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Environmental & Energy Insights

Climate change plays second fiddle: USTR opens investigation into Chinese clean energy subsidies

Climate change is not, and is never going to be, the first priority for either party to the US-China relationship. But playing second fiddle is one thing, becoming the cause of a global trade war is quite another.

Last month, the United Steelworkers filed a Section 301 petition with the US Trade Representative. USTR is obligated to respond to Section 301 petitions within 45 days. This statutory deadline would have tolled on October 24 – just a week and a half before the November elections. Perhaps in order to avoid this timing, USTR responded today and will commence a 90-day investigation into Chinese practices in a number of clean energy sectors.

Just when you think that things can’t get any worse on the climate diplomacy front…

This complaint is misguided in a number of respects in that it (1) ignores the benefits to US consumers of having solar panel assembly occur in China – lower panel costs, and (2) ignores the fact that at least as far as we have evidence, much of the profit associated with solar still accrues to developed world firms that maintain dominance in the high-profit portions of the solar value chain.

The real story here though is that it is beginning to appear that climate change diplomacy may become a casualty of a broader set of international relations issues. China-US cooperation on climate is essential to any multilateral deal, yet China-US relations on a number of fronts including security, exchange rates, and now trade subsidies, have been deteriorating in recent months.

We can only hope that the cooler heads prevail within both the Obama Administration and the Chinese Party Leadership – maybe we all actually do need to head to DC for John Stewart’s day on the Mall.

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