There's no shortage of opinions on the Commerce Department's decision to impose tariffs on imports of Chinese solar panels into the US.
The Department ruled that Chinese solar manufacturers did indeed flood the US with panels at prices below production costs, making it hard for US manufacturers to compete.
It set hefty tariffs of 31-250% on Chinese solar imports of 31.2% for Suntech, Trina Solar, Yingli Green and 59 other companies that agreed to be investigated. All other companies have tariffs of a whopping 250%.
The tariffs are much higher than the anticipated 10-12%. In light of the massive surge of imports ahead of the determination, the duties apply retroactively for 90 days.
But that could change when the Department issues a final rulling in October. And the tariffs apply solely to crystalline silicon photovoltaic cells, not the final solar panels if they are made with cells from another country.
In March, Commerce ruled "Because China is unfairly subsidizing solar production" tariffs will be set at 2.90%-4.73%. Rates vary depending on the subsidies the company receives from China's government. The two tariffs combined could raise the price by about $1.10 per watt, 17% higher than the current spot price of non-Chinese panels, says Bloomberg New Energy Finance.
Commerce will now initiate a final, more in-depth phase of its investigation, including examinations of solar operations and financial records in China. The International Trade Commission will come to its own conclusion, probably in July.
Center for American Progress says that one reason the tariffs are so high is that "the Chinese market is not transparent. When China's local government officials support local enterprises, that support is often off the books, and that makes it very hard for Commerce Department investigators to identify and measure exactly what type and level of subsidy Chinese companies are receiving. This is precisely why the World Trade Organization includes a second-stage determination, on dumping practices, specifically designed to address nonmarket economies such as China's."
"The Chinese government will no doubt respond negatively to this announcement. If so, Washington must respond with a steady hand. If China wants to negotiate, the US should be ready to listen. If China tries to force the U.S. government to back down in this dispute by threatening U.S. companies, however, that is not negotiation. Just as we cannot allow powerful corporations to bully and harass citizens who file legal complaints against them, we cannot allow China to bully and harass U.S. companies over trade complaints," they add.
SolarWorld's Reaction
If you remember a SolarWorld-led group, Coalition for Solar Manufacturing (CASM), initiated the trade complaint in October 2011, asking for 100% tariffs.
They argue that Chinese companies benefit from massive government subsidies, which allow them to sell solar products below cost - at artifically low prices - to seize US market share. That means its Hillsboro, Oregon-based manufacturing plant can't compete without tariffs.
Prices don't drop 50% in two years because of product improvements.
"The decision sends a clear signal: free trade does not mean there are no rules," Frank Asbeck, SolarWorld CEO, told Reuters.
Tariffs could begin to restore legal and fair global competition and revive growth in U.S. solar industry manufacturing and jobs, says SolarWorld in a statement.
Imposing tariffs "gives rise to the possibility that domestic solar manufacturing, environmentally sustainable solar production and robust global competition might one day soon return, boosting U.S. manufacturing jobs," says Gordon Brinser, President of SolarWorld Industries America.
SolarWorld says that CASM started with six manufacturers and has since grown to 210 employers representing over 17,000 employees, about 85% operating in downstream businesses such as solar system installation.
SolarWorld contends the Chinese government, in "showering manufacturers" with subsidies that cover costs spurred them to massively overbuild production capacity, export over 90% of production and sell solar products at dumped prices in the U.S. market.
The National Renewable Energy Lab (NREL) estimates that without such sponsorship, Chinese producers would have a 5% cost disadvantage in producing and delivering solar into the U.S. market, compared with domestic producers.
Solarworld AG (SWV.DE), Germany's biggest solar manufacturer, plans to bring the same anti-dumping complaint in Europe soon.
But "While the tariff may help SolarWorld in the U.S., Chinese modules will be sold into other markets, increasing price pressure there, so we see no huge fundamental improvement for SolarWorld," DZ Bank analyst Sven Kuerten told Reuters.
Chinese solar companies have a 60% share of the global market; the US market accounts for 20% of their sales.
They are already looking to shift beyond US and Europe markets, especially to Japan, which now has aggressive solar incentives.
Center for American Progress argues, "Once Chinese companies drive out competition, they will immediately start raising prices to increase their profits and wean off government subsidies. We are seeing a similar pricing pattern in the global rare earths market. China has a third of the world's rare earth supplies but controls 90% of the global market, primarily because lax regulatory oversight enabled Chinese companies to mine cheaply and price everyone else out of the market."
