Jobs and Environment Discussion Series: Blaming China or Learning from China?

The United Steelworkers Union (USW) has long recognized that environmental health and economic wellbeing are inseparable. As long ago as 1990, the USW declared “the real choice is not jobs or the environment. It’s both or neither.” (USW President Leo Gerard speaks about his union’s environmental history in this YouTube video.) The union is a major sponsor of the U.S. Good Jobs Green Jobs conferences that began in 2008 and that attract well over 1,000 participants annually: labor and environmental groups, business representatives, and public officials. The USW has 1.2 million active and retired members, representing workers in such energy-intensive industries as steel, aluminum, iron ore mining, cement, glass, metals, paper, and rubber, but also those in other sectors, including wind turbine manufacturing.

The USW leadership has placed strong bets that green job growth will be a healthy antidote to the blue-collar blues afflicting the U.S. economy. A recent report by the U.S. Census Bureau indicates that almost 44 million Americans are living in poverty. One of the report’s most shocking findings is that those falling below the poverty line are often full-time workers who simply do not earn enough. In 2009, the poverty rate for working-age people (18–64 years) grew to 12.9 percent, the highest rate in nearly 50 years.

It is against this backdrop that we must see the USW’s decision this month to file a 5,800-page petition with the Office of the U.S. Trade Representative, pressing the case that “a broad array of Chinese policies and practices threaten the future of America’s alternative and renewable energy sector.” The union is complaining about hundreds of billions of dollars in subsidies, performance requirements, preferential practices, and other activities that are illegal under World Trade Organization rules. The Obama Administration has 45 days from the date of filing to decide whether to act on the petition.

The petition represents another step in what shapes up to be a growing international battle over who dominates green industries like wind and solar energy. In a mere handful of years, China has transformed itself from marginal player to dominant force, to the point where this year it will likely produce more than half the world’s solar panels and close to half the world’s wind turbines.

This rapid development has been possible in part because China has used cheap labor, subsidized land, low-interest loans, as well as technology transfer requirements for foreign investors and domestic content rules to hatch and grow domestic companies. Its solar photovoltaics industry is almost entirely export-oriented: more than 95 percent of Chinese solar panels are exported to countries like the United States, Spain, and Germany. Former industry leaders in Japan and Germany are reeling.

As far as export subsidies are concerned, the USW is presenting a strong case. Eager to conquer global export markets, China has to date not taken any comparable steps to enlarge its domestic market for solar energy installations (though it has a much stronger record in the wind sector, accounting for one third of the world’s new installations in 2009). Given its sky-high coal use, expanding the use of solar power and other energy alternatives at home is a critical and urgent need.

USW President Leo Gerard (Flickr photo: aflcio Bernard Pollack)

Where I part ways with the USW is with regard to its critique of China’s domestic content rules and similar measures that stimulate the growth of the renewables sector, such as expedited approval of permits to build solar and wind factories. First, the United States itself is no stranger to domestic content requirements. In 1978, Congress imposed such rules with reference to government procurement of transportation equipment, in an attempt to revive the moribund U.S. rail manufacturing industry.

Second, it is high time to learn from China and to stop playing the blame game. China has made enormous strides in the renewables industry. In a climate-challenged world, we need more of these kinds of policies—in China, the United States, and elsewhere—not fewer. As Martin Khor, Executive Director of the Geneva-based South Centre, points out, China is being criticized in the West both for not doing enough to restrain its carbon emissions, and for providing overly generous support for its renewable energy industry.

Khor charges that Western countries have shaped and bent trade rules to their own benefit. Beyond an apparent double-standard in how such rules are applied lies an even larger question. Should we allow WTO rules, which elevate free trade priorities above all other considerations, to be the primary measuring stick of policies designed to avoid catastrophic climate change? Up to a point, domestic content requirements make enormous sense, since they create the space necessary for homegrown companies to compete and provide jobs, and they avoid domination of critical green industries by any single country—whether China, the United States, or any other nation.

Martin Khor

Martin Khor (Flickr photo: WTO Geneva Photos)

The United States needs less rhetoric, and more real action, in support of green industries—in the form of R&D programs, overall climate legislation, feed-in tariffs that set reliable prices for renewable energy, business incubators, preferential financing, worker training, and other measures. The experience of Massachusetts-based Evergreen Solar is a sad, but instructive case. Unable to raise funds in the United States, the company decided to move the final manufacturing phase for its solar panels to China, where state banks offered very attractive loan terms. Some 300 U.S. jobs will be lost.

This kind of development presents one kind of danger. Another lies in the rise of rivaling forms of green protectionism and green mercantilism that are oriented toward exclusively national goals. What the world needs instead is more cooperative efforts to develop and share sustainable technologies.

Go to Source