Trade frictions between Washington and Beijing over renewable energy are once again on the rise, following the 17 May announcement that the US Commerce Department would be imposing anti-dumping duties on solar panel imports from China.
The Commerce investigation had been launched in response to a complaint from the Coalition for American Solar Manufacturing (CASM), a group of seven solar panel manufacturers led by SolarWorld Industries America that had together petitioned the US to investigate Chinese solar imports last October.
The seven-company coalition had argued that Chinese companies were deliberately selling products abroad at below-market prices, a practice known as dumping.
In last Thursday’s preliminary determination, the US agency found that Chinese producers/exporters sold solar cells in the United States at prices that were between 31.14 and 249.96 percent lower than their normal price.
As a consequence, the majority of Chinese exporters/producers will face a cumulative duty around 250 percent to account for this price difference. Sixty-one exporters will be subjected to anti-dumping duties of roughly 31 percent.
The announcement quickly prompted outcry from Chinese government officials, who deemed the Commerce Department decision to be “unfair.”
“By deliberately provoking trade friction in the clean energy sector, the United States is sending the world a negative signal about trade protectionism,” Shen Danyang, a spokesman for the Chinese Ministry of Commerce (MOFCOM), said. MOFCOM has not yet outlined how it will respond.
According to calculations by Bloomberg New Energy Finance, the US decision will effectively raise the price of Chinese-made panels to US$1.11 per watt, making them 17 percent more expensive than their non-Chinese counterparts.
The duties announced last week do not immediately go into effect; rather, they must be confirmed both by Commerce and the US International Trade Commission this fall. If the final determinations are affirmative, the US may enforce the duties from 19 November onwards, as well as retroactively for 90 days.
Rift intensifies within US solar industry
The case has divided the US solar industry, pitting solar panel manufacturers against companies that purchase these panels for use in solar energy projects.
For his part, Gordon Brinser, president of SolarWorld Industries America and the leader of the Coalition for Solar Manufacturing, praised the decision.
“Commerce’s careful measures could help thwart China’s illegal drive to control the solar market and supplant manufacturers and jobs in America,” he said.
Meanwhile, the Coalition for Affordable Solar Energy (CASE) - a coalition of over 100 US firms that formally opposed the CASM case - continues to campaign against the anti-dumping duties, insisting that an increase in the price of solar panels will lead to a fall in the number of service-related jobs that make up a large part of the US solar industry.
“Today SolarWorld received one of its biggest subsidies yet - an average 31 percent tax on its competitors,” Jigar Shah, president of CASE, said. “What’s worse, it will ultimately come right out of the paychecks of American solar workers.”
Final decision on countervailing duties forthcoming
In the same complaint, the CASM had also alleged that Chinese companies had received unfair government support; with regards to this second claim, the Commerce Department tentatively announced in March that it would indeed be imposing anti-subsidy, or countervailing, duties against Chinese manufacturers. Final determinations regarding the countervailing duties are expected by late July.
However, the legitimacy of these countervailing duties could soon be thrown into question, given an ongoing controversy over whether the Commerce Department can indeed apply these duties against imports from non-market economies (NMEs), such as China.
Earlier this year, Washington enacted a law aimed at preserving Commerce’s ability to impose countervailing duties on NMEs after the US Court of International Trade had denied this possibility in 2011. However, the new law was later challenged on constitutional grounds, and has now been sent back to the Court of International Trade for review.
The case is closely tied to the issue of “double remedies” - in other words, the case where cumulatively applied countervailing and anti-dumping duties remedy the same governmental support. Double remedies could potentially occur in the current solar spat.
Proposal for US local content requirement
Additional legislation targeting Chinese solar panels could soon hit the floor of the US Congress, following the announcement last week of a proposal that would bar foreign-made solar panels from qualifying for a 30 percent tax credit.
The proposal, authored by US Senators Charles E. Schumer and Sherrod Brown - both Democrats - would see the addition of a requirement whereby 70 percent of the parts of the solar panel would need to be made in the US in order to qualify for the tax credit. Should the final point of manufacture be the US, however, then only 50 percent of the parts would need to be US-made.
“This hard-hitting plan will level the playing field for US solar producers so that they can compete, create jobs and become a global leader in this rapidly-growing industry,” Schumer explained.
ICTSD reporting; “WTO dispute strains the limits of friendship and fair trade,” PV MAGAZINE, 21 May 2012; “US ruling on solar panels ‘unreasonable’,” CHINA DAILY, 19 May 2012; “Solarworld to Lodge China Dumping Complaint In Europe Mid-Year,” BLOOMBERG, 18 May 2012; “US Solar Tariffs on Chinese Cells May Boost Prices,” BLOOMBERG, 18 May 2012; “China ‘caught red-handed’ on US solar anti-dumping charges,” PV MAGAZINE, 18 May 2012.
