Updated 1:30 pm ET, Tuesday, March 20
The U.S. Department of Commerce is set to announce on Tuesday on a trade case that’s taken the U.S. solar industry by storm: Whether the Chinese government is illegally subsidizing solar panel exports to the U.S. in violation of international trade agreements.
Already, though, both the Chinese and U.S. industries have largely coalesced around the view that the Commerce Department will likely find China guilty of illegal subsidies and vote to impose duties on all Chinese solar panels imported into the U.S. over the past 90 days. The question now is: how much will those duties be?
“We think there will be an affirmative determination,” said Timothy Brightbill, a lawyer with D.C. firm Wiley Rein representing the seven American companies that originally filed the trade case back in October.
“We aren’t forecasting the level of subsidies that will be found,” Brightbill added.
Analysts, however, have already put forth some numbers they think are likely: 20 to 30 percent import duties on the price of Chinese solar panels, according to Reuters.
That would be welcome news for the Coalition for American Solar Manufacturing (CASM) a trade organization made up of seven American solar manufacturing companies, including some competitors, that banded together in October 2011 to file the original illegal subsidies claim and another, separate but related offense: dumping, or flooding the American market with artificially low-priced solar panels, lowering the overall market price.
Currently, Chinese solar panels remain much cheaper than American ones, $1.41 per watt for the cheapest panels from Chinese company Astronergy, compared to $1.92 per watt for SolarWorld’s cheapest offerings, according to WholesaleSolar.com.
“We would have preferred the case to move more quickly,” said Gordon Brisner, CEO of SolarWorld America, an Oregon-based subsidiary of German company SolarWorld AG, and the lead American petitioner in the case against China, in a phone interview with TPM. “But we understand why Commerce took the time it did given the complexity of this case and the non-transparency from China.”
A recent report by CASM found that the U.S. solar industry’s trade surplus with China disappeared in 2011 and actually became a trade deficit, after having achieved an unlikely positive trade balance with China in 2010.
But not everyone thinks thats such a bad thing: A rival coalition of American solar companies, the Coalition for Affordable Solar Energy (CASE), was formed in November 2011 to represent the interests of so-called “downstream” companies — those that don’t make solar panels but do installation, financing, repairs and other servicing. And that part of the American solar industry is booming: Another separate recent report from the unrelated Solar Energy Industries Association and market research firm GTM Research found that solar installations soared a record 109 percent in 2011, up to 1,855 megawatts, enough to power upwards of 370,000 homes.
CASE doesn’t want to see a trade war erupt between China and the U.S. over solar panels, as they believe it would hurt the overall U.S. industry.
But Ed Rothschild, a spokesman for CASE told TPM that his organization was resigned to the fact that Commerce would likely rule in CASM’s favor and enact import duties on the Chinese panels.
“It’s the rare instance where the petitioner doesn’t win in these types of cases,” Rosthchild told TPM. “We think this will go the way of the petitioner,” e.g. SolarWorld and CASM.
Still, Rosthchild said that CASE was hoping that even in the event the case didn’t go in its favor, it could end up in some kind of “negotiated resolution” between the U.S. and China rather than an all-out trade war, with each country raising tariffs and conducting investigations on the other. Already, China has motioned that it will begin investigating American produces of polysilicon — the raw material from which most solar panels are made — for illegal subsidies and dumping.
That said, CASE wasn’t above launching a last-minute attack on its rival CASM. On Monday, CASE called upon CASM to release a full list of subsidies its members were receiving from the U.S. government, to show that the U.S. manufacturing industry was arguably as heavily subsidized as China’s. CASM responded by saying that the facts speak for themselves. Estimates place the total number of Chinese subsidies at $30 billion compared to the $1.1 billion estimated for the U.S. market.
Late update: The Commerce Department on Tuesday afternoon found China had illegally subsidized solar exports to the U.S. and moved to impose import duties on Chinese solar companies, sources close to the case told TPM.
Most Chinese companies will receive import duties of 3.59 percent, but two companies in particular were singled out for separate import duties: Trina Solar will have to 4.73 percent back to the U.S. on the price of every solar panel imported, and Suntech will have to pay 2.9 percent. Still, the amount of import duties was far less than had been anticipated by Wall Street analysts.
The Commerce Department has yet to release an official statement. Stay tuned.