Is China illegally subsidizing its solar industry to weaken competition from the United States? During today's OnPoint, Timothy Brightbill, a partner at Wiley Rein and the lead trade lawyer on SolarWorld's case against Chinese manufacturers, discusses his client's petition to the Obama administration to impose a tariff on solar imports from China. Brightbill explains why he believes the United States' solar industry is weakened by China's products, which are rapidly decreasing in price.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Timothy Brightbill, a partner at Wiley Rein, and the lead trade lawyer on Solar World's case against Chinese manufacturers. Timothy, thanks for coming on the show.
Timothy Brightbill: Thank you.
Monica Trauzzi: Tim, Solar World, along with six other solar companies, has filed a petition trying to pressure the Obama administration to impose tariffs on Chinese solar imports. How did this all come about?
Timothy Brightbill: Well, this came about because the U.S. industry, making solar cells and modules, has been extremely injured by reason of these Chinese imports. Over the last two years, we've seen imports up more than 300 percent from China, we've seen prices on solar technology drop 40 percent in the last year and we've seen that China has really built a whole solar industry out of nothing. And they're producing it to send it here, not for their own home market. So, after some time, Solar World and others just decided it's time to stand up and it's time to enforce our trade laws and take this step.
Monica Trauzzi: So, you believe that China is illegally subsidizing its own solar industry at home. Why do you think they've crossed a line beyond what we're doing here in the U.S. for our own solar industry?
Timothy Brightbill: Sure, well, the difference is under U.S. law and WTO law, if you subsidize an industry in order to export and injure another industry, that's the violation of trade law. So, the problem is that China is not only receiving these tens of billions of dollars of subsidies, but it's using that to injure the U.S. industry. That's illegal under U.S. law and WTO law and so that's what we're trying to address with these cases.
Monica Trauzzi: The timing of all of this is significant considering the recent collapse of Solyndra. Do you hold the Chinese government partially responsible for Solyndra?
Timothy Brightbill: Well, actually, that's not really relevant to the case. And Solyndra is not even covered. The products made by Solyndra are specifically not covered by this case. We're only talking about crystal and silicon cells and modules, so the thin-film sector that Solyndra and others are in is not really a part of the case. So, but we do hold China responsible for what they're doing to our industry and that is, really, trying to take it over. Trying to use these subsidies and pricing differences to take U.S. producers out of the market. And in our petitions we pointed out seven companies that have either had to lay off workers or go bankrupt in the last two years as result of China's dumping and subsidies.
Monica Trauzzi: Not everyone in the solar industry is in agreement with this petition, however. In fact, many believe that the move could actually raise the cost of panels. Is Solar World simply trying to save face and make a last-ditch effort before it goes belly up?
Timothy Brightbill: Oh, no, Solar World, they've been around 35 years. They are the market leader in many respects and they've been able to compete for these 35 years, even with cutting their costs. The U.S. industry, as a whole, does cut its costs to become more competitive year after year. So, you'll see costs for solar panels decrease 8 percent, 10 percent, but what you can't compete with is a 40 percent price decline in one year caused by China just sending massive volumes of imports here. So, Solar World is in it for the long haul and that's part of the reason why they filed this case. I mean, if they were going to exit the market, they wouldn't take the time and trouble to bring a big legal case. They want to defend the market. They want to be here in the United States for the long term.
Monica Trauzzi: So, do we draw the conclusion then that the U.S. solar industry can't stand on its own without something being done?
Timothy Brightbill: No, no, the U.S. industry can definitely compete and they have competed, they just can't compete against the government of China. They can compete against other companies anywhere around the world, it's just the government, it's these preferential loans and grants and subsidies and also the dumping at below cost levels that they cannot compete with and they're not required to compete with under WTO law.
Monica Trauzzi: So, if the tariffs aren't implemented, then what does that mean for Solar World? Can Solar World compete?
Timothy Brightbill: Well, Solar World has done it for 35 years. They'll find a way to stay in business, one way or another, but they shouldn't have to. The rules are very clear that there are violations going on here and we're very confident that when the Commerce Department and the International Trade Commission have done their work, they'll put these tariffs in place to level the playing field and give the U.S. industry and its workers a chance.
Monica Trauzzi: Some would argue that because the solar industry is a global industry it's not fair to single out one country. What do you say to that?
Timothy Brightbill: Well, the trade rules are simple. If a country like China is injuring another industry, that industry and that country has a right to use the trade laws, so it's just a matter of enforcing the laws that everyone's agreed to. When China joined the World Trade Organization in 2001, it agreed that it would not engage in dumping. It would not engage in these kind of subsidies. And so if it's not doing that, someone has to hold them accountable and the United States and any other country can do the same thing.
Monica Trauzzi: The six other companies that have signed on to this petition have chosen to remain anonymous. Why have they done that?
Timothy Brightbill: Well, they have concerns about retaliation from China. It's a tough marketplace, you know, that China raises concerns about intellectual property and all kinds of other concerns. So I do think they will become public in the days and weeks ahead, but for now they just want to maintain their position as part of our coalition.
Monica Trauzzi: China's response to all of this has come in the form of a warning to the United States to not take protectionist measures that could damage the global economy. Are you seeking to manipulate the dynamics of the market through this petition?
Timothy Brightbill: No, no, the only thing we're doing is trying to make sure that everyone is selling in some relation to their production costs and at non-dumped levels that don't injure an industry. And, by the way, I would just point out it's not protectionist to use the trade laws like this, it's defending our markets. We have a right to do it and that's why we hope that the U.S. government will look closely at these cases and make the right decision.
Monica Trauzzi: So, where do things go from here? A complaint has been filed, what are the next steps?
Timothy Brightbill: Well, it does move very quickly. Within the next 45 days the International Trade Commission will decide whether, preliminarily, whether the U.S. industry has been injured in part due to the Chinese imports. The Commerce Department will calculate dumping and subsidy margins and try to come up with a number to offset the effects of those Chinese imports. And that margin could start to be applied about six months into the case. Then there will be a final determination, one year start to finish. So, it does move very quickly.
Monica Trauzzi: All right, we're going to end it there. Thank you for coming on the show. Nice to see you.
Timothy Brightbill: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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