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U.S. decision watched in dispute over solar imports from China, Taiwan

02/14/2014 | 05:39am EDT
An employee walks on solar panels at a solar power plant in Aksu

LOS ANGELES/WASHINGTON (Reuters) - American trade officials on Friday will take a first step on potentially extending import duties on Chinese solar energy products to also cover panels made with parts from Taiwan, in a case that could have a major impact on the fast-growing U.S. solar market.

The U.S. International Trade Commission is scheduled to make a preliminary decision at 11 a.m. EST (1600 GMT) on whether there is good reason to think that the imports threaten or injure the domestic solar industry.

A finding that they do would put Washington on a path toward widening the reach of the steep duties it slapped on products from China in 2012, potentially escalating a tit-for-tat trade spat. In contrast, a negative finding could stop the complaint from the U.S. arm of German solar manufacturer SolarWorld AG in its tracks.

SolarWorld, which makes crystalline silicon solar panels at its factory in Hillsboro, Oregon, has complained that Chinese manufacturers are sidestepping the duties by shifting production of the cells used to make their panels to Taiwan and continuing to flood the U.S. market with cheap products.

Shayle Kann, senior vice president at solar market research firm GTM Research, said a decision to broaden the duties would have a greater impact than the 2012 decision as manufacturers have no handy escape route.

"Either the manufacturers will have to set up manufacturing elsewhere or they will have to pay the tariff. Either way, the impact will be a lot more than it was the last time around," he said.

"If the Commerce Department imposes tariffs that are significant with the scope SolarWorld has proposed, then prices for solar panels will be noticeably higher than they otherwise would have been."

The Coalition for Affordable Solar Energy, representing about 50 U.S. solar companies which mainly focus on installation, said the cost of modules had already gone up 10 percent since December 31, when the complaint was filed, as Chinese manufacturers prepared for likely heftier duties.

"If they (the ITC) go against us, that could be an immediate 20 percent increase in solar module prices. We might lose tens of thousands of jobs," said coalition President Jigar Shah.

He said only a fraction of the solar industry's 145,000 workers were employed by manufacturers, who would stand to benefit from higher duties on imports, while installers would suffer.

SolarWorld Chairman Frank Asbeck wrote in a letter to President Barack Obama on February 5 that Chinese subsidies and below-cost pricing had driven "dozens" of U.S. manufacturers out of business.

"Illegal trade practices threaten to destroy any ongoing U.S. role in global solar industry competition," he wrote.

The value of imports of solar products from China fell by almost a third from 2012 to 2013 and imports from Taiwan rose more than 40 percent, although from a much smaller base, according to ITC data. Commerce Department figures show solar imports from China were worth just over $2 billion in 2012, while imports from Taiwan totaled $510 million.

China, which has criticized the United States over the new investigation, has slapped anti-dumping and anti-subsidy duties on imports of U.S. polysilicon, solar's key raw material.

U.S. solar installations were worth more than $13 billion in 2013, according to research firm GTM. About half the solar equipment installed in the United States last year was made in China. In the fast-growing rooftop solar market, that figure was 71 percent.

If the ITC decides the imports could be hurting the domestic industry, the Commerce Department will make preliminary determinations about whether the products are being sold in the United States below their fair value or if their manufacturers receive inappropriate levels of subsidies, and suggest duties.

Follow-up decisions from both the ITC and the Commerce Department are needed before duties are finalized.

The trade group Solar Energy Industries Association has been trying to get SolarWorld, Chinese manufacturers and the Chinese and U.S. governments to settle the dispute.

Under the association's settlement proposal, Chinese companies would agree to pay into a fund that would then be used for the benefit of U.S. solar manufacturers. The deal would require China to revoke the restrictions on imports of U.S. polysilicon.

(Writing by Krista Hughes; Editing by Jonathan Oatis)

By Nichola Groom and Krista Hughes

ę Reuters 2014
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Managers and Directors
Frank H. Asbeck Chief Executive Officer
Khalid Klefeekh Al Hajri Member-Supervisory Board
Heiner EichermŘller Member-Supervisory Board
Andreas Ple▀ke Member-Supervisory Board
Gerald Voigt Vice Chairman-Supervisory Board
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