Jake Blumgart writes on Talking Union
On September 9th the United Steelworkers (USW) union filed a trade complaint against the Chinese government for violating WTO free-trade rules, by pumping billions into the clean energy manufacturing sector. Six weeks later the Obama administration agreed to take up the case. If the governmental review, scheduled to wrap up in early 2011, concludes that the USW is correct, the United States could file a complaint with the World Trade Organization, opening the way for tariffs on these Chinese imports.
The impetus behind the USW’s actions is the fact that the United States is letting yet another industrial market slip through its fingers. Although America has the technology, capacity, and skilled labor to mass produce green machinery—think solar panels and wind turbines—our ineffectual political system makes governmental support for the nascent industry halting, at best. The Chinese Communist Party has no such compunctions, and in a competition like this the country with the best industrial policy wins.
In recent years China has invested huge sums in clean energy manufacturing, massively increasing its output, and driving down prices worldwide. But like most of China’s manufacturing the vast majority of this output is meant for export, not for its very large, and very dirty, internal markets (China recently surpassed the U.S. as the world’s largest carbon dioxide emitter). If the Chinese were to use at least some of these subsidies to incentivize clean energy use at home, they would be far less likely to be found in violation of WTO standards.
Environmentally speaking, China’s massive subsidization of its green technology sector can only be a good thing. Their $216 billion post-recession stimulus investment totaled more than two times U.S. spending and comprised close to fifty percent of similar outlays worldwide. With the American Recovery and Reinvestment Act already winding down, and a new virulently anti-spending Republican majority in the House, it is unlikely that American industries will be getting anything else, anytime soon. Which leaves the Chinese free to lengthen their commanding head start. And, honestly, at least someone is spending to promote these technologies.
The most that can really be expected from the USW’s case is a dialogue about China’s industrial policy—and our lack of one. There simply aren’t any feasible power levers to make the complaint anything more substantive. (Tariffs on Chinese clean energy products are a possibility, but we need these technologies, and if American manufacturers aren’t making them on a sufficient scale, we shouldn’t make green imports harder to get.) And the intransigence of the Republican Party’s anti-government, anti-spending orthodoxy will make any dialogue muted and fruitless.
In the absence of a concrete American industrial policy, the USW is pursuing alternative avenues as well. Last summer, the union announced a deal with two Chinese companies willing to produce wind turbines in the United States, potentially creating 1,000 new union jobs. Unfortunately, the negotiations could be hard to duplicate, and they’ll never be a substitute for the American government working hand-in-hand with American capital and American labor, towards a new and lasting green technology sector.