Global Trade: U.S. Challenges China’s Clean Energy Subsidies

The U.S. on Wednesday filed a case against China before the World Trade Organization, claiming that Beijing has unfairly provided hundreds of millions of dollars worth of subsidies to Chinese wind power companies.

The accusation follows a petition filed by the United Steelworkers in September, which claimed that China buoys its clean energy sector with subsidies, allowing Chinese businesses to sell wind and solar equipment at a lower rate on the international market.


The WTO request alleges that the funding is in violation of global trade rules.

U.S. Trade Representative Ron Kirk said Wednesday that the Obama Administration is targeting China’s wind power production grants, because they seem to require that Chinese manufacturers use only domestically-made parts.

“Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules,” Kirk said in a statement. “These subsidies effectively operate as a barrier to U.S. exports to China.”

The case comes weeks before Chinese President Hu Jintao is scheduled to visit President Barack Obama.

U.S.-China relations are already tense: the two superpowers are arguing over a number of trade issues, including China’s currency policy and Chinese barriers against U.S. beef imports.

During trade talks last week, the U.S. persuaded China to loosen restrictions on foreign contributions to the booming Chinese wind power industry. Foreign suppliers will no longer require previous experience in the Chinese clean energy sector.

United Steelworkers President Leo Gerard expressed the union’s satisfaction with the Obama administration’s decision to submit the WTO request.

“Today’s announcement by the administration comes as an early note of holiday cheer for those workers in the alternative and renewable energy sector,” said Gerard in a statement. “The goal is not litigation; it’s to end their practices.”


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