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US Department of Commerce finds massive surge in Chinese solar imports

The US Department of Commerce has found a large surge in Chinese solar imports, which could trigger 90-day retroactivity if it finds duties are warranted.

By Kari Williamson

In the latest developments in the spat between US and Chinese solar manufacturers over potential dumping of Chinese solar products into the US market, the US Department of Commerce has taken action against the surge of Chinese solar cell and panel imports ahead of Commerce’s first preliminary determination on duties, now scheduled for 2 March, 2012.

Commerce’s finding of “critical circumstances” means that if the agency imposes preliminary countervailing duties in March, the duties will apply retrospectively to all imports of solar cells and modules from Chinese exporters that were brought into the US starting 3 December, 2011, the Coalition for American Solar Manufacturing (CASM) says.

This is the first time that Commerce has issued such a finding in advance of a preliminary countervailing duty determination.

Aside from the determination on anti-subsidy (also called countervailing) duties, the agency is scheduled to issue a separate preliminary ruling on anti-dumping duties on 27 March.

Commerce will issue a separate critical-circumstances ruling in the anti-dumping investigation.

Separately, the US International Trade Commission also issued a unanimous preliminary determination on 2 December that the imports are harming the US solar manufacturing industry.

“After several years of massive imports of illegally subsidised and dumped Chinese solar products, the US solar manufacturing industry and its workers greatly appreciate the Department of Commerce’s finding that importers of Chinese products have mounted a massive surge in product to evade accountability to US and international trade law,” says Gordon Brinser, President of SolarWorld Industries America Inc, which leads CASM.

“Recognising that an attempt at circumvention can happen, the trade law allows Commerce to act against such abusive behaviour. We value Commerce’s decision, and we hope that it will send a clear message to the marketplace about Commerce’s commitment to using all of its tools to combat unfair trade.”

Study says import tariff would harm US solar

An economic analysis by The Brattle Group, however, finds that a 100% tariff on imported solar PV cells and modules from China could result in as many as 50,000 net lost jobs in the US over the next three years.

Furthermore, retaliatory tariffs placed on US exports of polysilicon to China would put nearly 11,000 more American jobs at risk in the first year following tariff imposition.

According to The Brattle Group’s analysis, the imposition of tariffs will “slow the growth in domestic demand for photovoltaic systems by homeowners, commercial establishments and power producers, resulting in substantial job losses.”

The study, commissioned by the Coalition for Affordable Solar Energy (CASE), examined the impacts that imposing a 50% tariff or a 100% tariff would have on the US solar industry through 2014. Both scenarios are lower than the up to 250% tariffs sought by SolarWorld.

According to the study, a tariff of 100% would result in consumer losses between US$698 million and US$2620m. That would eliminate between 16,917 and 49,589 American jobs over the next three years. Similarly, a tariff of 50% would result in net consumer losses between US$621m and US$2287m. That would cause between 14,877 and 43,178 job losses over the same period.

“This analysis makes it clear that imposing even a 50% tariff, much less than SolarWorld has requested, would be devastating for American workers,” says Jigar Shah, President of CASE. “We cannot allow one company’s anti-China crusade to threaten the U.S. solar industry and tens of thousands of American jobs.”

According to the Brattle analysis, if no solar import tariff is imposed “the aggregate demand for photovoltaic systems is expected to grow from 1678 MW in 2011 to 4894 MW by 2014. A 50% tariff will raise industry-wide prices and delay solar industry growth, with total MW demand falling to as low as 3350 MW in 2014. A 100% tariff will delay this growth even more with demand falling to as low as 3159 MW in 2014. It is a significant decline in the market for solar cells that is central to the decrease in jobs identified in this study.”

Likely retaliation

Another aspect is the effect of likely retaliation by China to any US imposed tariff on imported solar cells from China. According to the report, “retaliation would likely take the form of a tariff on US polysilicon exports. The US is a major supplier of this component of photovoltaic modules, and removing Chinese demand for US-manufactured polysilicon is expected to result in around 10,881 US job losses in the first year after tariffs are imposed.”

The Brattle Group’s study did not consider the potential impacts that increased solar electricity prices could have on undermining support for solar policy across the United States. Analysts have expressed concern that solar industry infighting and higher prices would undermine the solar industry’s credibility and public policy support.

“Cost is the single most important factor in the ability to grow US solar markets. Most US incentive programmes are predicated on a declining cost-curve. In these political and economic times, getting to scale will depend on parity with alternatives,” says Adam Browning, Executive Director of Vote Solar Initiative, a non-profit public advocacy organisation that works to build state solar markets.

CASM response to the study

The Coalition for American Solar Manufacturing (CASM), has issued the following statement in response to the CASE/Brattle Group study:

“SolarWorld and the other members of CASM strongly support the creation of American jobs in the solar industry,” SolarWorld's Brinser says

“This highly speculative study ignores the illegality of China’s actions and fails to consider the harm those actions have caused to high-tech manufacturing jobs in the solar sector. We do know that thousands of good-paying American manufacturing jobs have already been lost to illegal Chinese dumping and subsidies for solar products. Our goal is to build America’s solar manufacturing base and the good jobs with benefits, innovation and competition that come along with it.”

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