The World Trade Organization (WTO) has been asked to intervene on the prevailing rare earths dispute by world economic leaders - the U.S., European Union and Japan against China.

The three world leaders on Thursday requested the world body to form a dispute settlement panel following unsatisfying talks with China, which in a complaint filed in March, they claimed was unfairly limiting exports of rare earth materials.

The request for a dispute settlement board is specifically aimed at China's exports of rare earths tungsten and molybdenum. Once created, the panel has six months to deliver a report to the parties. If appealed, the whole process can stretch to more than a year. The WTO could allow trade sanctions in a WTO dispute.

China feeds more than 95 per cent of the world's demand for rare earths which are highly vital for electronics and other products. Although the Asian country only actually has about 23 per cent of the rare earths reserves, it is the only country thus so far able to successfully mine and separate the precious metals.

"It is vital that U.S. workers and manufacturers obtain the fair and equal access to raw materials like rare earths that China specifically agreed to when it joined the WTO," Ron Kirk, U.S. Trade Representative (USTR) said in a statement.

When it joined the WTO in 2001, China agreed to eliminate export duties for rare earths and most other products, the USTR further said.

"China's restrictions on rare earths and other products are violating its WTO commitments and continue to significantly distort global markets to the disadvantage of our companies," Karel De Gucht, EU Trade Commissioner, likewise said in a statement. "We regret that we are left with no other choice but to solve this through litigation."

China had long argued it had to control its exports of the precious commodity to save its environment, which have started to experience the ill effects of its rampant and illegal mining.

"The protection of the environment is never a pretext for gaining advantage or increasing economic returns," Su Bo, vice minister of industry and information technology, said in a news conference in June.

But the U.S. contended the constraints gave Chinese industrialists the leeway to control world prices.

"Despite China's characterizations, its export restraint measures on rare earths, tungsten and molybdenum appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers at the expense of foreign manufacturers," the USTR said.