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China challenges US anti-subsidy tariffs with WTO case

China filed a complaint at the World Trade Organization on Friday against US import duties on 22 Chinese products that the United States claims are unfairly subsidized, including solar panels.

The action, eight days after the US imposed anti-dumping duties on Chinese solar cells, points to a looming trade war between two of the world’s largest renewable energy markets.

"The Chinese government opposes the abuse of trade remedy measures and opposes trade protectionism," China's Ministry of Commerce (Mofcom) said in a statement.

China's complaint covers a wide range of products, worth $7.3bn in total, says Mofcom, which the US has targeted in recent years with countervailing duties, or tariffs aimed at countering unfair government subsidies.

Mofcom spokesman Shen Danyang alleges that many of the US methods of calculating Chinese government subsidies are “inconsistent with WTO rules”.

The US Department of Commerce ruled in March that Chinese solar firms received unfair government subsidies and set countervailing duties of up to 4.73% on imports of China-made solar cells.

On 18 May it added anti-dumping tariffs of 31% on solar cells made by 61 named Chinese manufacturers, after concluding that the companies were selling products in the US at prices below the cost of production. It set tariffs of 251% on all other Chinese solar companies.

The Chinese firms have refuted the US government findings that they improperly benefit from government subsidies and sell solar cells below cost. They warned that the US actions could hurt the US industry, which sells billions of dollars of solar equipment and raw materials, particularly polysilicon, to the Chinese solar industry.

A group of Chinese solar panel makers has set up a new alliance to respond to the US tariffs. They are calling for the ruling to be changed in the final phase of the investigation, due to conclude in early October.

However, they look set to come under further pressure as Germany’s SolarWorld reportedly prepares to bring an anti-dumping investigation in Europe too.

China’s wind industry has also come under attack, with the US Commerce Department currently investigating a complaint filed in November last year alleging dumping by Chinese manufacturers of wind turbine towers in the US. It is scheduled to make a preliminary decision on the case later this week.

China has responded to the US investigations into its clean energy sector by launching its own probe into subsidies offered by five US states to support renewable energy. Last week Mofcom announced that it had found the incentive programmes to violate free-trade rules.

Mofcom’s decision to bring a complaint over the US countervailing duties to the WTO shows that China is determined to fight back, even as industry and officials on both sides call for further co-operation.

“We advocate free trade. We don’t want to see any retaliation,” said Shawn Qu, chief executive of panel maker Canadian Solar, which manufactures in China, at a recent press briefing in Shanghai.

Mofcom says it will first seek to discuss its issues with US countervailing duties with trade officials.

“China hopes that through active dialogue and communication under the WTO dispute settlement mechanism, the United States will correct the long-held erroneous practice of anti-subsidy investigations and return to working in line with WTO rules,” says the statement.

However if the two sides cannot resolve their differences, the dispute may go to arbitration. If the United States is found to have broken WTO rules, it could be forced to remove the duties and offer compensation.

A spokeswoman for the Office of the US Trade Representative, Nkenge Harmon, told news agencies it was studying the complaint and would respond in accordance with WTO rules.