The U.S. government hasn’t decided yet whether or not to slap tariffs on Chinese solar panels imported into the U.S., but that outcome is looking more and more likely: On Monday, the U.S. Commerce Department announced it had found “reasonable basis to believe or suspect” that Chinese subsidies of solar panels imported to the U.S. were in violation of international trade agreements.
Further, in an historic decision, the Commerce Department said that when it makes its final decision on March 2nd whether or not to enact tariffs on Chinese solar panel manufacturers, the tariffs will be retroactive for 90 days — requiring Chinese companies to pay drastically higher fees on all of the panels that they’ve imported to the U.S. since December 3, 2011. It’s the first time that the agency has rendered such a decision in advance of making a determination on the actual tariffs.
And in a bitterly ironic twist, a big part of the reason the Commerce Department announced its decision today is precisely because it observed the Chinese manufacturers drastically increasing the volume of imports to the U.S. over the past few months — up nearly 15 percent in the case of at least two companies — following the original complaint from U.S. solar panel companies in October of dumping by Chinese manufacturers.
“Normally in a trade case, when a petition is filed, we see importers back off the market,” said Timothy Brightbill, a lawyer at Washington, D.C. law firm Wiley Rein, who represents the American solar companies that filed the original complaint against the Chinese manufacturers.
“But in this case, by rushing [solar panels] in in an effort to beat the import duties, it only makes things more clear that they were in violation,” Brightbrill added.
Brightbill is counsel for the Coalition For American Solar Manufacturers (CASM), an industry trade group representing seven solar companies, led by German solar giant SolarWorld, which has a North American plant in Hillsboro, Oregon.
The group filed complaints with the Commerce Department and the International Trade Commission (ITC) in October alleging that they had uncovered evidence that Chinese solar panel companies were “dumping” their wares into the U.S. market, that is, exporting numerous solar panels to the U.S. below the U.S. market price, in an effort to force U.S. solar panel manufacturers out of business. The groups said that the dumping margins were “well in excess of 100 percent,” and called for corresponding tariffs of 100 percent.
The Commerce Department and the International Trade Commission have been investigating over 30 different Chinese solar subsidy programs ever since.
In December, the ITC said “there is a reasonable indication that a U.S. industry is materially injured” by Chinese imports.
Meanwhile, the Chinese government itself is considering opening an investigation into American polysilicon maufacturers — the makers of the raw materials of solar panels — for dumping in that country.
But Monday’s announcement is the best signal yet that Commerce agrees with CASM’s complaint and will likely severely penalize China for violating the World Trade Organization’s Agreement on Subsidies and Countervailing Measures.
CASM could not have been happier with the announcement, seeing as it is exactly what the group asked for just five days ago.
As Gordon Brinser, president of SolarWorld America said in a statement, “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.”
But the group isn’t popping the champagne quite yet. In fact, their good news was preemptively doused by a report released just hours earlier by Washington, D.C.-based consulting firm the Brattle Group, which found that the U.S. market could could lose between $698 million to $2.6 billion and up to 60,000 American solar industry jobs if the U.S. government imposes tariffs on Chinese solar panel imports.
The Brattle Group report was commissioned by another, rival American solar industry organization — the Coalition For Affordable Solar Energy (CASE), which doesn’t agree with the dumping claims and has even called upon CASM to drop their complaint entirely, arguing the resulting damage to the overal U.S. solar industry would be catastrophic for consumers and manufacturers alike.
“We cannot allow one company’s anti-China crusade to threaten the U.S. solar industry and tens of thousands of American jobs,” said Jigar Shah, President of CASE, referring to SolarWorld in a statement on Monday.
But CASM lashed back out at CASE, with Brisner saying in a statement “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.”
