US confirms final duties on imports of China, Taiwan solar products

18 December 2014

The US Commerce Department announced on Tuesday final anti-dumping and anti-subsidy duties on imported solar products from China and Taiwan, in a move expected to bring back to the fore long-standing tensions between Beijing and Washington on renewable energy trade.

The anti-dumping probe focused specifically on whether imports of certain crystalline silicon photovoltaic products – including cells, modules, laminates and/or panels – from China and Taiwan have been sold in the US at prices below their normal value, a practice known as “dumping.”

The final dumping margins in this investigation, the US agency said, range between 26.71 to 165.04 percent for products made in China – a significantly wider range than the preliminary duties announced back in July – while finding dumping margins from 11.45 percent to 27.55 percent for Taiwanese-produced goods.

Meanwhile, the countervailing probe focused on whether Chinese producers of those same imports also received unfair state aid. In this case, US investigators deemed that these producers were receiving countervailable subsidies ranging from 27.64 to 49.79 percent – also marking an increase from the preliminary duties announced earlier this year. 

Questions of scope

The investigations were both launched in January in response to petitions filed by SolarWorld Industries America Inc., which had claimed that Chinese producers were avoiding existing duties on these goods by using cells made abroad, primarily from Taiwan, in their production processes.

Those products already facing US duties as the result of a 2012 investigation are excluded from the scope of these new probes. 

Back in October, the US Commerce Department proposed expanding the new investigations’ scope to cover all products assembled in China, even if most of the manufacturing process occurred abroad.

Analysts, such as Paula Stern of the Washington-based advisory firm The Stern Group – which represents Hanwha Q CELLS, an American solar producer – have warned that this move could create substantial uncertainty for producers, and potentially be inconsistent with some of the US’ trade commitments at the WTO.

“If the Commerce Department scope expansion is finalised… it means punitive tariffs on Malaysian imports, which have nothing to do with the scope of this investigation,” Stern said, noting that much of the cells used in Hanwha Q CELLS’ production are made in Malaysia and later assembled in China.

Malaysia has become the world’s third-largest producer of solar equipment, and analysts say that the Southeast Asian nation could well boost its standing in the market as a result of the new US duties – though the expansion of the Commerce probe’s scope could complicate matters.

“Under WTO rules, member countries have the right to be secure in the knowledge that their products won’t be the target of penalties intended to be imposed on another country,” said Stern in an op-ed published by The Hill. Stern previously chaired the US International Trade Commission (ITC) and also served as an ITC commissioner.

Trade tensions brewing

Trade spats about renewable energy products have become increasingly common between the US and China in recent years, and the Asian economy’s practices in this area have been subject to high-profile investigations by other major trading partners, such as the EU.

US statistics placed the value of imports of certain crystalline silicon photovoltaic products from China and Taiwan at an estimated US$1.5 billion and US$656.8 million, respectively.

While the EU case ultimately led to a negotiated settlement through a “price undertaking” mechanism, involving a combination of minimum prices and import quotas, repeated efforts to reach a similar deal between Washington and Beijing have so far failed to bear fruit.

Concurrently, the US, EU, and China are all involved in negotiations for an Environmental Goods Agreement that would liberalise trade on various green goods. Those talks, which would focus on the reduction of import tariffs and do not currently address issues such as trade remedies, are currently in the early stages, having been launched earlier this year. The various members are currently working on putting together a broad “wish list” of products for tariff reduction, which would eventually be whittled down to a final list. 

US solar industry rift deepens

The US trade remedy investigations on these products have also fuelled a rift within the American solar industry, pitting solar cell makers against downstream producers that use these cells in their solar projects.

“These remedies come just in time to enable the domestic industry to return to conditions of fair trade,” said Mukesh Dulani, US president of SolarWorld, in a statement on Tuesday. “The tariffs and scope set the stage for companies to create new jobs and build or expand factories on US soil.”

However, the Coalition for Affordable Solar Energy (CASE), a group that represents various companies ranging from local installers to project developers, has long been among the most vocal opponents of these trade investigations, warning of their potential to actually undermine the competitiveness of the US solar industry.

Calling the investigation’s scope “unprecedented” in its reach, the new duties “will undercut the growth of American solar jobs, hurt the American solar industry and make it more difficult for solar technology to compete against fossil fuels,” said CASE President Jigar Shah in response to the news.

Earlier this month, various US solar companies that use these imported cells in their projects reportedly told the US International Trade Commission – another agency involved in these trade probes, which focuses on whether injury has been caused to US producers as a result of dumping or countervailable subsidies – that the duties could hurt their own production efforts, given that US-made alternatives are not equivalent.

“US suppliers cannot supply the high efficiency cells and high wattage modules that we use for our projects,” said Polly Shaw, SunEdison vice president of government affairs, in comments reported by Reuters. Shaw added that US solar products are “not interchangeable” with imported versions.

Injury determinations set for January

The long-running saga is not over, however, with another US government agency now set to review whether these imports materially injure, or threaten to injure, American industry.

The deadline for the latter probe, conducted by the International Trade Commission, is 29 January 2015. If injury is found by USITC, then final anti-dumping and countervailing duty orders will be issued from early February onward. Otherwise, no duties will be applied.

ICTSD reporting; “Taiwan, China solar producers no threat to U.S., commission hears,” REUTERS, 8 December 2014; “Obama Proposes Expanding China Solar-Cell Levy to New Suppliers,” BLOOMBERG, 8 December 2014.

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