Following China's strict export controls on dual-use items including gallium, germanium, antimony, and graphite targeting the United States last year, Beijing in April introduced additional export restrictions on seven categories of medium and heavy rare earth elements.
According to foreign media reports, China is establishing a rare earth export licensing system to comprehensively track production chains, further tightening control over rare earth resources. We're seeing that Beijing flexibly wields economic leverage in ways that would make any trade strategist take notes.
Beijing Tightens the Screws on Critical Materials
Nikkei Asia reported that as rare earth stockpiles are on the verge of depletion, India's automotive manufacturing industry faces enormous pressure, with concerns about production lines grinding to a halt. An Indian industry executive stated that supplier inventories typically last only 3 to 6 weeks, and shortages will soon emerge. He pointed out that China's export license requirements involve complex paperwork and lengthy approval processes. Indian importers must first obtain approval from their own country's Directorate General of Foreign Trade, then submit applications through India's Ministry of External Affairs to the Chinese Embassy in New Delhi, with final approval from China's Ministry of Commerce. Currently, more than 20 applications are still awaiting approval.
Another executive revealed that the Indian government is actively responding to the industry's urgent needs, with the Ministry of Commerce, Ministry of Heavy Industries, and Ministry of External Affairs all intervening, while the Prime Minister's Office is closely monitoring the situation. The Indian Embassy in Beijing is arranging for a delegation of Indian automotive and parts manufacturers to meet with China's Ministry of Commerce, though specific dates have not yet been determined.
Indian Tata Motors. AP file photo
India's Auto Sector Feels the Pinch
India is the world's fourth largest automotive producer. However, it is highly dependent on rare earth and component imports from China. The South China Morning Post noted that India's electric vehicle sales exceeded 1.9 million in number last year, accounting for 3.6% of total domestic vehicle sales, but almost all models rely on components imported from China. In 2024 alone, India imported approximately $7 billion worth of electric vehicle batteries and magnets from China. Although India possesses 6.9 million tonnes of rare earth reserves, its extraction and processing capabilities lag far behind China's advanced refining facilities and efficient supply chains.
The Uncomfortable Reality of Chinese Dependence
Mehra, partner and automotive sector head at market research firm Grant Thornton Bharat, stated that China's rare earth export restrictions have caused delays in India's electric vehicle production, rising costs, and slowed technological development. In 2023, China processed over 200,000 tonnes of rare earths, while India processed only 10,000 tonnes, highlighting the technological gap. Analysts warn that without accelerating autonomous transformation, India may fall behind in the clean energy competition.
Regarding rare earth export controls, at a regular press conference held on June 5, Chinese Foreign Ministry spokesperson Lin Jian stated that China's export control measures comply with international common practices, are non-discriminatory, and do not target specific countries.
A New Normal in Global Trade?
In short, China's rare earth controls affect more than just India. As British media noted, China has introduced a tracking system for the rare earth magnet industry, requiring manufacturers to submit transaction volumes and customer information, indicating that export controls may become a long-term policy aimed at strengthening industry supervision and cracking down on illegal activities. This isn't just about short-term leverage—it's about fundamentally reshaping how global supply chains operate in an era where economic security has become inseparable from national security.
Deep Throat
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Trump has just signed an executive order on Monday (July 7) locally, sending letters to 14 countries extending the so-called "reciprocal tariffs" 90-day grace period, postponing the original July 9 deadline to August 1. With Trump's tariff threats looming over global commerce, a bold Canadian academic is making waves by suggesting the unthinkable: kick the United States out of the World Trade Organization entirely. It's a radical idea that's got people talking; frankly, it might not be as crazy as it sounds.
The Case for Calling America's Bluff
Professor Kristen Hopewell from the University of British Columbia (UBC) isn't mincing words. Writing in Politico Europe just as Trump was threatening to slap 50% tariffs on EU goods, she's arguing that the US has essentially become a "rogue state on trade" that's making a mockery of the entire global trading system.
Professor Kristen Hopewell from the University of British Columbia, Canada, published an article calling on member countries to kick the US out of the WTO to save the global economy.
The timing couldn't be more dramatic. Trump’s grace period to August 1 is nothing more than classic Trump theater, really. But Hopewell's point stands: this isn't just about one president's trade tantrums anymore. It's about whether the international trading system can survive when its most powerful member basically ignores all the rules.
The article notes that as early as Trump's first term, he vigorously promoted unilateral and trade protectionist policies, and his criticism of international organizations including the WTO and WHO has never ceased. As an organization that arbitrates trade disputes, the WTO has long been bound and constrained by the US.
Her argument is pretty straightforward when you think about it. The US has already paralyzed the WTO's appeals mechanism by blocking appointments to the Appellate Body. They've been trampling on international trade rules left and right. Remember the Smoot-Hawley Tarriff Act? So, no wonder why countries and scholars are bringing up the question: why should they get to keep enjoying all the benefits of WTO membership while acting like a bull in a china shop?
According to Article 10 of the Marrakesh Agreement regarding amendment provisions, if two-thirds of members vote to amend the agreement, the US can be expelled.
How You Actually Kick Someone Out of the WTO
Lets take another closer look from the legal perspective. The WTO doesn't exactly have a "you're expelled" button, but Hopewell points out there's a workaround through Article X of the Marrakesh Agreement. Basically, if two-thirds of WTO members vote to amend the agreement, they could theoretically boot the US out. If America refuses to accept the amendment, it would take a three-quarters majority.
It's never been done before, but then again, we've never had a situation quite like this either. We're talking about a complete abandonment of the post-war trading order that America itself helped create.
WTO members must unite to clearly reject Trump's trade aggression and indicate that this is intolerable, and the only way to maintain the system is to expel or suspend the US's WTO membership.
The Economic Reality Check
Now, you might think losing the US would kill the WTO, but Hopewell makes a compelling counterargument. American trade only accounts for about one-tenth of global trade, and the system could actually function better without a member that's constantly breaking the rules and encouraging others to do the same.
Think about it this way: if Trump can impose massive tariffs with impunity, why should anyone else follow WTO rules? The real danger isn't just America's protectionism - it's the contagion effect where other countries start thinking they can break the rules too.
Without WTO membership, the US would lose access to preferential tariffs, face unlimited punitive measures from other countries, and lose the intellectual property protections that underpin much of its high-tech dominance. That's some serious economic leverage right there.
The Bigger Picture: A World Without America?
Hopewell's proposal isn't just about punishment - it's about calling Trump's bluff. The president has repeatedly threatened to withdraw from the WTO anyway, so why not beat him to the punch? Strip away the membership benefits, make America an "international pariah" on trade, and suddenly those tariff threats might not look so appealing to American businesses.
The scholar argues that supporters of multilateral trade need to fight back and defend the system rather than just hoping Trump will eventually come around. With the WTO's dispute resolution mechanism already crippled by US obstruction, maybe it's time for the rest of the world to move forward without America.
It's a bold gambit, and there's no guarantee it would work. But as global trade teeters on the edge of a cliff, perhaps extraordinary times really do call for extraordinary measures.
