Right now, the Obama administration and the International Trade Commission (ITC) are in the process of investigating complaints alleging that China is violating global trading rules to give their domestic solar-and wind-energy industries an advantage on the world market.
The contention is that the Chinese government -- recognizing the growing global demand for renewable energy products -- has been giving its solar and wind energy producers enough money to price Chinese solar panels and wind turbines less than the rest of the world's solar panels and wind turbines. Their goal is to get the world's customers to stop buying the rest of the world's products and start buying from the Chinese.
The Chinese Government has made no secret of its desire to become the world's leading producer of environmental goods and has even issued a series of economic plans laying out its strategy to "speed up the development and deployment of hydropower, wind power, solar energy and biomass energy," directing local authorities to "allocate the necessary funds to support renewable energy development."
By all accounts, the Chinese Government's strategy is working. Today, my office is issuing a report showing that in just the last five years, China rose from playing a minor role in the global market for environmental goods to become the dominant actor in the world's biggest and fastest growing markets. Among other things, the report lays to rest arguments that the U.S. solar industry isn't losing out to China, showing that in just 2011, the U.S. went from a $2 billion trade surplus in solar energy products to a $1.5 billion deficit.
Of course, some will undoubtedly say: "So what?" They'll argue that the Chinese Government can do what it wants, that we shouldn't start a trade war with China and that cheap solar panels are a good thing. And others will say this is just another example of why free trade isn't good for Americans.
Let me respond:
1. So what if China is helping its domestic industries charge less for solar panels and other environmental goods? Can't the U.S. do the same?
If China is helping its domestic industries charge an artificially low price for solar panels and other environmental goods, then China is violating international trade rules that it agreed to when it became a member of the World Trade Organization. The global rules based trading system -- established after World War II and the Great Depression -- was designed to prevent trade wars by creating clear, enforceable standards for all of the world's participants. Its rules ensure that competition is based, not on the amount of assistance a government provides its industries, but on each industry's ability to innovate quality products and produce them efficiently.
If China -- the world's second largest economy -- is violating trade rules to help its industries undercut the price of solar panels and other environmental goods, it changes the competition from a race to produce better products more efficiently to a competition to cheat better. Meanwhile, the global trading system breaks down and countries that play by the rules -- like the U.S -- suffer.
2. But wouldn't enforcing trade laws with China start a trade war?
Trade wars aren't started by countries appealing to respected, independent trade authorities. Rather, trade wars begin when one country decides to violate international trade rules to undercut another country's industries. In trade -- as in football or any other rules-based competition -- we hold the rule breaker accountable, not the coach who asks the referee for a review.
If the U.S. Department of Commerce finds that China isn't breaking the rules, then no action will be taken. But if China is breaking trade rules to give its industries an unfair advantage, it's important that trade rules be enforced and tariffs be applied to negate that unfair advantage. Again, doing otherwise would undermine the integrity of the rules-based trading system.
3. But won't fewer people install solar panels if we raise the cost of Chinese solar panels?
This is a short-sighted argument. Yes, while U.S. manufacturers of solar panels are closing plants and laying off workers, U.S. solar panel installers are doing well by using the low-cost Chinese solar panels. However, if China successfully puts the rest of the world's solar manufacturers out of business, the Chinese government will stop subsidizing the price of solar panels and prices will go up.
Moreover, if China successfully puts the rest of the world's solar industries out of business, the race to innovate better, more efficient and more affordable renewable energy technologies comes to a halt.
4. Isn't this just another example of why trade is bad for Americans?
No. This is an example of why unfair trade is bad for Americans. President Obama said it best during his state of the Union Address this year when he declared: "I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don't play by the rules."
More than 90 percent of the world's customers live outside the United States. Ensuring that U.S. companies have a level playing field to compete for those customers is probably the single best way to grow U.S. businesses and create more good-paying U.S. jobs. But free trade does not mean trade free from rules, and failing to enforce trade rules not only fails to ensure that level playing field, it leaves U.S. industries at the mercy of countries that break the rules.
