]  Nevertheless, the United States depends almost entirely on China for its supply of REMs.[10]  Therefore, Chinese export restrictions create a defense vulnerability.[11]  Some scholars suggest that China’s monopolizing of the REM market can be likened to the Middle East’s manipulation of oil into a political weapon.[12]  By flexing its [export] muscle, China sent a wake-up call:  you are all REM dependents.  In order to diminish this dominance, however, the United States may be inclined to increase its independence through legislation favoring domestic preference.[13]  If the country produced an abundance of a high-valued item, access to the item would be inherently quicker and more efficient.  Additionally, access to the item would not be threatened due to political power plays.  Through domestic preference, the country tightens its grasp on national defense.

Alike domestic defense protections, REM export restrictions also commingle with environmental national security.  REMs’ multifaceted usage enhances clean energy potential in the global “green” movement.[14]  China’s coveted export has the additional environmental benefit of being mined outside of the United States;[15] however, environmental interests must be weighed against REMs likely scarcity.[16]  The WTO’s ruling in the U.S.-China REM dispute demonstrates the tension between these two objectives.[17]  On the one side, REM harvesting and maintenance procedures contradict the environmentally friendly principle underscoring the green movement.[18]  Conversely, if REM procedures may be conducted in a manner that does not substantially pollute the environment, then the United States should practically consider the benefits of self-reliance.[19]  Despite environmental vulnerabilities, national security agencies seem to anticipate pro-mining legislature.[20]

United States national security additionally depends on the country’s cumulative employment prospects, which are affected by trade policies.  Trade encompasses both goods and services, thus job security rests on the amount of services imported to and exported from the United States.  Particularly in the realm of REM, Chinese export restrictions tighten the noose on employment opportunities.[21]  In light of export restrictions’ ripple effect on labor restrictions, labor unions are inclined to strengthen worker rights within trade policies.[22]  In short, current U.S. trade policies seem to present unfair competition for U.S. workers, creating an unstable employment environment.[23]

Overall, China’s restrictions on REM exports negatively impact our country’s economic, defensive, environmental, and employment security.  While China employs its REM market dominance as a political tool,[24] the United States has taken a remedial stance rather than a proactive approach.  Due to national security interests, China chooses to maintain restrictive in terms of foreign investment,[25] and simultaneously taunts the United States’ obvious vulnerability.  In order to demonstrate authority and resistance, Congress must reconcile all national security interests and balance self-reliance with foreign reliance.  One solution, possibly, may entail cutting back on REM exports from China, without fully taking on the burden of production.  Still, the United States then strikes a fine line with WTO importing regulations:  domestic favoritism violates the GATT 1994.  Nevertheless, if Congress does not find a legislative solution soon, the United States may soon find itself stuck between a rock and a hard place.

 

Photograph Credit:   http://i8.hexunimg.cn/2013-10-30/159212862.jpg


[1] See Trade, Department of Homeland Security < https://www.dhs.gov/es/topic/trade>.

[2] See generally Amy E. Farris, WTO Importing Regulations, Reliance, and National Security, National Security Law Brief (November 5, 2013) <www.nationalsecuritylawbrief.com/wto-importing-regulations-reliance-and-national-security-vulnerability> (concerning how international trade regulations impact U.S. economic national security).

[3] See Valeria Bailey Grasso, Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress, 7-5700 CRS Report R41744, at 10 (December 23, 2013) <http://www.fas.org/sgp/crs/natsec/R41744.pdf> (discussing the appropriate legislative framework regarding rare earth metals in national defense).

[4] See Ryan P. Carpenter, Note, The Bottom of the Smart Weapon Production Chain: Securing the Supply of Rare Earth Elements for the U.S. Military, 41 Pub. Cont. L.J. 411, 412 (Winter, 2012).

[5] See, supra, The Bottom of the Smart Weapon Production Chain (“Eventually, almost two months after the initial freeze, China once again resumed exports of the rare earth elements to Japan . . . China also halted shipments of raw rare earths to the United States for ten days in October 2010, after the Obama administration opened an investigation into whether China was violating international free trade rules with its rare earth export policies.”).

