Choosing Sides

The U.S.–China Solar Trade Dispute

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Coalition for Affordable Solar Energy
Coalition for Affordable Solar Energy
Coalition for American Solar Manufacturing
Coalition for American Solar Manufacturing
Coalition for Affordable Solar Energy
Coalition for American Solar Manufacturing

If you’ve been following the energy blogs or your favorite news site, chances are you’ve read about the U.S. Department of Commerce’s preliminary decisions to levy taxes on solar products imported from China.

The DOC is investigating whether China-based PV manufacturers have violated fair trade practices by illegally “dumping” solar products in the United States that may have been unfairly subsidized by the Chinese government. The proceedings began last November after Oregon-based SolarWorld Industries America filed a complaint with the DOC against China-based manufacturers within the crystalline silicon solar industry—singling out Suntech Power Holdings and Trina Solar.

Thus far, the DOC rulings have sided with SolarWorld—though the company “does not believe the duties outlined so far cover the full extent of China’s illegal trade practices.” The case has divided the solar industry, with U.S. manufacturers dominating one side (CASM—Coalition of American Solar Manufacturing, led by SolarWorld) and China-based manufacturers supporting the other (CASE—Coalition for Affordable Solar Energy). Solar installers, project developers, and other related companies seem split on the issue (and the cross-section of both CASM and CASE membership includes many of these downstream players), but they generally share a common concern for the bottom line. Beyond the central issue of fair pricing, the case has prompted a larger discussion as to whether trade enforcement is good for the U.S. solar industry, and whether this action may bring retaliatory trade action from China.

Energy policy analysts Melanie Hart and Kate Gordon, with the D.C.-based think tank Center for American Progress, explain the central issue: “If the Chinese government—or any other foreign government—is indeed engaging in ‘dumping’ by using WTO-illegal methods to reduce export prices and drive foreign firms out of the market, the end result of those practices will be Chinese market dominance. If that dominance is due to natural market forces, it is not necessarily a bad thing. But if it is due to state subsidies, that is problematic, because that would mean state officials in China are determining which companies and technologies dominate this critical global market, and those officials may not choose well.”

The Process

In October 2011, SolarWorld submitted a 3,000-plus-page petition, calling for the DOC to levy trade remedies— countervailing duties (to offset the subsidies from the Chinese government) and antidumping tariffs (to discourage dumping)—on Chinese-based manufacturers. Once the DOC determined that the petition satisfied all statutory guidelines, including criteria for industry support, the DOC formally initiated the investigation, asking Chinese exporters/producers to submit reports that detail their production costs. These reports were compared with information collected by the DOC as well as that provided by SolarWorld’s original petition. That information was the basis for preliminary decisions released on March 20 and May 17, 2012. The rulings exclude thin-film PV products and non-PV technologies (solar thermal and concentrated solar).

The May decision requires Chinese producers/exporters to pay antidumping tariffs, as follows: Suntech, 31.22%; Trina Solar, 31.14%; 59 other named firms, 31.18%; and all other Chinese producers/exporters (those that did not provide info to DOC), 249.96%. These tariffs are in addition to the countervailing duties the DOC levied on Chinese producers/exporters in March, ranging between 2.9% and 4.73% (far below some analysts’ expectations of 20% to 30%) to offset Chinese government subsidies. Both decisions pertain to Chinese-made crystalline silicon PV cells, modules, laminates, and building-integrated materials.

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