President Obama was right to make enforcement of those trade rules a priority and his creation, today, of a Trade Enforcement Unit is a massive step in the right direction. But as my office's report shows, we need to act quickly because it doesn't take long to lose to China.
Wyden Staff Report: Losing the Environmental Goods Economy to China
Follow Sen. Ron Wyden on Twitter: www.twitter.com/@RonWyden
Richard Seireeni: The China Syndrome: Trading Our Future for Trinkets
Leo Hindery, Jr.: China Trade: A 'Target Rich Environment.' Now, It's American Auto Parts
John Wagner Givens: Mitt Romney: The 'Currency Manipulator' Manipulator
Dean Baker: What If the Next Steve Jobs Is Chinese?
Chinese solar panels exemplify trade problems - CBS News
Cheap Chinese Panels Spark Solar Power Trade War : NPR
China Bends to U.S. Complaint on Solar Panels, but Weighs ...
First thing to do is to ignore China and focus on what is best for America - ALL of America - and you will quickly implement a Feed In Tariff (per-kWh payment) for rooftop solar and microwind systems under 100kW in size so that everyone who has a good site can afford to install these wonderful technologies and will be paid fairly for producing the clean, high-value, non-deadly power right where and when it's needed.
Secondly, include incentive payments for using locally - manufactured panels (see Washington State) - which make it more appealing to home and business owners to use the locally-manufactured goods instead of the shoddy imported goods.
You mention being shortsighted then you end up being exactly that. The LAST thing we need is a trade war or a price increase over the only technology (PV) that can truly help our economy, property values, jobs situation and environment. If done CORRECTLY (small systems, democratically owned, sited in the already-built environment), PV can revolutionize our energy grid, but so far ALL the US handouts are going to Big Solar (Chevron, Goldman Sachs, etc.) and Big Wind (BP, Morgan Stanley, Google) so they can kill wilderness and NOTHING is helping real Americans.
I have as of yet to encounter a single Republican that understands this
Who exactly gave China Permanent Most Favored Trade Status even though when he campaign he promised not to?
http://kucinich.house.gov/Issues/Issue/?IssueID=1466
But what happens? China enters and becomes a member in good standing of the WTO. Congress grants China Most-Favored-Nation trading status. No punitive actions of any material importance.
Sen. Wyden's complaint here is just another dutiful trotting out of the same dog-and-pony-show talking points we've heard over and over again as a way of deceiving the American public into believing that their government is actually looking out for them. Nothing could be further from the truth.
The federal government instead is looking out for those American industries that have invested heavily in China, transferring key U.S. jobs and strategically vital technology to a hostile regime because they can make a quick buck off importing the resulting products to the U.S. before American consumers are completely tapped out and our economy collapses.
So then you have renounced your position of providing subsidy to "green" energy?
If not when are you reporting to prison because you have done exactly what you accuse china of
Trade rules do matter.
So do tax laws - especially those that give a disproportionate amount to the top 1%.
And, tax laws that encourage offshoring jobs. And, those that discourage investment in manufacturing.
All to make the top 1% more wealthy and the bottom 99% less wealthy.
But, that's what the U.S. Congress does. Make laws that increase the wealth of the top 1% at the expense of the rest. Isn't it?
This cheap dirty energy helped them take a large market share of the energy intensive low labor cost solar cell manufacturing business. It was not labor cost that cost U.S. Manufactures like Solyndra, EverGreen, and Spectra Watt.
http://news.yahoo.com/solar-company-solyndra-follows-evergreen-spectrawatt-bankruptcy-court-223500220.html
a lot of U.S. manufactures lost market share to China because of cheap dirty coal energy!
The best planet wide solution is to add an environmental tariff on imports of products based on their manufacturing, transportation, sustainability, and recycling and a tax based on the same principles on domestic manufactured products.
This approach has a net positive effect on the planet!
That's why China has taken a large share of the energy intensive manufacturing like steel, solar cells, and the associate businesses like ship building and solar panel assembly.
Not labor cost!!!
Remember it's always energy cost that drive manufacturing since the industrial revolution began! Cheap labor we had well before the industrial revolution!