By SEWELL CHAN, New York Times
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| Wind Power Equipment Aid |
WASHINGTON — The Obama administration accused China on Wednesday of illegally subsidizing the production of wind power equipment and called for discussions at the World Trade Organization, the first step in a trade case sought by American steelworkers.
It is the second time in less than four months that the administration has accused China of violating world trade rules.
The move escalates the trade tensions between the United States and China over clean energy, a sector that the administration views as a technological frontier in which American companies are struggling to remain competitive.
Washington is challenging a special government fund in China that awards grants to makers of wind power equipment. The Americans say the fund provides subsidies that are illegal under W.T.O. rules because the grants appear to be contingent on manufacturers using parts made in China rather than foreign-made components.
“Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under W.T.O. rules,” Ron Kirk, the United States trade representative, said. “These subsidies effectively operate as a barrier to U.S. exports to China. Opening markets by removing barriers to our exports is a core element of the president’s trade strategy.”
The grants available under the Chinese program range from $6.7 million to $22.5 million, and the recipients, and the Chinese makers of wind turbines and associated parts can receive multiple awards as the size of the wind turbine models increases.
Grants under the program since 2008 could total several hundred million dollars, Mr. Kirk’s office said.
The accusation on Wednesday is the first step in the W.T.O. dispute settlement process. If China and the United States cannot reach a solution through consultations, the United States may request the establishment of a W.T.O. dispute settlement panel.
The action grows out of an investigation Mr. Kirk’s office initiated on Oct. 15 in response to a complaint by the United Steelworkers over a range of practices in the clean-energy sector, including prohibited subsidies, export restraints, discrimination against foreign companies and imported goods, requirements that foreign companies transfer technology to their domestic counterparts.
The wide-ranging filing, known as a Section 301 complaint, has been the subject of several one-on-one talks between Chinese and American trade officials.
Mr. Kirk’s office said it “was able to make progress on some of these other areas of concern during the course of the Section 301 investigation through its bilateral engagement with China.”
China agreed to lift one barrier to foreign developers seeking to build wind farms there after two days of meetings last week in Washington, part of an annual forum known as the United States-China Joint Commission on Commerce and Trade. Beijing will allow overseas experience in wind farm development, and not just experience in China, to qualify them for Chinese projects.
But several other barriers remain: foreign developers are barred from offshore projects for national reasons, are not allowed to borrow as much money as domestic developers and are not allowed to sell carbon credits from their wind farms.
Mr. Kirk said his office would continue to investigate the steelworker complaints that have not already been addressed but was not planning additional formal action under Section 301, which is part of the Trade Act of 1974 and authorized the president to take “all appropriate action,” including retaliation, to remove practices by foreign governments that violate international trade agreements or discriminates against American commerce.
“We will continue to work closely with the U.S.W. and other stakeholders in the months ahead on the remaining allegations,” Mr. Kirk said. referring to the steelworkers union. “If we are able to develop sufficient evidence to support those allegations and they can be effectively addressed through W.T.O. litigation, we will pursue the enforcement of our rights at the W.T.O. independently of Section 301.”
The steelworkers union, in a statement, said that resolving the remaining issues would take considerable effort. “The goal is not litigation; it’s to end their practices,” the union said.
The new decision follows two earlier cases the Obama administration brought against China on Sept. 15.
In one case, the United States is asserting that China violated W.T.O. procedures when it imposed duties on imports of a specialty steel producer, known as grain-oriented flat-rolled electrical steel, from the United States.
In the other case, the United States is challenging China’s restrictions on foreign suppliers of electronic payment services, including major American credit card companies like MasterCard and Visa.
Those cases are continuing.
“Our decision today, along with the two other W.T.O. cases that we recently filed against China, underscores our commitment to ensuring a level playing field with China for American workers and businesses,” Mr. Kirk said in a statement.
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