Export Control of Natural Resources: WTO Panel Ruling on the Chinese Export Restrictions of Natural Resources

Abstract

The delicate balance between the demand and supply of natural resources is likely to be affected by the increase in population and the needs of emerging nations. China’s de facto embargo on rare earths in 2010 has brought these issues to the forefront of WTO jurisprudence. The dispute initiated by the US, E.U. and Mexico led to the Panel holding that the Chinese restrictions were contrary to the GATT prohibition on export controls. Part I of the article introduces the various facets of the dispute against the background of WTO principles regarding export controls. Part II of the article discusses the legality of export controls under GATT and the exceptions to the rule of prohibition of export controls. The facts of the Chinese rare earth minerals dispute, the questions of law involved, the discussions adopted by the Panel and the decision regarding the legality of such measures are analysed in Part III of the article. The Panel held that the Chinese measures were inconsistent with Article XI:1 and that the justifications under Article XI:2(c) as well as Article XX: (b) and (g) could not be upheld. Part IV examines the key themes present in the dispute and also summarily scrutinizes the supplementary questions involved. More specifically, it deals with the question of whether a Member can resort to Article XX: (b) and (g) to control the production of natural resources and impose export quotas on them. Part V offers a conclusion with regard to the formulation of certain principles regarding export controls and the role of the WTO in implementing them.