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The EU business is lobbying in Beijing to set up special channels to quickly track China’s approval of rare earth export licenses for “trusted” companies, as strict control over China’s shipment of critical minerals threatens supply chains around the world.
The proposal was made at a meeting between European companies and officials of the Chinese Ministry of Commerce, according to three people who were explained on the issue, as European authorities warned that factories were at risk of closure due to Chinese measures originally targeting the US.
“The companies in the meeting proposed a clean channel. It’s a white list,” explained European executives at a conference last week.
“Mofcom took our concerns seriously,” he said, noting that Chinese officials at the conference are working on “innovative tools” to speed up the process.
Authorities and businesses also discussed the possibility that the government would grant companies multiple licenses for rare earth exports, so they would not need to apply for each freight, he said.
China controls the global supply of rare earths and its export control system – introduced in April after President Donald Trump’s “Liberation Day” trade war, but it has caused disruption in supply chains not only in the US but also India and Japan.
Trump accused Beijing of resigning from the trade war ceasefire agreed on May 12, when the US agreed to reduce additional tariffs from 145% in return for China to ease tariffs and non-tariff measures.
Washington is increasing pressure on Beijing to promote rare earth transport by retaliating with its own supply chain measurements, including cutting off Chinese groups from its chip design tools and halting ethane exports.
European trade commissioner Maloszhuchovich said on Wednesday that he had pressed China’s commerce minister Wang Wentio about a shortage of key elements that had delayed delivery of all manufacturers, from cars to washing machines.
The second person familiar with the conference said that the so-called “whitelist” of known companies is the usual practice of export and customs management. “If we consider a trustworthy company that is very common in customs clearance worldwide and in China, and has a great track record, our inspection rates go down.”
China’s bureaucracy was so abolished in applications around the world for rare earth export licences that it was difficult to select applications for expedited approval.
“That’s why they (the companies) wanted to create this special line for them,” the person said, referring to the white list proposal.
Those who were briefed at the meeting said that there has been little progress since. One of the exporters, which usually ships 2,000 kg a year, has previously received a permit for just 75 kg.
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Chinese officials at the conference were referring to negotiations between the Japanese and South Korean governments, which they understood that this meant that people could use rare earth shortages as leverage in these consultations. Beijing is eager to block the US from surpriseing bilateral trade deals with other countries that are disadvantaged in China’s interests.
China’s Commerce Ministry said Thursday it had legally considered export licensing applications for double use items such as rare earths, such as general international practices.
“For applications that meet the requirements, China will grant approval to promote and promote compliant trade,” the spokesman said, Yongqian.
Additional Reports by Andy Bound of Brussels
