U.S. pushes market-opening green tech plan at APEC

HONOLULU (Reuters) - It's an environmental plan for the Asia-Pacific region that even President Barack Obama's harshest Republican critic could love: cut taxes paid by corporations and reduce market-distorting regulation.

But those two key elements of the U.S. "green growth" agenda for this weekend's annual summit meetings of the Asia-Pacific Economic Cooperation forum are facing resistance from China, a world leader in clean energy technologies.

That could derail or weaken a key part of the APEC agenda that the United States has worked all year to advance.

The White House wants Chinese President Hu Jintao and other APEC leaders to pledge to cut tariffs on environmental goods such as solar panels, wind and hydraulic turbines, air pollution filters and sewage treatment pumps to 5 percent.

Obama also wants APEC to agree to address certain regulatory barriers that hamper trade in environmental goods and services sectors including air pollution control, sewage treatment, solid and hazardous waste management, nature and landscape protection and noise pollution control.

"We're keeping our fingers crossed, hoping it comes together," said Karan Bhatia, vice president of global government affairs and policy at General Electric, one of the world's largest wind energy companies and provider of other goods and services that could be covered by the pledge.

'U.S. DOESN'T NEED TO DO ANYTHING'

However, even though commitments in APEC are not legally binding, Beijing on Monday threw cold water on the plan, which it said would require much greater sacrifice from developing countries in APEC than the United States.

"The problem is, if we set a goal of 5 percent, the U.S. doesn't need to do anything. We are the ones that need to do all the work," Assistant Minister of Commerce Yu Jianhua said.

Average U.S. tariffs on the 153 green products proposed for cuts by the United States are 1.4 percent, compared to China's average of nearly 7 percent, Yu told reporters.

"Some economies on one hand promote free trade of green products and services and at the same time abuse trade remedies and protectionism of green products within the APEC region," Yu added, in apparent reference to a case filed by the U.S. arm of German company SolarWorld, which has added a discordant note to the APEC focus on green growth.

The U.S. operation based in Oregon is seeking antidumping and countervailing duties of more than 100 percent on imports of solar cells and modules from China, alleging unfair pricing practices and subsidies that threaten U.S. jobs.

The U.S. International Trade Commission will hold a preliminary hearing on Tuesday on SolarWorld's allegation and the Commerce Department is expected to formally accept SolarWorld's petition on Wednesday, starting an investigation that could lead to duties being imposed next year.

The case is one of a growing number of trade spats in the green technology sector as governments step in to help their own companies grab market share.

BIG MARKET, BIG STAKES

Since APEC accounts for about 54 percent of world output and 44 percent of world trade, even a non-binding commitment among members to cap environmental goods tariffs at 5 percent would be "a significant step," said Bhatia, who was a senior U.S. trade official during the Republican administration of George W. Bush.

"Secondly, there is obviously a climate change dimension and that adds a certain political imperative to the initiative," Bhatia said.

The United States and China are the world's biggest economies and the top two sources of carbon dioxide and other greenhouse gases blamed for climate change.

The environmental goods and services proposal is reminiscent of the 1996 Information Technology Agreement, which also began in APEC and eliminated tariffs on semiconductors and other high-tech goods among a number of countries.

That had an explosive impact on trade, said Bill Morin, senior director for government affairs at Applied Materials Inc, which manufactures equipment to make semi-conductors and solar panels.

"We're hoping something analogous to that could happen if we get an environmental goods and services agreement," Morin said, adding his company would like a pact that eventually reduces tariffs to zero.

A 2010 Commerce Department report said the global market for environmental technologies was $782.4 billion in 2008 and the United States was by far the largest single market, accounting for $299.5 billion of the total.

But "foreign markets, particularly those of developing countries, continue to grow at a higher rate and offer the most opportunities for U.S. companies," the report said.

Tariffs on environmental technologies average 15 to 20 percent in most major emerging markets and are as high as 40 percent in other countries such as Brazil and APEC members China, the Philippines and Malaysia, the report said.

Numerous non-tariff barriers also inhibit trade such as restrictive technical standards, onerous labeling, packaging and documentation requirements and high domestic content requirements, the report said.

(Additional reporting by Michael Martina in Beijing; editing by Anthony Boadle)