Trade War on Solar Panels and Components Between China and the West Continues to Brew

One of the last things Europe needs right now is a trade war with China. Yet there seems to be one brewing, and the battleground is the solar products industry.


China is all set to launch anti-dumping and anti-subsidy investigations into solar imports from the EU. These investigations, as highlighted in an article by BusinessGreen.com, will join inquiries into American (and South Korean) solar imports that are already underway. Cars, steel and rare earth minerals have been other recent areas of dissension in the escalating trade disputes between China and the West.

China is now looking into subsidies that European polysilicon producers receive. Agence France-Presse quoted an unnamed source “close to” the World Trade Organization as saying “China is claiming that certain measures affecting the renewable energy generation sector relating to the feed-in tariff programs of EU member states… [to] include domestic content restrictions and are inconsistent with the WTO rules.”

The AFP report said China’s commerce ministry will examine “alleged subsidies received by the EU producers and exporters” to determine if they are selling polysilicon in China at “artificially low prices.”

Meanwhile, according to BusinessGreen.com, Chinese solar manufacturers are maintaining that the low prices for their solar panels are due to declining consumer and commercial grants for solar energy implementation in Europe and the U.S. that impacted demand and forced them to slash prices by up to 30 percent in a bid to tackle panel surpluses.”

European and American manufacturers counter that the price cuts are actually the result of subsidies that those companies receive from the Chinese government. They assert that Chinese companies, which produce about 60 percent of the world’s solar panels, have been abetted by Beijing to undercut competition and dump panels in the U.S. and European markets.

The announcement of the new investigation by China came nearly the same time the Wall Street Jounal reported that the U.S. is going to impose tariffs on inbound Chinese solar panels.

The U.S. International Trade Commission found that U.S. solar panel makers “had been injured by illegal dumping from Chinese competitors, clearing the way for the Commerce Department to order tariffs,” the Journal said. Commerce Department officials said in October that the tariffs would be between about 24 percent and 36 percent for most Chinese panel makers.

This follows the Commerce Department’s imposed tariffs on Chinese-made solar cells (which are arranged together to make panels) ranging from 31 to 250 percent. The EU, meanwhile, has been investigating since September whether Chinese companies were selling panels in Europe at prices as much as 80 percent below actual cost.

While the U.S. solar industry has been beset by low-cost competitive Chinese products, the issue of cost undercutting is a small part of the overall future of solar power not only in this country but around the world. If solar utilities can buy less expensive panels, they can offer lower prices on their solar installations to customers and compete better with traditional energy utilities. And if Chinese companies oblige with highly affordable panels, why should they be stopped, say buyers?

Nick Blitterswyk, founder and CEO of solar installation provider Urban Green Energy, and two top UGE officials, Micah Steiger and David Droz, co-authored an article for Forbes earlier that the tariffs were a bad move on precisely those grounds.

The ruling will constrict the growth of renewable energy here in America, driving up the prices for installers, their customers and, ultimately, the American taxpayer. This legislation threatens to kill the very blue-collar jobs it claims to save.

Basically, they wished that UGE and others can be allowed to obtain panels as cheaply as possible in order to make solar power as cheap as possible.

But over 20 European solar panel makers claim in an ongoing EU investigation that Chinese panel dumping has driven them out of the business. China exported nearly $26 billion in solar panels and products to Europe last year.

Ultimately, of course, a trade war is detrimental to all sides. The Journal reported in May that Chinese officials said U.S. tariffs will hurt both countries because China imports a large amount of raw materials and equipment for solar panel production. China Daily recently reported that Gao Jifan, chairman of Trina Solar Ltd., one of the major solar panel producers in China, and which is being investigated, said all the inquiries and tit-for-tat duties are destructive to the global solar industry in general.

Jifan said such actions make it more difficult to lower the costs of the industry and enable it to compete with fossil-fuel energy. “There should not be any trade protectionism between China and Europe,” Jifan told China Daily. “I’m confident that we will achieve a good solution eventually through communication among governments and companies from the two sides.”

In a CNN report, Kevin Lapidus, senior vice president at solar energy provider SunEdison, basically echoed Jifan, quoted as saying that expensive panels are ultimately harmful to the industry.

“By increasing the price of modules and therefore the price of solar energy, these tariffs will undermine the success of the U.S. solar industry and reduce the ability of solar energy to compete with electricity generated from fossil fuel.”

The Forbes editorial by UGE contended that the production of solar panels isn’t the center of industry growth anyway, but rather in implementation and services, saying the panel-making business is one of razor-thin margins, increasing automation and commoditization.

Companies like SolarCity, Sungevity, and Urban Green Energy are focusing on the actual implementation of solar and renewable energy technologies, rather than just the production of panels. In doing so, we are growing extremely fast, creating thousands of American jobs. These jobs, far outnumbering what would be created in manufacturing, cannot be outsourced.

Nevertheless, China is striking back. Last month, BusinessGreen.com also reported that the WTO agreed to convene a panel to decide whether the U.S tariffs contravene trade rules, noting that Chinese officials accused the U.S. of acting “inconsistently with WTO rules and rulings in many aspects” when investigating whether Chinese companies receive government loans that breach global commerce agreements.

 

 

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