U.S. Requests WTO Talks with China on Wind Power Subsidies

Special Fund May Only Allow Use of Components Made in China

Under this program, China appears to provide subsidies that are prohibited under WTO rules because the grants awarded seem to be contingent on Chinese wind power equipment manufacturers using parts and components made in China rather than foreign-made parts and components.

The size of individual grants currently available under the Special Fund for Wind Power Manufacturing ranges between $6.7 million and $22.5 million, and the recipients of these grants - Chinese manufacturers of wind turbines and Chinese manufacturers of parts and components for wind turbines - 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.

USTR Also Including Transparency-Related Claims in Request

USTR is also including in its request for consultations transparency-related claims, which address China’s failure to comply with its obligation to notify on the subsidies at issue under the WTO’s Agreement on Subsidies and Countervailing Measures and China’s failure to translate the underlying measure into one or more of the official languages of the WTO.

WTO Request Arises from Ongoing 301 Investigation Triggered by USW

According to the USTR, this action arises out of an investigation USTR initiated in response to a petition filed by the United Steelworkers (USW) under Section 301 of the Trade Act of 1974, as amended.

That investigation was initiated on October 15, 2010, and addresses allegations relating to a variety of Chinese practices affecting trade and investment in the green technology sector, including not only prohibited subsides but also export restraints, discrimination against foreign companies and imported goods, technology transfer requirements, and domestic subsidies causing serious prejudice to U.S. interests.

USTR notes 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.

USW Raised Multiple Concerns Regarding Discrimination Faced by U.S. Firms

The USW raised a number of concerns regarding discrimination faced by U.S. firms seeking to supply equipment to large-scale wind power projects in China, some of which were addressed at the recent meetings of the U.S.-China Joint Commission on Commerce and Trade (JCCT).

U.S. Able to Obtain Clarification on 2 Other Chinese Subsidy Programs Identified by USW

During the course of the Section 301 investigation, the U.S. was also able to obtain China’s clarification that two additional subsidy programs identified by the USW in its petition, the Export Research and Development Fund program and the Ride the Wind program, had been fully terminated. Along with the current case being filed, these steps effectively address a substantial portion of the claims in the USW’s petition.

USTR Will Continue to Investigate Other USW Allegations

With respect to the remaining USW allegations, Kirk stated that USTR will continue to investigate them even though no formal action is being taken under the Section 301 statute. Kirk added that if the USTR is able to develop sufficient evidence to support those allegations and they can be effectively addressed through WTO litigation, USTR will pursue the enforcement of U.S. rights at the WTO independently of Section 301.

(See ITT’s Online Archives or 09/10/10 news, 10091015, for BP summary of the USW filing the Section 301 petition against China’s green technology practices.

See ITT’s Online Archives or 10/20/10 news, 10102014, for BP summary of the USTR initiating a Section 301 investigation on China’s green technology practices in response to a petition filed by the USW, etc.)