October 20, 2011 - A coalition of seven US-based solar panel
manufacturers filed a complaint Wednesday alleging unfair trade
practices, setting off an investigation that could thrust the solar
industry in the middle of a US-China trade dispute.
By filing their petition, the companies are claiming that they are
unable to compete in the lucrative and quickly expanding American
solar market because, they say, they are being undercut by Chinese
panelmakers and cell manufacturers that are dumping their product at
artificially low prices. They also contend that panelmakers and cell
manufacturers are receiving unfair subsidies from their government.
A finding on behalf of the American companies would lead to tariffs
being imposed on solar panels imported from China, possibly as soon
as next spring.
The American division of SolarWorld, which employs more than 1,000
workers at its Oregon headquarters and manufacturing facility, is
the only company named in the trade complaint. The other six remain
anonymous, which is allowed by the Department of Commerce. The group
on Wednesday launched the Coalition for American Solar
Manufacturing.
There was also an growing indication Thursday that German parent
company SolarWorld may also be taking steps to file a complaint in
Europe.
Trade complaints are not uncommon. However, according to industry
sources, the sheer level of inventory and dollars at stake, and the
vast potential of a future market, could make this among the most
divisive trade complaints filed in recent years.
In response to the news, Rhone Resch president and CEO of the Solar
Energy Industries Association (SEIA) said that his organization
"will continue to support open markets based on free and fair trade
principles." SEIA believes that it is crucial for governments and
private organizations, however, to "operate within the framework of
internationally-negotiated trade rules. [The SEIA also put out
a more formal statement in support of the SolarWorld coalition.]
"If it appears that trade obligations are not being met, solar
companies -- whether foreign or domestic -- have the right to
request an investigation into alleged unfair trade practices. These
allegations must be thoroughly examined and, if unlawful trade
practices are found, action to remedy those practices should be
taken," he added.
Politically, some Republican presidential candidates and
Congressional lawmakers on both sides of the aisle have indicated
support for a more hardline stance against China over issues ranging
from manufacturing to perceived currency manipulation. Sen. Ron
Wyden, D-Ore., has been among the most vocal critics of the price of
solar panels coming into the American market. He recently wrote
President Obama a letter saying the administration should impose a
heavy tariff on panels coming in from China.
The International Trade Commission has 45 days to issue its
preliminary determination, while the Department of Commerce has 180
days for the preliminary determination. The cases generally take 15
months for final determination. While much is conjecture at this
point, the prices for Chinese solar panels could be between 20% and
a worse-case-scenario 300% more expensive, sources have said.
A ruling at the higher level could effectively shut out competition
from the Chinese market. It also opens up the possibility that China
could retaliate against US-based manufacturers that depend on
Chinese panelmakers and cell manufacturers, such as the polysilicon
industry.
According to a recent report released by SEIA, the US was a net
solar exporter to China in 2010, so such a move could strain or
potentially jeopardize many of the relationships between American
and Chinese companies.
The petition was filed jointly with the Department of Commerce (DOC)
and the United States International Trade Commission (ITC).
According to sources, it is likely that the DOC and the ITC acted in
an advisory role regarding the law and the process prior to the
claim being filed. Both organizations now will shift to a
fact-finding mode.
The ITC must make its preliminary determination based on three
measures of injury:
-- Whether the volume of imports is significant
-- Whether the prices of those imports represent underselling,
depresses prices or prevents price increases
-- Whether the imports have a negative impact on domestic producers
and production.
Following the ITC determination, the DOC has up to six months to
implement preliminary dumping duties. Panels could be sold in the US
during that six-month window, but any indication that products were
being pushed through to avoid pending tariffs would make many of
those transactions subject to penalty.
Chinese panelmakers and/or cell manufacturers could file for an
appeal through the World Trade Organization, which could work to
find a resolution.
Industry reaction
Barry Cinnamon, CEO, Westinghouse Solar
"My opinion is really calibrated on what we in the United States
need to do for jobs. The Republicans have a jobs program, Democrats
have a jobs program. And we in solar, we should have a jobs program
of getting people to work by manufacturing and installing solar. If
we can create more jobs installing relatively inexpensive solar
panels, and free trade is what supports that, then I think that's
the right thing to do."
Lisa Frantzis, Navigant Consulting
"The Chinese suppliers have certainly gained a tremendous market
share globally. They've gone from 3% market share in 1997 to 54%
maker share in 2011. Most of that has been in the last three or four
years. The US has gone from about 47% to 6% in that same time frame.
If you look at some of the major module suppliers -- Yingli, Trina,
Suntech -- in Q3, their modules are selling at about $1.30 a watt
peak, and we're hearing prices even lower here today, which will
make it very hard for US players to compete in the US market."
Adam Browning, Vote Solar
"Countries around the world offer incentives in order to attract and
build manufacturing sectors. Germany has long offered 50% unsecured
loans. Malaysia will give you a 10-year tax holiday if you site a
manufacturing plant there. In fact, this is what we often ask the US
government to do. The key all along has been about reducing costs.
China has identified solar as a strategic industry of national
importance and the result is they've brought down costs
tremendously. That is to the benefit of the sector globally. It
results in much lower costs in installations and growth in the
installation sector. At this point, I'd say a trade war is not of
benefit to the American solar industry, the global solar industry
and consumers in general."
Lou Schwartz, analyst, China Strategies
It certainly shouldn't be a surprise that US solar panel
manufacturers are pursuing anti-dumping and anti-subsidy actions
against their Chinese competitors; warnings began circulating in the
Chinese renewable energy press months ago that this likely would be
one consequence of "cabbage pricing" by Chinese solar exporters.
Given the inability of the Chinese to reign in runaway growth in
solar capacity development, shrinkage in China's most significant
solar market largely as a result of the European Financial Crisis,
growing discontent over high profile bankruptcies, such as Solyndra,
amid a prolonged economic stupor in the US and the failure of the
Chinese government to more energetically put in place policies
directing a greater percentage of this largely export-oriented
industry to domestic markets, it all seems rather inevitable.
Though avoidable, "it is what it is", so we now must address the
fallout, which will include more trade friction, an increase in
subtle Chinese retaliatory actions, the acceleration of the
shake-out in the Chinese solar industry, price increases in the US
as a consequence of reduced imports from China, a slowdown in the
growth of US solar installations and a delay in achieving the goal
of grid parity.
Steve Leone writes for the Renewable Energy World
network. This article originally appeared on
www.renewableenergyworld.com and is republished here with
permission.