EDITORIAL: Trading rules that served the world so well must be rebuilt

Asahi Shimbun

15 hours ago

A mine for rare-earth metals in Inner Mongolia, northern China (Reuters)
Although the United States and China reached an agreement to mutually rescind high tariffs, there is still a potential for flareups.
Avoiding further negative ramifications on the global economy is paramount.
Ministerial-level discussions between the two nations in London in early June led Beijing to lift its restrictions on rare-earth metal exports to the United States.
For its part, Washington partially removed restrictions on semiconductor-related exports to China.
During the discussions, the focus was on China's restrictions on exports of rare-earth metals.
Rare-earth metals are used in high-performance magnets and optical equipment. They are also indispensable to a wide range of products, from automobiles and home appliances to missiles and fighter jets.
China has about a 70-percent share of the global market in rare-earth metals.
From April, Beijing implemented a system to regulate rare-earth metal exports on grounds they could be used not only for commercial products but also military purposes.
But China did not explain the standards it uses for the assessment.
That led to concerns being raised by both the United States and Europe.
In Japan, Suzuki Motor Corp. has had to stop production of some models.
Beijing began restricting exports of rare-earth metals after a Chinese fishing boat collided with a Japan Coast Guard cutter close to the disputed Senkaku Islands in 2010. The move was seen as retaliation against Japan.
However, China said it was simply protecting its resources.
In 2012, Japan, the United States and Europe filed a complaint with the World Trade Organization, which ruled against China.
Even with its latest move, Beijing has not retracted its explanation that restrictions were needed because the metals could be used for both military and commercial purposes.
This is not an issue that involves only criticizing China.
Since his first term, U.S. President Donald Trump has intensified restrictions on semiconductor exports to China.
It was intended to thwart China from gaining the advantage in a sector that has direct national security implications.
China's restrictions on rare-earth metals can be seen as tit-for-tat for the U.S. semiconductor restrictions.
Whatever the reason, excuses for limiting or preventing trade should not be permitted.
After two world wars, the global economy operated on the common understanding that a relationship based on free trade provides national security benefits to all.
But that recognition now stands on the brink of collapse.
An action plan was compiled at the June Group of Seven summit to diversify the sources of rare-earth metals.
The intention was to move away from dependence on China, but doing so will likely be difficult in the near term, given the overwhelming share controlled by China.
Every nation has national security considerations.
But with the deeper mutual economic dependence now in place, nations need to figure out rules that protect the free trade order.
In the background to the United States and China sitting down at the negotiating table lies the condition of mutual dependency, which differs from what existed between the United States and the Soviet Union during the Cold War.
We call on both superpowers to fulfill their responsibility.
--The Asahi Shimbun, July 7