The US Commerce Department has continued its investigation into a formal unfair trade case led by SolarWorld and a consortium of six other manufacturers into the dumping of solar panels well below cost in the US by Chinese companies. This department has announced it is considering punitive tariffs of 50 to 250 percent on Chinese solar panels, based on their initial inquiry. In addition, the Commerce Department is evaluating whether the Chinese government is breaching international trade rules by subsidizing the export of solar panels, which may lead to additional tariffs and ultimately redirect the overall US import policy by sharpening its competitive stance. The US energy secretary, Steven Chu, stated recently in Congressional testimony related to the Solyndra bankruptcy investigation, that solar panel prices have fallen 70 percent in the last two and a half years.
The trade case was filed against solar panels produced in China for steps including: the cutting and polishing of the material into thin, smooth wafers, processing of silicon wafers into cells, and assembling of solar cells into a semi- or fully-functional panel. The majority of the imported low-cost solar panels from China have been installed in California, which has about 100,000 solar projects underway, according to a report by Climate Nexus.
Besides declining prices and profits for solar panel makers, the unfair trade case is focused on preserving the American solar industry. Three American solar companies, comprising one-sixth of American manufacturing capacity, went bankrupt in August including Solyndra, whose failure even after receiving more than $500 million in federal loan guarantees, has intensified Republican criticism of the Obama administration’s alternative energy policy. Several American solar companies have laid-off workers and reduced output since the spring of last year, while others have stopped hiring until prices stabilize or rise again. Also, many global companies are in the red and/or expected to report financial net losses in the next quarter.
More than 100,000 Americans are employed in the solar industry, according to most estimates; however that will shrink dramatically based on the current market dynamics. Thus, the once vouched savior of America’s unemployment crisis during the last presidential campaign, green jobs, would be muted to a significant degree.
In hopes of defusing the unfair trade case, Chinese solar panel makers have announced plans to shift some of their domestic production to South Korea, Taiwan and the US. For example, Suntech Power Holdings is planning to expand capacity at its assembly plant in Goodyear, Arizona to increase its US presence. What’s more, the Chinese solar industry has announced it is planning to counteract the solar dumping case by filing a formal complaint of its own with China’s Commerce Ministry. One of the prime candidates is expected to be American polysilicon exports to China, as this ingredient is a critical raw material used in solar cell production, which has subsequently fallen dramatically in price the last several years along with solar panel prices. According to the New York Times, US manufacturers exported approximately $873 million of polysilicon to China last year, which is nearly equivalent to the value of the solar panels that China shipped to the US.
The final decision on this trade case, which is the largest monetarily ever filed of its kind, and possible solar tariffs from the US Commerce Department against China will have a major impact on the future of both the US and global market over the next decade, setting the course of many companies’ strategic business plans. Most important, it will set a precedent in the US regarding product dumping policies with respect to foreign entities and ultimately determine the new standard for the US import policy.
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