In the latest development in a U.S.-China trade dispute, China has agreed to close down a fund that the U.S. says violated World Trade Organization rules by subsidizing Chinese wind-energy equipment makers.
U.S. Trade Representative Ron Kirk said on June 7 that China had shut its Special Fund for Wind Power Equipment Manufacturing, which Kirk's office said provided grants to Chinese wind-turbine companies that used componehts made in China instead of imported parts.
According to USTR, the grants from the fund ranged from $6.7 million to $22.5 million and may have totaled several hundred million dollars since 2008.
Kirk said, "Subsidies requiring the use of local content are particularly harmful and are expressly prohibited under WTO rules." He added, "We challenged these subsidies so that Ameican manufacturers can produce wind turbine components here in the United States and sell them in China/."
USTR opened an investigation into China's wind energy assistance programs last October, folloiwing a petition filed by the United Steelworkers union (USW) under Section 301 of the Trade Act of 1974. The USW alleged that China's special fund and other programs ran counter to WTO regulations .
USW President Leo W. Gerard welcomed the announcement about the end of China's wind power fund, but he added, "It needs to be followed up with continued vigilance, to ensure the Chinese keep their commitments."
Over the past several months, China also agreed to change its criteria for approving wind projects and also stopped two other subsidy programs.
Some issues that the steelworkers union raised have not yet been resolved, says USW spokesman Wayne Ranick. He says they include financing by China's Export-Import Bank at below-market rates as well as export credit insurance. "They remain issues of concern," Ranick says.