WTO Dispute – China Revokes Wind Subsidies

After having some of its wind power equipment subsidies disputed by the United States at the World Trade Organisation, China has revoked its Special Fund for Wind Power Equipment Manufacturing subsidy. The U.S.challenged that the subsidy was illegal as it provided grants to Chinese wind turbine manufacturers with the stipulation that the manufacturers had to purchase key parts and components produced in China. The grants ranged between $6.7 million and $22.5 million.

In October 2010, the United Steelworkers Union (USW) petitioned to the U.S.government to investigate these prohibitive government incentives, which the Union claimed were protectionist measures that violated free trade by artificially promoting domestic goods at the expense of imports. After conducting a significant investigation, the Office of the U.S. Trade Representative held WTO consultations with China in February. These consultations resulted in China agreeing to remove the Special Fund.

China and the United States are embroiled in a stiff competition to become the global leader in the clean energy technology market place. Over the past year, the United States has not only been replaced by China as the largest cleantech financier, it has also fallen behind in clean energy manufacturing, and its lack of progressive energy policy is driving clean energy businesses to other countries, including China. However, China’s wind energy turbine makers have said scrapping subsidies for the domestic sector will have little impact, even as US manufacturers hailed the move as a victory.

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