China initiated World Trade Organization proceedings to seek a ruling on whether some European Union nations violated global commerce rules through their green energy programs.

China has begun WTO dispute settlement procedures after it accused some EU countries of providing subsidies for power generated by solar plants outfitted mainly with components made in EU countries or the European Economic Zone, Shen Danyang, a spokesman for China’s Ministry of Commerce, said in a statement posted on the ministry’s website yesterday.

Such subsides violate national treatment and most-favored- nation treatment under the WTO rules and “seriously” harm exports of Chinese photovoltaic products and damage China’s legitimate rights as a WTO member, Shen said.

The case follows anti-dumping and anti-subsidy probes China started last week into solar-grade polysilicon imported from the EU, which in September opened an investigation into whether Chinese manufactures sold solarpanels and cells and wafers used in them at a loss.

Trade disputes are escalating as the solar industry struggles with a supply glut and shrinking profits. The global average spot price of polysilicon in the week beginning Oct. 22 dropped to a record of $18.3 a kilogram, according to Bloomberg New Energy Finance.

Yesterday’s statement didn’t specify which countries are targeted in the case. Italy and Greece offered extra subsidies for projects that use EU-produced solar-power equipment, the official Xinhua News Agency reported, citing Yang Guohua, deputy head of the commerce ministry’s treaty and laws department.

For more analysis on this topic, see Doug Young's commentary on the China solar market. 

Copyright 2012 Bloomberg

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