Saying that China is violating World Trade Organization rules by flooding the US market with underpriced solar panels, US-based solar manufacturer SolarWorld filed a 3000 page petition with the Commerce Department and the International Trade Commission, calling for the imposition of stiff tariffs on panels imported from China.
SolarWorld wants duties of more than 100% levied to offset below-market pricing by the Chinese, as well as additional countervailing duties against Chinese subsidies.
SolarWorld says it’s representing the Coalition for American Solar Manufacturing, a seven member group that produces much of US solar products. Its purpose is to "halt the ever-rising tide of heavily subsidized solar products that China’s state-supported solar industry is illegally dumping into the American market."
The company says China is flooding the US with under-priced panels and subsidizing its solar industry in violation of World Trade Organization rules. It’s making it impossible for US solar firms to compete and is partly responsible for seven U.S. companies going out of business or downsizing in the last year.
"Artificially low-priced solar products from China are crippling the domestic industry," says Gordon Brinser, president of SolarWorld, based in Hillsboro, Oregon, which employs 1100 people.
In the past four years, Chinese solar modules skyrocketed to over 50% of the world market, while the US share plummeted from nearly 50% to just 6%. Chinese imports to the US rose over 300% from 2008- 2010.
SolarWorld is the US subsidiary of Germany-based SolarWorld AG (ETR:SWV). It had to close its California factory last month because of the steep drop in solar prices.
The companies say Chinese producers can aggressively undercut American prices because they receive massive cash grants, tax breaks, discounted raw materials, land, power and water, multibillion-dollar preferential loans, export assistance grants and preferential export insurance.
"China’s systematic campaign to dismantle the U.S. industry has cost thousands of solar jobs in the US. China’s wrongful tactics run systematically across the board; central planning has subsidized most facets of these companies’ business. China actually has no production cost advantage. Labor makes up a modest share of solar industry costs, and China’s labor is less productive. Its raw material and equipment come from the West and China pays for long-distance shipping. Yet, massive state subsidies and sponsorship have enabled Chinese manufacturers to illegally dump their products into a wide-open U.S. market, says Brinser."
Along the way, it also sidesteps US-level manufacturing standards for labor, quality, and the environment.
The US could impose preliminary tariffs in a matter of months if the Commerce Department accepts the petition in the next 20 days and the ITC decides US producers are being hurt.
Earlier this month, the Obama administration notified the World Trade Organization that nearly 200 Chinese subsidy programs – particularly in solar and wind – may violate free trade rules.
The petition has caused lots of controversy. For one thing, Brinser is refusing to name the other companies in the coalition, leading some to question whether the petition is in fact the work of one struggling company.
Also, some solar companies oppose the petition, saying it will prevent Americans from getting access to low-cost solar panels, and that a trade war with China is not in the best interests of the US.
While few believe the rift will grow into an all-out trade war, there are concerns that trade between the two countries could be hampered by increasingly protectionist measures on both sides.
Next week, the House of Representatives Ways and Means Committee will hold a hearing to examine a broad array of Chinese trade actions that are causing concern in the US.
Impact on Chinese Solar Companies
Chinese solar companies could be hurt by US barriers – demand has fallen in Europe, where subsidies have been cut. They’re looking to replace Europe – which accounts for 75% of their sales – with the US.
While the US was the fourth-largest market for solar in 2010, most companies expect it to soon be the largest. And Chinese companies are eager to increase their share in the US from its current level of 7%.
In Related News…
The U.S. Department of Energy (DOE) moved to block the sale of solar panel manufacturing patents to Chinese companies.
DOE attorneys argue that the US government has ownership rights to Evergreen Solar’s technology and intends to "prevent foreign entities from gaining control over federally funded technology and competing with American industry unfairly." Evergreen, which moved its factory from Massachusetts to China because it couldn’t compete on price, recently declared bankruptcy.
Most of the potential buyers of Evergreen’s assets, including patents, are from China.
Coalition for American Solar Manufacturing: