China on Friday announced an investigation into government policy and subsidy support for renewable energy, weeks after the United States decided to probe sales of Chinese-made solar panels. The announcement by the Commerce Ministry also comes after China's solar industry association said on Tuesday that Chinese solar companies may ask Beijing to launch an anti-dumping and subsidy probe into imports of U.S. polysilicon, the raw material used to make solar cells....The Chinese action doesn't appear to be your standard trade remedies (anti-dumping, countervailing duty or safeguards) investigation but instead something similar to "Section 301" of US trade law, which allows domestic companies and unions to petition the US government to engage in consultations with - and, where necessary, file WTO disputes against - foreign countries based on the latter's alleged protectionism. As you may recall, the United Steelworkers union filed a Section 301 petition against Chinese renewable energy policies back in 2009, and USTR initiated a WTO dispute - which eventually resulted in China's elimination of the challenged policies - a year later based on the USW petition.
"The Ministry of Commerce has decided to initiate a trade barrier investigation into policy support and subsidies for the U.S. renewable energy sector," a statement on the ministry's website (www.mofcom.gov.cn) said. It said Chinese companies argued that the U.S. policies "constitute a trade barrier against the export of Chinese renewable energy products to the United States".
The companies complained that U.S. measures "violated the United States' commitments under World Trade Organization rules, and are an unreasonable barrier and restriction on China's renewable energy industry, reducing the competitiveness of Chinese products in the U.S. market".
The investigation would cover programs from the states of Washington, Massachusetts, Ohio, New Jersey and California, the statement said, and include wind energy, solar and hydro technology products.
"During the investigation, the investigating agency may engage in consultations with the U.S. government concerning the measures in question," the ministry said.
An unnamed ministry official said in a separate statement that the ministry would "fairly and objectively evaluate" the U.S. policy and subsidy measures identified by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products and the China New Energy Chamber of Commerce.
The official added that the ministry would consider "initiating the WTO dispute resolution process" if justified. Earlier this month, the ministry said it was "greatly concerned" about Washington's probe into whether China was selling solar panels in the U.S. at unfair discounts and that its investigation could hurt U.S.-China energy cooperation....
As an aside, the article above notes this interesting tidbit:
The United States was a significant net exporter of solar products in 2010, including to China, according to U.S. industry group Solar Energy Industries Association. Total U.S. exports of solar energy products were $5.6 billion, with net exports totaling $2 billion.
U.S. imports of solar panels from China rose to $1.5 billion in 2010 from $640 million in 2009.
Yes, you read that right: the United States is a net exporter - by a very large margin - of solar technology products. That little nugget might come as a revelation if you listened to only President Obama, his Democratic allies in Congress, or any number of pundits and industry hacks who breathlessly push for increased government subsidies - and domestic protectionism - to help US "green energy" companies can become globally competitive.
Seems like they're doing just fine to me, huh?
Meanwhile, the EU formally announced that it was initiating anti-dumping and anti-subsidy investigations of US ethanol imports - a decision that was pretty much a foregone conclusion when the European industry filed the petition earlier this month:
“The EU has today initiated anti-subsidy and anti-dumping investigations into imports of bioethanol from the USA to establish if U.S. imports of bioethanol have an adverse effect on the European bioethanol industry,” said John Clancy, a spokesman at the European Commission in Brussels.As I reported a few weeks ago, the new EU investigation isn't at all surprising given the immense US subsidies at play here and the fact that the EU industry had been complaining for months about a surge of US imports. And as I've repeatedly noted here, the number of international trade disputes over nations' "green" energy policies is almost certain to increase in the future.
The probes, based on Oct. 12 complaints by the European bioethanol industry represented by the European Producers Union of Renewable Ethanol Association, or ePure, may result in extra taxes on U.S. producers such as Poet LLC, Archer Daniels Midland Co. and Valero Energy Corp. Provisional findings are due by Aug. 24, 2012, Clancy said....
“Generous” federal excise-tax and income tax credits and aid at “all levels of government” helped the U.S. become the top ethanol producer as output fell in Brazil, once the largest exporter, ePure said in a Nov. 2 statement. The lobby represents 21 ethanol producers including Sued-Chemie AG and Tereos Internacional SA’s French unit and 26 companies in the ethanol value chain such as DuPont Co. and Novozymes A/S....
The U.S. is benefiting from higher costs and production shortfalls in Europe, where output is about 165 million gallons (625 million liters) short of the 2.45 billion gallons that drivers are mandated to use this year, according to Bloomberg New Energy Finance.
International traders are shipping ethanol blends to Europe to take advantage of the EU’s lower tariff and a U.S. tax incentive for ethanol blending, ePure said. U.S. exports of ethanol to Europe climbed more than 500 percent from 2008 to 2010 and probably doubled this year from last, ePure said.
Federal tax breaks for ethanol and other renewable fuels were worth $6.3 billion in 2010, according to the Congressional Research Service. While the ethanol aid is due to expire at the end of this year, manufacturers are set to thrive as a government mandate for increased use of the fuel may add $6.9 billion a year in sales....
The U.S. subsidizes the ethanol industry with a 45-cent tax break for every gallon added to fuel. The tax break makes it profitable to blend ethanol with wholesale gasoline when the margin is less than 45 cents.
What is surprising, however, is the fact that (i) US taxpayers are forced to spend billions of dollars subsidizing domestic ethanol production - through tax breaks and the aforementioned "government mandate" - so that EU consumers can benefit from artificially cheap ethanol; and (ii) there are actually several Republican presidential candidates who are proud to support the current disaster that is US ethanol policy - mandates(!), trade disputes and all.
Isn't it time we reconsidered that policy and, you know, all of our other "green" shenanigans?
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