China Aid to Clean-Energy Industry Brings U.S. Probe After Union Complaint

The U.S. agreed to investigate China’s aid to its clean-energy producers, acting on a complaint from the United Steelworkers union that says the assistance violates global trade rules.

Accepting the petition may lead the Obama administration to file a protest at the World Trade Organization over subsidies that the union says are contrary to trade rules.

“Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field,” U.S. Trade Representative Ron Kirk said today in a statement in announcing the decision.

The case escalates commercial strains between the U.S. and China, its second-largest trading partner. Trade tensions grew as President Barack Obama criticized China’s currency policy and the House of Representatives passed legislation targeting imports from China as a way to prod its leaders into raising the value of the yuan.

The union’s complaint, called a Section 301 filing, is the first filed and accepted by Obama’s administration after his predecessor, Republican George W. Bush, turned down trade complaints against China.

Lawmakers such as Democratic House Speaker Nancy Pelosi of California and House Ways and Means Committee Chairman Sander Levin, a Michigan Democrat, praised the U.S. plan to review the subsidies.

Sends Message

“By accepting the petition the Steelworkers filed against China’s predatory and protectionist policies, it sends the message that America is not going to stand by while our jobs get outsourced,” union President Leo Gerard said in a statement.

China and the U.S. have pushed development of wind, solar and clean-energy technologies, offering tax breaks and government aid to spur projects. That aid doesn’t violate WTO rules, said Wang Baodong, a spokesman for the Chinese Embassy in Washington.

“The environment-friendly green technology policies introduced by the Chinese government are for the purpose of energy protection and ensuring sustainable development, which are in conformity with WTO rules,” Wang said in an e-mail.

The Steelworkers said in their filing to the trade office last month that illegal export credits, preferences in bidding, the forced transfer of technology and discrimination against foreign firms give Chinese producers of renewable-energy products an unfair advantage.

China Bank

China Development Bank, a state-owned lender, has said it plans to lend more than $42 billion to support expansion of solar manufacturers and wind-turbine makers.

Kirk said his office will examine and verify aspects of the complaint. If the practices warrant it, the U.S. would file a case at the WTO after the 90-day review, he said.

“For those allegations that are supported by sufficient evidence and that can effectively be addressed through WTO dispute settlement, we will vigorously pursue the enforcement of our rights through WTO litigation,” Kirk said.

In a separate decision today, the U.S. International Trade Commission ruled that U.S. Steel Corp. and companies making steel pipes used in oil refineries and chemical plants are being harmed by imports from China. The decision means that duties that could average more than 100 percent will be imposed on $182 million worth of the pipes from China.

The decision by the trade panel is the last of four that producers such as U.S. Steel and the U.S. subsidiary of France’s Vallourec SA, the world’s second-largest maker of steel tubes for oil and gas production, needed to win to get dumping and countervailing duties imposed on Chinese exporters.

“Without this decision, the U.S. industry would have completely lost the U.S. market,” Roger Schagrin, a lawyer at Schagrin Associates in Washington, representing the U.S. producers, said in an interview. Even with duties, “it’s going to be a slow recovery in demand.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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