October 26, 2010 / 3:24 PM / 9 years ago

Trade German know-how for Chinese commodities - executive

BERLIN (Reuters) - Germany must offer China more than money in exchange for its scarce raw materials, and improve its own energy infrastructure and recycling processes to address commodity shortages, a German industry leader said on Tuesday.

German goods and technology could be a currency with which to secure a steady supply of Chinese raw materials crucial for German manufacturing, said Ulrich Grillo, chairman of the German Industry Federation’s committee on raw materials policy.

“We have technology and goods that the Chinese would like to have,” Grillo told Reuters on the sidelines of a raw materials conference in Berlin.

Governments and industry worldwide have been rattled by recent Chinese moves to limit its exports of raw materials - particularly rare earths used in the production of high-tech and defence goods as well as internet communication.

The G20 group of rich and developing nations are due to discuss the issue during a summit next month.

German policy should rapidly address possible bottlenecks and alternative sources of the materials outside of China, Grillo said in an interview.

“We have to put our foot on the accelerator. Our rivals aren’t waiting around,” he said.

German Economy Minister Rainer Bruederle warned that speculators have sent rare earth prices soaring and promised to monitor raw materials pricing, but Grillo would not condemn commodities traders.

“Speculators are not a bad thing in themselves. You need a counterposition to your long-term plans,” he said.

Germany should work instead on a comprehensive policy approach that would combine trade, development and foreign policy and improve energy transit infrastructure.

German firms should also be allowed to fully exploit the country’s sand and gravel resources and not be burdened by requirements under the EU’s emissions trading scheme, which aims to the bloc’s greenhouse gas emissions.

Grillo applauded the German government’s raw material policy, unveiled earlier this month. But he said more needed to be done to conserve materials already circulating in its economy, through more efficient recycling and tighter customs controls on illegal exports of scrap metal.

While Germany should push for greater access to industrial inputs there should be no lifting of tariffs that would benefit foreign producers using illegal export pricing to squeeze out European competitors, Grillo warned.

Calls by the Italy earlier this year to suspend import tariffs on certain raw materials have been rejected over concerns such a move might undermine European producers.

Reporting by Juliane von Reppert-Bismarck; Editing by Jon Boyle

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