China's measures to conserve and preserve its rare-earth resources from excessive export and potential environmental abuse was thumbed down by the World Trade Organization (WTO), calling it a violation of international trade law.

"China is currently assessing the panel report and will follow the WTO dispute settlement procedures to settle this dispute," said an official from China's Ministry of Commerce who expressed regrets over the WTO decision and said they will respect the ruling.

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China is the world largest producer and exporter of rare-earth materials, amounting to nearly 90 percent of the world's requirements.

The WTO's ruling states that tariffs imposed by Beijing on rare-earth metals, tungsten and molybdenum are "inconsistent with its obligations in the organization" and opposed the export quotas and restriction in its trade.

China stressed that mining these rare-earth metals will be detrimental to the environment but the world trade body thumbed down the reasoning. The WTO believes that there is a very low risk to the environment since these elements are at the lowest levels of the periodic table.

Seventeen rare-earth materials that include thulium, lutetium and ytterbium are covered by the WTO ruling. These materials are essential in the manufacturing of sophisticated electronic products such as solar panels, lasers, electric-car batteries and smart phones, while molybdenum and tungsten are in-demand for various industrial uses like steel production.

Critics of China's rare-earth policies include the United States, the European Union and Japan. These countries petitioned the WTO and claimed that China created a monopoly for rare-earths and it uses its influence in creating favorable conditions for domestic manufacturers.

The WTO decision is not expected to affect global trade in the immediate future since China's global market share in rare-earth production is now down to 80 percent from 95 percent in 2010. New rare-earth deposits were discovered in Greenland, Russia and more recently in Japan, thus reducing dependence on Chinese exports.

Demand for rare-earth metals is weaker in the last three years resulting in a sharp drop in world prices. The discovery of alternate sources and higher efficiency in the use of rare-earth metals contributed to the low demand and lower prices.

China has sixty days to appeal the WTO decision.