WASHINGTON – The Obama administration on Wednesday filed a case against China before the World Trade Organization, accusing Beijing of providing unfair government subsidies to Chinese energy companies.
The case is in response to a petition from the United Steelworkers union last September. The union alleged that Chinese businesses are able to sell wind and solar equipment on the international market at a cheaper price than their competitors because they receive subsidies.
The administration's WTO case alleges that the subsidies were in violation of global trade rules.
Bringing allegations before the Geneva-based organization that oversees global trade adds tension to already strained U.S.-China relations. The two superpowers are fighting on a number of other trade fronts, from China's currency regime to barriers China still maintains against U.S. beef imports.
U.S. Trade Representative Ron Kirk said the type of subsidies the Chinese government had employed were "particularly harmful and inherently trade distorting."
The administration's case with the WTO will first trigger consultations between the two nations.
If those talks cannot resolve the dispute, the WTO will convene a hearing panel. If the administration wins the case and China does not abandon its subsidies, the United States would be authorized to impose penalty tariffs on Chinese products equal to the lost sales that U.S. energy companies are experiencing.
The administration agreed on Oct. 15 to launch an investigation into the 5,800-page complaint from the Steelworkers. That decision came only two weeks before congressional elections in which America's large and rising trade deficit with China had become a campaign issue.
The WTO case filed Wednesday covered only a portion of the Steelworkers' complaint. Kirk said other allegations made in the complaint remained under review. He said that China had agreed last week at a high-level trade meeting in Washington to address some of the grievances raised by the Steelworkers.
The Steelworkers said in a statement that they were pleased that the administration had decided to pursue a WTO case.
"Today's announcement by the administration comes as an early note of holiday cheer for those workers in the alternative and renewable energy sector," said Steelworkers' president Leo W. Gerard.
House Ways and Means Committee Chairman Sander Levin also expressed support. He said 181 members of Congress had sent a letter to Obama in September urging him to address China's unfair practices in the emerging area of green technology.
"The United States needs to take a more assertive approach to China's mercantilist policies and the administration's action today is a welcome step in the right direction," Levin, D-Mich., said in a statement.