U.S. seeks WTO talks with China over wind power subsidies

The Obama administration is seeking formal talks with China through the World Trade Organization (WTO) over Chinese wind power subsidies that the U.S. alleges run afoul of WTO rules.

The conclusion and effort to launch the WTO process escalate a simmering dispute over China’s subsidies for green-energy technologies.

“Under this program, China appears to provide subsidies that are prohibited under WTO rules because the grants awarded under the program seem to be contingent on Chinese wind power equipment manufacturers using parts and components made in China rather than foreign-made parts and components,” the office of U.S. Trade Representative (USTR) Ron Kirk said in announcing the effort.

If the consultations fail, the U.S could take the case further by asking the WTO to convene a dispute resolution panel and make a ruling on the subsidies.

“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.”  

According to the U.S. trade office, China’s grants for domestic manufacturers of wind turbines and components range from $6.7 million to $22.5 million, and companies can receive multiple grants. Total support since 2008 could be in the hundreds of millions of dollars, the agency said.

The push for formal talks stems from a wider USTR probe of China’s green energy trade practices announced in October that was requested by the United Steelworkers. The union’s president applauded the USTR’s action Wednesday.

“Today’s announcement by the Obama administration comes as an early note of holiday cheer for those workers in the alternative and renewable energy sector who work hard, play by the rules and simply want a chance to compete,” said United Steelworkers’ President Leo Gerard in a statement. The union filed a wide-ranging petition with the USTR in September.

But Gerard cautioned that the announcement "is just the first chapter in the saga of pushing China to live up to the commitments they have made."

Kirk said USTR would continue the probe stemming from the Steelworkers’ petition, but also said remedies would have to come outside of the Section 301 process, which refers to the section of a mid-1970s trade law that enables investigations and a range of U.S. actions, including new import duties.

“We will continue to work closely with the USW and other stakeholders in the months ahead on the remaining allegations. If we are able to develop sufficient evidence to support those allegations and they can be effectively addressed through WTO litigation, we will pursue the enforcement of our rights at the WTO independently of section 301,” Kirk said in a statement.

This post was updated at 4:19 p.m.