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September 23, 2010 02:00 AM

USW chief: China violating international trade rules

Miles Moore
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    WASHINGTON—China is violating World Trade Organization rules and spending hundreds of billions of dollars to steal alternative and renewable energy business from the U.S., the United Steelworkers union has alleged in a trade petition to the Office of the U.S. Trade Representative.

    “Green jobs are key to our future,” said USW International President Leo W. Gerard in a press release dated Sept. 9, the same day the petition was filed. “Right now, China is taking every possible step—many of them illegal under international trade laws—to ensure that it will control that sector. America can't afford to cede more of its manufacturing base to China.”

    The USW filed the 5,800-page petition under Section 301 of the Trade Act. Section 301 is the chief statutory authority under which the U.S. may impose trade sanctions against foreign countries that violate international trade agreements or encourage trade practices that discriminate against U.S. commerce.

    The petition identifies five separate areas in which China has discriminated against U.S. commerce in alternative and renewable energy products, ranging from solar panels and wind turbines to advanced batteries and energy-efficient vehicles. All five areas constitute violations of WTO regulations, Gerard said during a media conference call.

    These areas include:

    — Restriction of access to critical materials. China produces more than 90 percent of the raw materials critical to “green” technologies, the USW said. Yet it slaps export quotas, taxes and licensing procedures on these materials to restrict access by the U.S. and other countries, it claimed.

    — Government subsidies contingent on export performance or domestic content. China offers all sorts of special subsidy programs for its alternative and renewable energy producers, including an export product research and development fund, despite such measures being forbidden by the WTO, the USW said.

    — Discrimination against imported goods and foreign firms. China regularly discriminates against foreign companies, including but not limited to forcing them to form joint ventures with Chinese firms, the union said.

    — Technology transfer requirements for foreign investors. China's laws give the government absolute power over joint venture agreements, and they mandate the transfer of advanced technology in such agreements, the USW said.

    — Trade-distorting domestic subsidies. In its economic stimulus package, China gave its “green” technology industry more than $216 billion in subsidies, amounting to nearly half of the “green” stimulus money spent worldwide, according to the union. “These subsidies are helping Chinese producers ramp up production, seize market share, drive down prices and put global competitors out of business,” it said.

    In the conference call, Gerard cited the USW's successful move last year to have the Obama administration place tariffs on passenger and light truck tires imported from China. The situation with the Chinese alternative and renewable energy industry was very similar, but much broader and more general in its impact, he said.

    When asked what the USW would do if the WTO eventually ruled in China's favor, Gerard said he did not believe that would happen. “I'm willing to stand on this, anywhere in the world: China is cheating,” he said.

    Under Section 301 rules, USTR has until Oct. 24 to rule on the USW petition. At that time, Gerard said, the agency has the choice of rejecting the petition; granting it and initiating a Section 301 investigation; or postponing its decision for another 90 days while it conducts further research.

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