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Mainland China Files WTO Case Against U.S. Renewable Energy Measures

Mainland China has filed a World Trade Organisation complaint against the United States over certain measures at the state and municipal level that provide incentives for the use of domestically-sourced renewable energy products and technologies. This complaint is in addition to a separate action challenging the legality of the U.S. safeguard restrictions on crystalline silicone photovoltaic cells and modules. The two requests were circulated to WTO members on 16 August.

Beijing is targeting the following U.S. renewable energy measures:

  • the Renewable Energy Cost Recovery Incentive Payment Program of the State of Washington;
  • the Self-Generation Incentive Program of the State of California;
  • the Solar Photovoltaic Incentive Program implemented by the Los Angeles Department of Water and Power;
  • the Renewable Energy Credits requirements of the State of Michigan; and
  • the Experimental Advanced Renewable Program proposed by Consumers Energy Company and approved by the Michigan Public Service Commission.

Mainland China argues that each of these measures is inconsistent with the following provisions of the WTO covered agreements and, as a result, appear to nullify or impair the benefits accruing to mainland China directly or indirectly under these agreements:

  • article III:4 of GATT 1994, because the measures at issue appear to embody laws, regulations and/or requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products which provide less favourable treatment to products imported into the United States than that accorded to like products originating in the United States;
  • article 2.1 of the TRIMs Agreement, because the measures at issue appear to be investment measures related to trade in goods that are inconsistent with Article III:4 of GATT 1994;
  • article 2.2 of the TRIMs Agreement, because the measures at issue appear to be investment measures related to trade in goods which are mandatory or enforceable under domestic law or under administrative rulings, and/or compliance with which is necessary to obtain an advantage, and which require the purchase or use by an enterprise of products of U.S. origin, as provided for in paragraph 1(a) of the Annex to the TRIMs Agreement; and
  • articles 3.1(b) and 3.2 of the SCM Agreement because they appear to grant and maintain subsidies contingent upon the use of domestic over imported goods.

Mainland China and the United States have until around mid-October to resolve the dispute through bi-lateral consultations. Should a mutually acceptable agreement not be reached, the WTO will establish a dispute settlement panel within 45 days after one is requested and the panel will issue a decision to the parties within six months. The decision of the panel can be appealed, in which case the Appellate Body would consider the case and render a final decision within three months.

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