Indeed, Brightbill brushed off CASE’s concerns:
“It’s very common in these types of trade cases, for folks to claim the industry — in this case the solar industry — is going to be severely harmed, that tariffs will set back solar for years and years,” Brightbill told TPM. “The important thing to keep in mind is that this is a legal process. The Commerce Department is simply looking for, one: Is there dumping? Two: Were there subsidies? Three: Has the U.S. manufacturing industry been hurt as a result?”
China is estimated to have subsidized its top five solar manufacturers to the tune of $30 billion in 2010 alone, according to The Guardian. Meanwhile, the U.S. offered subsidies of just over $1 billion to its entire solar industry the same year, according to the Energy Information Administration.
As for some of the specific Chinese companies named in CASM’s complaints, they have continued their policy of “deny, deny, deny.” Chinese company Trina Solar, for example responded to news saying, “We are opposed to any suggestion that our U.S. imports surged as the result of efforts to evade potential tariffs,” and “Further, due to production cycle and delivery logistics, it is an established industry pattern to see the majority of any quarter’s shipments occurring in the last month,” as quoted by Greentech Media.
Still, everyone is on pins and needles until March 2nd, the date that Commerce’s preliminary determination on tariffs is due. We’ll keep you updated on any significant developments before then. Stay tuned.
Carl Franzen
Carl Franzen is TPM Idea Lab's tech reporter. He used to work for The Daily, AOL and The Atlantic Wire (though not simultaneously, thankfully). He's never met a button that didn't need to be pressed. He can be reached at carl@talkingpointsmemo.com.
Ahh, a trade war with China and every Republican is praying that the US loses...
About time.
Interesting article. It has a few minor errors. First, Commerce does not actually make the decision to impose tariffs retroactively by itself. The US International Trade Commission also has to agree -- and they almost never do. That sort of thing often happens in international trade matters, by the way. An administration publicly announces an action that seems to restrict imports, but then through very subtle legal methods undoes the effect. Or if the administration doesn't, the courts or the WTO, which strongly support "free trade," take care of it. That said, it might actually happen in this case, which seems very strong.
Also, this is the second time that Commerce has announced before its decision on the tariffs themselves that it would make the tariffs retroactive. The first time involved hot-rolled steel from Brazil in 1998.
It's reasonable that the US should take steps to even the playing field in such an important emerging industry, but as the nation which is by far the highest per capita consumer of oil, something neighboring 5 percent of the world's population consuming a quarter of its petroleum, we, more than any other nation, have a responsibility to be part of the solution and not the problem in the transition to greener energy.
China subsidizing their industry is nothing more than a PR excuse.
The fact is, if the lobby group is powerful enough, any import can and probably will have a tariff placed on it.
New Zealand is a classic example: the only western country to have achieved zero - yes, ZERO farm subsidies, but all livestock imports - dead, alive, packaged or whole carcasses ready for processing - has tarifs placed on it on entry to the U.S.
Because the U.S farming industry is one huge inefficient good old boy club that would die an instant death if it didn't receive all those city-folks derived subsidies.
The U.S believes in free trade the same way it believes in Democracy in Iraq, and Does Not Torture.
Good...
"China is estimated to have subsidized its top five solar manufacturers to the tune of $30 billion in 2010 alone, according to The Guardian. Meanwhile, the U.S. offered subsidies of just over $1 billion to its entire solar industry the same year, according to the Energy Information Administration."
This is a huge problem right here. If we want to lead the green revolution (which really should be the goal), then the government needs to heavily invest in it. $1 billion in subsidies compared to $30 billion is just sad.
Beavis - But, but, but ... Solyndra!
Remember... the Republican line is that ALL solar panels MUST be made in China. Because we wouldn't allow that hippie filth here in America!
China control rare earth that make lithium batteries and they control the world with solar panels just like middle east control grude oil and natural gas. The Chinese also own most of the world's manufacturing capacity, white people are blind and stupid but worst they still don't know it! LMFAO!
emenot Please post in mandarin, it looks better.
emenot They don't own the wallets that buy their goods, without US customers, they will have little to emerge market into.
