U.S. President Barack Obama says he is putting China on notice that it cannot get away with "skirting the rules" on international trade.
Obama says Washington is bringing a new trade case against China because of its export restrictions on rare earth materials needed to produce technology components.
The United States on March 13 filed its case to the World Trade Organization along with the European Union and Japan. The request for "dispute settlement consultations" with China at the WTO is the first step in a bid to settle the trade dispute.
China controls the global supply of 17 different so-called "rare earth" minerals used in the production of components for hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapor lights, and camera lenses. But Beijing has cut export quotas in recent years.
Obama says that is an unfair trade practice that violates the rules of the WTO, a group to which China belongs.
"Now, if China would simply let the market work on its own, we'd have no objections," Obama said. "But their policies currently are preventing that from happening, and they go against the very rules that China agreed to follow.
"Being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing. We've got to take control of our energy future, and we can't let that energy industry take root in some other country because they were allowed to break the rules."
U.S. Trade Representative Ron Kirk says the U.S. complaint was filed because China "continued to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace."
Kirk also said China's policies artificially increase prices for the materials outside of China while lowering prices in China.
EU Trade Commissioner Karel De Gucht said China's export quotas and tariffs give Chinese firms an unfair competitive advantage and must be removed.
But Chinese Foreign Ministry spokesman Liu Weimin said that Beijing needs to limit environmental damage and conserve scarce resources.
"Exploiting rare earths effects the environment," Liu said. "So in order to protect the environment and resources and to realize sustainable development, China is implementing some management policies. We believe these policies are in line with WTO rules."
The complaints follow a previous challenge made to the WTO about China's restrictions on other raw materials. In that case, the WTO ruled earlier this year that China's export restrictions on those materials were incompatible with its trade rules. The EU says China has done nothing since the ruling to change the practice.
With AP, Reuters, and AFP reports