14 Feb 2012

Guest Opinion: SolarWorld states its case for tariffs on Chinese solar panel imports as Xi Jinping visits the U.S.

Written by Jim Pierobon

China's Xi Jinping is the assumed next leader of the Chinese Communist Party. Watch for what he says about the raging dispute over China's solar panel prices and the trade war that looms. CREDIT: sify.com

The visits this week in Washington, Iowa and Los Angeles by the presumed next general secretary of the Chinese Communist party, Xi Jinping, underscore the stakes for solar energy companies that buy panels from Chinese companies and companies with operations in the U.S. whose prices are being undercut by China’s subsidies.

The U.S. Commerce Department has delayed reaching an interim decision on in import levy until March 2 because of Xi’s visits. So after the political ‘dust’ has settled, most international trade experts and many politicos expect a decision to begin imposing an import fee, which would be retroactive 90 days.

To make it final, the International Trade Commission must provide its final determination. Despite its initial 6-0 preliminary vote to proceed with an investigation, sometimes it does not, in the end. agree with the Commerce Department. So stay tuned. What impact an import levy could have on solar prices, American jobs and its ability to compete in this high-profile industry remains to be seen. You can read the previous EnergyFix post on this here.

To take a step back for a moment, The Energy Fix welcomed this Guest Opinion from Ben Santarris, the head of communications and sustainability at SolarWorld Industries America Inc., the company that filed the anti-dumping suit against China along with a coalition of six other manufacturers. SolarWorld operates the largest U.S. solar panel manufacturing facility in Oregon.

SolarWorld USA's Ben Santarris stands up for his employer and six other U.S.-based solar panel manufacturers. CREDIT: SolarWorld Industries America

The Energy Fix welcomes opposing views and other perspectives on these and other topical energy issues.

By Ben Santarris, Head of Communications and Sustainability for the Americas, SolarWorld USA

Our trade case focuses on China’s unfair trade practices, which have injured the U.S. solar manufacturing industry. In particular, massive and all-encompassing support from the Chinese government has enabled manufacturers to mount production capacity that is 16 times larger than its domestic demand for the purpose of selling at artificially low prices to injure the U.S. manufacturing industry and seize market share. The chairman of Suntech admitted as much in a 2009 article in The New York Times. In short, our trade complaint pivots on the illegality of a government’s role in underwriting an export campaign to eliminate U.S. domestic competition.

China does not have a comparative advantage in solar manufacturing; in fact, it costs more for Chinese solar manufacturers to produce and deliver product into the U.S. market than it does for domestic manufacturers. Last week, the National Renewable Energy Laboratory posted a presentation that concludes Chinese manufacturers face a 5 percent cost disadvantage, when shipping costs are included.

China’s comparatively poor energy mix to power manufacturing equipment, operations and transportation, carbon impacts from trans-ocean shipping, poor and inconsistently applied environmental, labor, safety, quality and freedom-of-information regulations governing Chinese production – though extremely important in evaluating the comparative production impacts – are issues that are secondary to the actual case.

SolarWorld and its coalition believe in domestic production in the major markets where we sell, sustainable manufacturing, robust and legal international competition to drive up efficiencies and push down pricing long term, and free trade – free of illegal foreign government intervention. In that way, the trade case is merely a first step in a long-term strategy to restore fairness for manufacturers to produce, and grow operations and jobs, on U.S. soil – sustainably, in all senses of the word.

Given the losses that even Chinese producers have reported for 2011, current prospects are sustainable only for those companies operating in an economy where government can prevent the natural laws of supply and demand from taking their course. In other words, if the current situation continues, everyone goes bust except companies owned or heavily underwritten by the Chinese government.

In that case, no one but the Chinese manufacturers and importers win. It would be naïve to expect that a unilateral price-setter, having invested billions in subsidies to sell below fair market value, would continue to hold prices artificially low. On the other hand, robust competition has already made solar affordable for all, and if restored, it can continue to grow and build markets for solar energy over the long term.

Xi Jinping’s visit to the United States is an opportunity to insist that the Chinese government and its industries hold to the requirements as well as enjoy the benefits of membership in the World Trade Organization (WTO). China’s injurious dumping and subsidies must stop, and the Chinese government should regularly and completely report all of its subsidies, as the WTO expressly requires.

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