A trade squabble has broken out between the U.S. and China over government assistance for solar and wind power and other “green” technologies.

The U.S. made the first move with the Oct. 15 announcement by U.S. Trade Rep. Ron Kirk that his office is launching an investigation into whether China engaged in unfair practices regarding its support to renewable-energy programs.

Kirk’s action, under Section 301 of the 1974 Trade Act, came in response to a petition filed by the United Steelworkers (USW) union on Sept. 9. The USW contends that China has carried out a range of actions that run counter to World Trade Organization (WTO) policies.

But Kirk’s announcement drew a quick and sharp retort from China. According to reports in the People’s Daily, China’s Ministry of Commerce called the charges groundless and said its clean-energy policies are consistent with WTO rules.

It quoted Zhang Guobao, head of China’s National Energy Bureau, as saying, “The probe will backfire on itself by exposing more of the huge [U.S.] subsidies to its own clean-energy sector.” Zhang cited federal incentives for renewable energy in the 2009 American Recovery and Reinvestment Act.

The energy dispute is not the only controversial issue between the U.S. and China. For example, the U.S. has been pushing China to let the value of its currency rise.

But Kirk said that green technologies are “a vitally important sector for the United States.” He added, “Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field for American workers, businesses and green-technology entrepreneurs.”

The steelworkers’ union alleged that China engaged in a variety of unfair policies, including providing export assistance to domestic companies that is prohibited by an international trade agreement; discriminating against imports of foreign products and access by foreign companies to its home market; and restricting access to rare earth elements and other materials that are critical to solar panels, wind turbines and other green technologies.

90-Day Review

The U.S. Trade Representative’s (USTR) office says its investigation will look at whether Chinese government actions deny any U.S. rights under the 1994 General Agreements on Tariffs and Trade and other pacts.

The USTR’s office has deferred requesting direct green-technology talks with China for the time being while it carries out a 90-day examination of the charges contained in the USW petition, Kirk said.

Rhone Resch, president and CEO of the Solar Energy Industries Association, said, “The USTR investigation of China will provide clarity on the extent of support that China provides their domestic industry. Any violation of WTO rules must be immediately addressed. If China is not violating WTO rules, however, then lawmakers in the U.S. need to take a hard look in the mirror and recognize that they are not doing enough to keep the solar industry in the U.S.”

Steelworkers’ union President Leo W. Gerard said the USTR’s decision to begin an investigation “starts an intense process designed to resolve our concerns about China’s vast array of policies and practices that they have assembled to dominate the alternative- and renewable-energy sector.”

Gerard added, “Enough is enough: China needs to start playing by the rules they agreed to when they joined the WTO.”