US launches new probe into China, Taiwan solar trade practices

7 February 2014

US officials have launched new investigations into Chinese and Taiwanese solar trade practices, in a move expected to rekindle tensions between Beijing and Washington.

The investigations announced by the US Commerce Department last Thursday come in response to a December petition by SolarWorld Industries America, the US' largest solar panel manufacturer. The company claims that China has managed to exploit a loophole in a 2012 trade case by using cells made abroad, mainly from Taiwan, in its production process - in effect avoiding US anti-dumping and countervailing duties.

Dumping refers to the practice of selling goods abroad at prices below their normal value. Countervailing duties are meant to combat unfair subsidies to producers and are also known as anti-subsidy duties.

"We are once again simply asking our trade regulators to investigate the facts and apply the well-established laws that enable free trade, robust competition, and lower long-term pricing," said Mukesh Dulani, president of SolarWorld, in December. "If fair competition can be restored, the US industry will return to growth."

China's Ministry of Commerce has urged the US to abandon the probe, and says it plans to follow the proceedings closely. Beijing will "resolutely safeguard [its] interests through various mechanisms," the ministry said in a statement published by media outlet Xinhua.

SolarWorld was one of the main proponents of the case that led to the original duties. Following a year-long investigation, the US Commerce Department had announced in 2012 that they had found evidence of both dumping and illegal subsidies, and would be imposing duties on Chinese-made solar cells to counter both.

These new investigations will focus on imports of certain crystalline silicon photovoltaic products, which are the basic component of solar panels, modules, and/or laminates. In 2012, imports from China and Taiwan of these products were worth US$2.1 billion and US$513.5 million, respectively, according to US data.

As before, Chinese producers will be investigated for both dumping and unfair subsidies. Taiwanese producers will only face an anti-dumping investigation. The US International Trade Commission (ITC) will make a preliminary injury determination by 14 February to evaluate whether the investigations will continue.

If the US ITC does find "reasonable indication" that such imports cause material injury to US producers - or threaten to do so - Commerce will then proceed with its investigation, and would announce preliminary countervailing determinations in March and its anti-dumping findings in June.

US solar industry remains split
The new investigation has the support of the Coalition for American Solar Manufacturing (CASM), a group of seven US solar panel manufacturers that includes SolarWorld, and had backed the original 2012 Commerce case.

Not all of the US solar industry is on board, however, with downstream producers being among those to raise questions over whether these investigations actually cause more harm to US renewable energy production than good. Imposing duties on foreign-made cells, they say, can actually raise costs for US producers that use these cells as part of their overall manufacturing processes.

"We oppose [December's] escalation of the US-China solar trade conflict," said Rhone Resch, the president and CEO of the Solar Energy Industries Association, following the news of the SolarWorld petition. "It's time to end this conflict and negotiations must play a role."

The past two years have been fraught with arguments between the US and China over their renewable energy trade practices, particularly as US producers struggle against the influx of lower-priced Chinese products. China's solar industry has experienced its own downturn in recent years, though new reports are indicating a potential resurgence.

The EU had similarly sparred with the Asian giant over solar trade, with the two sides later coming to a "price undertaking" arrangement last year that resolved the disagreement. The US was not part of this final deal, despite Washington officials being involved in some of the discussions. Under the terms of the agreement, participating Chinese exporters have committed to respecting minimum import prices. Non-participating Chinese companies will, however, be subject to a 47.6 percent average anti-dumping duty.

China imposes duties on US, South Korean polysilicon
In a separate development, China's Ministry of Commerce (MOFCOM) confirmed on Monday that it would be imposing anti-dumping duties on imports of US and South Korean solar-grade polysilicon, another ingredient used in making solar panels. Beijing had imposed provisional duties on these imports last July.

In the notice released on Monday, MOFCOM officials said that their investigation confirmed that there had been dumping of these products onto the Chinese market in the survey period, resulting in "substantial damage" to domestic industry. Furthermore, there is a "causal link between dumping and material injury," officials said.

US producers are also set to face anti-subsidy duties on these products, the Chinese ministry said in a separate announcement.

Solar stakes
With the low-carbon and energy-efficient technology market on track to triple by 2020, according to the United Nations Conference on Trade and Development (UNCTAD), the stakes are high in the battle for fair solar terms.

Last July China signaled its intention to more than quadruple solar generating capacity to 35 GW by 2015, which currently accounts for only a small part of the country's energy mix. The move appeared to respond to popular discontent over the hazardous smog that periodically engulfs major Chinese cities.

ICTSD reporting; additional sources, XINHUA, REUTERS.

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