Assignment 2: Rare Earths
Chinese domination of rare earth production and the resulting trade issues have been a continuing story. It first appeared in 2009. But, before we get to that, first let’s see what rare earths are and potential issues:
https://www.youtube.com/watch?v=ru_02Pxux6o That clip was from a few years ago. But let’s go a bit further back in time to see in more detail how rare earths first emerged as an important trade issue. http://www.youtube.com/watch?v=fUSaAJ7IVco
As you saw, first China restricted exports to Japan. But then during the next several years, China reduced its export limits to all nations and exported significantly less than it had before. As a consequence, in 2012 the United States, Japan, and the EU called for talks with China under the WTO dispute settlement system.
(Notice how Lynas faced discontent in Malaysia. This is, of course, another issue the MNEs must face. It seems particularly acute for firms involved in the extraction industries. But that is an issue/topic for another day because it is not directly related to the concerns surrounding rare earths.) These talks did not settle the dispute, so a panel was formed to investigate the subject. As suggested in the video, the WTO ruling did not come immediately nor even quickly. But it did come in 2014:
http://www.youtube.com/watch?v=lca95lsgpeA The findings of the panel were upheld and China changed its policies. China’s views at the time are interesting, particularly in light of what eventually occurred: http://www.youtube.com/watch?v=I_-USRysBik
The analyst was incorrect insofar as the price of rare earths fell significantly. It fell because of different market adjustments that took place as a result of the high price/low quantity of rare earths. Here is what occurred and why (plus notice what was Molycorp’s fate):
https://www.youtube.com/watch?v=Ej-fF-rQqew Now let’s come to the present. First is a Los Angeles Times story about rare earths production and the resulting pollution in China: https://www.latimes.com/world-nation/story/2019-07-28/china-rare-earth-tech-pollution-supply-chain- trade Recently China has mentioned rare earths and restricting exports of rare earths, in particular restricting exports to the United States: https://www.youtube.com/watch?v=hzr5-gudwl4
While U.S. concerns over an export restriction should be clear, nonetheless here is a video discussing it: https://www.youtube.com/watch?v=9m2dFdg_Iq8
What is China’s view of rare earth production? The following video is from CGTN (China Global Television Network) and clearly presents the Chinese perspective:
And here is an article expressing a view that the United States would not have a large effect on the United States:
So you now have an extensive background in a trade issue that is potentially once again emerging. I want you to go well beyond this background to explore the recent issues surrounding rare earths in more detail. Then write a 2 to 3 page essay with the following parts/topics:
• Start by summarizing the issues and the Chinese and American actions. References are necessary but do not blithely copy from your reference material. This is plagiarism and, as I said on the syllabus, is cause for an F on the assignment and possibly the class and, depending on how extensive it is, a major violation of the UF Honor Code that I will take to the Dean of Students office.
• Then presume that you have been hired to argue that the Chinese actions in the rare earth market are proper and legal. Write a brief presenting this argument.
• Next, suppose that you have been hired to argue in favor of the U.S. actions as proper and legal and present these arguments. When you are presenting why each side is correct, in both cases try to anticipate what the other side would say and rebut their position.
• Finally, conclude with your opinion as to which side has the stronger case and what you see as the likely outcome(s).
Two important comments: First, I DO NOT WANT your opinion about President Trump. You can discuss his policies as background to the controversy and as possible rationales for Chinese and/or American actions. You can comment on the effect of his policies. But do not give me your opinion about President Trump—that is not the purpose of this assignment. Second, I do not think there is necessarily an absolutely correct answer to the question about which side has a stronger case. So the papers will be graded on their writing (grammar, punctuation, clarity, and so forth) and particularly the quality of their arguments and presentation.