New York Times (10.15.10)

U.S. Plans Inquiry on China’s Subsidies of Clean Energy

The Obama administration announced Friday that it would investigate a complaint accusing China of illegally subsidizing its clean-energy industries, in another sign of its newly assertive posture over China’s trade and commercial policies.

At the same time, according to administration officials briefed on the decision, the Treasury Department plans to announce on Friday that it will delay its semiannual report on foreign-exchange rates, deferring a decision on whether to brand China a currency manipulator. The report was due Friday, but the Obama administration has been pressing China to allow the value of its currency, the renminbi, to rise, so the delay allows those negotiations to continue.

The United States trade representative, Ron Kirk, said his office would investigate a complaint filed by the United Steelworkers, the nation’s largest industrial union, on Sept. 9. The complaint asserted that China had violated its obligations under the World Trade Organization, which China joined in 2001, by supporting manufacturers of wind and solar energy products, advanced batteries, energy-efficient vehicles and other goods.

“This is a vitally important sector for the United States,” Mr. Kirk said. “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.”

Mr. Kirk added that the government took the union’s claims “very seriously,” adding, “we are vigorously investigating them.”

The Commerce Ministry press office in Beijing was closed on Friday night when the American announcement came out. Calls to a ministry spokesman and to the press office of the Chinese Mission to the W.T.O. were not answered.

The administration plans to complete the investigation within 90 days and, if a complaint is warranted, to pursue litigation against China through the W.T.O.

Under American trade rules, the United States is supposed to request consultations with the Chinese government to discuss the complaint. But Mr. Kirk’s office said it would delay that request for up to 90 days in order to “seek information and advice” from the steelworkers and other parties.

The United Steelworkers and the American Iron and Steel Institute, a trade group, both issued statements in support of the action.

“President Obama showed again today that fighting for U.S. workers and their jobs is his top priority,” the steelworkers union said. “He’s backed up his commitment to a clean energy future by making it crystal clear that that future is going to benefit all Americans.

There were also expressions of support from Congress, though Senator Charles E. Schumer, Democrat of New York, said the action did not go far enough. “The Obama administration is treating the symptom, but not the disease,” said Mr. Schumer, a persistent critic of China’s currency practices. “An investigation into China’s illegal subsidies for its clean energy industry is overdue, but it’s no substitute for dealing with China’s currency manipulation. Democrats and Republicans alike in Congress are prepared to move legislation confronting China’s currency manipulation this year. We hope to have the administration’s support, but will go forward without it if necessary.” The House of Representatives voted overwhelmingly last month to threaten China with tariffs on a broad range of Chinese exports to the United States, and Treasury Secretary Timothy F. Geithner has become more pointed in his criticisms of China, warning that China had set off a “damaging cycle” of “competitive nonappreciation” in which countries are aiming to block their currencies from rising in value.

The currency dispute is likely to be a top subject when leaders of the Group of 20 economic powers gather for a summit meeting in Seoul, South Korea, in November.

The lead example of unfair Chinese trade practices in the United Steelworkers’ petition involved China’s restrictions on the export of rare earth minerals and two other obscure minerals, tungsten and antimony. China dominates the worldwide mining of all three, producing 95 percent of the world’s rare earths and somewhat smaller percentages of global tungsten and antimony production.

China has halted virtually all exports of rare earths to Japan since Sept. 21, to the anger and dismay of Japanese manufacturers, who have been the biggest customer for rare earths and use them to make everything from mobile phones to hybrid gasoline-electric cars like the Toyota Prius. A trickle of rare earths is now reaching Japan because of smuggling.

The statement from the Office of the United States Trade Representative on Friday morning conspicuously omitted any mention of rare earths. People who have discussed rare earth policy with American trade officials said earlier this week that before taking action on rare earths, the Obama administration wants to see the initial decision in mid-February of a W.T.O. panel reviewing cases filed last year against China by the United States, the European Union and Mexico involving China’s export restrictions on a half dozen other industrial minerals, like bauxite.