Cleantech, China, and the WTO

There's a pretty fascinating saga unfolding following some intrepid reporting by the New York Times on Wednesday. To make a long story short, the United States Steelworkers Union has petitioned the Obama Administration to sue China in the WTO for violating trade regulations, specifically by implicitly and explicitly subsidizing clean tech manufacturing; blocking the export of rare-earth minerals and other raw materials necessary for batteries and solar panels; and discriminating against foreign goods and firms.

This drama shouldn't surprise anyone familiar with the clean energy race, and the growing threat to U.S. competitiveness from Asian nations like China, Japan, and South Korea. In the seminal report "Rising Tigers, Sleeping Giant," co-authors at the Breakthrough Institute and ITIF called attention to the billions of dollars in cleantech investment and the myriad of policies to encourage R&D, deployment, manufacturing and exports of clean technology. These investments and direct action on clean energy far surpass any efforts taken in the United States, where a decade-long focus on the politically toxic cap-and-trade has poisoned the well for anyone laboring to bring clean tech industrial policy to America.

The question is, should we be spending the bulk of our energy condemning China for its vigorous pursuit of a guaranteed-growth industry, or should we take a leaf out of their book? I would obviously not support the use of illegal trade policies to promote clean tech development in the United States, but perhaps this conflict will serve as the inspiration for the creation of a new American industrial policy. Government investment as a response to international forces were responsible for the propagation of nuclear energy, the space race, and tertiary effects of these investments like the personal computer and the Internet. Cleantech will be the next game-changing industry, and China obviously isn't afraid to get a little skin in the game. Are we?

Here's a round-up of reactions to the China-WTO story:

• Kate Sheppard (Mother Jones): "We can ask China to knock off the subsidies, but unless the US ramps up its own policies, we're probably still going to keep handing our lunch money over to China."
• John Whitehead (Environmental Economics): "The dynamic effects are not so clear. If the export subsidies trigger some sort of positive spillover effects (e.g., learning by doing that leads to a reduction in production cost), then the exporting country might benefit."
• Teryn Norris and Daniel Goldfarb (Americans for Energy Leadership): "Not only could China's practices end up suppressing innovation from both domestic and foreign firms, they could also discourage other countries from deploying clean energy."
• Brad Plumer (The New Republic): "So how should the United States respond? One possibility would be to retaliate and set up new trade barriers. But that runs the risk of making various renewable technologies more expensive, which would only deepen the world's reliance one cheaper and dirtier energy sources like coal."
• Michael Levi (Council on Foreign Relations): "This dynamic is no different from happens in many other sectors. China assembles computers that used to be made in the United States. Does anyone think that this means America is losing from the computer and IT revolutions? Of course not: the United States is making its contributions primarily in fields that yield far greater profits, while cheap Chinese computer assembly is enlarging the market for everything computer and IT-related."
• Randy Rieland (Grist): "Multinational companies have shied away from formally challenging the practice because they're afraid they'll be shut out of the alluring Chinese market."