China has recently buckled to trade pressure from the United States, announcing a halt to subsidies of wind turbine manufacturers and thus ending a long running dispute between the two countries, according to U.S. trade officials on Tuesday.
The program, called the Special Fund for Wind Power Equipment Manufacturing, subsidized domestic producers of wind power equipment if they agreed to use Chinese parts; it gave away hundreds of millions of dollars, according to a statement from U.S. Trade Representative Ron Kirk.
Grants ran as high as $22.5 million and had been awarded since 2008.
“The United States is pleased that China has shut down this subsidy program. Subsidies requiring the use of local content are particularly harmful and are expressly prohibited under WTO rules,” Kirk said.
“We challenged these subsidies so that American manufacturers can produce wind turbine components here in the United States and sell them in China.”
The subsidy program was being investigated by the World Trade Organization after a 5,800-page petition from the American trade union United Steelworkers (USW).
USW President Leo Gerard, in a statement, called the move “good news,” but said the United States needs to be persistent in investigating China’s trade policies.
“We need continued action on our other complaints in our petition to ensure that China’s protectionist and predatory practices in the clean tech energy sector are eliminated,” he said.
Washington has pressured China before over government subsidies, with effective results. This is the third time that a challenge to the WTO has resulted in China halting some of its subsidies, the statement from Kirk noted.
Previous subsidy programs that China ended as a result of U.S. protests involved a range of manufactured goods as well as popular Chinese brands in 2007 and 2008.
China’s party-state is notorious for the opacity with which it administers and distributes subsidies, which is in violation of WTO rules.
“Because of China’s inadequate transparency, it has taken significant investigatory efforts by the United States Government, working with industry and workers, to uncover the subsidies that the USTR has successfully challenged at the WTO,” Kirk said.
