Preliminary antidumping duties hit Chinese solar companies

The U.S. slapped tariffs of 31% on about 60 Chinese solar panel manufacturers, alleging dumping of panels on the domestic market at below fair market value. Due to “critical circumstances,” the duties are retroactive 90 days.

The preliminary decision was expected, as the U.S. Department of Commerce had issued a related ruling on alleged illegal subsidies in March. A coalition of manufacturers, led by the American subsidiary of German SolarWorld, hailed the decision.

“Today, SolarWorld and the many industry players who embrace the sustainable efficiency gains and price declines that come from fair competition can take heart that the U.S. government is standing up against Big China Solar,” said Gordon Brinser, president of SolarWorld Industries America Inc. and leader of the Coalition for Solar Manufacturing (CASM). “Commerce’s careful measures could help thwart China’s illegal drive to control the solar market and supplant manufacturers and jobs in America, the very country that invented, pioneered and innovated solar to today’s mainstream viability.”

The CASM complaint was filed last October and the Commerce Department opened an investigation in November. A preliminary decision in March determined unfair subsidies were granted by the Chinese government and low tariffs of 2.9% to 4.7% were imposed. If upheld in a final decision, expected by the end of the year, these figures would be added to today’s preliminary numbers.

A counter-group, the Coalition for Affordable Solar Energy (CASE), said American consumers and workers will eventually lose out.

“Today SolarWorld received one of its biggest subsidies yet – an average 31% tax on its competitors. What’s worse, it will ultimately come right out of the paychecks of American solar workers,” said CASE President Jigar Shah. “Fortunately, these duties are much lower than the 250% tax that SolarWorld originally requested. This decision will increase solar electricity prices in the U.S. precisely at the moment solar power is becoming competitive with fossil fuel generated electricity.”

One of the sanctioned companies, through its American subsidiary, Suntech Power Holdings Co., Ltd. (NYSE: STP), disputed the antidumping duties (AD) of 31.22% on Suntech’s crystalline silicon photovoltaic cells imported from China.

“These duties do not reflect the reality of a highly-competitive global solar industry. Suntech has consistently maintained a positive gross margin as revenues are higher than our cost of production. We will work closely with the Department of Commerce prior to their final decision to demonstrate why these duties are not justified by fact,” said Andrew Beebe, Suntech’s Chief Commercial Officer.

Besides Suntech, major manufacturer Trina Solar had duties of 31.14% imposed.

The Solar Energy Industries Association (SEIIA) trade group issued a statement seeking a cease-fire in the escalating dispute.

“The solar industry calls upon the U.S. and Chinese governments to immediately work together towards a mutually-satisfactory resolution of the growing trade conflict within the solar industry.  While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations,” said SEIA President Rhone Resch.

A trade attorney sees a lot of posturing over the ruling coming from both the American and Chinese sides.

 “American consumers and Beijing will decry today’s decision, but it’s unlikely to further enflame bilateral trade tensions because high anti-dumping duties were widely expected,” says White & Case International Trade Attorney Scott Lincicome.

After global prices collapsed, excess inventory had to be unloaded at below cost, making the ruling inevitable, regardless of intent.

“Nevertheless, the decision will likely be used as a rhetorical weapon by U.S. solar panel producers and members of Congress seeking to demonize ‘unfair’ Chinese trade practices, as well as by the Chinese government and other critics of the United States’ current trade remedies,” he concluded.