US accuses China of subsidizing at WTO

Updated: 2010-12-23 14:37
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WASHINGTON - The United States on Wednesday asked China for talks at the World Trade Organization accusing China of illegally providing subsidies to Chinese manufacturers of wind power equipment, Reuters reported Wednesday.

US trade officials said they were concerned Chinese makers of wind turbines and related parts and components could have received several hundred million dollars in government grants in 2008 under China's Special Fund for Wind Power Manufacturing.

They said the grants appeared to violate WTO rules by requiring Chinese manufacturers to use only Chinese-made parts and components.

"Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules," US Trade Representative Ron Kirk said in a statement. "These subsidies effectively operate as a barrier to US exports to China.

US wind turbine manufacturers such as General Electric and United Technologies are eager to take a share in China's fast-growing market, although the United Steelworkers union was the driving force behind the case.

"The United States cannot replace its dependence on foreign oil with a dependence on clean energy technology made in China," said Senator Sherrod Brown. "American manufacturing must lead the way and to do this, they need a level playing field."

By asking for WTO talks, US begins a 60-day period for the two countries to resolve the disagreement through consultation. If those efforts fail, US could ask for a WTO dispute settlement panel to hear its complaint.

The steelworkers union filed a petition in September, accusing China of a long list of subsidies and other policies to favor production of clean energy technologies in China at the expense of the United States and other countries.

Kirk said his office would continue to investigate many of the allegations raised in the steelworkers' petition, and could bring additional cases at the WTO.

One high-profile issue still being examined by the US trade representative's office is a complaint about China's restrictions on exports of rare earth minerals used in production of wind turbines, electric vehicles, solar cells and energy efficient lighting.

Rare earth materials

US trade representative spokeswoman Nefeterius McPherson said they are very concerned about China's restraints on exporting rare earth materials, antimony and tungsten and could file a case.

"We have raised our concerns with the Chinese and we are continuing to work closely on the issue with stakeholders," he said. 

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Kirk's office also said it had made progress on some of the steelworkers' concerns during the US-China Joint Commission on Commerce and Trade meeting last week in Washington.

China agreed to no longer require foreign companies bidding for large-scale wind power projects in China to have prior experience in China, the US trade office said.

Kirk's office said China also recommitted to eliminating discriminatory local content requirements in wind manufacturing and informed the United States that two other subsidy programs challenged by the steelworkers union had been eliminated.

Steelworkers President Leo Gerard acknowledged progress was made in the recent US-China talks and said the steelworkers were satisfied with the administration's approach.

"From day one, the USW knew that the complexity and enormity of the case and the lack of transparency in the Chinese system would require that we be in this for the long haul ... The goal is not litigation; it's to end their practices," Gerard said.

Representative Sander Levin, a senior Democrat, said the inability of US Trade Representative's office to fully investigate all of the union's charges in the time allotted under US law showed it "lacks sufficient tools and resources to quickly and effectively address the full range of China's trade-distorting policies."