China moves forward with potential WTO case against US renewables incentives

PV cell manufacturingThere’s been a rather epic battle going on over competitive practices in renewables between China, the U.S. and, increasingly, Europe. The battlefield just got a little more interesting as China’s Commerce Ministry reaffirmed former findings that six renewable energy projects in the U.S. violated World Trade Organization (WTO) rules. A finding that could ultimately lead to actions against U.S. solar and wind manufacturers.

It’s the most recent action in a series of actions stemming from when SolarWorld-backed Coalition for American Solar Manufacturing (CASM) first filed a complaint against Chinese silicon PV manufacturers’ trade practices last fall. Since then the U.S. Commerce Department has instated preliminary tariffs against Chinese PV imports. Following the U.S. action SolarWorld’s parent company SolarWorld AG and partners in Europe have filed similar complaints with the E.U.

The issues have the solar industry split. Installers want cheaper modules so they can sell more systems for less and continue installing solar at the rate they’ve going. Manufacturers want to preserve their pricing so they can, well, survive.

However, this action by China may help stimulate a discussion on exports and imports from both countries, contended John Smirnow, vice president of Trade & Competitiveness at the Solar Energy Industries Association (SEIA). “In this case one of the things they could do is request bilateral discussions with the U.S.,” he said.

Such action could be beneficial and save face for both countries. “Anyway to get them together. “We think there’s a critical need for our governments to start finding common ground rather than just litigate,” Smirnow said. “Or they could file a WTO case. That’s how they would effectively punish the U.S.”

The Chinese petition was filed in November 2011, shortly after CASM’s complaint in October 2011. Still, “I would not say that this is a response to the U.S. trade action or a retaliation. This is the second phase of this investigation. In May or June [China] issued a preliminary determination,” Smirnow said. “The petition is 40 pages long, they would have been working on this well before the U.S. petition was filed,” he said.

“The U.S. case certainly makes the Chinese Government more receptive to complaints from Chinese industries,” Smirnow said. China alleged that local content incentive programs aren’t looked kindly on by the WTO. Those include programs like Washington State's “Renewable Energy Cost Recovery Incentive Program,” Ohio's “Wind Production and Manufacturing Incentive Program,” and New Jersey's “Renewable Energy Incentive Program” as well as its “Renewable Energy Manufacturer's Incentive Program.”

If the issue isn’t resolved it could result in actions against U.S. manufacturers, according to Smirnow. “The WTO can authorize compensation.” In such a scenario China could impose tariffs on U.S. goods or negotiate a tariff reduction on certain Chinese products.