WTO Rare Earths Case's Influence on China's Domestic Regulatory Changes

This article reviews the influence on China's domestic governance exerted by a high profile WTO case - the Rare Earths case. It argues that China's domestic regulatory framework for rare earths has been phenomenally reshaped by the WTO Rare Earths case. First, China removed the export restrictions on rare earths in order to implement the WTO Dispute Settlement Body (DSB) Rulings. Second, China improved environmental legislation to facilitate its defence in the WTO Rare Earths case, and incorporated environmental protection concerns in its regulatory philosophy. Third, China invested more administrative resources in mobilizing local governments to better implement rare earths policies, which cover the mining, production, circulation, and industrial consolidation of rare earths. While the first measure was mandatory in terms of China's obligation to implement WTO DSB rulings, the second and the third initiatives resulted from China's voluntary adjustment of its governance in reaction to the WTO Rare Earths case. Reading China's engagement with the WTO Rare Earths case in the broader context of China's performance in the WTO Dispute Settlement System (DSS), it is evident that China is a firm supporter of the WTO DSS: China has kept its good record of compliance with the WTO rulings, maintained its reputation as an active player in the WTO DSS, and embraced WTO's far-reaching impact on its domestic management regime.