Very long story short: SolarWorld and some American solar manufacturers won their claim with the U.S. Department of Commerce that China solar module manufacturers were receiving unfair subsidies and dumping solar modules in the U.S. at prices below their cost. The preliminary ruling placed a 36 percent tariff on the modules from the major Chinese suppliers. (We looked at the real cost impact of the tariff here.) European manufacturers have made similar claims (led by the "EU ProSun Initiative") and are launching their own investigation into unfair trade practices by China. The end result of the tariff remains to be seen, but we've already witnessed some blowback in the form of small American solar manufacturers getting hit by retroactive duties and, more onerously, Chinese efforts to place tariffs on polysilicon exported by the U.S.
The global impact of the trade ruling will play out in the months and years to come. In the meantime, in advance of final rulings by the Department of Commerce, the International Trade Commission, and the European Commission, various stakeholders are bolstering their case and hoping to sway the decisions of the arbiters.
The Greater Phoenix Economic Council (GPEC) announced that it is filing a formal letter of protest to the U.S. Department of Commerce and the International Trade Commission (ITC) against the tariffs on Chinese-manufactured photovoltaic cells and modules.
“With such a significant projected national job loss, and with Arizona ranked third in the nation for solar installation capacity, we have no doubt the tariff will not only cause solar companies to alter their business models, but [will] also make future Chinese investment in Arizona more challenging”
GPEC plans to testify before the ITC at its official hearing for this investigation on October 3, 2012.
“Imposing tariffs creates a loss for everyone, including small cities like ours,” City of Goodyear, Arizona Mayor Georgia Lord said. “It slows innovation and diminishes the effort we’re all making to cultivate jobs.” Goodyear is the site of a Suntech solar module manufacturing facility.
China's Trina Solar (NYSE: TSL), had this response to the request with the European Commission on alleged unfair trade practices:
Trina Solar believes that its transactions with customers in Europe were made in accordance with fair trade practices. It has, and will continue to, adhere to prudent and recognized industry practices and standards in the European Union. Trina Solar is confident that these facts will be affirmed with the proceedings.
Jigar Shah, founder of SunEdison, and President of anti-trade barrier group CASE, wrote an op-ed on the unintended consequences of the tariff in the U.S. entitled "Special Tariffs on Chinese Imports Punish Smaller U.S. Solar Companies" in which Shah claims that "a recent federal edict threatens the survival of small solar companies." Shah notes that "when policymakers in Washington, D.C. talk about creating and saving “green jobs,” they can have a hard time imagining how actions like the imposed tariffs affect small companies a continent away." He gives the example of Small Steps Solar, a small firm making off-grid solar products that has been hit hard by the tariffs. We covered this story a few weeks ago.
Shah continues in the op-ed: While small companies are the tariff’s victims, the victors are nowhere in sight. Supposedly, the tariffs protect silicon solar cell manufacturers, but cell manufacturers account for only three percent of U.S. solar jobs. [...] More importantly, 97 percent of American solar jobs are in other sectors of the industry, across the supply chain. Some U.S. companies produce polysilicon -- the essential ingredient in solar cell manufacturing. Other firms manufacture the machinery and equipment that is used to produce solar cells and modules. The largest segment of the industry engineers and develops residential, commercial and utility solar products or installs solar panels on residential and commercial structures.
Far from posing problems, international competition and falling prices have made the U.S. solar industry a bright spot in a troubled economy. [...] By raising prices and escalating a trade war with China, the special tariffs will discourage business expansion throughout the U.S. solar industry. Recently, China announced that it will investigate U.S. solar-grade polysilicon for dumping and subsidies, potentially setting off a skirmish that will decrease US exports and destroy American jobs.
Hopefully, the punitive 90-day retroactive tariff can be eliminated so the small companies affected can be saved. In the best case, we hope that tariffs can be reduced, adjusted or even reversed. In October, the Commerce Department will make its final decision and in November, the U.S. International Trade Commission can either confirm or overturn the decision.
These federal policymakers should reduce the special tariffs and remove the retroactive charges, if not for everyone, then at least for small and medium-sized U.S. companies. The U.S. solar industry -- and the entire economy -- needs a helping hand, not extra burdens.
Heraeus, a Germany-based supplier of materials to the solar industry issued a statement saying that it "believes the European Union should reject the recently-filed complaint that seeks the introduction of import duties on solar modules manufactured in China. Heraeus has always supported preserving free trade without protectionist government intervention. In this instance as well, we regard the attempt to impose import duties on solar modules made in China as clearly interfering with the rules of free competition. [...] Should a trade war between the European Union and China result, it would cause further harm to companies across Europe's solar industry.
“The key to maintaining a competitive edge lies in innovation, not government intervention, and only a company's innovations ensure the continued success it needs to thrive in the competitive arena," according to a Heraeus spokesperson.
CASE, The Coalition for American Solar Manufacturing (CASM), the coalition that launched the original complaint with the U.S. Department of Commerce is holding a webinar on Thursday, Aug. 9 "to provide an overview of the ongoing anti-dumping and anti-subsidy cases against Chinese producers of solar cells and panels and to highlight potential pitfalls for solar importers and purchasers."
Info on the webinar, titled “Understanding the Mechanics of Import Duties from the Solar Trade Cases,” can be found here.
The webinar will address the scope of the trade cases and the domestic industry’s request that all Chinese crystalline silicon solar cells and panels be subject to duties. Tim Brightbill, a partner of the Washington, D.C. law firm Wiley Rein, will be the key presenter.
On another renewable energy trade case, the Department of Commerce announced its preliminary determination in the AD investigations of imports of utility-scale wind towers from China and Vietnam. Commerce preliminarily determined that Chinese and Vietnamese producers/exporters sold utility-scale wind towers in the United States at dumping margins of 20.85 percent to 72.69 percent and 52.67 percent to 59.91 percent, respectively.