By Philip Blenkinsop and Laurie Chen
BRUSSELS/BEIJING (Reuters) -European Union leaders will use a summit with China next month to seek better access to Chinese rare earths and critical minerals, four sources familiar with the plans said, as the two sides tackle an array of tariff-related issues.
For years, China has had a near monopoly on rare earth production. It increased its export controls on the minerals, in demand from automakers, the defence industry and producers of renewable energy, following the tariffs announced by U.S. President Donald Trump on April 2.
China also has grievances with the EU as the bloc has sought to protect its auto-making sector from cheaper Chinese imports, while China has imposed measures on France’s brandy industry.
European Commission President Ursula von der Leyen and European Council President Antonio Costa will travel to Beijing for the summit on July 24-25.
It marks 50 years of EU-Chinese relations and will also take place two weeks after a deadline set by the United States for most trade partners to agree deals to avert higher tariffs.
As automakers have said China’s export restrictions on rare earth alloys, mixtures and magnets could cause production delays, European leaders are expected to press their case with President Xi Jinping and Premier Li Qiang in separate meetings, said an EU official, who declined to be identified.
Two EU sources said the EU mission to China is solely focused on rare earths until the summit.
China’s ministry of commerce in May said a “green channel” expediting rare earth licences for EU firms had been set up. However, one EU diplomat said that out of several hundred applications, no more than half had shown signs of being processed.
“The situation is improving, although the percentage of cleared licences does vary. Additionally, even once the licence is given, delays can still be seen in customs clearances,” Adam Dunnett, secretary general of the European Chamber of Commerce in China, said.
The quest to resolve the supply crunch is among a number of trade conflicts between Europe and China.
Brussels has imposed tariffs on Chinese-made electric vehicles alleging unfair state subsidies, prompting China to impose anti-dumping measures on EU brandy. Beijing has also initiated trade probes into EU pork and some dairy goods.
BEIJING NOT BRUSSELS
The lead-up to the summit, has not been smooth. It had been Brussels’ turn to be the host but after China indicated Xi would not travel to the Belgian capital, Beijing was chosen as the venue.
Some EU officials said they did not expect the summit to produce major deals, one commenting that China was “playing its cards very well”. The official said China had identified rare earths as a major vulnerability and was waiting until the last minute to make any concessions.
The EU wants China to grant rare earth licences for a longer period or to scrap them for exports to the bloc. In any case, it wants Beijing to clearly differentiate between the EU and the United States. China offered to prioritise civilian-use rare earth export licences for U.S. firms during talks in London earlier this month.
“If China wants the EU equidistant between itself and the Trump administration, China’s trade regimes cannot equate the U.S. and Europe either,” said Hosuk Lee-Makiyama, director of trade think tank ECIPE, who met senior Chinese officials last week.
Another EU official said the impending deadline to secure an agreement with the United States, which might press the EU to be hard on China in exchange for moderating U.S. tariffs, made it difficult for the EU to work on a deal with Beijing.
The official said it was always possible the July 9 deadline would be postponed or that details of any U.S. deal could emerge later, limiting the possibility of EU progress with China.
China wants the EU to replace its import tariffs on Chinese electric vehicles with minimum price commitments and other concessions after it delayed the imposition of duties on EU brandy. China has said talks are in the final stages, but EU officials say progress has been limited.
(Reporting by Philip Blenkinsop and Laurie Chen; additional reporting by Jan Strupczewski and Julia Payne; editing by Richard Lough and Barbara Lewis)
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