Come on, America. Show some of that confident pioneer spirit. Stand up for yourself. Tell China that America isn’t going to hand over its lunch money anymore; international trade law will be enforced now.
That’s the demand the United Steelworkers (USW) union made this week when it filed a 5,800-page suit detailing how China violates a wide variety of World Trade Organization (WTO) obligations.
The case, now in the hands of the U.S. Trade Representative, shows how China uses illegal land grants, prohibited low-interest loans and other outlawed measures to pump up its renewable energy industries and facilitate export of those products at artificially low prices to places like the United States and Europe.
The U.S. aids renewable energy industries, like solar cell and wind turbine manufacturers, but nowhere near the extent that China does. And the American aid lawfully goes to renewable manufacturers that produce for domestic consumption. China, by contrast, illegally subsidizes industries that export, a strategy that kills off competition.
The USW recognizes and appreciates that trade with China has lifted millions there out of poverty. But truly fair trade would benefit workers in both China and the United States. And that is what the USW is demanding.
The USW is far from alone in accusing China of violations. New York Times reporter Keith Bradsher described them in a story Sept. 8, titled “On Clean Energy, China Skirts Rules.” It ends with this quote from Zhao Feng, general manger of Hunan Sunzone Optoelectronics, a two-year-old solar panel manufacturer that exports nearly 95 percent of its products to Europe and is opening offices in three U.S. cities to push into the American market:
“Who wins this clean energy race really depends on how much support the government gives.”
The U.S. isn’t providing support that violates WTO regulations. China is. And it’s hundreds of billions -- $216 billion from China’s stimulus package, another $184 billion to be spent through 2020, $172 million in research and development over the past four years.
Bradsher’s story details illegal aid given Sunzone and says that it’s common, not exceptional. It includes China turning over land to Sunzone for a third of the market price and government-controlled banks granting Sunzone low-interest loans that the provincial government helps Sunzone repay.
In addition, the USW suit notes that China, which accounts for 93 percent of the world’s production of so-called rare earth materials like dysprosium and terbium essential for green energy technology, has severely restricted their export. That practice, illegal under WTO rules, forces some foreign companies to move manufacturing to China to get access.
And when corporations move, China routinely – and illegally – mandates they transfer technology to Chinese partners, which often means U.S.-tax-dollar-supported research and development benefits China.
That is one reason China rose to first in the world in clean energy so quickly. China now leads globally in producing solar panels. It doubled its wind power capacity in one year – 2009. Worldwide, Chinese manufacturers supply at least half of all hydropower projects and fabricate 75 percent of all compact fluorescent light bulbs.
Meanwhile, here in the United States, BP shut down its solar panel manufacturing plant in Maryland this year and Evergreen Solar of Marlboro, Mass., plans to close its American plant, eliminating 300 U.S. jobs. Both are moving manufacturing to China.
Germany’s Solar World still manufactures in Europe and the United States, and its chief executive, Frank A. Asbeck, told Bradsher the German solar industry association is investigating whether to file a suit of its own to try to stop China’s illegal practices:
“China is cordoning off its own solar market to fend off international competition while arming its industry with a bottomless pile of subsidies and boundless lines of credit.”
The Times story also says China’s “aggressive government policies” are designed to ensure “Chinese energy security.”
China’s illegal aggression to secure its energy independence and dominate world production of green technology threatens the energy security of the United States.
America turned to renewables not just to diminish climate change but also to reduce dependence on foreign oil, an addiction that has entangled the U.S. in costly and bloody wars.
If the United States can’t build its own renewable energy products, it will forfeit the next generation high technology industry and good manufacturing jobs, and it will remain dangerously beholden to foreign nations for energy.
China agreed to follow international regulations when it joined the World Trade Organization. This pledge was crucial because China’s economy is government-controlled, very different from the free market economies of the United States and most Western nations.
Faced with blatant rule-flouting that has cost USW members their jobs and threatens to cost their children high-technology manufacturing of the future, the USW is demanding the American government put a stop to it.
That is how a true American acts. Americans have a sense of justice. They follow the rules and expect trading partners to do the same. When they don’t, Americans do something about it.
Gerard is the International President of the United Steelworkers