U.S. Slaps High Tariffs on Chinese Solar Panels

By KEITH BRADSHER and DIANE CARDWELL

Published: May 17, 2012

The United States Commerce Department announced on Thursday the imposition of anti-dumping tariffs of more than 31 percent on solar panels from China, a decision certain to infuriate Chinese officials already upset after recent bilateral frictions over China’s human rights policies and its increasingly confrontational approach towards American allies like the Philippines and Japan.

The anti-dumping decision is one of the largest in American history, covering one of the largest and fastest-growing categories of imports from China, the world’s largest exporter. The department said the United States bought $3.1 billion worth of Chinese solar cells last year, giving China more than half the American market for the devices.

Chinese officials have been indignant at American criticism of their solar power industry, pointing out that the United States has urged China for years to embrace renewable energy as a way to reduce air pollution, combat climate change and limit the need for oil imports from politically volatile countries in the Mideast. Government support for solar energy is an important feature of China’s current Five-Year Plan, which runs through 2015, although Premier Wen Jiabao publicly cautioned in March that he was becoming concerned about overcapacity in the sector.

The Chinese solar panel industry threatened in November that if the United States puts heavy tariffs on Chinese exports, then the Chinese industry would file a trade case at the Chinese commerce ministry against American exports of polysilicon. Produced mainly in Tennessee and Washington state, where hydroelectric dams produce cheap electricity, polysilicon is the main ingredient in solar panels.

The American decision was made by civil servants in a quasi-judicial process that is heavily insulated by law from political interference, and does not represent a deliberate attempt by the Obama administration to confront China on trade policy. But that distinction has been largely lost in China, where the solar panel issue has been one of many causes embraced online by the country’s vociferous ultranationalists, who put heavy pressure on Chinese officials to respond forcefully to perceived snubs to China.

Further complicating matters is a similar case against China and Vietnam over the manufacture of steel towers for wind turbines, charging that steep government subsidies were giving foreign companies an unfair advantage over American manufacturers. A preliminary ruling is due on May 30 in that case.

The solar tariffs, which are retroactive to 90 days before the decision, are in addition toanti-subsidy tariffs of 2.9 percent to 4.73 percent that the department imposed in March. The combined anti-dumping and anti-subsidy tariffs are likely to mean a substantial increase in the price of solar panels here.

SolarWorld Industries America, which led the coalition of manufacturers that filed the solar dumping case, welcomed the department’s ruling. The decision “is a very positive step in the process. It’s also in line with what we expected,” said Ben Santarris, a company spokesman. “We consider this a bellwether case. It underscores the importance of manufacturing to the U.S. economy.”

Alan Price, a partner who heads the international trade practice at Wiley Rein, the law firm representing the U.S. companies in both the solar and wind cases, said that China poses a particular threat to America’s developing green energy sector.

“China’s method is straightforward: it sets forth industry-specific Five-Year Plans and then uses all forms of national and local subsidies and other governmental support to quickly transfer jobs, supply chains, intellectual property, and wealth, to the permanent detriment of U.S. and global manufacturers,” he said. “China’s ability to ramp up and overwhelm an industry is unique and particularly devastating with new and emerging technologies, where global competitors may be less established and can be knocked out more easily and quickly.”

Andrew Beebe, chief commercial officer of Suntech, a major Chinese solar manufacturer, said his company would try to convince the Department of Commerce that the duties were unjustified.

“These duties do not reflect the reality of a highly competitive global solar industry,” he said. “SunTech opposes trade barriers at any point in the global solar supply chain.”

Isabelle Christensen, the marketing director of JinkoSolar , another Chinese manufacturer, said that the company had already established a factory in Canada and could probably shift production there if necessary.

“We can begin ramping up our manufacturing facility in Canada fairly quickly,” she said, matching what the company produces in China for the American market in a matter of months.

But while Chinese solar panel manufacturers may threaten to set up production elsewhere, they may face another obstacle: their bankers. State-owned banks have already lent heavily to the Chinese manufacturers under pressure from the government, producing a capacity glut in China that has prompted factories to slash prices as they fight to maintain market share.

A senior Chinese banker, who insisted on anonymity because of the political sensitivity of the solar panel issue, said that Chinese banks were not eager to lend heavily for another round of solar panel factory investments on the large scale needed to supply the American market.

In the United States, solar panel trade cases have divided the industry in much the same way that automotive trade disputes in the 1980s split the American auto industry, when Detroit automakers seeking import restrictions were opposed by American car dealers who were making large profits from selling and servicing cars imported from Japan.

Many solar panel installers in the United States have opposed tariffs on Chinese panels, contending that inexpensive imports have helped spur many homeowners and businesses to put solar on their rooftops.

Opponents of the tariffs say that the United States benefits from cheap Chinese production. They point out that Chinese companies often turn to American companies to buy the factory equipment and polysilicon they need to make solar panels, and installers hire local American workers to set up and service rooftop systems.

Like the anti-subsidy tariffs, the anti-dumping decision on Thursday is preliminary. But if solar panel importers win a final review of both tariff decisions by the Commerce Department later this year, the preliminary tariffs could be reduced or even entirely refunded, although they also might be increased.

The Commerce Department calculated the 31 percent tariff by estimating Chinese manufacturers’ costs and then determining how far below cost the solar panels were being sold in the United States. But the department’s methods for calculating costs are controversial for countries that it designates as non-market economies, where the government plays such a large role in allocating land, credit and other resources that the true costs of any given product may not be apparent.

In Thursday’s decision, the Commerce Department sided with SolarWorld in using solar manufacturing costs in Thailand as a proxy for costs in China. The Chinese industry had wanted to use India as a proxy instead.

 U.S. Slaps Tariffs on Chinese Solar Panels – NYTimes.com.

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