Jay Eidsness

October 28, 2011

     Seven American solar panel manufacturers filed a trade case last week, alleging unfair labor practices by the Chinese solar industry. The American division of SolarWord is the only named company on the complaint. The case, filed at the US Commerce Department, accuses the Chinese government of giving solar companies illegal subsidies, allowing solar panels to be sold in US markets at prices far below manufacturing costs. Domestic manufactures are seeking tariffs of over 100% for panels manufactured in China and imported into the US.

     This is a significant move for the American solar industry. China is a world leader in solar manufacturing, accounting for three quarters of the world's photovoltaic production. China has shipped $1.6 billion worth of panels to the US in 2011 alone. The Commerce Department has 180 days to rule on the trade case, a ruling that promises to have large implications however the Department ultimately decides.

     The trade case places two important interests in direct conflict. On one side you have the American solar industry, struggling to maintain a viable domestic labor and manufacturing presence. The complaint arrives while the US industry is still reeling from the recent bankruptcies of Solyndra and two other solar companies. The remaining companies are struggling, slashing labor and closing plants in an attempt to lower costs. If tariffs are imposed, the American solar industry will be better able to compete with their Chinese counterparts, which may revitalize an industry in need of an adrenaline shot.

     On the other hand you have government subsidized renewable energy, something many claim is required to transition away from fossil fuels. If the requested tariffs are imposed, photovoltaic panels will immediately become more expensive, potentially inhibiting the technology from acquiring further market share. Many claim the American government is not doing enough to encourage domestic manufacturing and consumption of solar technology. Is China simply providing the required incentives to scale this technology while American government is late to the party?

     It will be interesting to see how global markets respond. Rumblings have been heard concerning a similar case being filed in Europe, but as of yet, no action has been taken. The Commerce Department is expected to make a ruling on this case sometime next spring.

Sources:

China Daily --October 27, 2011 - China opposed to US anti-dumping probe on solar panels - http://www.chinadaily.com.cn/bizchina/2011-10/27/content_13988529.htm

CNBC --October 24, 2011 - China Slams US Over Solar Complaint - http://www.cnbc.com/id/44996993/China_Slams_US_Over_Solar_Complaint

Renewable Energy World -- October 19, 2011 - SolarWorld Files Complaint Against Chinese Panelmakers and Cell Manufacturers - http://www.renewableenergyworld.com/rea/news/article/2011/10/us-solar-companies-file-lawsuit-against-chinese-panelmakers?cmpid=rss

The New York Times -- October 27, 2011 - Trade Disputes Hurt Renewable Energy, Chinese Executive Asserts - http://www.nytimes.com/2011/10/28/business/global/trade-disputes-hurt-renewable-energy-chinese-executive-asserts.html

The New York Times -- October 19, 2011 - U.S. Solar Panel Makers Say China Violated Trade Rules - http://www.nytimes.com/2011/10/20/business/global/us-solar-manufacturers-to-ask-for-duties-on-imports.html?_r=2&pagewanted=all?src=tp