The Office of the U.S. Trade Representative (USTR) recently announced that they are challenging a program in China which appears to be subsidizing domestic wind power companies.
The USTR is concerned about China’s Special Fund for Wind Power Manufacturing since the program seems to be providing subsidies that are prohibited under World Trade Organization (WTO) rules. The program’s grants are contingent on domestic wind power equipment manufacturers specifically using components made in China. The USTR will try to resolve the dispute using WTO dispute settlement provisions.
“Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules,” said U.S. Trade Representative Ron Kirk.
“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. Our decision, along with the two other WTO cases that we recently filed against China, underscores our commitment to ensuring a level playing field with China for American workers and businesses.”
USTR’s action is the result of an investigation that the office initiated in October at the request of the United Steelworkers (USW). The USW raised numerous concerns of U.S. firms seeking to supply equipment to large-scale wind power projects in China, including domestic subsides, export restraints, discrimination against foreign companies and imported goods, and technology transfer requirements.
The grants available as part of the Special Fund for Wind Power Manufacturing range between US$6.7 million and US$22.5 million and grant recipients can receive multiple grants as the size of the wind turbine models increases. USTR estimates that grants provided under this program since 2008 could total several hundred million dollars.
Image credit: Samantha Appleton, White House Photographer
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