The Commerce Department yesterday levied stiff tariff rates on imported Chinese crystalline silicon cells in one of the final steps of a high-profile trade case that pits U.S. solar manufacturers against the Chinese government.
But SolarWorld Industries America and the half-dozen other U.S. manufacturers that joined the trade action were unsuccessful yesterday in a push to Commerce to expand the scope of the case to close what they argue is a major loophole that allows Chinese manufacturers to avoid U.S. trade remedies.
Today's determination by Commerce comes almost exactly one year after SolarWorld launched the largest trade action ever in the renewable energy sector. The case, which has caused a schism in the U.S. solar industry, now hinges on a vote next month by the U.S. International Trade Commission (U.S. ITC).
When it filed its case a year ago, the SolarWorld-led Coalition for American Solar Manufacturing (CASM) charged that massive government subsidies allowed Chinese module makers to flood U.S. markets with products that were sold at less than fair value. Those actions, CASM said, threaten to decimate the U.S. solar manufacturing sector.
In March, Commerce made a preliminary determination that China was indeed illegally subsidizing its domestic solar market and opened the door for U.S. customs officials to begin collecting duties of 2.9 to 4.7 percent on Chinese solar imports. In May, the agency took a much more drastic step after concluding that Chinese solar manufacturers had been dumping products on the U.S. market at artificially low prices. Commerce's preliminary dumping decision levied additional tariffs ranging from 31 to nearly 250 percent on Chinese solar imports.
Commerce adjusted those rates yesterday in its final determination, raising countervailing duty rates by more than 10 percent on all companies but dropping some individual dumping tariff margins.
Refusal to expand case's scope draws fire
Trina Solar Ltd. saw its final combined duty rate drop from the preliminary determination by about 12 percentage points to about 24 percent, while Suntech Power Holdings Co. Ltd. saw its combined duty rate tick up about 2 percentage points to 36 percent. All other Chinese module manufacturers saw their combined duty rates set at somewhere between 31 and 255 percent.
Commerce also ruled that Suntech would be the only company that will not be subject to Commerce's "critical circumstances" determination when it comes to dumping duties. An affirmative critical circumstances determination allows tariffs to be imposed retroactively beginning 90 days before Commerce announced its duty decisions earlier this year.
Despite the reprieve, Suntech was highly critical of yesterday's decision and the process by which it was reached.
"The growth of destructive trade barriers represents a significant, long-term challenge to the health of the solar industry in the U.S. and globally," E.L. McDaniel, managing director of Suntech America, said in a statement yesterday evening. "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 100 MW of PV production capacity."
By not expanding the scope of the trade case, Commerce limited the enforcement action only to solar cells made in China. CASM had argued that the case should be expanded because Chinese manufacturers could avoid the duties by using non-Chinese cells in their solar panels.
SolarWorld President Gordon Brinser said in a statement following yesterday's decisions that the "positive impact of Commerce's duties" will be "undercut" by the decision not to expand the scope of the trade action.
Sen. Ron Wyden (D) -- a vocal supporter of the trade case who hails from Oregon, where SolarWorld is based -- also released a statement yesterday expressing his concern about the continued loophole available to Chinese manufacturers.
"This decision leaves a lot more to do," Wyden said. "As chairman of the Finance Subcommittee on Trade, I will be monitoring the impact of this determination closely and will pursue additional measures if necessary to protect American manufacturers and workers from Oregon and around the country from China's unfair trade practices."
While Commerce is charged with determining whether dumping and subsidies are occurring in violation of World Trade Organization rules and setting tariff margins, the tariffs will only be upheld if the six-member U.S. ITC rules that the U.S. solar industry is suffering "material injury" as a result of China's actions. The commissioners voted unanimously in favor of SolarWorld in a preliminary ruling, but the two sides made their final arguments before the committee last week (Greenwire, Oct. 3).
Association worries about prolonged battle
Among those who testified was Kevin Lapidus, who helped form a coalition of U.S. and Chinese manufacturers and U.S. installers to fight the trade case. The group, the Coalition for Affordable Solar Energy, has argued that the SolarWorld case has launched a global renewable energy trade war that is boosting solar prices, lowering demand and costing jobs up and down the solar supply chain.
In a press conference following last week's hearing, Lapidus blasted SolarWorld for setting off a global trade war that has spread to Europe and South Asia and triggered retaliatory investigations by China.
Lapidus argued that any harm affecting SolarWorld has come from self-inflicted wounds, including focusing on the wrong technologies and emerging U.S. markets.
"SolarWorld, which is a German company, is using the U.S. legal system to compensate for its own mistakes and inability to compete," Lapidus said. "SolarWorld is transferring the cost of its own failure on the rest of the U.S. solar industry."
Concern about fanning the flames of retaliatory trade actions has also been expressed by the U.S. Solar Energy Industries Association (SEIA) (Greenwire, Aug. 8).
In a statement released last night, SEIA President Rhone Resch said Commerce rightly showed it would protect U.S. interests in the global trading system but said that trade litigation alone is not the way to solve the challenges that exist between the United States and China.
"Prior to these trade cases, the U.S. and Chinese solar industries enjoyed a strong, productive working relationship," Resch said. "For both sides to succeed going forward, we must return to our collaborative roots at both the industry and government levels."