Commerce Department Fixes Low Solar Tariffs

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Tianwei PV production line

The U.S. Department of Commerce has announced preliminary countervailing tariffs to correct for more than $30 billion in subsidies provided by the Chinese government for silicon modules and cells made in China.

But the tariffs are far lower than American solar module makers asked for, between 2.9 and 4.73 percent. Members of the Coalition for American Solar Manufacturing (CASM), which lodged the original complaint, asked for tariffs ranging from 30 to 50 percent to offset subsidies and dumping (the sale of product below its cost to manufacture and ship). An announcement regarding antidumping tariffs — which may be higher — is due in May.

Both sides claimed initial victory in the dispute between American solar manufacturers and other solar industry interests, represented by the Coalition for Affordable Solar Energy (CASE).  But stock prices for solar module manufacturers surged on the news.

Jigar Shah, president of CASE, noted that in anticipation of stiff tariffs, module manufactures have been padding their U.S. prices for several months. “Today, the U.S. pays the highest prices in the world, by about 12 percent,” he said. “A mid-size firm pays about 95 cents a watt, versus about 84 cents in Europe. Hopefully this announcement, which largely exonerates China, will bring American module prices down.”

Shah also released this statement:

Today’s preliminary determination by the Department of Commerce imposing low tariffs on imported solar cells and modules, is a relatively positive outcome for the U.S. solar industry and its 100,000 employees.  However, tariffs large or small will hurt American jobs and prolong our world’s reliance on fossil fuels. Fortunately, this decision will not significantly raise solar prices in the United States as SolarWorld has sought.

 This decision clearly demonstrates that the Commerce Department did not find the Chinese government engaged in massive subsidization, as SolarWorld and CASM claim. 

 There is more work to be done to protect the future of solar industry and power in America. There will be another decision in May when the Commerce Department announces anti-dumping duties.  A recent study by the Brattle Group confirmed that placing artificially high tariffs on solar panels would severely undermine the US solar industry, resulting in the loss of up to 60,000 US jobs by 2014.

At the same time, SolarWorld, the lead company in the CASM petition, issued this press release:

U.S. trade ruling will help restore fair competition in solar trade

Commerce ruling is calibrated to offset effects of China’s subsidized solar exports

HILLSBORO, ORE., March 20, 2012 – SolarWorld, the largest U.S. solar manufacturer for more than 35 years, today said the U.S. Department of Commerce’s preliminary trade-remedy ruling against China’s state-sponsored solar industry represents an important step toward restoring fair trade in the critically important U.S. renewable-energy manufacturing industry.

The U.S. Department of Commerce today issued a preliminary finding that Chinese state sponsorship of its solar industry is anti-competitive under U.S. and international trade law and ordered preliminary duties on the industry’s U.S. exports of crystalline silicon solar cells and panels to offset the effects of China’s illegal subsidies. Commerce will require importers of record to post deposits or bonds toward anti-subsidy margins of 2.9 percent for cells and panels made by Suntech, 4.73 percent Trina Solar and 3.6 percent for all other Chinese manufacturers.

“We commend the Department of Commerce for its preliminary decision today, which is the first step in a process that will roll out over the next several months,” said Gordon Brinser, president of SolarWorld Industries America Inc., member of the seven-manufacturer Coalition for American Solar Manufacturing (CASM) and petitioner in anti-subsidy and anti-dumping cases against the Chinese industry.

“If fair international trade can be re-established, the solar-pioneering U.S. industry will once again compete on legitimate market factors such as product performance, production efficiency and unsubsidized pricing,” Brinser said. “We need both the domestic manufacturing and installation businesses to participate in fair competition to advance our solar industry’s reach for greater national energy, economic and environmental security.”

CASM contends that China’s broad portfolio of subsidies spurred its producers to build huge excesses of manufacturing capacity, export more than 95 percent of production and sell product at artificially low prices to unfairly seize U.S. market share at the expense of domestic producers. At least 12 U.S. manufacturers of crystalline silicon solar cells and panels have closed plants, gone bankrupt or staged significant layoffs since 2010.

On Dec. 2, the U.S. International Trade Commission (ITC) made a unanimous preliminary determination that China’s trade practices were harming the domestic industry. On Jan. 30, Commerce found that Chinese importers had mounted a massive, evasive surge ahead of the preliminary determination. As a result, today’s ruling on duties applies to Chinese solar imports not just hereafter but also retroactively 90 days.

Commerce is expected to issue a preliminary ruling on anti-dumping duties on May 16 (announced May 17). Final determinations on the duties would take place in the summer. To close the case in the fall, the ITC would need to make a second, final ruling on whether Chinese trade practices have harmed the domestic industry.

Trina’s American distribution subsidiary released this statement:

Trina Solar is committed to providing high-quality modules to the United States for the long term. We value our customers, and we our working to ensure that our U.S. team will continue to grow our North American business in order to meet our customers’ expanding needs.

This determination is only the first step, and is subject to further examination and final determination later this year by the Department of Commerce and the International Trade Commission. Until then, Trina and the solar industry will continue to operate in an era of uncertainty brought upon by these proceedings. As a forward-thinking global company, we are constantly assessing our options so that we can most effectively serve all of our markets around the world. Until the final determinations are made, it is premature to speculate about next steps in the United States, but know that Trina Solar is committed to serving the United States market for the long term.

 

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