Dec. 23: The Obama administration filed a case against China with the World Trade Organization on Wednesday, siding with an American labour union, the United Steelworkers, in accusing Beijing of illegally subsidizing the production of wind power equipment.
The decision is the second time in less than four months that the US has accused China of violating world trade rules. It represents an escalation of trade tensions between the US and China over clean energy, viewed by the Obama administration as a frontier in which American companies are struggling to remain competitive.
The US is challenging a special Chinese government fund that awards grants to makers of wind power equipment. The Americans say the fund provides subsidies that are illegal under WTO rules because the grants appear to be contingent on manufacturers using parts made in China.
“Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules,” Mr Ron Kirk, the United States trade representative, said in a statement. “These subsidies effectively operate as a barrier to US exports to China. Opening markets by removing barriers to our exports is a core element of the president’s trade strategy.”
China’s ministry of commerce issued a brief statement on its Web site early Thursday afternoon in Beijing, defending the country’s policies but providing few specifics.
The individual grants available under the Chinese program range from $6.7 million to $22.5 million. Chinese makers of wind turbines and associated parts can receive multiple grants as the size of the wind turbine models increases. Total subsidies under the program since 2008 could amount to several hundred million dollars, according to Mr Kirk’s office.