U.S. asks WTO for help in China wind tech dispute

U.S. asks WTO for help in China wind tech dispute    The United States on Wednesday requested consultations with China under the World Trade Organization's dispute settlement provisions concerning a program known as the Special Fund for Wind Power Manufacturing.
   Under this program, the United States said China appears to provide subsidies that are prohibited under WTO rules because the grants awarded under the program seem to be contingent on Chinese wind power equipment manufacturers using parts and components made in China rather than foreign-made parts and components.
   '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, in a statement. 'These subsidies effectively operate as a barrier to U.S. exports to China.'
   The United States is also including in its consultations request transparency-related claims, which address China's failure to comply with its obligation to notify the subsidies at issue under the WTO's Agreement on Subsidies and Countervailing Measures (SCM Agreement) and China's failure to translate the underlying measure into one or more of the official languages of the WTO.
   According to the Office of the U.S. Trade Representative, the size of individual grants currently available under China's 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.
   Consultations are the first step in the WTO dispute settlement process. Parties are encouraged to arrive at a mutually agreed solution through consultations. If the matter is not resolved through consultations, the United States may request the establishment of a WTO dispute settlement panel.
   The United States' action arises from an investigation that USTR initiated in response to a petition filed by the United Steelworkers (USW) under section 301 of the 1974 Trade Act. That investigation was initiated on Oct. 15, and addressed allegations related 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.
   At the Dec. 14-15 meetings of the U.S.-China Joint Commission on Commerce and Trade (JCCT) in Washington, USTR was able to address one highly problematic Chinese policy measure negatively affecting U.S. firms in China's wind sector. Going forward, China agreed to modify its criteria for approval of new wind power projects by no longer requiring foreign enterprises to have prior experience supplying equipment to large-scale wind power projects in China and instead will recognize their prior experience outside China.
   Through the JCCT, China also reconfirmed its 2009 JCCT commitment that it had eliminated other discriminatory provisions related to local content requirements in the wind manufacturing sector.
   During the section 301 investigation, the United States was able to obtain China's clarification that two additional subsidy programs identified in the steelworkers' petition — the Export Research and Development Fund program and the Ride the Wind program — had been terminated. These programs appeared to have provided prohibited export subsidies and prohibited import substitution subsidies. Along with the case filed Wednesday, these steps effectively address a substantial portion of the claims in the USW's petition, USTR said.
   In respect to the remaining USW allegations, Kirk said USTR will continue to investigate them even though no formal action is being taken under the section 301 statute.
   'We will continue to work closely with the USW and other stakeholders in the months ahead on the remaining allegations. If we are able to develop sufficient evidence to support those allegations and they can be effectively addressed through WTO litigation, we will pursue the enforcement of our rights at the WTO independently of section 301,' he said.