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Globe Editorial

Obama should take on China’s trade violations in clean energy

September 16, 2010

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President Obama and politicians from both parties can talk all they want about clean-energy technology leading the US economy out of the doldrums, but the fact is that China is quickly becoming the world’s biggest producer of solar panels and wind turbines — and may be violating international trade rules in doing so. That is the accusation made by the United Steelworkers union, which is asking the Obama administration to challenge Beijing for the generous subsidies the Chinese energy companies get from the federal and local governments. The administration should ask China to change its practices voluntarily and take it before the World Trade Organization if it refuses to.

Under WTO rules, countries can support fledgling industries that are producing for domestic markets, as long as the subsidies do not discriminate against imports. Countries cross the line, however, when they heavily subsidize exporters. The New York Times last week described one solar panel maker in Hunan Province that got dirt-cheap land from the government and subsidized financing. It sells almost 95 percent of its panels to European customers.

That’s a far cry from the tax breaks and infrastructure assistance that local governments in the United States, including Massachusetts, have provided to some American manufacturers. Within the coming year, China expects to be producing close to or more than 50 percent of the world’s solar panels and wind turbines. China’s position in green energy is strong enough, and its efforts on behalf of its solar panel industry have been aggressive enough, that it clearly intends to foreclose competition rather than promote it.

More disturbingly, China allegedly protects its own manufacturers by limiting exports of raw materials needed by manufacturers in other countries to make clean-energy products. So while Massachusetts has been hoping to build on the wind-energy testing facility in Charlestown and become a center of renewable technology, opportunities will be scant if China artificially restricts the supply of materials that US companies need. Meanwhile, foreign firms that hope to do business in China regularly feel pressured to share their technology with Chinese joint-venture partners — a condition that can inhibit competition.

In light of China’s ever larger carbon footprint, the growth of that country’s green technology is in some ways reassuring. As Chinese companies push down the cost of solar panels, more consumers everywhere can afford nonpolluting sources of energy. But predatory trade practices run the risk of killing off worldwide competitors that — with a more level playing field — could come up with more technically advanced models. This isn’t a matter of sticking up for American manufacturers; it’s sticking up for the principles of free trade. And now that China has the world’s second-largest economy, there’s no reason to treat it with kid gloves in international trade disputes.

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