[6] See Ruth Jebea1, Don Mayeraa1, and Yong-Shik Leea, China’s Export Restrictions of Raw Materials and Rare Earths: A New Balance Between Free Trade and Environmental Protection?, 44 Geo. Wash. Int’l L. Rev. 579 (2012) (discussing the history and duplicity of the WTO Panel’s decision in the U.S.-China REM dispute).

[7] Id.

[8] See, supra, Rare Earth Elements in National Defense.

[9] Id.

[10] Id.

[11] See id.; cf., supra, The Bottom of the Smart Weapon Production Chain.

[12] Supra, The Bottom of the Smart Weapon Production Chain, at 413.

[13] See Nicholas Sanders, A Response to Ryan P. Carpenter’s “The Bottom of the Smart Weapon Production Chain: Securing the Supply of Rare Earth Elements for the U.S. Military,” 41 Pub. Cont. L.J. 957, 958 (Summer, 2012) (“If domestic prices of rare earth metals are trending downward relative to foreign sources, as Mr. Carpenter seems to imply, then there is no economic harm from requiring contractors to acquire from domestic sources. In fact, contractors will do so in any case because domestic sources will become cheaper than foreign sources.”).

[14] See generally Andrew W. Eichner, More Precious Than Gold: Limited Access to Rare Elements and Implications for Clean Energy in the United States, 2012 U. Ill. J.L. Tech. & Pol’y 257 (Fall, 2011) (concerning rare earth metals’ vitality to clean energy initiatives).

[15] See Winfield J. Wilson, The Lurking Costs of Green Technology Metals in a Global Market, 11 Sustainable Dev. L. & Pol’y 14 (Spring, 2011) (Producing rare earth metals involves a number of polluting processes, from “mining and smelting to recycling and waste management.”).

[16] See Karen A. Miller, Renewable Energy and Rare-Earth Elements, Special Issue: Climate Change and Clean Energy, 40-OCT Colo. Law 69 (October, 2011) (“Renewable energy technologies are dependent on rare-earth elements that must be mined. Thus, mining is a necessary component of developing renewable energy resources and energy independence.”).

[17] See, supra, China’s Export Restrictions of Raw Materials and Rare Earths.

[18] See Technical Resource, EPA Studies The Potential and Risks of Rare Earth Elements, 30, No. 6 Hazardous Waste Consultant 1.6 (2012). (“The most significant environmental impact from contaminant sources associated with hard rock mining is to surface water and groundwater quality. However, documented impacts have also occurred to sediments, soils, and air … comparable to other hard rock metal mining and processing operations, and similar environmental impacts and risks would be expected.”).

[19] See, supra, More Precious Than Gold (“…the type of energy policy portfolio that will be able to meet national demands while still mitigating the risk of foreign material reliance.”).

[20] See, supra, Rare Earth Elements in National Defense.

[21] See Katherine Weatherford, The Real Cost of China’s Rare Earth Export Quotas on American Job Security, 12 Sustainable Dev. L. & Pol’y 18 (Fall, 2011) (“China’s economic policies, particularly its export restraints and currency manipulation, have not only increased the already significant trade deficit between the US. and China, but have cost approximately 2.8 million U.S. jobs. Of specific concern are China’s export quotas on Rare Earth Minerals.”).

[22] See Marisa Anne Pagnattaroa1, U.S. Trade Policy: Increased Emphasis on Worker Rights, 40 Ga. J. Int’l & Comp. L. 663 (Spring, 2012) (concerning the potential for unfair competition raised by U.S. trade policies made under the Obama Administration).

[23] Id. at 670.

[24] See generally Vivienne Bath, Foreign Investment, The National Interest and National Security–Foreign Direct Investment in Australia and China, Special Issue: Asian Investment and Finance Law, 34 Sydney L. Rev. 5 (March, 2012) (discussing the strategic similarities Australia and China use to promote national interests within international trade operations and foreign investments in particular).

[25] See id.


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