Obama admin takes aim at China’s renewable-energy subsidies

[pampango]

http://www.grist.org/article/2010-12-28-obama-admin-takes-aim-at-chinas-renewable-energy-subsidies

Last week, in a move that pits American labor against China's green-technology industry, the Obama administration filed a complaint with the World Trade Organization over China's wind-power subsidies. The U.S. move challenges China's rapid growth in the renewable-energy market, and also throws the weight of the administration behind the unions, elevating concern about Chinese competition to the level of official U.S. policy.

The complaint falls on the heels of a 5,800-page filing made in September by the United Steelworkers against China, arguing that its renewable-energy subsidies violate international trade regulations. According to that filing, China defied trade agreements by providing land grants and low-interest loans in order to produce clean technology at artificially low prices.

China, for its part, feels it is being presented with a damned-if-you-do-and-damned-if-you-don't set of options. If the country invests in clean technology, U.S. officials claim China is engaging in "unfair" trade practices. If it does not, U.S. lawmakers threaten to slap a high-carbon tariff on Chinese imports. It's a no-win situation.

China is now the world's largest emitter of greenhouse gases, but it still ranks far below the U.S. in terms of per capita emissions and historical emissions. Its renewable-energy subsidies, which have made it a leading producer of wind and solar technology, are one of the most encouraging signs of progress in the global fight against climate change. China is currently the only country producing green technology at a scale that could dramatically bring down the price of goods like solar panels and wind turbines, making them affordable for both the developed and developing world. These advances could not have been brought about without government subsidies.

[FreakinDJ]

1. Nice "Lip Service" Mr Pres. but your FAILURE to re-open trade deals

as promised in the run up to the 2008 election

[piratefish08]

2. Dear China, Don't you DARE make advances in areas that we are not willing

to advance in ourselves. You make us look bad.

Love,
The US

P.S. - Next month's loan payment might be a few days late. War ain't cheap, you know! LOL

[ladjf]

3. Yes. nt

[Statistical]

4. You are aware that US is major producer of wind turbines and China is directly offsetting

mnaufacturing cost.

This isn't a subsidy or rebate for the consumer but a method to create an unfair advantage (see "dumping") and is in direct violation with international trade agreements.

Essentially US (and Germany, and South Korean) companies need to price wind turbines to sell at a profit.
Chinese companies get a subsidy for each turbine sold so they can price them BELOW cost, hell they can price them below the raw material cost. Essentially they sell them at a loss and still remain profitable via Chinese subsidies.

Hypothetical.
Cost to produce 1MW turbine: $3 million
Chinese subsidy: $2 million
Market price (average of fairly competing international companies): $5 million
Chinese "market" price: $2 million.

The Chinese company can sell the turbine at $2mil ($1 million below cost) and still walk away with $1 mil profit because of illegal subsidies.

Now why would China do this? Once China destroys world market for turbines by undercutting every manufacturer and closing plants all over the world, they can stop subsidies and keep lions share of a very profitable, rapidly growing industry.

Somehow you think this is "fair" and Obama shouldn't challenge it with the WTO? Really I am curious.

Given three options:
a) Allow it to happen and watch factories close in the US
b) Challenge it in the WTO and get worldwide tarriffs on Chinese wind exports until they stop
b) Can't beat them, join them. In direct violation of international trade agreements provide illegal subsidies to US manufacturers to undercut China and allow them to sell product below cost.

Obama is going with B. What is your answer?