Trade war over wind energy heats up between US and China

The trade dispute between the US and China over renewable energy equipment is growing shriller. The Wind Tower Trade Coalition (WTTC), a coalition of producers of wind towers in the US, has filed a complaint with the US Department of Commerce and International Trade Commission seeking anti-dumping and countervailing investigations into the Chinese and Vietnamese wind towers imports in the US market. Two similar probes against China are already underway.

The first was filed on December 22, 2010 by the US with the World Trade Organization (WTO), accusing China of unfairly helping its domestic wind power equipment manufacturing industry with soft loans, cheap land and subsidies, thereby giving it a competitive edge (See US targets China’s Wind Subsidy). Last year in October, the US solar manufacturers association filed a complaint with the US Department of Commerce and International Trade Commission to conduct an anti-dumping probe against China for selling solar panels and cells in the US much below market price, severely affecting domestic business. Following this the US department of Commerce launched a probe on November 9. The investigations are still on. (Read Trade Barred)

Wiley Rein, a Washington-based law firm which filed the petition on behalf of WTTC on December 29, stated in a press release that the US wind industry is suffering severe harm in profits, pricing, production and employment levels as a result of dumping and improper subsidies provided by China and Vietnam to its manufacturers. China made wind towers are 64.37 per cent cheaper than those produced by the US manufacturers and Vietnamese wind towers are 59.11 per cent cheaper. According to officials imports of wind towers from January to September last year were $148 million from China and $78 million from Vietnam.

“The Chinese and Vietnamese industries are using unfair pricing practices to capture critical sales from the US industry. This has injured the US industry and its workers,” says Alan H Price, counsel for WTTC and chair of the international trade practice unit at Wiley Rein. “Additionally, the Chinese government has used, and continues to use, unprecedented levels of subsidisation to push wind towers into the US market,” he adds.
 
The US Department of Commerce and the International Trade Commission are expected to initiate the probe within three weeks of the date of filing of these petitions.

However, the petition covers only utility scale wind towers having a generation capacity of more than 100 kilowatts. According to estimates, the wind tower reflects about 20 per cent of the cost of an installed wind turbine. These towers are produced in facilities located throughout United States including California, Iowa, Illinois, Texas and Washington.
 
Spill over from China

The China Wind Energy Association (CWEA) differs from the US manufacturers. "The over-capacity of production charge is untrue,” argues Qin Haiyan, secretary-general of CWEA. "We cannot restrict competition simply because of excess capacity. We will promote technological progress and lower costs through market competition,” he adds.
China’s wind industry, which was almost non-existent before 2004, grew exponentially after the government’s intervention. In 2007, the government introduced protectionist measures stating that Chinese wind industry will have to use 70 per cent of the components of a wind mill from local manufacturers. It also requires foreign companies that want to enter Chinese market to form joint venture with Chinese companies having 51 per cent ownership. Besides, there is massive government funding to produce cheap wind equipments and solar panels.
 
According to the third National Wind Energy Resources Census, in 2010, China overtook the United States as the country with the most installed wind energy capacity by adding 16,500 MW over the course of the year, a 64 per cent increase from 2009 in terms of cumulative capacity, reaching 42.3 gigawatt in total. China’s wind market doubled every year between 2006 and 2009 in terms of total installed capacity, and it has been the largest market since 2009. Chinese ownership of its domestic wind-power production has also increased from 18 per cent to 62 per cent.

While China reacted shapely against the US department of commerce probe into the import of Chinese solar panels warning that it can hamper energy cooperation between the two countries, its reply is awaited in case of the recent probe.  

 

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