Although the official pronouncement has not been made, we've learned from sources close to the case that the Commerce Departments's preliminary decision on SolarWorld's solar dumping petition against China has been handed down in a case that had the potential to rock the U.S. solar market's status as an emerging growth market.
Here are the preliminary tariff numbers in the anti-dumping piece of the case:
- Suntech: 31.22 percent
- Trina: 31.14 percent
- Everyone else: 31.18 percent
In short, China solar manufacturers have been accused of unfair trade practices in subsidizing solar panel manufacture and selling panels in the U.S. below their cost. Cheaper Chinese solar panel pricing has been a boon for consumers and solar installers, but a competitive challenge for the few crystalline solar manufacturers in the U.S.
SolarWorld accuses Chinese firms of dumping. Others suggest that China has a legitimate cost advantage. For the purpose of AD investigations, dumping occurs when a foreign company sells a product in the United States at less than fair value.
On March 20 of this year, The Department of Commerce's preliminary verdict on unfair subsidies for Chinese solar panels was handed down, along with what amounted to low tariffs for the Countervailing Duties (CVD). The preliminary determination indicated the DOC’s intention to impose a duty of 4.73 percent on U.S. imports from Trina Solar, 2.9 percent from Suntech, and 3.59 percent from all other remaining Chinese manufacturers.
The AD (Anti-Dumping) tariffs will be added to the CVD (Countervailing Duties) tariff.
The CVD tariffs are retroactive. We're waiting for word on the AD duties and whether they are retroactive.
Gordon Brinser, president of Oregon-based SolarWorld Industries America, had this to say: “This is a bellwether case. It underscores the importance of domestic manufacturing to the U.S. economy and provides a clear indication of whether our country will be a global competitor in clean technologies or outsource them to China. The Commerce Department has already determined that the U.S. solar industry has been harmed by China flooding the market with illegally subsidized goods, and we are in need of relief that counts.”
Clyde Prestowitz, president of the Economic Strategy Institute, added this: “The president has said he will insist on a level playing field for U.S. industry and has said that America always wins when the playing field is level. Well, this week is the week when the administration must decide how to respond to China's industrial policy for solar panels. This decision will tell us whether Obama means business or whether all the activity around the creation of a trade enforcement unit is just a mirage.”
An anti-dumping tariff of 30 percent together with the CVD tariff could mean a difference of roughly $0.30 per watt on solar panel prices. Chinese module manufacturers could ship cells and modules through Taiwan at a cost of $0.06 to $0.08 a watt, which might help Taiwanese solar cell makers like Neosolar or Motech.
A report from The Brattle Group looked at 50-percent and 100-percent tariff scenarios and found that a 50-percent tariff will effectively shut the majority of Chinese imports out of the U.S. and result in a job loss of 15,000 to 50,000 -- even accounting for production gains in the U.S. The report also considers the impact of Chinese retaliation in importing polysilicon, which could result in a loss of 11,000 jobs in 2012, for a total of up to 60,000 jobs lost by 2014. The author of the report did acknowledge that there would be some gains among U.S.-based module producers -- albeit at higher module prices.
The Center for American Progress (CAP), a left-leaning think-tank, put out a release yesterday that considered if the "U.S. solar market would be much better off if SolarWorld would drop the petition and allow the U.S. government to negotiate a private solution with China." Their analysts' take was that "if U.S. companies drop trade petitions in response to China’s real or implied threats, then capitulation wins out over negotiation -- and capitulation is a losing game. As a result of this proposed balancing exercise, CASE expects that a bilateral negotiation would result in much lower tariffs (compared to what the U.S. Department Commerce might impose) or a price floor, possibly in exchange for Chinese promises to reduce or eliminate the contested subsidies. But such a balanced outcome is highly unlikely, either in the case of the solar industry or in the many other cases in which U.S. companies face unfair Chinese trade competition."
CAP concludes that the U.S. cannot capitulate to China’s solar market ambitions.
Hari Chandra Polavarapu of Auriga Research released a research note on the trade case, saying, "We have written extensively on this issue as part of industry debate and our viewpoints largely converge with Gordon Brinser/CASM that the insidious and predatory nature of Chinese state support (via subsidies, mispricing/misallocation of capital) has emasculated global solar PV manufacturing while propping up its large domestic base, which is littered with uncompetitive/unviable companies. Free of rules, China's state-sponsored capitalism in solar PV manifests as a massive employment welfare scheme engaged in asymmetric/unrestricted warfare against overseas competition."
Note that these tariffs and decisions are preliminary and can be decreased, refunded or increased in a final review by the Commerce Department.