Solar Dumping Decision Reached

In a preliminary ruling, the Department of Commerce announced on May 17 that Chinese solar panel makers had “dumped” solar panels on the U.S. market, illegally selling them at unfair prices. Therefore, the department said Chinese-made crystalline silicon photovoltaic cells and panels will be subject to tariffs of 31%.

The dumping charges were brought last year by seven solar manufacturers with U.S. plants, led by SolarWorld, an Oregon manufacturer. They charged that illegal Chinese government subsidies to Chinese companies allowed the companies to sell cells and panels below their manufacture cost.

“The verdict is in,” said Gordon Brinser, president of SolarWorld, in a statement. “In addition to its preliminary finding that Chinese solar companies were on the receiving end of at least 10 WTO-illegal subsidies, Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the U.S. market,” he said.

In a statement, SolarWorld and the other companies stressed that the decision underscores the importance of domestic solar manufacturing to the U.S. economy and will help determine if the U.S. will be a global competitor in clean technologies or if the industry will be outsource to China. The decision, they said, also is critically important for thousands of U.S. workers and will not disrupt U.S. solar growth or solar installations.

Last year, Chinese module prices plummeted by more than 40%, providing a flood of cheap modules on the U.S. market. Cheap Chinese panels made solar more affordable in the U.S. and helped increase installations, but they also drove some U.S. solar panel manufacturers out of business.

Not all U.S. solar companies support SolarWorld.

The Coalition for Affordable Solar Energy (CASE), a broad solar industry trade association, noted in a statement that the vast majority of the 100,000 jobs in the American solar industry are in sales, marketing, design, installation, engineering construction, and maintenance of solar projects and not in modules.

“These jobs depend on affordably-priced solar panels, and companies would have to lay-off workers if solar panel prices rise as a result of this investigation,” the collation stated.

Another broad U.S. solar trade group, the Solar Energy Industries Association (SEIA), warned of a trade war and urged that U.S. and Chinese government quickly reach a resolution to the growing solar trade conflict.

SEIA also noted in its statement that the U.S. solar industry goes well beyond solar cells and modules and includes billions of dollars of recent investments in production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export.

“If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments,” SEIA said. The U.S. solar industry grew by more than 100% last year, SEIA said, quoting their study that found U.S. solar exports to China exceeded Chinese exports to the U.S. by $240 million when all solar-related products, raw material, and capital equipment are included.

Suntech Power Holdings, the primary Chinese company affected by the ruling and the world’s largest maker of solar panels, warned that the decision could lead to a “deepening solar trade war” and vowed to challenge the decision. “These duties do not reflect the reality of a highly-competitive global solar industry,” Suntech officials said in a statement.

Shyam Mehta, a solar analyst with the economic research firm, GTM Research, predicted the impact of the tariffs could be “significant,” but noted that it is a preliminary decision and will be contested by Chinese manufacturers as well as some U.S. solar companies.

China-based manufacturers are likely to increase their prices for modules and cells sold to the U.S. market, he said, and in the short term that may dampen demand and slow U.S. installation growth.

However, he added, “Chinese firms are hardly likely to stand still.”

For instance, Chinese companies could set up cell manufacturing outside China and then assemble the modules in China, he said. This would allow them, under Commerce’s preliminary ruling, to bypass import tariffs with only a slight increase in cost, he said.

The department’s decision is preliminary, Commerce noted, and a final determination will not be made until later this year.