US steel union challenges China's clean tech protectionism

The first shot in a potentially explosive clean tech trade war has been fired after the United Steelworkers union announced yesterday that it will file a trade complaint with the US government protesting against renewable energy imports from China that it claims have benefited from protectionist policies.

The case promises to escalate a simmering row between the US, EU and China over the Chinese government's alleged use of protectionist policies designed to provide a competitive boost to domestic manufacturers of wind turbines, solar panels and other clean technologies.

The US union issued a statement claiming that the case will reveal "five major areas of protectionist and predatory practices utilised by the Chinese to develop their green sector at the expense of production and job creation here in the US".

The filing is expected to be made to the US Trade Representative's office, at which point further details about the precise nature of the allegations will emerge. The Obama administration will then have 45 days to choose whether or not the complaint merits investigation under US trade laws.

A spokesman for the Chinese Ministry of Commerce told news agency Bloomberg that the country's renewable energy policies were in accordance with World Trade Organisation rules that allow governments to provide incentives and subsidies that help to accelerate the development of low-carbon technologies.

China has emerged as the world's largest manufacturer of wind turbines and solar panels, and is also fast establishing a leadership position in the development of electric cars and other green technologies.

Earlier this week, Ernst & Young released a report arguing that generous subsidies and accommodating legislation meant China had overtaken the US as the most attractive location for renewable energy investors.

However, there is growing disquiet amongst US and European clean tech firms that they are unable to compete on a level playing field with increasingly powerful Chinese rivals.

There have been numerous allegations that in addition to providing generous incentives and subsidies, Chinese officials have also unfairly favoured domestic manufacturers when dishing out lucrative renewable energy contracts, making it difficult for US and European companies to break into the market.

Most notably, the Chinese government introduced a controversial "Buy Chinese" policy, requiring projects paid for using economic stimulus funds, including large numbers of low-carbon projects, to apply for government permission to purchase products from outside China. Several foreign wind turbine manufacturers, including Vestas Wind Systems of Denmark, US-based GE Energy, Spain's Gamesa and Indian firm Suzlon Energy, all subsequently failed to make it to the second round of bidding for 25 wind energy projects worth more than $7bn (£4.3bn), prompting vocal protests from industry groups.

The United Steelworkers union also fears that government support for Chinese renewable energy manufacturers has reached such a high level that other manufacturers of wind turbines and solar panels will struggle to compete.

The Obama administration will face a tough decision on whether to pursue the complaint, given the delicate nature of international climate change negotiations and fears amongst some clean tech firms that any attempt to tackle Chinese protectionism will only spark a trade war.