Last Friday Stuart wrote a two part series on the movement of US wind and solar power jobs to China. You can read those posts and comments here. As we went to press on Friday, the United Steelworkers Union filed a 301 Petition essentially challenging China’s trade practices around green technology on grounds of violating WTO rules. We would characterize the arguments the USW raises as broad and varied. From a metals perspective, the USW raises the biggest argument against Chinese export restrictions on rare earth metals that we have seen. The arguments also include the following: allegations that the Chinese have engaged in prohibited subsidies based on export performance or domestic content, discrimination against imported goods and foreign firms, technology transfer requirements for foreign investors and trade distorting domestic subsidies, according to the USW petition. All of these allegations or elements of the petition tie to specific violations within WTO law. The USW outlines each of these allegations in detail here.
Now whether or not one supports the USW and its philosophy across a range of issues has no bearing on this specific petition (we typically find ourselves at odds with USW policy in general) but if even just a couple of the allegations are proven true, this petition represents one of the largest challenges against the Chinese ever presented against them since their admission to the WTO in December, 2001. Before we dive into some of the details in the petition, from a political perspective, the USW has thrown a hot-potato to the Obama administration which will likely become a dominant theme in the November elections. According to the The Washington Post, “The Obama administration has 45 days to decide whether to accept the steel union’s complaint, which was filed with the office of the US trade representative. The Post article also indicated that the USW has specifically asked the administration to proceed with talks with the Chinese, “under a process established by the WTO, with potential WTO follow-on activity in the event the talks fail to produce an amicable agreement.
Prediction: International trade policy as it relates to both the US/Chinese trade deficit and the loss of US manufacturing jobs to China, will become a central plank of the upcoming mid-term elections.
A New York Times account of the petition also highlights several political hot potatoes that have yet to be addressed by the administration, Congress, or for that matter, the American people. Consider for example, the following, “Is there a clash between our environmental goals and our goal of having a robust technology manufacturing sector, according to Tim Keeler, counsel at the law firm of Mayer Brown and former USTR chief of staff under the Bush administration. After all, we all have a vested interest in seeing China clean up its factories and air quality. Some also argue that, “pursuing trade sanctions might not be the best approach to creating US jobs, according to the NYT story. Both issues belong in the realm of public debate.
In a follow-up post, we’ll cover additional details of the petition and spend some more time discussing the arguments against the Chinese restriction of rare earth metals tied to this particular case. MetalMiner has published multiple viewpoints on that debate previously. Here is a post outlining why some of the China bashing may be justified and a second piece seeking to understand Chinese actions.
Another interesting aspect of this case involves the convergence of broader metals trade cases and the overall “US vs. China level playing field debate with that of the rare earth metals industry. At MetalMiner, we have always felt it would be only a matter of time when the two industries converge in terms of the international trade implications. This petition filed by the USW makes it official.