Chinese Wind Subsidies

Chinese Wind Subsidies

January 15, 2011

Chinese wind subsidies are being challenged by the United States in a complaint to the World Trade Organization.

The US trade representative filed a formal complaint on December 22 against China for requiring manufacturers of wind turbines in China to use Chinese-made parts and components as a condition to receiving government grants. The grant program has been in effect since 2008.

The US requested consultations with China under the WTO dispute settlement procedure, and discussions are expected to take place this month. If consultations do not resolve the dispute, then the US can request a WTO panel of judges to rule on the issue.

The complaint followed an investigation into China’s renewable energy trade practices at the urging of the US steelworkers’ union. The WTO complaint addresses only part of the steelworkers’ allegations. Others were addressed during the investigation. In December, China agreed no longer to require foreign companies to have prior experience supplying large Chinese wind power projects in order to obtain approval for new wind projects. It now will recognize companies’ experience outside of China. Other subsidy programs were found to have been discontinued.

Some parts of the steelworkers’ petition remain under investigation, including China’s practices regarding “rare earths” —- metals that are key for manufacturing many clean energy technologies. In a December 23 report to Congress regarding China’s WTO compliance, the US trade representative expressed disapproval of China’s export restraints on rare earths and said that it could take further action, including filing another complaint with the WTO.

The wind turbine proceeding could lead to US duties on Chinese products. The US trade representative is accepting public comments during the course of the settlement talks. To be considered, comments should be received by January 31.

Keith Martin