China has requested the World Trade Organization’s (WTO) dispute settlement body (DSB) for consultations with regards to U.S. safeguard measures on imported solar photovoltaic products and domestic subsidies.

In a statement issued by China’s commerce ministry, it was stated that the decision to subsidize renewable energy firms and impose tariffs on imported products by the U.S. has seriously distorted the global market and harmed China’s interests. China claimed the action of the United States has violated the rules of WTO.

According to documents filed with the WTO, China has claimed that the safeguard measure on solar cells is inconsistent with a number of provisions of the WTO’s Agreement on Safeguards and the General Agreement on Tariffs and Trade (GATT) 1994.  China has also claimed that the incentive measures for renewable energy are inconsistent with provisions under the Agreement on Trade-Related Investment Measures (TRIMs) and the GATT 1994.

China has also complained against renewable energy incentive programs provided by 3 U.S. states and 2 municipalities for requiring ‘domestic content requirements.”

The following programs of states and municipalities have been included in the complaint –

• The renewable energy cost recovery incentive payment program (“RECIP”) of the State of Washington
• The self-generation incentive program (“SGIP”) of the State of California
• The solar photovoltaic incentive program (“SIP”) implemented by the Los Angeles Department of Water and Power (“LADWP”)
• The renewable energy credits (“REC”) requirements of the State of Michigan
• The experimental advanced renewable program (“EARP”) proposed by Consumers Energy Company and approved by the Michigan Public Service Commission (“MPSC”)

In January 2018, President Trump announced tariffs on imported solar cells and modules at 30 percent for the first year, which would gradually decline in five percent increments over a four-year period to 15 percent by 2022.

Two of the world’s biggest markets have been embroiled in a tug of war over trade disputes with each other for a while now.

Recently, the Office of the United States Trade Representative (USTR) announced a 25 percent additional tariff on the import of 279 Chinese products, worth approximately $16 billion. These products, solar cells and modules are included under the category “diodes for semiconductor devices, other than light-emitting diodes.”

This follows a USTR investigation into China’s acts, policies and practices related to technology transfer, intellectual property, and innovation under section 301.

The Chinese solar exports to U.S. are currently under 15 percent. The motive of this latest compliant seems to be part of the broader trade war and less to do with solar industry specifically. This could backfire if U.S. decides to file a tit for tat case against China.

India also recently imposed a 25 percent safeguard duty on imported solar cells and modules from China and Malaysia.