A Tug of War Over Solar Tariffs

The United States trade case against Chinese manufacturers of solar panels took a step toward completion Wednesday with a final hearing before International Trade Commission on whether cheap Chinese imports have injured or threatened to injure the domestic solar industry. The Commerce Department found earlier this year Chinese companies, dominate global panel business, were quite benefiting from unfair government subsidies and were selling their products below the cost of production on the American market. In March, the department imposed anti-subsidy tariffs of 2.9% to 4.73%, and in May, it added anti-dumping duties of at least 31%. Those rulings were preliminary, the department is due to announce its final decision on both on Oct. 10. (NYTimes – 04/10/2012)

But for any tariffs to go into effect, the trade commission must find Chinese pricing practices have actually harmed or threatened to harm American industry, a determination is not expected until November. The solar case has become one of the sharpest sticking points in growing trade tensions between United States and China, which have surfaced in the presidential contest as well. In trying to make a case for harm, a group of American solar industry executives told the panel of commissioners on Wednesday that they had been forced to close plants, scale back production and lay off workers at a time when they should have been able to take advantage of rising demand for their products. They said that they were unfairly undercut by Chinese suppliers that had been able to sell at loss and continue operating, despite tottering on brink of bankruptcy, because of generous support from the state-owned banks. Kevin Kilkelly, president of sales in the Americas for SolarWorld, the German-based manufacturer that originally filed the trade complaint, said that his company had already shut down one facility and laid off nearly 200 workers. “Now, more workers and production at our Hillsboro, Oregon, facility are threatened”. “We hope that with relief from this case, we will be able to stop the harm to this industry and return to fair competition in this market”. But tariff opponents argued that SolarWorld had largely brought its problems on itself, and had proved unable to compete in a world where the low price of natural gas and declining subsidies were putting pressure on solar manufacturers to cut their prices sharply in order to survive.

SolarWorld, they said, had bet on a more expensive technology for its panels and failed to pursue potentially lucrative utility sector quickly enough. Alan King, general manager of Canadian Solar’s business in United States, said that it was critical to pick an efficient technology, but one that would work in marketplace. He named Evergreen Solar and Solyndra, both bankrupt, as companies that had not made good choices. “The continuing importance of innovation in the solar industry cannot be overstated”. “Our goal has to be to reach grid parity”. Some said that the trade dispute had harmed their businesses because of a preliminary finding of “critical circumstances” allows tariffs to be applied retroactively to goods entering the country 90 days before the ruling. The International Trade Commission will uphold or reject that finding, assuming that it remains in the Commerce Department’s final determination in the case. Marco Mangelsdorf, a solar contractor from Hilo, Hawaii, told the panel he had received a notice that he owed about $138,000 in duties (his profit for the year) on a $54,000 order placed before tariff announcement. He said he had become “collateral damage in a much wider economic and political dispute between countries and titans of the solar electric industry.” “To harshly penalize me and my small business and employees, along with the other independent American businesses caught in this same government retroactive tariffs dragnet, cannot and should not be seen as just or fair,” Mr. Mangelsdorf said.


Acerca de ignaciocovelo
Consultor Internacional

One Response to A Tug of War Over Solar Tariffs

  1. Professor Uziel Nogueira says: In the 21st century, the country that harness cost effective renewable, non-pollutant energy sources will have a dominant position in the global economy. China and the US are the two leading countries in this race and the WTO is the battle field. The United States trade case against Chinese manufacturers of solar panels is another example of this fierce competition. Which country is better positioned to win this energy race in the long run? The US has strong fundamentals but a wrong economic model. The US has a first rate R&D industry in the area of energy sources.

    The weak spot is the uni dimensional economic model that prioritizes SHORT TERM profits above all other factors.

    This is a major drawback for an infant renewable energy industry — wind, solar and renewable fuels — that has high producing costs. Without SUBSIDIES in the form of low interest rate loans or tax breaks, the industry cannot survive and compete effectively. For example, fuel ethanol production from corn cannot compete in the US market without costly and permanent farm subsidies.

    China has R&D capability comparable to the US and the right economic model. China’s economic development model — besides profit maximization — incorporates environmental and social issues. Chinese producers of renewable energy sources have a guaranteed long term financial support from the state with deep pockets. China is better positioned to dominate the global renewable energy industry in this new century.



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