The U.S. is threatening China with World Trade Organization (WTO) action on two clean energy issues.
Last Wednesday the U.S. accused China of illegally subsidizing its wind power industry and took the first step in filing a trade case with WTO.
Then on Thursday, the U.S. expanded its complaint to include China’s export restrictions on rare earth metals–which are key for the manufacturing of many clean energy technologies. China has a 97% monopoly on rare earth production and cut export quotas 40% this year with future cuts planned.
China’s Ministry of Commerce responded to the wind industry allegations by stating that its actions are in line with global trade rules. However, the ministry said it would consider the U.S. request for consultation under dispute settlement rules.
The U.S. Trade Representative says that Chinese manufacturers of wind turbines and components may have received several hundred million dollars in government grants that violate trade rules by requiring Chinese manufacturers to use only Chinese-made parts and components.
Under WTO rules the countries have 60 days to resolve the disagreement through consultation, after which the U.S. can ask for a WTO panel hearing, if no agreement is reached.
Concerning the rare earth metals, the U.S. said it has repeatedly urged China to eliminate export restrictions, "But to date China has not been willing to change its policies," the U.S. trade office said.
The trade office said world prices for some of the rare earths have risen dramatically higher than China’s domestic prices. China says it is cutting exports to manage supplies and respond to environmental issues associated with mining.
Chinese President Hu Jintao is expected to meet President Obama in Washington DC in January to discuss, among other things, how China and the US can work together on clean energy job creation. These two trade issues are likely to play a large role in those discussions.
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