U.S., China wage war of words over solar panels

By Eric Watkins

LOS ANGELES, May 28 – A war of words has broken out after China filed a complaint with the World Trade Organization in response to the earlier decision by the United States to impose anti-dumping penalties against Chinese solar panel makers.

“China firmly opposes the abuse of trade remedy measures and trade protectionism,” said China’s Ministry of Commerce, referring to a number of products including solar panels, which were recently subjected to punitive tariffs imposed by the U.S. Department of Commerce.

U.S. trade officials did not take kindly to China’s decision to approach the WTO, suggesting that Beijing was knee jerking.

“China’s resort to dispute settlement is premature and not an appropriate use of dispute settlement system resources,” said Nkenge Harmon, a spokeswoman for the U.S. Trade Representative’s office.

“This step by China suggests that China does not really care what the United States does; rather, China has determined without benefit of the facts that whatever the United States does will fall short of what China would like to see,” Harmon said.

ANTI-DUMPING DUTIES

What China would like to see is a relaxation of the U.S. decision to impose tariffs on Chinese-made solar panels, made under the claim that Chinese companies are improperly flooding the U.S. market with government-subsidized products.

The DOC issued anti-dumping duties of 31.14% on imports of solar cells and panels from Suntech, 31.22% from Trina Solar, 31.18% from other companies that had requested but not received individual duty determinations and 249.96% from all other Chinese producers.

U.S. solar industry firms, which had initiated their complaint against China last fall, welcomed the decision by the DOC.

“Today, SolarWorld and the many industry players who embrace the sustainable efficiency gains and price declines that come from fair competition can take heart that the U.S. government is standing up against Big China Solar,” said Gordon Brinser, president of SolarWorld Industries America Inc.

SolarWorld issued a statement contending that the government of China has “showered” its manufacturers with support to cover costs in many phases of their business lives, spur them to massively overbuild production capacity, export more than 90% of production and sell solar products at dumped prices in the U.S. market.

COST DISADVANTAGE

“The National Renewable Energy Laboratory estimates that without such sponsorship, Chinese producers confront a 5% cost disadvantage in producing and delivering solar into the U.S. market, compared with domestic producers,” SolarWorld said.

“Commerce’s careful measures could help thwart China’s illegal drive to control the solar market and supplant manufacturers and jobs in America, the very country that invented, pioneered and innovated solar to today’s mainstream viability,” said Brinser, also leader of the Coalition for Solar Manufacturing.

But it is not altogether clear that Brinser’s desires will be fulfilled.

SLOWING DEMAND

According Chinese state media, the global solar power industry is being hit by slowing demand and falling prices. But Suntech shows no sign of a downturn even in the face of the proposed U.S. tariffs.

“The production line is operating normally. And we are well prepared with our internationalized production,” Suntech spokesman Zhang Jianmin told China Daily. Suntech exported 460 megawatt modules to the U.S. last year, accounting for 23% of the company’s total global shipments.

“It is impossible to remain price-competitive with a tariff of 31%,” said Zhang.

But the U.S. tariffs apply only to solar cells, not to the modules in which they are assembled. That means firms on the Chinese mainland can serve the U.S. market provided they use cells from alternative sources.

Zhang told China Daily that the use of solar cells manufactured in Taiwan will push the price of his company’s modules higher, but he insisted that the company’s products will none the less remain competitive in the U.S. market.

CONSUMERS TO PAY MORE

CEOs from Changzhou-based Trina Solar and Suzhou-based Canadian Solar told China Daily that they also are using cells made outside the Chinese mainland to avoid the prospective tariff.

“The cost will be higher with the U.S. duties on Chinese solar products. However, the increased cost will be transferred to the downstream U.S. distributors, installers, and consumers,” said Gao Jifan, CEO of Trina Solar.

Meanwhile, China’s Ministry of Commerce is eyeing the U.S. very carefully for violations of trade rules, last week announcing that it uncovered six U.S. policies that support or subsidize the country’s renewable-energy industry, in contravention of WTO rules.

Chinese officials had no compunction is stating that retaliation over the solar panel tariffs is the purpose behind their search for U.S. violations of WTO policies

Ren Yifeng, executive secretary-general of the China Society for WTO Studies, said that China’s move in uncovering the alleged U.S. subsidies is aimed at hitting back at the anti-dumping duties imposed on Chinese solar products.

WORLD WAR?

But executives in China’s solar industry called for reason to prevail to avoid an all-out trade war that would, at the very least, hamper development of new energy.

“I hope all industry insiders take action to avoid a ‘world war’ in the solar industry, because fighting each other will not help to promote new energy,” said Canadian Solar CEO Shawn Qu. “What we should do is play according to the market rules, and make solar cheaper and cheaper.”

He’s got a point there. But this is an election year, and there are more voters in the U.S. solar industry than there are in China’s – at least as far as the Obama administration is concerned. As for price making a difference, well, U.S. voters are much more concerned about gas pumps than solar panels.

The only war we’ll see between the U.S. and China over solar panels is a war of words.

© Glamma Productions Inc. 2012

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About Eric Watkins

Eric Watkins is a consultant specializing in oil diplomacy. A former journalist, Mr. Watkins's work has appeared in numerous leading publications including The Wall Street Journal, The Economist, The Financial Times, and specialist media such as Oil & Gas Journal, Middle East Economic Survey (MEES), and Lloyd's List.
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One Response to U.S., China wage war of words over solar panels

  1. Pingback: Solar power faces eclipse from US tariffs|Business|chinadaily.com.cn « Ye Olde Soapbox

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