They do NOT own all of the rare earth either, that's commie BS.
emenot Yeah we're so stupid in our refusal to live in indentured servitude.
Grow up you sad little child.
emenot "owns most of the world's manufacturing capacity" - you really do see human beings as property, don't you kiddo?
Given your behavior is clearly that of a ten year old, I take it that's the kind of sick inhumanity your parents are teaching you. And to have a good laugh about it.
Well, little one, the world would be better off without little monsters like you. We beat your kind in ww2 - and if we have to, we will beat you again if we have to.
emenot Hey, Enjoy breathing that Chinese air. It makes you high!
emenot Tell me this was snark...
It is very important to do this but for a completely different reason. China is massively polluting their land with their poor regulations and lack of regard for the environment. American solar panels are getting cheaper by the day, even with strict environmental regulations. If China wants to play fair, they should do so by not destroying the planet to achieve their goals. Then maybe the cost will even out with the American producers.
Is this good for the planet though? The cheaper solar panels are for the consumer, the more competitive they are with fossil fuels. Do we really want to be increasing taxes on clean energy?
puppycow2000 "Do we really want to be increasing taxes on clean energy?"
Most people want the opposite. Vested interests in carbon fuel want increased taxes on clean energy. That is part of the issue here.
puppycow2000 What's good for the planet is the US ending fossil fuel subsidies and increasing alternative energy subsidies instead. We CAN build our own!
votevetswapuppycow2000 Sure. We can build our own, but China can do it cheaper and alternative energy is not a local issue, it's a global one. I say if China wants to be the world's producer of solar cells, let them, and people who worry about jobs can find solace in the fact that the vast majority of jobs in the American solar industry are installation and maintenance jobs, not manufacturing.
Flying Squidvotevetswapuppycow2000 Gotta disagree on this one - we still need a manufacturing base and alternative energy production is as good a place to start as any. Did you know we actually invented the VCR (see Ampex). At some point in the 1980s we decided we really didn't want to make things any more and we've been playing catch-up ever since. China can outperform us with regard to lax environmental regulations and cheap labor now, but their sun is soon setting. We've got to get out of the Walmart mentality of slitting our own economic throats just so our consumers can save a few dollars.
Jack of All TiradesFlying Squidvotevetswapuppycow2000 I think the bigger problem is that Americans in general (and Republicans in particular) don't want to put any R&D or infrastructure or other investments to jumpstart clean energy production in the US.
They just want to slap on tariffs and complain. I don't know all of the gory details so the tariffs may very well be warranted, but at some point if China is going to spend hundreds of billions to develop this stuff and we're devoting peanuts, we're going to lose no matter how many tariffs we put on.
At some point we have to start innovating again instead of just saying "we're America and the only way we can be beaten is if someone cheats."
Jack of All TiradesFlying Squidvotevetswapuppycow2000
Being able to manufacture locally is greener, ultimately. It takes an awful lot of fossil fuel to ship cheap goods over from China.
General investment is a problem at the federal level, along with internalizing the external costs of fossil fuels which would close the price gap between renewables and fossil fuels fairly quickly.However, it is simply wrong to say that "they just want to slap on tariffs and complain"--the use of "they" here is unhelpfully ambiguous and seems to, based on your above sentence, imply that this is an act brought about by the American public and Republicans. Rather, this is a legitimate trade complaint brought to the ITC by a trade group independent of any political support. Such a complaint would occur regardless of subsidy support levels because it deals with market and trade rules established by the WTO.Dumping is illegal, pure and simple. In the past the United States and Europe have been major perpetrators of dumping in agricultural markets, and the issue has been a continued point of contention in DOHA trade negotiations. Selling below the cost of production is a huge market distortion, and arguably drives innovation and quality out of the marketplace. It's incredible to hear such indifference about the complaint, and rather dismissive responses about how China can do it cheaper. The question is, cheaper under what circumstances? And this is precisely the question that the complaint seeks to answer. Without selling at distorted prices, can Chinese solar manufacturers compete with US based manufacturers? If they can't, the answer is not in fact "they can do it cheaper", but we can, and if under fair market conditions we can do it cheaper, this has important long-term implications for our manufacturing base -- even with labor and regulatory costs taken into account; though I would argue labor is the factor to focus on in this case. Sure, installers may not enjoy this, but what scenario do you want over the long term: one in which we lose not only manufacturing jobs but high-tech engineering ones as well, while retaining installer positions; or, one in which we retain those manufacturing and engineering jobs, and over the long run retain installer positions? It's rather absurd to think that this decision will dissolve the long-term solar installer market. These positions will be there in the long-term, and the imperative of climate legislation will accelerate growth in 5 to 10 years despite the current political realities, whereas the positions exist in their current state due to distorted production costs. Blows my mind a bit that on this board in particular there is such a shrug your shoulder "its cheaper therefore better" mentality.
