Steel Workers File 301 Petition Against China’s Green Technology Practices
On September 9, 2010, the United Steelworkers (USW) union filed a comprehensive trade case under Section 301 of the Trade Act of 1974 identifying a broad array of Chinese green technology policies and practices that USW believes violate world trade rules and threaten the U.S. alternative and renewable energy sector.
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(According to the International Trade Administration, Section 301 is the principal statutory authority under which the U.S. may impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices. Section 301 proceedings can either be initiated by petition or self-initiated by USTR.)
Covers 5 Areas of Alleged WTO Violations in Green Technology Sector
The petition covers the following five broad areas of alleged World Trade Organization (WTO) violations by China in the green technology sector.
Export restrictions on “rare earth” materials. The petition states that China uses export quotas, taxes, and licensing procedures to restrict exports of “rare earth” raw materials to users in the U.S. and other countries, in violation of WTO rules. This is a problem as China produces more than 90% of the world’s supply of these minerals. It also creates a powerful incentive to shift production to China in order to secure necessary supplies, as there are often no substitutes for these materials in green technology applications.
Prohibited subsidies. The USW petition identifies five subsidy programs that it states are prohibited under WTO rules and which China currently uses to benefit its producers and exporters of green technology: “Ride the Wind” Program, Special Fund for Wind Power Manufacturing, Export Product Research and Development Fund, Export Credits from China’s Export-Import Bank, and Export Credit Guarantees from Sinosure.
Discrimination against foreign goods/firms. USW states that through several “green” programs, China violates the WTO requirement to accord imported goods treatment that is no less favorable than that accorded to domestic goods. These include local content requirements for wind and solar power plants; bidding preferences for domestic wind companies; exclusion of foreign firms from access to carbon credits; and certain requirements in agreements with state-owned enterprises.
Required technology transfer. The petition states that even though China’s WTO commitments prohibit it from requiring foreign companies to transfer technology as a condition of investment approvals, China continues to require technology transfer in foreign joint venture agreements.
Domestic subsidies. USW states that China’s “massive” domestic subsidies to green technology are distorting trade and harming producers in other countries. For example, China’s economic stimulus package gave more than $216 billion to subsidize green technologies - more than twice as much as the U.S. spent in the sector and nearly half of the total “green” stimulus spent worldwide. USW believes that the subsidies are putting global competitors out of business and causing serious prejudice actionable at the WTO.
USTR Has 45 Days to Respond
USTR has 45 days from the date of filing to determine whether to accept the petition for further action. This determination will occur on approximately October 24, 2010.
(See ITT’s Online Archives or 06/10/10 news, 10061027, for BP summary of testimony by Senators and government officials that China has not fulfilled its non-discrimination commitments, pressures foreign firms to transfer technology, etc.)
USW press release, dated 09/09/10, available here.