The Rare Metals War Between China and the United States: Export Restrictions and National Security Exceptions

A Study within the Framework of World Trade Organization Rules and the Reshaping of the Legal Framework of International Trade

Abstract

This study examines the “rare metals war” between China and the United States as a trade-geopolitical dispute centered on rare earth elements (17 elements including the lanthanides, in addition to scandium and yttrium), as well as the inclusion of tungsten and molybdenum among “critical raw materials” due to the concentration of production and their defense significance. This occurs within the context of Chinese dominance over supplies (approximately 97% in 2012) and its continued control in 2025 of around 70% of extraction and 90% of refining. The study places this dispute within the framework of World Trade Organization rules and examines the limits of export restrictions, general exceptions, and national security exceptions, as well as their effects on the enforceability of the multilateral trading system and the reshaping of the legal framework of international trade. Conversely, the study examines dispute DS623, brought by China against the incentives contained in the U.S. Inflation Reduction Act (2022) related to local content and supply chains. The study concludes that the shift from Article XX to Article XXI, coupled with the paralysis of the Appellate Body since 2019 and the resulting “appeal into the void,” highlights the need for a more comprehensive international framework governing trade in critical minerals that integrates resource security, environmental security, and transparency. The study recommends diversifying supplies through investment in alternatives, recycling, localization/friend-shoring, and repositioning environmental considerations and resource security within the concept of national security rather than marginalizing them within the dichotomy of free trade and its exceptions.