U.S. Trade Representative Ron Kirk announced on June 7 that China has ended certain wind power equipment subsidies. The United States had challenged the Special Fund for Wind Power Equipment Manufacturing (Special Fund) subsidies at the World Trade Organization (WTO) following an investigation initiated in response to a petition filed by the United Steelworkers (USW). The subsidies took the form of grants to Chinese wind turbine manufacturers that agreed to use key parts and components made in China rather than purchasing imports. The United States estimated that the grants provided to Chinese companies since 2008 could have totaled several hundred million dollars. The size of the individual grants ranged between $6.7 million and $22.5 million.
“The United States is pleased that China has shut down this subsidy program. Subsidies requiring the use of local content are particularly harmful and are expressly prohibited under WTO rules. This outcome helps ensure fairness for American clean technology innovators and workers. We challenged these subsidies so that American manufacturers can produce wind turbine components here in the United States and sell them in China. That supports well-paying jobs here at home,” said Ambassador Kirk.
This is the third successful WTO challenge that the United States has brought against Chinese government subsidies. In each of these cases, following formal consultations at the WTO, China agreed to eliminate the subsidies that the United States had challenged.
Because of China’s inadequate transparency, it has taken significant investigatory efforts by the United States Government, working with industry and workers, to uncover the subsidies that the USTR has successfully challenged at the WTO. Under WTO rules, China is obligated to submit information about all of its subsidy programs on a regular basis. This information is required of all WTO Members so that countries may assess the nature and extent of subsidy programs. Despite this obligation, China never notified the WTO of the wind power equipment subsidies challenged in this WTO dispute.
The United States’ WTO dispute challenging the Special Fund subsidies was initiated as a result of an investigation launched by USTR in response to a petition the United Steelworkers (USW) filed under section 301 of the Trade Act of 1974, as amended. The investigation was initiated on Oct. 15, 2010. It probed allegations relating to a variety of Chinese policies and practices affecting trade and investment in the clean energy technology sector, including subsides.