China challenges EU solar power subsidies at WTO

BEIJING/GENEVA Mon Nov 5, 2012 7:47am EST

An employee walks on solar panels at a solar power plant in Aksu, Xinjiang Uyghur Autonomous Region May 18, 2012. REUTERS/Stringer

An employee walks on solar panels at a solar power plant in Aksu, Xinjiang Uyghur Autonomous Region May 18, 2012.

Credit: Reuters/Stringer

BEIJING/GENEVA (Reuters) - China lodged a complaint with the World Trade Organization on Monday to challenge the European Union's support for its solar power components industry, adding to a growing body of claims of unfair competition in the sector.

The move also shows increasing concern by WTO members for "local content requirements" - countries insisting on domestic producers getting to supply a certain portion of a particular project. That is normally a breach of WTO rules because it discriminates against foreign firms.

China's Ministry of Commerce said in a statement that some EU countries' laws provided subsidies for solar power generation if components for the projects were produced in Europe.

"(The subsidies) constitute a violation of WTO prohibitions on import replacement subsidies, seriously affect Chinese exports, and harm China's rightful interests as a WTO member," ministry spokesman Shen Danyang said.

"The Chinese government has the right and the responsibility to fight for a fair international trade environment for China's solar industry," Shen said in the statement.

Shen said all countries should strengthen industry cooperation and should not "adopt trade protectionist measures based on short-term interests".

China's move follows the EU's own challenge with Japan of local content rules with regard to a Canadian renewable energy scheme that requires firms in the scheme to source up to 60 percent of their equipment locally.

According to a leak of an early draft of the judgment in that case, Canada is set to lose.

China has triggered the formal process for a WTO legal dispute by asking for consultations with the EU. If there is no resolution after 60 days China could ask the WTO to adjudicate.

The move comes days after China opened an anti-dumping and anti-subsidy investigation into EU polysilicon, a material used to make solar power panels.

(Editing by Greg Mahlich)