The On Going US-China Trade Dispute Enters New Arena: “Green.”
By: Ainsley Brown
The tit for tat trade battles, one could even say bordering on a trade war, has entered a new area – Green. More precisely the U.S. is investigating China’s alleged subsidization of its green technology sector (wind, solar and advanced batteries, etc.) in breach of WTO rules.
The US Trade Representative has launched the investigation under section 301 of the Trade Act 1974 after receiving a petition from the United Stealworkers Union (USW). Section 301 authorizes the President to take all appropriate action to obtain the removal of any policy or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. Such action may be self initiated by the U.S. Trade Representative or as in this case by way of petition by a business or industry group.
The USW claims that China’s green energy policies are ones that “protect and unfairly support its domestic producers of wind and solar energy products, advanced batteries and energy-efficient vehicles, among other products, as China seeks to become the dominant global supplier of these products.” The policies objected to are wide ranging and “include export restraints, prohibited subsidies, discrimination against foreign companies and imported goods, technology transfer requirements, and domestic subsidies causing serious prejudice to U.S. interests.” However, more importantly the petition “alleges that China’s policies have caused the annual U.S. trade deficit in green-technology goods with China to increase substantially since China joined the WTO, making China the top contributor to the U.S. global trade deficit in the sector.”
The Obama Administration has identified the Green technology sector as a priority; an industry of the “future,” a job creator and an engine for growth. While a 301 investigation is in of itself important this one has taken on and additional flavor for three main reasons. The first is the general U.S. fear of Chinese domination, especially in this sector of the “future.” The second, if the allegations prove to be true, not only is the first reason further exacerbated the problem is about to become much worse as it is anticipated that China will soon announce a U.S. $ 750 Billion clean energy stimulus. And lastly, the timing of the petition and subsequent investigation has lead to allegations that the Obama Administration is pandering to an important constituent – the union vote- right before the mid-term elections.
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