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U.S. turns to WTO to challenge China's energy-firm subsidies

By Martin Crutsinger
Thursday, December 23, 2010; A11

The Obama administration filed a case against China with the World Trade Organization on Wednesday, accusing Beijing of providing unfair subsidies to Chinese energy companies.

The case comes in response to a petition from the United Steelworkers union in September. The union claims that Chinese businesses are able to sell wind and solar equipment on the international market at a cheaper price than their competitors because they get government subsidies.

The administration's WTO case alleges that the subsidies violate global trade rules.

Bringing allegations before the Geneva-based organization that oversees global trade adds tension to already strained U.S.-China relations. The two superpowers are fighting on a number of other trade fronts, from China's currency regime to barriers that China still maintains against U.S. beef imports.

U.S. Trade Representative Ron Kirk said Wednesday that the type of subsidies the Chinese government employs are "particularly harmful and inherently trade distorting."

The administration's case with the WTO will first trigger consultations between the two nations.

If those talks cannot resolve the dispute, the WTO will convene a hearing panel. If the administration wins the case and China does not abandon its subsidies, the United States will be authorized to impose penalty tariffs on Chinese products equal to the lost sales that U.S. energy companies are experiencing.

The administration agreed on Oct. 15 to launch an investigation into the 5,800-page complaint from the Steelworkers. That decision came only two weeks before congressional elections in which America's large and rising trade deficit with China was a campaign issue.

The WTO case filed Wednesday covered only a portion of the Steelworkers' complaint. Kirk said other allegations made in the complaint remained under review. He said that China had agreed last week at a high-level trade meeting in Washington to address some of the grievances raised by the Steelworkers.

The Steelworkers said in a statement that they were pleased that the administration had decided to pursue a WTO case.

"Today's announcement by the administration comes as an early note of holiday cheer for those workers in the alternative and renewable energy sector," said the union's president, Leo W. Gerard.

House Ways and Means Committee Chairman Sander Levin (D-Mich.) also expressed support. He said 181 members of Congress sent a letter to Obama in September urging him to address China's unfair practices in the emerging area of "green" technology.

"The United States needs to take a more assertive approach to China's mercantilist policies and the administration's action today is a welcome step in the right direction," Levin said in a statement.

- Associated Press

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