Bloomberg News

China to Drop Wind-Power Subsidies After WTO Case, U.S. Says

June 07, 2011

(Updates with union comment in sixth paragraph, Chinese embassy comment in seventh paragraph.)

June 7 (Bloomberg) -- China agreed to end hundreds of millions of dollars of subsidies to wind-power manufacturers following a complaint the U.S. filed at the World Trade Organization, the U.S. Trade Representative’s Office said.

China’s Special Fund for Wind Power Manufacturing illegally required aid recipients to use Chinese-made parts, the U.S. said in a case filed in December at the WTO after getting a complaint from the United Steelworkers union. Individual grants were for as much as $22.5 million.

“Subsidies requiring the use of local content are particularly harmful and are expressly prohibited under WTO rules,” U.S. Trade Representative Ron Kirk said today in a statement. “We challenged these subsidies so that American manufacturers can produce wind turbine components here in the United States and sell them in China.”

The steelworkers’ complaint with the U.S. trade office, filed last year, said export credits, preferences in bidding, forced transfers of technology and discrimination against firms outside the nation gave Chinese producers of renewable-energy products an unfair advantage.

The union also said China’s restrictions on rare-earth exports provide an unfair advantage to its green-energy manufacturers, which rely on those elements.

“We need continued action on our other complaints in our petition to ensure that China’s protectionist and predatory practices in the clean-tech energy sector are eliminated,” Leo Gerard, president of the union, said in a statement.

‘Ready To Settle’

The Chinese embassy in Washington was “not updated” on the decision, spokesman Wang Baodong said. “It’s been my government’s consistent position that China is ready to settle trade disputes with its trading partners through bilateral consultations and relevant multilateral channels,” he said in an e-mail.

The U.S., which praised China for eliminating the subsidies, also faulted the nation’s disclosures to the Geneva- based trade arbiter.

“Under WTO rules, China is obligated to submit information about all of its subsidy programs on a regular basis,” the U.S. trade office said in its statement. “Despite this obligation, China never notified the WTO of the wind power equipment subsidies challenged in this WTO dispute” or dozens of similar subsidies, the statement said.

--Editors: Steve Geimann, Judy Pasternak

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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