Steelworkers union targets China on green-energy exports

Sept. 9 (Bloomberg) -- U.S. Trade Representative Ron Kirk discusses today's report on the trade deficit in July. The trade gap shrank 14 percent, the most since February 2009, to $42.8 billion, the Commerce Department said today in Washington. Kirk, speaking with Margaret Brennan on Bloomberg Television's "InBusiness," also discusses the prospects for free trade agreements with Colombia, Panama and South Korea. (This is an excerpt of the full interview. Source: Bloomberg)
By Howard Schneider
Thursday, September 9, 2010; 10:30 PM

The United Steelworkers union launched a broad challenge Thursday against what it alleges is illegal support for China's growing dominance in the renewable energy industry. The move targets China's practices in a sector that President Obama has said is central to U.S. economic renewal.

In a filing with the office of the U.S. trade representative, the union claims that China is steadily seizing world market share in the production of such things as solar panels and wind turbines through an array of subsidies, tax credits, cut-rate loans and other policies that favor local producers.

Those policies violate World Trade Organization rules, the union says, and it is asking the Obama administration to open talks with the Chinese and then pursue the matter with the WTO if those negotiations fail.

"These practices have enabled China to emerge as a dominant supplier of green technology," with an estimated 50 percent share of world solar panel production, USW President Leo Gerard said in a conference call Thursday morning. "It's a direct violation of the obligations China undertook when it joined the WTO."

The complaint strikes a sensitive note for the White House heading into midterm elections that may turn in part on the sluggish nature of the economic recovery and sustained high unemployment.

Treasury Department and other officials have tried to handle some of the more sensitive economic issues between the two countries through negotiations. The administration has pressed China, for example, to change currency policies it regards as unfair. But it refrained from using U.S. laws and regulations designed to punish countries that manipulate exchange rates.

At the same time, union and manufacturing groups have highlighted the resurgent U.S. trade deficit with China, and argued that Beijing's support for its exporters robs the United States of factory jobs.

New trade data released Thursday emphasized the point. The overall U.S. trade deficit narrowed in July, and exports rebounded after a June decline. But the monthly trade shortfall with China remained near an all-time high.

The administration has 45 days to decide whether to accept the union's complaint and pursue formal talks with China and a possible WTO complaint - a decision that will come just before the midterm elections.

While the global market for solar power, wind turbines and other renewable energy products remains small, the Obama administration has made them key to boosting U.S. exports and cited them as critical to the country's long-term economic fortunes.

USW's president, Gerard, said unionized steel, aluminum, glass and other plants have lost jobs to Chinese manufacturers in recent years. The complaint cited five broad areas in which the union argues that China's policies go against WTO rules - from export restriction on rare-earth elements that other countries need for renewable energy products, to unfair subsidies and financing arrangements for Chinese exporters. In some cases, Gerard said, U.S. firms establishing joint ventures with Chinese companies must surrender technologies and designs as a condition of doing business.

"As they steal the technology and force the companies to China, they are locking down" the research and development, Gerard said. "If we are not going to do solar panels and fluorescent bulbs and wind turbines here, the next generation of R and D will not be here."

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