China 'caught red-handed' on US solar anti-dumping charges18. May 2012 | Top News, Industry & Suppliers, Markets & Trends, Trade cases | By: Cheryl Kaften
The verdict is in and China has been found guilty as charged – or more accurately, liable for undercharging on sales of crystalline silicon photovoltaic cells and panels in the U.S. market.
On May 17, the U.S. Department of Commerce (DOC) announced its preliminary determination in response to a petition filed in October 2011 by Oregon-based SolarWorld Industries America and six other complainants. The DOC ruled that the People’s Republic of China (PRC) had violated fair trade policies by "dumping" goods at prices geared to give an advantage to its own manufacturers.
As a result, there will be payback: Wuxi Suntech and Trina Solar received preliminary dumping margins of 31.22 and 31.14 percent, respectively. Fifty-nine other China-based exporters each qualified for a separate rate of 31.18 percent. The remainder of PRC producers, who do business in the United States, but did not participate in the case, received a cumulative preliminary dumping margin of 249.96 percent.
In addition, Commerce granted the plaintiffs’ request for a finding of "critical circumstances," to counter the deluge of Chinese imports into the U.S. market ahead of the decision. Therefore, the preliminary dumping tariffs will be retroactive, 90 days from the date the decision is published in the Federal Register.
Preceding the findings, on March 20, the DOC clarified the scope of the anti-dumping investigation (as well as the related countervailing duty complaint), to consider not only imports of solar cells and panels produced in China, but also imports of solar panels made outside of China using solar cells produced domestically. Commerce further ruled that the scope would not cover imports of panels made in China from solar cells produced in a third country.
Upping the ante
The penalties in the anti-dumping case greatly exceed those imposed two months ago by the Commerce Department in its preliminary ruling on the countervailing duty (CVD) petition, also filed by SolarWorld.
Corroborating that China had unfairly subsidized its own industry, at least to some extent, in March, the DOC levied single-digit tariffs on imports from the PRC of solar cells and panels. Specifically, the department imposed a duty of 4.73 percent on imports from Trina Solar; 2.9 percent, on those from Suntech; and 3.6 percent, on all other similar goods shipped to the country by Chinese solar PV manufacturers. What’s more, the ruling was retroactive to late December 2011.
The CVD penalty was not severe enough to deter the PRC from continuing to cash in on U.S. solar sales. Even the faction of the American solar industry that supported free trade at any price, and opposed the SolarWorld petition, did not perceive the ruling as a major cause for concern.
At that time, speaking on behalf of the U.S. Coalition for Affordable Solar Energy (CASE) – a group of 150 solar companies comprising many installers and vendors – Jigar Shah, former CEO of SunEdison and the Carbon War Room expressed his mild misgivings: "Today’s preliminary determination … 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."
His reaction to the anti-dumping decision was measured, but concerned. "Fortunately," Shah said, "these duties are much lower than the 250 percent tax that SolarWorld originally requested. [However,] this decision will increase solar electricity prices in the United States precisely at the moment solar power is becoming competitive with fossil fuel generated electricity. CASE will continue to fight SolarWorld’s anti-consumer and anti-jobs efforts to ensure a better result for America’s solar industry."
Coming out swinging
Predictably, Trina Solar also came out swinging after the DOC announcement. The company’s chief commercial officer, Mark Kingsley, commented, "We intend to strongly defend with data our position that these duties are unwarranted and serve as an impediment to the broader adoption of solar energy in a time of rising fuel costs. As a forward-thinking global company, we will continue to assess our options to most effectively serve all of our markets, including our growing business in the United States."
Suntech, meanwhile, has vowed to work with the DOC to demonstrate that the duties are "not justified". "These duties do not reflect the reality of a highly-competitive global solar industry. Suntech has consistently maintained a positive gross margin as revenues are higher than our cost of production," stated Andrew Beebe, Suntech's chief commercial officer.
Tore Torvund, CEO of REC Silicon, a state of Washington-based CASE member, predicted there would be reprisals. "Tariffs are not in the best interest of American solar manufacturing, the American solar industry, or American solar consumers. We are concerned about the increased likelihood that China will retaliate with their own unilateral tariffs on polysilicon exports from U.S. producers, such as REC Silicon. No one benefits in a global solar trade war."
And, according to one industry analyst, Jesse Pichel with Jeffries Group Inc., "It should be clear by now that there are more U.S. jobs on the installation side of the solar business than on manufacturing. These cases have a chilling effect on business and it will linger for a long time. It’s unfortunate that SolarWorld has taken this scorched Earth approach and that they are distracting from the growth of U.S. jobs and affordable solar energy."
Celebration or cooperation?
However, the petitioners were pleased. Speaking on behalf of the seven original complainants, who have formed The Coalition of American Solar Manufacturing (CASM), Gordon Brinser, president of SolarWorld America, praised the Commerce Department’s efforts and assessments. "In addition to its preliminary finding that Chinese solar companies were on the receiving end of at least ten World Trade Organization (WTO)-illegal subsidies, Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the U.S. market. We appreciate the Commerce staff's hard work on this matter."
Brinser further stated, "Commerce today put importers and purchasers on notice about the consequences of importing illegally subsidized and dumped products from China. We understand U.S. Customs and other federal agencies are already aggressively enforcing the countervailing tariffs in order to prevent circumvention, and we expect they will be equally vigilant with the anti-dumping tariffs."
By contrast, Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), the national trade association representing companies across the solar value chain, exhorted his colleagues in the East and the West to come to an understanding. "The solar industry calls upon the U.S. and Chinese governments to immediately work together toward a mutually-satisfactory resolution of the growing trade conflict within the solar industry. While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations.
"Importantly," he continued, "disputes within one segment of the industry affect the entire solar supply chain – and these broad implications must be recognized. In addition, the U.S. solar manufacturing base goes well beyond solar cell and module production and includes billions of dollars of recent investments into the production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export. If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments."
Final decisions on both cases are contingent on further investigation.
The DOC is currently scheduled to make its final determination in early October. If Commerce makes an affirmative final determination, and the U.S. International Trade Commission (ITC) makes an affirmative final determination that imports of solar cells from China materially injure, or threaten material injury to, the domestic industry, Commerce will issue an anti-dumping duty order. The ITC will make its final injury determination on or before November 19.
In the CVD case, Commerce is scheduled to make a final call next month. If Commerce makes an affirmative determination, and the U.S. International Trade Commission (ITC) concurs that imports of solar cells from China materially injure, or threaten material injury to, the domestic industry, Commerce will issue a CVD order. The ITC is scheduled to make its final injury determination on July 19.
But stay tuned. According to a report in World Trade Online, in a surprise decision that leaves the ultimate status of more than 25 active U.S. countervailing duty (CVD) orders unresolved, despite the passage of bipartisan legislation aimed at preserving them, a U.S. federal appeals court last week declined to overturn the retroactive application of its December 2011 ruling that the Commerce Department cannot apply countervailing duties against imports from non-market economies (NMEs). That could make the latter decision moot.
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