"This price dynamic creates significant advantages for China's producers when competing against U.S. producers -- both in China's market and in other markets around the world," said the U.S. statement. "The improper export restraints also contribute to creating substantial pressure on U.S. and other non-Chinese downstream producers to move their operations, jobs and technologies to China."
The WTO, the body tasked with monitoring trade between nations, will be asked to be a facilitator in talks with China, an Obama administration official said Monday.
"China's restrictions on rare earths and other products violate international trade rules and must be removed," Karel De Gucht, EU trade commissioner, said in a statement. "These measures hurt our producers and consumers in the EU and across the world, including manufacturers."
Despite a recent ruling in a separate dispute over different raw materials, "China has made no attempt to remove the other export restrictions," he said. "This leaves us no choice but to challenge China's export regime again to ensure fair access for our businesses to these materials."
Ron Kirk, the U.S. trade representative, said, "America's workers and manufacturers are being hurt in both established and budding industrial sectors by these policies. China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace."
Concern in the United States over the supply of rare earths resulted in a September hearing on the matter by the House Foreign Affairs Subcommittee on Asia and the Pacific.
Of particular concern was how vital the minerals are for top-of-the-line weapons, including missile guidance systems, drones and the new F-35 Joint Strike Fighter.
American companies are trying to answer the demand. Molycorp Inc., one of the few producers of rare earth minerals outside China, has urged Congress to do more to confront the problem and encourage research and development. Molycorp has mines in California and Colorado.
In 2010, China temporarily halted shipments of rare earths to Japan, prompting a sharp spike in prices of the minerals.
The EU said it has raised the issue repeatedly with China over the past few years without success. If no solution can be found through the consultation process, the dispute can be transmitted to a WTO panel for a ruling, the European Union said.