American Resources Policy Network
Promoting the development of American mineral resources.
  • Blog

  • HOMEPAGE >> BLOG >> China’s New Export Control Legislation Raises Specter of REE Ban

China’s New Export Control Legislation Raises Specter of REE Ban

Three weeks ago, U.S. President Donald Trump signed an executive order declaring a critical minerals national emergency aimed at expanding domestic production of rare-earth and other critical minerals in an effort to reduce dependence on China. Among other things, the order directs the Department of the Interior to explore the application of the Defense Production Act — used earlier in the year to accelerate production of medical supplies in the context of the ongoing coronavirus pandemic — to promote domestic resource production and development.

The executive order is a direct response to an inconvenient truth the current pandemic has brought to the forefront — our over-reliance on foreign (and especially Chinese) critical minerals, and China’s penchant for playing politics when holding leverage over its adversaries, indications for which have been mounting over the last few months amidst growing trade tensions between the United States and China.

News coming out of China this weekend point to China’s readiness to escalate tensions with the United States and its allies and underscore the need for action.

According to Nikkei Asia, the Chinese legislature on Saturday passed export control legislation China to “take countermeasures against any country or region that abuses export-control measures and poses a threat to China’s national security interests,” and effectively allows the “government to ban exports of strategic materials and advanced technology to specific foreign companies.”

Listing some of the ramifications of the new law, which is set to go into effect on December 1, 2020, Nikkei Asia writes that “[c]oncerns have been raised that rare-earth metals, for which China’s market share exceeds 60%, may be included in the restricted items. Such a ban would have broad implications worldwide.”

Aside from also affecting companies that import export-controlled items from China, and not only end users, the law can also “be enforced over acts committed outside Chinese borders,” and employees of foreign companies without offices in China could be arrested upon entering the country.

The move comes on the heels of ministerial meetings of the Australia-India-Japan-United States Quadrilateral or Quad in Tokyo earlier this month — which had prompted the Chinese Communist Party to dub the Quad an “anti-China coalition” and an “exclusive clique.”

During the Quad meetings, U.S. Secretary of State Mike Pompeo had called for the four-nation grouping to “collaborate” on countering China, stating that “[a]s partners in this Quad, it is more critical now than ever that we collaborate to protect our people and partners from the Chinese Communist Party’s (CCP’s) exploitation, corruption, and coercion.”

With tensions escalating, it is encouraging to see that stakeholders have begun to realize the urgency of the situation and there are indications that the new executive order is (finally) setting off a flurry of activity in the U.S. critical minerals space — along all links of the supply chain. As ARPN’s Daniel McGroarty has stated:

“[W]e’ve spent enough time admiring this problem. The question now will be whether this EO triggers an immediate and active response on the part of the U.S. Government – one that will encourage American ingenuity, innovation and investment to bring new sources of supply into production.”