SolarWorld just announced that it has filed new anti-dumping and anti-subsidy cases against China and Taiwan with the U.S. International Trade Commission and the U.S. Department of Commerce. The new filing looks to close a loophole in a ruling issued in late 2012, allowing Chinese solar module firms to evade up to a 31 percent tariff by using solar cells manufactured outside of China.
Ben Santarris, Strategic Affairs Director at SolarWorld America, told Greentech Media today that the loophole "allows state-subsidized assembly to use non-Chinese cells while evading duties that should apply to Chinese module assembly."
He stressed that SolarWorld and the members of the coalition that brought the previous case, CASM, "share a belief in sustainable manufacturing using sound labor standards in the domestic markets where solar is sold." He added that "free trade depends on trade with rules that keeps government out of intervening in a foreign market." He added, "There is no reason why U.S. employees can't compete if they compete on equal terms. We think fair competition is best for the industry; a Chinese monopoly is not."
He continued, "The facts have borne out pretty clearly in our favor: China was financing an export campaign," adding, "The first case didn't take in a large part of the manufacturing because it defined the product at the cell level." This filing is "trying to finish the work of the first case" and "close this outstanding issue."
"We're finishing the job of presenting the facts to our trade regulators to prevent China from further damaging yet another manufacturing industry and another rich base of employment," said Mukesh Dulani, president of SolarWorld Industries America, in a statement.
Has the tariff had an impact?
GTM Research estimates that Chinese module pricing in the U.S. has increased by about 11 percent so far in 2013, rising from $0.63 per watt in Q1 2013 to $0.70 per watt in Q3 2013. This is partly due to a better balance of supply and demand and more robust market conditions -- prices have increased globally from Q1 to Q3. But the tariff allowed Taiwanese cell makers to raise prices when faced with high demand from China.
Trina Americas President Mark Mendenhall explained in an earlier interview, “Our 24 percent tariff has been in effect for over a year now, and it has prevented us from deploying the high-efficiency honey-cell technology we invested in. Because the tariff is a burden the market cannot bear, we had to develop strategic relationships with Taiwan cell suppliers, and it adds cost in the supply chain." Trina has remained competitive, Mendenhall said, but “if there were no tariffs, costs would be lower and it would be easier to build and finance more solar.”
Leading Chinese solar module vendors include Yingli, Trina and Canadian Solar.
Is there room for a negotiated solution?
SolarWorld's Santarris said this would be a "new case with its own regulated schedule just like the previous case."
Shayle Kann, GTM VP of Research, sees the current case as one where "China has much more impetus to negotiate" and potentially end up with a settled solution. That's what happened in the EU when SolarWorld spearheaded a trade claim there: the EU agreed to a price floor and a volume cap. The price floor, according to sources, was 0.56 euro cents per watt for the first 7 gigawatts of imported modules. Beyond that quantity, it was speculated, EC tariffs would apply. Kann suggests that in the event of a negotiated solution, the Obama administration could play a role. As could Ron Wyden, the chairman of the Senate energy and natural resources committee, representing Oregon, the home state of SolarWorld.
When asked about a negotiated solution, Santarris cited an SEIA proposal but said, "As far I know, that hasn't gone anywhere. Many ideas have been thrown around, but there has been no solution -- so the government of China is still active in our marketplace, and that's not the way it's supposed to be."
The SEIA proposal asks that tariffs be revoked on imports from China, as well as duties on imports from the U.S. for at least five years. SEIA wants Chinese manufacturers to pay into a fund to support U.S. manufacturers and to help grow the U.S. solar manufacturing base.
[updated 1/1/14] Rhone Resch, president and CEO of SEIA), released the following statement today:
“We oppose today’s escalation of the U.S.-China solar trade conflict. More litigation is the wrong approach. Trade litigation is a blunt instrument and, alone, incapable of resolving the complex competetiveness issues that exist between the U.S. and Chinese solar industries. It’s time to end this conflict and negotiations must play a role. "For well over a year now, SEIA has encouraged the U.S. and Chinese governments and key industry stakeholders to find common ground, even putting forth a settlement proposal. SEIA’s proposal provides a mutually-satisfactory resolution which recognizes the interests of all solar stakeholders and not just one segment of the industry. To the best of our knowledge, however, the U.S. and Chinese governments have neither adopted SEIA’s proposal as the basis for negotiations nor put forth any meaningful offer to resolve the broader conflict. It’s time for both governments to get in the game and end this conflict - we urge the United States and China to immediately commit to serious, results-driven negotiations.”
The previous case did not hobble the U.S. market. which continues its robust growth. But this action could shut China -- which now holds a 71 percent DG solar market share -- out of the market and drive up prices. It could be good news for SolarWorld, as well as First Solar and SunPower.
Jigar Shah, author of Creating Climate Wealth, told GTM, "This is Frank Asbeck using his family money to wage another war against the Chinese. I hope SolarWorld realizes that, at this point, they have pissed off the whole solar industry, including 90 percent of their customers. At least they were smart enough not to send out a racist Christmas card this year."
Shah added, "SEIA will be leading the defense this year instead of being on the sidelines. Here's hoping the Obama administration will pay attention to an issue affecting 125,000 U.S. jobs in 2014."
With a flair for the dramatic, SolarWorld announced the first case on the eve of Solar Power International 2011. This case was announced on New Year's Eve 2014.
SolarWorld Americas did not disclose 2013 production figures, but claimed a module capacity of 350 megawatts and a cell capacity of 500 megawatts. The U.S. is now the No. 3 solar market behind Japan and China, connecting 4.3 gigawatts of photovoltaics in 2013 in a global market of 33 gigawatts, according to GTM Research.
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GTM Research is closely monitoring this trade case and potential solar market impacts for clients and the press. If you have questions, contact Shayle Kann, Vice President of Research, at [email protected].