The long list of trade disputes between the US and China has lengthened further, with Washington asking the WTO to examine subsidies to the Chinese wind power sector.
The US government said on Wednesday it had asked the WTO to deal with allegedly illegal subsidies that favor Chinese manufacturing firms.
The US alleges China offers multimillion-dollar grants to only companies making turbines and other equipment with Chinese parts, a violation of trade rules.
“China appears to provide subsidies that are prohibited under WTO rules,” US trade officials said in a statement announcing their request for WTO arbitration.
The request means that representatives from Beijing and Washington will have to discuss a solution within the WTO.
If no agreed solution is found, the US can ask the WTO to move toward sanctions.
Chinese officials yesterday attacked the move, with the Commerce Ministry saying it was “highly concerned” with the development and insisting that China’s approach to the field “comply with WTO rules.”
“Every country in the world is seeking to develop renewable energy to cope with climate change. China’s wind power measures are helping save energy and protect the environment,” the Commerce Ministry said in a statement.
“This is crucial for sustainable development and is in accord with WTO principles,” it said.
“These subsidies effectively operate as a barrier to US exports to China,” said US Trade Representative Ron Kirk, vowing Washington was committed to “ensuring a level playing field.”
The grants, said to be worth as much as US$22.5 million, are part of a vast Chinese effort to become a world-beater in green technology.
Despite heavy US spending to improve its own green energy sector, it is still seen as lagging the emerging giant.
The US move was prompted by a major trade union, which in September accused Beijing of handing out hundreds of billions of dollars in illegal subsidies in a bid to corner the green energy market.
The United Steelworkers union has accused China of blocking access to materials used in green technologies, illegally linking subsidies to export sales, curbing imports and demanding foreign investors hand over technology secrets.
It also accused China of providing more than US$216 billion worth of subsidies to green technology makers “more than twice as much as the US spent in the sector and nearly half of the total ‘green’ stimulus spent worldwide.”
Kirk said the US would investigate the union’s other claims, but appeared to rule out imminent action.