By Lewis Jackson and Nora Eckert
Dec. 10 – Chinese suppliers of rare earth magnets to U.S. automaker Ford Motor have been included in the first batch of new export licenses issued by Beijing to boost shipments and reduce shortages of vital components, the automaker said Wednesday.
The so-called blanket licenses were agreed after Presidents Xi Jinping and Donald Trump met in South Korea and would allow larger shipments with fewer obstacles under one-year permits for individual customers.
China’s introduction of export controls on rare earths in April forced companies to apply for licenses for every shipment, creating shortages that have crippled parts of the auto supply chain and given Beijing enormous leverage in trade negotiations with Washington.
Reuters reported last week that three Chinese magnet suppliers had been granted licenses, but Ford appears to be the first foreign customer to acknowledge that suppliers have received approvals under the streamlined system.
China has said little publicly about the new licenses, how they will work or who will receive them, raising concerns among diplomats and non-U.S. producers that the licenses will be aimed primarily at U.S. customers.
Those concerns were reinforced this week when German Foreign Minister Johann Wadephul said the country’s automakers were not included in this first round. Many of these manufacturers, like Volkswagen, have had links with China for many years.
Wadephul said there was still “a lot of work” to be done to persuade Beijing to grant the new licenses to German companies.
Although the system agreed between Xi and Trump is expected to speed up exports for some customers, it remains to be seen to what extent Beijing will issue licenses and whether customers – in more sensitive sectors – like aerospace or semiconductors will be eligible. Chinese exports of rare earths surged in November.
“While we are pleased that some of our suppliers have obtained these approvals, we urge the U.S. and Chinese governments to continue working together to fully address supply chain issues,” Ford said in its statement to Reuters.
(Reporting by Lewis Jackson and Nora Eckert, editing by Mike Colias and David Goodman)