RealWorldProgressiveJack of All TiradesFlying Squidvotevetswapuppycow2000
RealWorldProgressiveJack of All TiradesFlying Squidvotevetswapuppycow2000 Additionally, the notion that dumping also is good for consumers because it lowers costs is an incomplete and short-sighted analysis of market dynamics. Driving competition out of a market through price distortion exposes consumers to long-term price fluctuations, because the distorting firm gains monopoly or quasi-monopoly power over the market, which can allow it to sell at higher prices in the future -- which it is likely to do in order to maintain profitability and/or relieve subsidy support that becomes politically untenable. Additionally, the price distorting firm may not be very efficient in its operation or produce goods of high quality, which again, over time will incur costs to the consumer which will have less market alternatives to pursue in the future. But, hey, it's cheaper now so it must be the best option -- we know how well that mentality has worked in the past, right?
Flying Squidvotevetswapuppycow2000 If Chinese solar panels are cheaper because they are made by wage slaves working 12 hours a day in dangerous conditions, living in dormitories, denied unions, and paid in pennies, then no, they shouldn't be the world's supplier of solar cells.If it's 1792, do you say, "Jamaica can be the world's supplier of rum! They can do it so cheaply!"
Flying Squidvotevetswapuppycow2000
This seems all great & wonderful until all American manufactures (Solyndra anybody) are driven out of business and China holds a monopoly on these panels.
Then ya can watch these artificially low prices skyrocket.
Bill from DoverFlying Squidvotevetswapuppycow2000 Solyndra also went out of business thanks to the commodities market that manipulated the costs of silicon to give the advantage to the Chinese.
Dave AdamsJack of All TiradesFlying Squidvotevetswapuppycow2000 It can compare favorably to moving goods much shorter distances over land. Very roughly speaking, you can move a ton of stuff almost a thousand miles on a large container ship with a gallon of fuel.
Dave AdamsJack of All TiradesFlying Squidvotevetswapuppycow2000 Not that much, actually. Container ships are very efficient because their cargoes are so huge.
skatscanBill from DoverFlying Squidvotevetswapuppycow2000
No, Solyndra went out of business because they were stuck on the chemistry of CIGS thin film. Silicon prices dropped because its availability increased dramatically and it is still going down. If they pulled their heads out of their asses and switch to amorphous silicon or Cadmium Telluride, they could have been competitive. They were charging $3.75 or so a watt and at that time you could by american Crystalline modules for $2.50 a watt. Solarworld is down to a wholesale price of $1.25 a watt, The chinese are between 95 cents and $1.05, they have a 20% advantage at most. Claiming 100% is ridiculous.
Not only is this interesting for the trade part, but for the manufacturing part.
China decided to get the price down. The US has decided for innovation. Solyndra was focusing on flat roofs, which we have a lot of. But the early adopters here, because we subsidize oil over sun, need low-cost product to start. China provides that.
