The Obama administration’s trade complaint against China over support for its wind-energy manufacturers won backing from U.S. business groups. The case, filed at the World Trade Organization in Geneva, is the first by the U.S. over green technology after months of complaints about Chinese efforts to force manufacturers to make those products in the country. A government fund for wind manufacturers requires recipients to use domestically made parts, violating WTO rules, the U.S. Trade Representative’s office said in a statement announcing the case.
The complaint “appears to be an appropriate first step,” John Frisbie, the president of the U.S.-China Business Council in Washington, which represents investors such as General Electric Co., the biggest U.S.-based wind-turbine maker, said in a statement. GE and and Vestas Wind Systems A/S, the world’s biggest maker of the turbines, have invested in manufacturing in China under the country’s rules. Vestas of Randers, Denmark, has its largest integrated manufacturing complex globally in Tianjin, China and a second factory in Hohhot, according to the company’s Web site. GE of Fairfield, Connecticut, formed a joint venture in China in September with Harbin Electric Machinery Co. to make and supply turbines for the Chinese market. GE spokesman Dan Nelson declined to comment on the trade case.
‘Level Playing Field’
“Our role as a global exporter of wind turbines relies on a level playing field in international markets,” Rob Gramlich, senior vice president of the American Wind Energy Association, a Washington trade group whose members include GE and Vestas, said in an e-mail. “Any practice that tilts the global playing field unfairly would be of serious concern to our members who want to play a role in China.”
China’s measures to develop its wind-energy industry are in line with WTO rules, and it will “closely watch” study how the complaint is handled in accordance with the regulations, the Ministry of Commerce said today.
China is now the largest wind-power market in the world in terms of installed capacity, according to Bloomberg New Energy Finance. Its market is growing at 116 percent a year, compared with 40 percent in the U.S., according to the Global Wind Energy Council based in Brussels.
The draw of China’s market does more to attract investment from companies such as GE and Vestas than any protectionist rules, said Michael Levi, a fellow at the Council on Foreign Relations in New York. “Every year people look at the U.S. market and wonder if recent investments will be maintained,” Levi said in an interview. “But China has a stable and growing environment,” spurring companies to build plants there, he said.
The complaint at the WTO, the international trade arbiter, escalates commercial strains between the U.S. and China, its second-largest trading partner, a month before President Hu Jintao is scheduled to visit Washington. China has said its aid to clean energy doesn’t violate trade rules and supports international efforts to reduce global warming. “The environment-friendly green-technology policies introduced by the Chinese government are for the purpose of energy protection and ensuring sustainable development, which are in conformity with WTO rules,” Wang Baodong, the spokesman for the Chinese Embassy in Washington, said in October. Wang didn’t respond to an e-mail asking for comment yesterday.
The U.S. trade office said that China’s Special Fund for Wind Power Manufacturing violates WTO rules by requiring recipients of aid to use Chinese-made parts and amounts to a subsidy, both of which violate WTO rules. Aid under the program since 2008 could total several hundred million dollars, the U.S. said.
The complaint against China was praised by lawmakers and business groups that had called for such action. “With China on track to make half of the world’s wind turbines and solar panels, American manufacturers cannot afford a delay on trade enforcement,” Democratic Senator Sherrod Brown of Ohio said in a statement.
The WTO case filed yesterday was one slice of a complaint filed with the U.S. trade office on Sept. 9 by the United Steelworkers union. The union said export credits, preferences in bidding, forced transfers of technology and discrimination against firms outside the country give Chinese producers of renewable-energy products an unfair advantage.
Most of the union’s contentions remain under review, and future cases depend on getting sufficient evidence from American producers and unions, according to Nefeterius McPherson, a spokeswoman for the U.S. Trade Representative’s office.
The Obama administration has committed to addressing the remaining vast web of protectionist policies,” Leo Gerard, the Steelworkers president, said in a statement. “The goal is not litigation; it’s to end their practices.”
Under the rules of the WTO, the filing begins a 60-day period of mandatory consultations between officials from the two nations. After that, the U.S. can request a WTO panel of judges to rule on the matter.
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