High Export Tariff Better Than Permit Management   

By Guo Kai   

To protect rare earth resource, control overdue exports and keep market stable, the effect of levying high export tariff is prior to that of the export permit management.
   On December 18th the Ministry of Commerce of China (MOC) prepares to assign the 2010 export quota of rare earth metals to 22 domestic firms and exposures their names on the governmental website to collect public suggestions. Like before, MOC still controls rare earths exports by permit and quota management. Nevertheless, such quota management method has taken little effect on protecting the precious resources and raising international price of rare earths. Reversely, this management method may continue to cause the domestic rare earths producers to conduct price slashing in order to win the secondary quota from the certificated exporters.  
    High export tariff, as supposed, will be faced by all exporters. Without export subsidy or rebate, if the export price plus exchange margin can not offset the export tariff, no company will be anxious to export and the prices both at home and abroad can not be slashed. The export amount will therefore be controlled and the reserves will also be protected. Of course, it can stimulate illegal smuggle.
    Furthermore, export quota management does not belong to the market economy concept. Although the government goes public the names of appliers before approving permit, it is not fair to others. The government should work more on export tariff policy, environment protection and developing cost of resources and let each company get fairly a trade certificate, which will serve better the national control strategy.