Suniva, SolarWorld double down on trade proposals

As befits the importance of this case for the U.S. solar industry, most of the big names in U.S. solar have crammed into a hearing room at the U.S. International Trade Commission (ITC) in Washington D.C. today, as well as representatives of four foreign governments and the European Union.

All are here to make a case as to the form of remedies that the ITC should recommend to the Trump Administration as the result of its finding that imports of solar cells and modules have seriously injured domestic manufacturing.

And the differences could not be more sharp. While SEIA has proposed minimal trade remedies consisting of a licensing fee for importers that would fund support for U.S. manufacturers, Suniva and SolarWorld have put forth proposals that center on steep tariffs, as well as either a minimum module price or import quotas.

And while Suniva has minimally softened its proposal, calling for a minimum module price which starts at $0.74 per watt instead of $0.78 per watt, SolarWorld’s proposal for restrictive import quotas is perhaps the most extreme recommendation to date.

This will come as no surprise to those who recall the 2012 and 2014 antidumping and countervailing duty cases initiated by SolarWorld, and their arguments in those cases. However, it is notable that Suniva did not support SolarWorld in the 2012 and 2014 trade cases but is now singing the same tune.

Objections by Brazil, Korea and the EU

For SolarWorld and now Suniva, the enemy is again China, and the ability of Chinese companies to shift production globally, resulting in what was described by a witness for the proponents as “whack-a-mole” to protect U.S. manufacturers from subsidized foreign imports. However, they are casting a wider net this time, as the global safeguard relief which they are proposing would include the EU, Korea, and Brazil, according to the ITC’s recommendations.

These were disputed by representative from these nations, with Brazil citing sections of trade law to argue that the application of relief against its imports is not in compliance with existing trade law, given that the United States did not import PV cells or modules from Brazil during the 2012 to 2016 period.

Likewise, the representative from the European Union noted that as 86% of the cells and modules imported to the United States were from a handful of Asian nations, there has been no surge in solar imports from the EU. As such, she proposed that ITC consider a remedy whereby tariffs were only applied to imports above a certain volume from any nation.

Korea has become a significant exporter of solar cells and modules to the United States, including through LG Solar. This has its own consequences, and the representative of the Korean embassy argued that if the proposed trade action was implemented, cells based on n-type wafers would no longer be available for the domestic market.

Evidence?

But even this would not satisfy SolarWorld, which has asked that the ITC adjust its position and recommend trade action to apply to Singapore and Canada as well, imports from which the ITC found did not cause “serious injury”.

And to back up its proposals, SolarWorld and Suniva have presented a volume of evidence which at times could not be verified or does not line up with the estimates of market analysts. The two companies argue that their proposal of a $0.25 per watt tariff on cells and $0.32 per watt tariff on modules would bring the industry back to late 2015/early 2016 prices, however data provided by Bloomberg New Energy Finance suggests that prices were more like $0.60 per watt for modules during that period, meaning that a $0.32 per watt tariff would more than double prices.

This is before we even get to the $0.74 per watt minimum price, which would bring module prices back at least to 2014 levels.

Much of the two company’s evidence is proprietary, which makes it harder to evaluate. However, one consequence of SolarWorld’s proposal for import quotas would be to put a hard stop on the volume of the U.S. solar market at a level that involves calculations of what modules are currently, as well as the amounts that have been “hoarded” by developers and EPCs.

If SolarWorld’s numbers are wrong – and there is no way to verify future demand with any sort of precision – they will be guaranteeing a market for themselves and curtailing growth of the U.S. solar market.

This clearly appears to trouble ITC. “You make those adjustments, and if you are wrong, what happens?” asked Commissioner Williamson. Late in the hearing, SolarWorld’s counsel Tim Brightbill conceded to ITC that he “cannot stand here and say that there would be no market impacts”.

The ITC has agreed with SolarWorld and Suniva that the U.S. industry was injured by foreign imports – a conclusion which is not hard to reach given the graveyard of U.S. cell and module makers. However, it remains to be seen what recommendations they will give for actual remedies.

And whatever remedies ITC recommends on November 13, it is U.S. President Donald Trump who will ultimately decide on whether or not to take trade action and what action he will take. And if he acts on the severe proposals from Suniva and SolarWorld, this could be damaging for the U.S. solar market for at least the next two years.