U.S. President Donald Trump had said a deal had been signed to “open up China” on Wednesday, but did not go into details.Toby Melville/Reuters
Beijing will review and approve exports of certain rare earth minerals to the United States in exchange for Washington lifting “a series of restrictive measures against China,” the country’s Ministry of Commerce said Friday.
Rare earths have been a major sticking point in ongoing trade negotiations between the U.S. and China ever since Beijing choked off the global supply of the critical minerals, vital for the production of automobiles, semiconductors, smartphones and military equipment.
After high-level talks in London this month, U.S. President Donald Trump said Beijing would resume supplying rare earths and magnets, but companies complained they were still struggling to get exports approved, often waiting weeks only to be turned down.
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On Thursday, U.S. officials indicated these problems were in the process of being ironed out, with Commerce Secretary Howard Lutnick telling Bloomberg, “They’re going to deliver rare earths to us,” after which Washington would “take down our countermeasures.” On Wednesday Mr. Trump said a deal had been signed to “open up China,” but he did not offer any details.
Speaking to reporters on background, a White House official said the Trump administration and China had agreed to an additional framework to implement their earlier trade agreement and were working on expediting rare earth shipments to the U.S.
In a statement, the Chinese Ministry of Commerce said that, after a June 5 call between Mr. Trump and Chinese President Xi Jinping, “the teams maintained close communication” and had recently confirmed further details of a new framework.
“China will review and approve export applications for controlled items in accordance with the law,” the statement said. “The U.S. will correspondingly lift a series of restrictive measures against China.”
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It added it was “hoped that the U.S. will work with China to follow through on the important consensus and requirements from the June 5 call, further leverage the China-U.S. economic and trade consultation mechanism, enhance mutual understanding, reduce misunderstandings, strengthen cooperation, and jointly promote the healthy, stable, and sustainable development of China-U.S. economic and trade relations.”
While rare earths are found in a number of countries around the world, including Canada, China holds a near-monopoly when it comes to processing, producing more than 70 per cent of all refined critical minerals, according to the International Energy Agency.
Beijing has used that leverage to great effect against the U.S. and other trading partners, few of whom export anything of equal importance to China.
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But the strategy is a risky one, as it has led to complaints against China at the World Trade Organization and calls from many policymakers in the West to break the dependence on Chinese rare earths by friend-shoring their processing or finding alternative materials for cutting-edge technologies.
As well as easing restrictions on exports to the U.S., China also began issuing new licences this week to European firms caught up in the fallout of Mr. Trump’s trade war with Beijing, after weeks of lobbying by Brussels, according to the South China Morning Post.
Eva Valle Lagares, the European Commission’s head of trade for China, said Thursday that it was “unclear” whether Beijing had “intentionally hit” EU firms or whether that was an unintended result of tensions with Washington.
“In reality, it is probably a mix of everything. We are looking for a far more structural and reliable long-term solution,” Ms. Valle Lagares said. “If we ever needed a business case for derisking, China is giving us it right now.”
With files from Alexandra Li in Beijing