If we were truly interested in diversification, we'd figure this out.
staley.dan
They decided to get the price down by subsidizing the cost of their panels, by using really cheap labor and by ignoring a lot of the safety and antipollution technology that's required in this country.
Dave Adamsstaley.dan Don't forget the scum on Wall Street who manipulated the commodities markets on the costs of the material to make solar panels NOT made by Solydra.
NPR had an interesting piece on the solar trade war a few weeks ago. While solar manufacturers in the U.S. are hell-bent on stopping China, solar installers, maintenance people, etc., in other words the vast bulk of the solar industry in the U.S., is devoted to continuing the import of cheaper Chinese solar panels because it impacts their bottom line.
Flying Squid
I think it has more to do with leveling the playing field. Do you suppose that an American solar panel manufacturers are even allowed to sell American-made solar panels in China?
Hell we would"ant want any of that free market stuff gumming our profit margins, and those poor utility investors what will they do
t.dougan55 Sarcasm aside (yours and mine), still not sure which side you're on. Your comment seems kind of obscure. There is no illusion about China having a free market system, is there? It's a complete financial monopoly. The government pegs the value of the currency, it basically owns everything. If they want to sell solar panels here for 1% of what it costs to make them, they go can go ahead and do that. Their manufacturers are not going to "go out of business". The only thing between the USA and complete economic devastation is government intervention of this type, and in my opinion it's been too long coming.
One of the biggest lies of the past 30 years is that “Free markets” are somehow the hallmark of democracy and they should be allowed to roam free, untrammeled by evil governments who never do anything right. When you hear this one, huge amounts of money are leaving your wallet.
We're all in the same boat here in the US, when one industry is attacked, the rest are not far behind. Unless of course you're not in the USA, t.dougan55, in which case this doesn't apply to you.
mass murdocht.dougan55
" First they came for the textile manufacturers, but I stood by and said nothing. Then they came for the steel manufacturers, but again I stood by and said nothing. Then they came for the auto manufacturers... Finally they came after my industry and no one was left to speak for me".
I know, it's hyperbole. But having a healthy domestic manufacturing base is a good thing. It's inherently greener for one thing because you're not getting your goods from halfway around the globe. We've let so many industries die already, but maybe we ought not let this one slip away without a fight. It isn't going to kill solar power to make sure that Chinese manufacturers stop dumping product.
I'm a republican. I am supposed to think this is evil because solar energy is based on sharia law (Solyndra), and because a tariff would be "job-killing". Now I'm going to turn on FOX and see if I was right!
that's going to really hurt China in the wallet since they seem to not understand the concept of "retroactive"
NerdRage I guarantee that the chinese gov't will reimburse their manufacturers for the subsidies... also they will put a tariff on our wafers.... most chinese module manufacturers buy wafers from America.... that will hurt American manufacturing....
What everyone is missing here is the retroactive tariff will hurt countless American Business, both on the consumer and industry side. Anyone in the business is aware of the 5% safe harbor rules. Millions of projects have already started and to meet safe harbor the projects must take possession of the panels within 3.5 months of whatever date they ordered in December. If the customer can't take possession than they will lose the 30% federal grant. The large majority of projects depend on the grant to float. So what is going to happen with all these projects that started and the millions of dollars owed to the contractors that just went away. I will tell you what is going to happen. Most projects will be left partially built which will put the business that purchased them in deep debt with no future income to pay the debt. Next the contractors will suffer insurmountable losses that will put them under. I'm all for tariffing Chinese products but retroactive taxes will cripple Americans not the Chinese. Now solar companies are forced to pay 20-30%more for panels to try to get these jobs done. They can't go back to the customer with the increased cost after the contract is signed. This is no different than the Feds taking money directly from the solar companies bank account. What is next, the garment industry, automotive industry? This is why we had the Boston Tea Party we were taught to be so proud of. We can't allow the gov't to steal money from Americans thru some BS loop hole. If we do than all businesses in the United States will someday become subject to the Federal takeover. Beware!!!!!
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