USTR estimated Chinese manufacturers of wind turbines and related parts and components could have received several hundred million dollars in questionable government grants in 2008 under China's "Special Fund for Wind Power Manufacturing."
"Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules," U.S. Trade Representative Ron Kirk said in a statement. "These subsidies effectively operate as a barrier to U.S. exports to China.
U.S. wind turbine manufacturers such as General Electric and United Technologies are eager to compete in China's fast-growing market.
USTR's decision comes about a month before Chinese President Hu Jintao will be in Washington for talks with President Barack Obama.
It responds to a petition filed in September filed by the United Steelworkers union, which accused Beijing of a long list of subsidies and other trade-distorting policies to favor the manufacture of clean energy technologies in China at the expense of the United States and other producers.
"The administration has shown its commitment to enforcing the rules of trade by making it clear to the Chinese government that they will pursue U.S. interests," Steelworkers President Leo Gerard said in statement welcoming the news.
The union's "section 301" petition also included a complaint about China's restrictions on rare earth minerals used in production of wind turbines, electric vehicles, solar cells and energy efficient lighting.
Rare Earth Materials
USTR announced no decision on that issue, but USTR spokeswoman Nefeterius McPherson said the United States was "very concerned about China's export restraints on rare earth materials, antimony and tungsten" and could still file a case on that at the WTO.
"We have raised our concerns with the Chinese and we are continuing to work closely on the issue with stakeholders," McPherson said.
USTR said it had made progress on some of the steelworkers' other concerns during the annual U.S.-China Joint Commission on Commerce and Trade last week in Washington.
Beijing agreed to no longer require foreign companies bidding for large-scale wind power projects in China to have prior experience in China, USTR said.
China also reconfirmed its commitment to eliminate discriminatory local content requirements in the wind manufacturing sector, and informed the United States that two other subsidy programs challenged by the steelworkers union had been eliminated, USTR said.
"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," Kirk said. (Reuters)
Gerard acknowledged progress was made in the recent U.S.-China talks and said the steelworkers were satisfied with the administration's approach.
"From day one, the USW knew that the complexity and enormity of the case and the lack of transparency in the Chinese system would require that we be in this for the long haul ... The goal is not litigation; it's to end their practices," Gerard said.
