Solar Panel Litigation & the Emerging Clean Energy Trade War — Good for Whom?

A new dumping / subsidies case was filed recently by American solar panel makers attacking China’s subsidies to its manufacturers. This filing with the International Trade Administration / U.S. International Trade Commission is a new skirmish in the emerging clean energy trade war between the U.S. and China.
Actions by related manufacturers, such as the steel towers for wind turbines, are being contemplated in this emerging front in global trade actions by the U.S. and its firms against China in the green energy sector. (The U.S. previously brought an action in the WTO against China concerning wind turbine subsidies .)
This case may or may not be easy to win. Even with reliance on the fact that China is considered a non-market economy, so it’s easier to establish trade remedy violations, this could be a difficult case to win. This is because of the complex nature of the corporate structures and financial transactions involved.
If trade restrictions are eventually imposed Chinese firms could establish American operations to avoid these newer  restrictions. The same way foreign auto firms did throughout the American south in the 1980’s and 1990’s and continue to do so. Just note the poor shape the rustbelt auto producers found themselves in after the establishment of these foreign plants.
Undoubtedly, states throughout the U.S. would seek this new foreign investment from Chinese firms. Which would actually be good for workers but not the firms or the employees of those firms that brought this new litigation.
Trade protection doesn’t necessarily really help U.S. manufacturers. In fact, some U.S. firms might move to China to partner with Chinese firms in order to have access to those foreign subsidies.  It’s not only multinationals that can enter into cross-border transactions and take advantage of foreign regulations and financing. It’s a globalized world.
To me the better answer is not more domestic litigation by industry but more effective trade negotiations by the USTR.  Get China to fully report existing subsidies  as required by its accession agreement. Address them diplomatically and if that fails through the WTO litigation process. This process has proven to be fairly quick and effective. The U.S. has won most its cases brought against China.
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About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (School of Public Policy).
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