The Department of Commerce is standing behind its preliminary decision to impose massive import tariffs on Chinese-made solar technology, despite the threat of potential retaliation from China.
The penalties for Chinese-made solar cells range from 18%-250%, with the duties levied on Trina Solar Ltd. (18.32%) reduced and the ones on Suntech Power Holdings Co. raised slightly (31.73%). Another group of about 60 companies faces tariffs of about 26%, with all other Chinese producers subject to a 250% rate.
The Commerce Department’s final ruling also set anti-subsidy tariffs – about 16% for Trina (up from the 4.73% imposed in March) and slightly less than 15% for Suntech (up from about 3%). The rate is 15.24% for all other Chinese solar companies.
The duties stem from a complaint originally filed by SolarWorld AG and US solar companies that claimed Chinese solar companies were being unfairly subsidized by the government – allowing them to sell their products below cost and creating an unlevel playing field. The group also took its cause to the European Union over the summer; talks to resolve the matter in Europe are ongoing.
As you might expect, China is sharply critical of the decision and is demanding the US repeal the tariffs – pointing to dozens of domestic solar manufacturers that are struggling because of weaker demand and steep price cuts.
“The United States is inciting trade friction in new energy and sending a negative signal to the whole world about protectionism and obstructing the development of new energy development,” says Ministry of Commerce spokesman Shen Danyang. “We hope the U.S. side will correct its erroneous action with early termination of the trade remedy measures.”
China in the past has hinted it will retaliate. It considering whether to impose duties polysilicon imports from the US – Chinese companies currently buy about $2 billion of these materials annually. It also has demanded that the federal government to intervene to stop six clean energy programs in states including New Jersey, Massachusetts and Ohio because they are unfair to Chinese companies.
A top US executive for Suntech, the world’s largest solar panel maker, issued a statement suggesting the decision is misguided and won’t address the challenges the solar industry faces.
“Unilateral trade barriers will not make any one company more competitive, but will make solar less competitive against other forms of electricity generation,” says E.L. “Mick” McDaniel, Managing Director of Suntech America. “These ill-conceived taxes on solar products were the outcome of an unrealistic analysis that compared, for example, Suntech’s costs of production to the theoretical costs of production in Thailand, a country with less than 100MW of PV production capacity. It’s unfortunate that the process works this way; however, Suntech is well-prepared for the future and to serve the needs of our customers.”
The International Trade Commission, which is considering the case, has yet to make its final decision on the matter – although a ruling is expected by early November. The US duties won’t go into effect until that decision is made, but they are retroactive up to 90 days before they were announced.
There have been plenty of opinions offered on both sides of the dispute.
A spokesman for Yingli Green Energy Holding Co. says the 30% duties his company faces will make selling to the US unprofitable because the industry’s gross profit margins are about 10%.
“A tax rate of 30 percent is the same as 200 percent. Both of them mean the door is closed for exporting to the United States,” the spokesman, Wang Shuai, told Bloomberg. “No one does business to lose money.”
Some US solar companies – notably developers and installers who have benefited from lower solar technology prices – remain critical of the tariffs, while welcoming the Commerce Department’s decision not to raise them.
“We are hopeful that continued innovations in technology, a competitive global marketplace, and demand-generated pressure for lower prices will take precedence moving forward,” says Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE). “At the same time, we remain concerned about the growing global trade war, which will only hurt American solar industry jobs, growth and consumers.”
SolarWorld praised the Commerce Department’s ruling, say it will help raise the industry’s chances of “reclaiming equal footing” for US solar makers.
“SolarWorld and [Coalition for American Solar Manufacturing] have fought only to give the solar-pioneering domestic industry a fair chance to continue to compete by removing China’s trade distortions from the U.S. market,” says Gordon Brinser, president of SolarWorld Industries America Inc., based in Oregon. “Only fair competition can provide sustainable gains in technological efficiency, cost reduction and end-user pricing.
But SolarWorld and the Coalition for American Solar Manufacturing (CASM) aren’t entirely happy, since the tariffs focus on Chinese solar cells rather than on fully assembled panels.
“By leaving this ‘loophole’ as defined by Members of Congress in its enforcement decision, Commerce continues to expose U.S. manufacturers to Chinese unfair trade practices,” says Brinser. “This will undercut the positive impact of Commerce’s duties.”
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