WTO to decide on China-EU solar power dispute

The ongoing battle over renewable energy between China and the European Union got a lot worse Monday, after Beijing filed a complaint to the World Trade Organization charging the EU with violation of rules governing subsidies to its solar-components industry.

China claims that power generated in Europe using solar-energy components made in any of the EU regions, receives a subsidy. China's Ministry of Commerce even said in a public statement that, EU subsidies have affected China's solar exports and violated the country's rights as a WTO member.

The allegations, which target mostly Italy and Greece, have a lot in common with a WTO case that the EU and Japan brought against the Canadian province of Ontario earlier this year.

Canadian authorities said they wanted to encourage clean energy production by offering incentives to energy producers that use electricity from renewable sources. By doing this, Ontario had apparently broken an international trade law that prevents favouring local producers.

China’s “request for consultations” on this issue is the first step in the WTO’s dispute settlement process. If it goes on to the next stages the action may conclude with an independent judicial panel agreeing to trade sanctions.

The dispute over solar power technologies is one of the most contentious in current world-trade disputes, causing tension between the U.S., China and the EU. An increasing number of European producers are being pushed into bankruptcy by falling prices and they blame Chinese companies for having cornered the market while European companies face increasing financial pressure.