The US Commerce Department announced on Tuesday that it would be imposing preliminary countervailing duties on imports of certain Chinese crystalline silicon photovoltaic products – including solar cells, modules, laminates, and/or panels. The anti-subsidy duties are significantly higher than those confirmed in a separate probe two years ago and cover an expanded scope of products, including those partly manufactured in Taiwan.
The investigations were launched by the US government agency in January, in response to a complaint filed by SolarWorld Industries America, the US’ largest solar panel manufacturer.
The company had alleged that Chinese producers – following the previous imposition of anti-dumping and countervailing duties in 2012 – had gotten around paying said duties by commissioning part or all of the production of these solar cells in Taiwan, and then using such cells to then assemble solar panels back in China. (See BioRes, 7 February 2014)
The new duties, which take effect immediately, range from 18.56 percent to 35.21 percent. Changzhou Trina Solar Energy Co., Ltd. would face the lowest of these duties, while Wuxi Suntech Power Co., Ltd. and five of its affiliates would face the highest. All other Chinese producers will be subject to a rate of 26.89 percent, Commerce said.
The duties announced on Tuesday exclude those products already affected by the 2012 duties, which had ranged from 14.78 to 15.97 percent for those producers under investigation. (See BioRes, 15 October 2012)
Notable in Commerce’s determination was the agency’s decision to expand the scope of its investigation. Rather than just targeting solar cells, as in the previous 2012 case, this new investigation also covered partially or fully assembled solar panels.
Furthermore, the US agency said, the merchandise subjected to these duties would also include modules, laminates, and/or panels assembled in China, but using cells completely or partly manufactured within another customs territory – ostensibly Taiwan – that, in turn, used Chinese-made ingots or wafers in their production process.
Cells whose production began in China and were then completed in another customs territory were also included in the probe.
Beijing fires back
Beijing trade officials promptly slammed the Commerce Department decision, with the Chinese Ministry of Commerce (MOFCOM) issuing a statement in which they claimed that US investigators both ignored the facts and legal basis for conflicting rules of origin on these solar products.
The preliminary duties, MOFCOM added, are an “abuse of trade remedy measures” meant to protect US industry, and would only serve to reignite bilateral tensions on solar trade.
In addition, the Chinese ministry said, these trade remedies are unlikely to help the US develop its solar sector. Rather, Washington should terminate the investigation in order to “create a good environment” that would promote competitiveness within the photovoltaic industry worldwide.
Help or hindrance?
Imports into the US of these Chinese-made crystalline silicon photovoltaic products were valued at approximately US$1.5 billion in 2013, according to Commerce Department figures. However, whether or not these latest duties are indeed a win for the US solar industry – or could instead cripple its own growth – is a subject that has proven divisive domestically.
SolarWorld, the petitioner in the case, called the decision a “strong win” for the American solar sector, applauding the Commerce Department “for its work that supports fair trade.”
The same company had been the main proponent for the original 2012 case, together with several other US solar panel manufacturers that were known collectively as the Coalition for American Solar Manufacturing (CASM). According to SolarWorld, many of the founding members of CASM have since had to shut their doors as a result of the intense competition from China, which the US-based solar giant claims is the result of unfair trade practices.
However, US downstream producers that use these same products in their solar projects – such as those companies represented by the Coalition for Affordable Solar Energy (CASE) – disagree. Calling the ruling a “major setback” for the American solar industry, the group urged US government officials to continue efforts toward a negotiated settlement with China instead.
“US solar businesses now find themselves collateral damage to litigation, which is increasing module costs and freezing future investment through pricing uncertainty,” the group said on Tuesday, warning that the move would put a damper on the recent “record-breaking” growth seen by the domestic solar industry.
George Hershman, Division Manager of the Colorado-based company Swinerton Renewable Energy and a CASE member, suggested in a recent op-ed that the low prices on Chinese solar panels are actually “one of the reasons [the American solar industry] is thriving.”
Rather than competing with China or Taiwan, he added, US solar companies are really competing against “coal, natural gas, and other forms of electricity generation that solar has only recently been able to beat on cost.”
The US and China have repeatedly been at loggerheads over their renewable energy trade policies in recent years, with complaints of unfair trade practices being lobbed by both sides. These disagreements have also extended to other sectors, including wind power, as both sides continue their efforts to advance clean energy generation at home.
The spats have not been limited to these two countries alone. The EU and China engaged in a similarly heated row last year, with the disagreement being defused only by an eleventh-hour “price undertaking” deal that committed Chinese manufacturers to exporting a set volume of solar products at a minimum price in order to avoid hefty anti-dumping duties from Europe. (See BioRes, 5 September 2013)
While the US was involved in the early discussions on this price undertaking agreement, it ultimately was not involved in the final pact.
Australia, meanwhile, announced last month that it was launched its own anti-dumping investigation into Chinese solar imports, while India has recently imposed anti-dumping duties on products from the US, China, and various other countries. (See BioRes, 21 May 2014)
The growing frequency of trade spats over renewable energy – which has in some cases led to formal disputes at the WTO – has highlighted the growing question of how countries can work to develop their domestic renewable energy generation capacity, while respecting international trade rules and finding avenues for global cooperation.
Even amid this flurry of disagreements, the US, EU, and China are also among a group of countries planning to launch negotiations for an Environmental Goods Agreement (EGA), aimed at lowering tariffs on a list of environmental goods in order to promote the increased deployment of renewable energy globally.
Formal talks on such a pact could begin as early as this summer, once the 14 WTO members involved complete their domestic procedures.
The duties announced by Commerce this week mark just one phase in a longer process. The US agency has said that a final determination on these countervailing duties will be issued in mid-August, unless this deadline is extended.
If this final Commerce determination is affirmative, the US International Trade Commission (ITC) will then need to review whether or not these imports did cause – or threaten to cause – material injury to US industry, and issue its findings within 45 days.
Should both the Commerce and ITC determinations be affirmative, the duties will continue, though the level could be revised. However, should either issue a negative finding, no countervailing duty would be issued.
Until then, cash deposits will be collected on these imports, based on the preliminary rates. A separate probe into allegations of dumping – a practice where producers sell their goods abroad at prices lower than their normal value – is still ongoing, with preliminary findings expected in July.