It’s not that Senator Schumer (NY) doesn’t like Texas, or even the Chinese for that matter, but the senior senator from New York does not like to see money from the stimulus bill that passed earlier this year going to foreign manufacturers and creating jobs in other nations.The main target of the senator’s ire is the funding intended for a “utility-scale wind farm in West Texas that would make use of turbines manufactured largely in China,” according to Tom Zeller Jr. and Keith Bradsher’s reporting for the New York Times blog Green Inc.
The projects is set to cost $1.5 billion, which involves a “coalition of American and Chinese companies,” and those behind the project had sought $450 million from the clean-energy development funds made available in the stimulus bill. The rest of the funding would come from commercial banks in China. The turbines would be made in Shenyang, China by A-Power Energy Generating Systems.
It is the $450 million that Senator Schumer would like the Obama administration to do something about, such as block stimulus funding for the project. If the administration doesn’t do something Schumer likely will. In a telephone interview Schumer pointed to a report by the Investigative Reporting Workshop at American University in which the analysis finds 84 percent of the money for ‘“green”’ funding in the stimulus bill “has thus far gone to foreign companies building renewable energy projects in the United States [.]” As Green Inc. reports, Schumer has vowed to introduce legislation to prevent this from happening “if such funding isn’t reconsidered.”
Green Inc. reports that on Thursday Senator Schumer sent a letter to Energy Secretary Steven Chu, apparently “urging him to ‘reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States.”’ The West Texas project will reportedly create over 2,000 manufacturing jobs in China and more than 300 in Texas. The disparity highlights Schumer’s concerns that American money be used to boost the American economy. Still, the project’s partners say the project can’t move forward without the stimulus money.
Schumer’s actions and desired change does raise some yellow flags as far as international trade rules go, but the flags are yellow at worst, and may really be green according to Alan Wolff, the chairman of international trade practice at Dewey & LeBoeuf, a Washington law firm. ‘“If this is government procurement, we don’t owe the Chinese anything’ under WTO rules, said Mr. Wolff.”
This is because, per World Trade Organization rules, governments can set high local-content thresholds for “demonstration projects,” which China has done to the detriment of foreign energy companies that would like to get contracts for energy development in China but are unable to do so because China has set a 70 percent “local content” requirement for domestic wind projects and solar projects are routinely labeled as demonstration projects. Additionally, China has refused to sign the World Trade Organization’s agreement to extend free-trade rules to government procurement.
This is why Wolff thinks the US doesn’t owe China anything with regards to these contracts. Without China being a signatory to the agreement the US also does not “have to follow W.T.O rules in deciding whether to include Chinese companies in its own government spending programs [.]”
Still, as Green Inc. reports, the Chinese government has eased its local content requirement “for wind turbines in a bilateral commitment to the United States government last week . . . as part of the U.S.-China Joint Commission on Commerce and Trade.”
What happens next in this issue may be in the hands of the senior senator from New York.
To read the Green Inc. report click here.
Posted: 11/06/09
