Term Paper/Case Study : China’s export quotas on rare earth elements: Should the world worry?
CASE ASSIGNMENT: The superiority of free trade is one of the profession’s most cherished beliefs, yet in reality trade is rarely free and a policy of selected protectionism and domestic favoritism is thriving. In July 2010, China took new measures to restrict supply of rare earth elements. The Chinese government announced it was cutting its rare earth export quotas by a staggering 72% for the second half of 2010. Shipments will be capped at 7,976 metric tones, down from 28,417 tones in the same period a year ago. This follows previous quotas the government introduced in the past. The export limits are part of a broader plan in China to bring more oversight to the industry. (Read, for example, the article “Rare earth minerals from China are rarer” on ( http://marketplace.publicradio.org/display/web/2010/08/31/pm-rare-earthminerals-from-china-are-rarer/).
In this paper, students are to describe the international trade in rare earth materials, analyze potential impacts and implications of the recent Chinese export quota cut, and critically assess different strategies that may be implemented to reduce the US’s (as well as the world’s) dependency on Chinese rare earth materials. In attempting the assignment, students are expected to apply concepts, tools and techniques introduced during the course. The assignment is designed to make students (i) apply economic analysis to a real world situation and (ii) search in current newspapers, periodicals, on-line, in order to find data and articles that illustrate a specific issue.
PAPER OUTLINE
The paper should have a logical flow to it, and make use of appropriate headings and subheadings. You should follow the suggested format described below: COVER PAGE (1 page). Your paper should include a cover sheet which is similar for all students (see the MS-Word file “Cover Sheet” posted within the “Term Paper/Case” icon). Do not show the page number on this sheet.
ABSTRACT (1 page). Abstract should not exceed 200 words and should summarize the main points of your paper. Do not show the page number on this sheet.
TABLE OF CONTENTS (1 page). Do not show the page number on this sheet.
1. INTRODUCTION (1 page). Start page numbering at “1.”
a. In the Introduction you should:
i. briefly define globalization, its types, aspects, importance, evolution, etc.;
ii. briefly describe a specific global phenomenon (that is, international trade in rare earth materials) you are going to analyze in the paper (a detailed description of the phenomenon under consideration should appear in the Discussion part);
iii. carefully explain how this phenomenon fits into/relates to the process of economic globalization, that is, whether it reflects globalization of consumption, globalization of production and ownership, or globalization of labor;
iv. describe how your paper is organized, that is, what you are going to discuss in each of the following sections.
2. DISCUSSION/ANALYTICAL PART (3-8 pages). It is recommended that you break this part into several sections (and sub-sections) with appropriate headings (sub-headings). For example,
2.1. Rare earth elements, their availability and use
• What are rare earth elements/materials? What are their useful properties? Where (that is, commercial and military applications) are they used?
• Where (in what countries) are the major known rare earth ore reserves located? What countries are the largest suppliers of rare earth materials in the international market? How does the US rank among the world largest exporting nations? What has happened to the US rare earth material supply chain since 1950? Why?
• What countries are the major buyers of rare earth materials in the international market? How does the US rank among the world largest importing nations?
• Describe the dynamics of US imports of rare earth materials over time (say, the past 10 years) and provide sufficient data to support your claim: What is the evidence of this process? Is it really happening? Does this process intensify or weaken over time? Why?
2.2. China’s trade policy on rare earth materials and its recent developments
• How did China acquire a world monopoly on the family of rare earth materials?
• List different trade barriers China has been using on rare earth materials. Provide actual examples.
• Focus on a dramatic cut in export quotas on rare earth materials in July 2010. Describe the export quota, how it is set and administered. Describe the recent cut. List the reasons China cites as a justification for this cut. In addition to these “official” reasons, do you think China has a secret agenda? If yes, can you think of any reason(s)?
2.3. Potential impacts and implications of the recent Chinese export quota cut
• Describe the recent dynamics of the rare earth material prices in the international market. To what degree the recent change in prices may be attributed to China’s decision to cut exports? Are there any other reasons that may have contributed to the observed price dynamics?
• Describe at least 5 consequences that the recent cut in Chinese export quotas on rare earth materials is likely to have on the Chinese economy, Chinese producers and exporters of rare earth materials.
• Describe at least 5 consequences that the recent cut in Chinese export quotas on rare earth materials is likely to have on the US economy, American manufactures, workers, and consumers.
2.4. Rare earth materials: Heading for a global resource crunch?
• Analyze potential opportunities and threats that Chinese export restrictions pose for businesses (both in the US and worldwide): How should businesses respond to it?
• What strategies may be implemented to reduce the US’s (as well as the world’s) dependency on Chinese rare earth materials?
• Should the US rebuild its rare earth material supply chain? What do you think? Provide at least 3 arguments in favor and at least 3 arguments against. What are the major difficulties the US may face in its attempt to rebuild its rare earth material supply chain?
• What is the WTO position on export quotas? Should the US bring a formal case to the WTO?
2.5. Please provide a comprehensive demand and supply side analysis.
3. SUMMARY AND CONCLUSIONS (1 page). Your analysis should lead you to reasonable conclusions.
4. REFERENCES/BIBLIOGRAPHY should include the references that you cite, but also a listing of the material that contributed to your body of knowledge. Where did you look for answers? If it helped you, please include a reference. Use of information from outside sources that is not attributed will be considered plagiarism.
5. Reference/Bibliography section should give full information. Authors of articles and books and material without specific authors or editors, such as government 4 documents, bulletins, or newspapers, are to be listed alphabetically. Include page numbers only when appropriate. Consistency is more important than style. Be sure to acknowledge the source of all information from outside sources either in footnotes or in the text. In-text quotations must correspond exactly with the original in wording, spelling, and punctuation. Page numbers must be given. Changes must be indicated: use brackets to identify insertions; use ellipsis dots (…) to show omissions. Also indicate where emphasis has been added. Only lengthy quotations (more than 50 words) should be separated from the text; such quotations must be double-spaced and indented at the left margin. References to authors in the text must exactly match those in the Reference/Bibliography section.
6. APPENDICES. Here you should put your tables, graphics (such as bar charts, trend lines, etc.) and any other important materials. Tables must be designed to fit comfortably on a page. For tables, use the ‘create table’ feature in MS-Word. Each table must have a title and be numbered consecutively with Arabic numbers. Do not abbreviate in column headings, etc. For example, spell out “percent”; do not use the percent sign. Place a zero in front of the decimal point in all decimal fractions (i.e., 0.357, not .357). Each table should be no more than 10 columns wide. Figures should be supplied as high quality. Figures should be produced in black and white. Tints and complex shading should be avoided. Figures must have a title and be numbered consecutively with Arabic numbers.
7. SUBMISSION FORMAT LENGTH REQUIREMENTS: The text of your paper (the text only, that is, not including the Cover Sheet, Abstract, Table of Contents, Bibliography/References, Tables, Charts, and other appendices) may not exceed 10 pages (that is, a one-page introduction, a 3-8 page discussion section, and a one-page summary). FONT: Use any 11-12 point standard font (Times New Roman, Garamond, Verdana, Courier New). The main thing is to keep it consistent throughout the entire text.
8. LINE SPACING: Use single line spacing.
9. PARAGRAPHS: Allow one space between paragraphs.
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