Rare Earth Policy Lessons U.S. Can Learn From China-Japan Conflict

Here’s the conclusion of MetalMiner’s recent interview with Dan McGroarty, principal of Carmot Strategic Group and founder of American Resources Policy Network, a think-tank devoted to identifying solutions to reduce America’s dependency on rare earths and other strategic minerals.

In Part One, we covered which nation will lay claim to the extensive rare earth metals (and other resources) thought to sit in the surrounding seabed of the East China Sea. In Part Two, we looked at how resource nationalism manifests itself. Here in Part Three, McGroarty talks about the economic/political relationship between China and Japan, and what the US can learn from this for its own rare earth and strategic mineral policies.

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MetalMiner: Pundits have said this dispute arose only due to weak economies and political environments within Japan and China. Do you agree or disagree and why or why not?

Dan McGroarty: I’m not sure I’d say it was due to near-term faltering of the economies in either country. Whether it’s a strong situation or a slightly weaker one, both sides still need resource access. It isn’t just China and Japan in the South China Sea – ten different countries also lay claim to some of it. The issue is not confined to the Asia-Pacific either. We see these types of disputes between the US and Russia in the Bering Strait, Denmark and Canada, and others. This is under the rubric of resource wars and will likely play itself out over decades. These are fundamental territorial rights not likely to ebb and flow based on quarterly GDP.

Over time, perhaps the conflict in the East China Sea could be resolved much like the conflict between the Norway and Russia Arctic dispute. The two countries there established joint sovereignty and each side walked away with half a loaf, so to speak. Could China and Japan do that? Right now, it’s hard to see where and how they can compromise. We can define progress as the avoidance of further escalation of the conflict. Then we need a cooling-off period. We need more confidence from the Chinese side. This is no Hans Island. A more temperate effort can be made. China’s claims go back considerably and Japanese sovereignty goes back more than 100 years. Does China really want to sever relationships with Japan? Would they place an embargo against Japan? It would be an economic suicide pact.

MM: What is the takeaway here for US policy as it relates to our own domestic rare earth mineral/resource policies?

DM: I do believe there is an impact on the US – the question is, to what extent? What form does that impact take? Can we affect it in a positive way? From a security standpoint, we have a treaty relationship with Japan that requires us to come to their defense and will guarantee that our policymakers will watch this closely. Longer-term, it reminds us that resources will be fought over (metaphorically and hopefully not militarily) and can be used as a policy tool. This conflict should give us pause to develop [the United States’] own strategic rare earth resources. We need to cover our own dependencies.

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