Wyden Report: U.S. Losing Out to China on Goods that Protect the Environment

In recent years, global demand for environmental goods has skyrocketed, creating opportunities for U.S. manufacturers to reach new customers.

(WASHINGTON DC) - As President Obama signs an executive order creating an Interagency Trade Enforcement Unit, U.S. Senator Ron Wyden – chairman of the U.S. Senate Finance Committee’s Subcommittee on International Trade, Customs and Global Competitiveness – issued a report illustrating why trade enforcement matters.

The report, entitled “Losing the Environmental Goods Economy to China” is the latest in a series of reports Wyden has issued examining the opportunities and challenges facing U.S. exports of products and services that contribute to a cleaner and more sustainable environment, known as “environmental goods.”

In recent years, global demand for environmental goods has skyrocketed, creating opportunities for U.S. manufacturers to reach new customers.

But, as the Wyden report illustrates, “exports of environmental goods from the U.S. and other similarly-positioned countries are not growing at a rate commensurate with the technology their industries hold, the productivity of their workforce and the overall growth in global demand, because they appear crowded-out by China’s exports.”

The report specifically finds that:

· Driven by rising imports from China, the overall U.S. deficit in environmental goods grew by 87 percent.

· Exports of solar cells and modules from China to the U.S. grew by over 300 percent by volume. (Taking the U.S. from a nearly $2 billion trade surplus in solar energy products in 2010 to over $1.5 billion deficit in 2011.)

· U.S. imports of utility scale wind towers from China grew by over 100 percent.

· In each of the largest and fastest-growing markets throughout the world, U.S. exporters of environmental goods are rapidly losing market share to China.

The report also found that Chinese growth within specific regions has been particularly noteworthy:

· Between the years 2005 and 2010, China’s market share of environmental goods in the EU, the biggest regional market for such products, increased sevenfold (to 21 percent), while U.S. market share shrank during the same period.

· In other regional export markets of environmental goods, Chinese market share generally doubled (Africa, Asia, and Middle East) or tripled (NAFTA, Latin America).

· EU and Japanese exporters of environmental goods are also losing market share to China in most major markets in the world.

“Losing the Environmental Goods Economy to China” is especially timely as its findings track recent complaints that U.S. solar manufacturers and producers of utility scale wind towers have filed with the International Trade Commission (ITC) and the U.S. Department of Commerce.

“The report's findings correct the contention that the U.S. continues to enjoy a trade surplus with China in solar products,” Wyden writes in the report. “Overall, it supports the assertion that China’s environmental goods industries are experiencing rapid growth that industries located in other countries appear unable to duplicate, suggesting that China’s competitiveness is significantly due to its violation of norms and rules of international trade.

While some have argued that applying tariffs to Chinese imports would escalate a trade war with China, Wyden argues that if the Chinese government is found to be violating trade rules to artificially lower the price of solar and wind products, then the U.S. must enforce the rules.

“Congress and the Administration’s work to promote trade and help American producers gain from foreign markets not only follows the rules of the global trading system, it requires other participants in the trading system to follow the rules as well. The system breaks down when the world’s participants fail to abide by its rules,” Wyden writes. “That is especially true when the country that appears to be breaking the rules has the world’s second largest economy.”

Click here to download (pdf) a copy of “Losing the Environmental Goods Economy to China.” Click here to view in browser.

Read Wyden’s Huffington Post Piece “Trade Rules Matter”