Commentary:Solar trade war between US and China looming Jackie Chang,DIGITIMES,Taipei [Friday 18 May 2012]In 2011,several US-based solar firms such as Solyndra,SepctraWatt,Evergreen Solar,and Energy Conversion Devices filed for bankruptcies.While the fundamental problem may be due to higher production costs,the US solar industry has been suspecting dumping of solar products from China as the main cause.Led by Germany-based SolarWorld's US unit,the US government began an anti-dumping and anti-subsidy investigation against China-based solar firms.
Some US-based solar firms believe it is precisely the heavy subsidies provided by the China government that allows China-based solar firms to make low quotes on solar products.Some quotes were said to be lower than production costs.These solar products were then sold in the US market,and domestic firms continued to have a hard time competing.
According to Coalition of Affordable Solar Energy(CASE),nearly half of the solar PV systems installed in the US in 2011 were made up of China-made solar panels.
However,the true impact of China's solar products on the US solar market is still debatable.The US Department of Commerce has made a preliminary decision to impose heavy punitive tariffs on China-made solar products.But according to US media,the department will not issue the final decision until October while International Trade Commission determines if China-made solar products imported to the US are truly harming the domestic industry.
Supporters of levying tariffs on China-made solar products pointed out that such significant tariff rates are a win for the US-based solar manufacturers.Supporters also claim that this will help the US solar economy to return to normalcy and boost solar jobs in the US.Solar module prices dropped 50%in 2011 and the drop has been on-going due to expanding production capacities by China-based solar firms which resulted in oversupply,added supporters.This oversupply caused the US market to be flooded with cheap China-based imports,said supporters.
Opponents noted that imposing such tariffs will increase the cost of solar PV systems.If system firms purchase solar modules from solar firms of other countries,the total cost of solar PV systems is likely to go up.Also,if China-based solar module makers switch production or issue OEM orders to other countries,the total cost of solar PV systems in the US will likely increase.Canadian Solar,a China-based solar firm,indicated possible plans to begin production in Canada to avoid being taxed by the anti-dumping duty.Furthermore,according to New York Times,a report from Solar Foundation pointed out that 100,000 workers joined the US solar industry last year but more than half of the people worked on installations.Only one quarter of the new workers were in manufacturing,added report.A rising cost of solar PV systems will likely to imperil jobs of the employees in the installation sector,said opponents.
One other aspect,the solar industry has been striving for grid parity as the ultimate goal.However,grid parity is more likely to be achieved when total costs of solar PV systems are low or the costs of generating power of these systems are comparable to electricity price of traditional energy sources.An increase in total cost of solar PV systems while the government halts tax credits for solar PV system buyers may cause a set back to the growth of the clean energy market in the US.Nevertheless,the tariff rates may weed out firms that lack competitive advantages and push the market back to stable prices.
But a trade war may begin.China-based solar firms have been complaining to the government over polysilicon dumping by US-and South Korea-based firms.This harsh tariff levied by the US government may cause China to retaliate by starting similar investigations.A trade war between the two giants can cause negative impacts around the world.
Interestingly,for China-based large-size solar firms such as Suntech and Trina,the tariff rates are around 31%.Other China-based solar firms were told to pay tariffs up by 249.96%.This may drive small-and medium-size solar firms from China to exit the market completely.In addition,the duties are retroactive to 90 days before official publication of the decision,meaning unless the firms were prepared,it is likely that they will be taxed.
The preliminary result of the anti-subsidy investigation was to levy a tariff rate around 4%on China-based solar firms.Combining with the anti-dumping duties that range from 31-250%,the astonishing tariff rate on China-based solar firms may lead to a trade war between the two countries.
US government demands Suntech to pay retroactive tariff rate of 31.22%Photo:Digitimes file photo
