Alan Beattie, Joshua Chaffin：China takes solar power dispute to WTO

　　Chinaon Monday added to a growing global pile of trade disputes over renewable energy, starting a World Trade Organisation case against the EU over solar power generation programmes inItalyandGreece.

　　China’s complaint, alleging thatRomeandAthensbroke international trade law by favouring local producers, resembles a WTO case that the EU itself has brought against a similar scheme in the CanadianprovinceofOntario.

　　 China alleges that Italian and Greek law, which authorises high “feed-in tariffs” to encourage solar power generators, permits “prohibited” subsidies that directly discriminate against foreign companies and must immediately be abolished under WTO rules. A statement from the commerce ministry said: “Chinaconsiders that the measures are inconsistent with the WTO rules on national treatment ... and constitute import substitution subsidies that are banned by the WTO.”

　　Beijing’s “request for consultations” on Monday is the first step in the WTO’s dispute settlement process, which can ultimately end in an independent judicial panel authorising trade sanctions.

　　A spokesperson for the EU trade commission said it was studying the case. EU officials have privately warned some member states that their renewable energy and biofuels programmes risk breaking global trade law.

 Greecehas proposed an ambitious solar power project called Helios, which would use miles of solar panels to capture the country’s abundant sunshine and then transmit the energy to customers inGermany. But despite support from Günther Oettinger, the EU energy commissioner, Helios has so far failed to make it off the drawing board, hindered by doubts about the feasibility of transporting electricity over long distances and by tepid interest from German utilities.

 Solar and wind power, which have attracted heavy state support in many countries, have become one of the most contentious issues in global trade, testing the ability of WTO rules to constrain unfair subsidies. Although subsidies have been cut in recent years, some have increasingly been skewed towards trying to build up domestic industries. Earlier this year theUSannounced anti-subsidy tariffs on imports of solar cells fromChina– with the EU contemplating similar action – a decisionBeijinghas also challenged at the WTO.

 Trina Solar, one of the Chinese solar manufacturing exporters targeted in the EU investigation, has noted the difficulty of applying trade rules to complex renewable energy programmes. “Many governments give support – it’s a question of what are the details, and is it OK?” says Jodie Roussell, Trina Solar’s director of European public affairs. “[Is] a feed-in tariff an incentive or a subsidy? Is a line of credit an incentive or a subsidy?”

 According to a leaked draft obtained by the International Centre for Trade and Sustainable Development, aGenevathink-tank, a WTO dispute panel has ruled againstOntario’s feed-in tariff programme, in a case brought by the EU andJapan. Trade lawyers say that if the ruling is confirmed, it could lead to a rash of new subsidy cases.

 

Source: The Financial Times, November 5, 2012