European growth might be stopped by the lack of raw materials

Article by Christian Andrei, on November 25, 2010

For its economic recovery, Europe needs to export rare earths -- raw materials used in most high-tech products. But acquiring these essential materials is being hindered by a mistrust of foreign supplies and internal disagreement over what a raw material is.

The European Union is now seeking to come up with a market mechanism that will strike a balance between encouraging exports from foreign suppliers and preventing these suppliers from flooding the EU market.

The EU, the world's largest trading zone, has been complaining about non-EU countries limit the export of essential materials used by European manufacturers to make products such as steel, semiconductors and light bulbs.

The EU has brought China, one of the world's largest raw materials exporters, to face the World Trade Organization for inflating the cost of materials through steep export taxes. This challenge has since been joined by the United States and Mexico.

However, EU’s efforts have not given companies the access they need to acquire the ingredients. In fact, China is now threatening an even more restrictive policy, with plans to put ceilings on exports of rare earths. This matter has gotten the attention of European policymakers and industry that have decided to put in measures to persuade countries to be more open with their resources.

But no progress has been made. In fact, there is now a debate to determine what exactly constitutes a raw material, and how much the EU should be producing domestically or from outside the country. [via autonews - sub. required]

Topics: europe, sales

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