The US along with the EU and Japan plans to launch a case at the World Trade Organisation against China's decision to curb rare earth exports.
The Financial Times, cited an unnamed, senior US official who confirmed that the Obama administration would soon bring a case against China over rare earths – 17 elements crucial for producing a range of items from fluorescent lightbulbs and BlackBerrys to guided missiles and hybrid cars.
Tensions between the US and China have been simmering for some time but election-year politics in the US have put China trade ties in focus. A recent ruling by the WTO went against China's export restrictions of raw materials, in a case that served as a litmus test for the approach of the trade body to a dispute over rare earths.
According to Karel De Gucht, the EU's trade commissioner, China's restrictions on rare earth were damaging to European manufacturers and ''must be removed''. De Gucht also expressed frustration that China had failed to address the situation after the WTO ruling that Chinese restrictions on exports of raw materials were illegal.
He added that left the WTO with no choice but to challenge China's export regime again. China had committed to lifting of export quotas as part of its accession to the WTO in 2001.
According to the estimates of EU officials the restrictions forced European manufacturers to pay double the price of their Chinese competitors for such materials, which are used in everything from smart phones to computer hard drives and energy efficient light bulbs.