Bloomberg News

China Says U.S. Renewable Subsidies Violate Trade Rules

May 24, 2012

U.S. renewable-energy subsidies in five states violate free-trade rules, China’s Ministry of Commerce said today.

The ministry identified programs supporting renewable power, including wind and solar, in California, New Jersey, Massachusetts, Ohio and California that violate World Trade Organization policies and trade treaties, according to a preliminary finding on the agency’s website today.

The finding comes a week after the U.S. Commerce Department announced tariffs as high as 250 percent on Chinese solar cells and is the latest salvo in a renewable-energy trade dispute, according to Theodore O’Neill, an analyst at Wunderlich Securities Inc. in New York.

“It’s a long, slow escalation of trade and currency wars as we race to the bottom,” O’Neill said today in an interview.

Chinese solar companies have criticized Commerce’s preliminary decision May 18 that they improperly benefit from government subsidies and sell solar cells below cost. At least four U.S. solar manufacturers filed for bankruptcy in the past year.

Fourteen Chinese solar panel companies formed a group to develop a response to the U.S. tariffs, the China Chamber of Commerce for Import and Export of Machinery of Electronic Products said today.

China initiated the investigation into U.S. subsidies in November, a month after seven U.S. solar manufacturers filed a complaint with the U.S. International Trade Commission and Commerce.

‘Economic Warfare’

All countries offer subsidies to certain industries, Hari Chandra Polavarapu, an analyst at Auriga USA LLC in New York, said in a telephone interview.

“The absurdity is the scope and depth of the subsidies in China,” Polavarapu said. “You’re competing against a sovereign when you’re talking about the Chinese solar industry. It’s economic warfare.”

The Commerce Department said a final determination on the solar tariffs would be made in early October. U.S. customs agents will collect a deposit or bond on solar cells made in China in the 90 days before last week’s decision. Duties range from 31 percent to 250 percent for different manufacturers.

To contact the reporters on this story: Justin Doom in New York at jdoom1@bloomberg.net; Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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