Rare Earth Producers, Users Urge Bold Action to Maintain Sufficient Supplies

Staff Writer, U.S.-China Trade

The U.S. executive and legislative branches should adopt a series of steps that aim to create a secure supply of critical and strategic materials that serve as key inputs to U.S. industrial and military production, Jeff Green, a lobbyist for a coalition of rare earth producers and users, told the U.S.-China Economic and Security Review Commission.

These steps should include taking joint action with the European Union, Japan and others to bring China into compliance with its World Trade Organization obligations on how to manage rare earths and other critical industrial materials, including the its imposition of export restraints, he testified at a Jan. 26 hearing on China’s Global Quest for Resources and Implications for the United States.

Congress should also require a U.S. government-wide definition of “strategic and critical” materials, and should encourage the establishment of “a common definition with key allies,” according to Green.

Based on the testimony it collects during the year, the commission formulates recommendations for actions by the U.S. Congress.

Another action Congress could take would be to require that the Defense Department’s Strategic Materials Protection Board issues long-delayed recommendations on which materials are actually strategic, he said.

As part of the trade element of an overall strategy, the Congress should urge the Office of the U.S. Trade Representative to issue a report on Chinese compliance with its WTO obligations on strategic and critical minerals, he told the Commission.

According to Green, Congress also should require Federal agencies to use “existing tools” to create incentives for the extraction and manufacture of strategic and critical materials in the U.S. Those tools could include stockpile arrangements of different types, such as maintaining vendor-managed inventories and buffer stocks and invoking Title III of the Defense Production Act, which authorizes incentives to create, expand and preserve domestic industrial manufacturing of technologies and items necessary to meet national security requirements.

He also urged that the federal government consider grants, tax credits or other incentives; and streamlined permitting.

Green also wants the Congress and the administration to acknowledge that a policy of “reduce, reuse, recycle and substitute” in and of itself is “woefully inadequate” for preserving supply of strategic and critical materials “because it tacitly embraces current market conditions, thereby encouraging states to follow what have been described as predatory practices in the rare earth market,” according to his written testimony.

Green, the CEO of J.A. Green & Company, also pressed for the creation of a “development fund” that would seek to promote the development and manufacture in the U.S. and allied nations of strategic materials for the U.S. defense market. The fund would be used to “offset high barriers to entry, long-lead times, and foreign predatory practices,” he recommended.