A lot more details needed to be included for us to help you.
What computer operating system is your Premiere Elements 12 running on?
Then the other usual questions, to get them out of the way,
a. do you have the latest version of QuickTime installed on your computer with Premiere Elements 12?
b. are you running the program as Run As Administrator or from a User Account with Administrative Privileges?
c. do you have the latest video card driver version according to the manufacturer of that video card.
Then we get to the project itself and its setup, importing of media, and export.
a. What are the properties of your source media...video and audio compressions, frame size, frame rate, interlaced or progressive frame rate, duration, etc to go along with your .mts file extension?
b. What are you or the program setting for the project preset so that the project preset matches the properties of the source media?
c. What is your export choice and how are you viewing the export?
a. Share/......., preset, and export settings under the Advanced Button/Video Tab?
Is your computer optimized? Do you multitask while editing and exporting a Premiere Elements project? What does the rendered Timeline look like in the Edit Mode monitor before you export your video?
Let us start here and then decide what next.
Thanks. Looking forward to your follow up.
Also note that what you're seeing in your monitor panel may not actually represent how your finished movie will look. (You can improve how it looks in the monitor, however, by right-clicking on the monitor panel and setting the playback quality to Best.)
You should also ensure that your project is properly set up. If it is, there should be NOT yellow line above the clips in your timeline in Expert view. Is that the case in your project?
From what SG writes, he uses Premiere Elements Mac. So I am not sure if what he has written in post 2 reflects Windows vs Mac details.
If you right click the Premiere Elements 12 Windows' Edit Mode monitor, one of the options is for Playback Quality. The Playback Quality choices are Automatic and Highest.
An interesting note about the colored line to be looking for. For Premiere Elements 12 and 11 on Windows 8.1 64 bit (Intel HD Graphic video card), the yellow line to which SG refers is orange. And, for Premiere Elements 12 and 11 on Windows 7 64 bit (Intel HD Graphic video card), the yellow line to which SG refers is orange.
All right, technically the line is amber.
But if you see a yellowish, orangish line, that's the indicator.
To do a small test to check if the quality is lost or retained, try exporting to a HD preset. Do this by adding this video to the timeline and going to Publish/Share (Top right of the app) -> Computer -> AVCHD -> MP4 1280x720 30p preset (This works well even for 1920x1080 HD files). If it is only playback, the playback settings should get a good quality for you if the project setting matches. The exported file quality has never been a problem with any version of Premiere Elements if the project settings match the clip settings which in turn matches the export settings.