Will the SEIA Settle the US-China Solar Energy Dispute?

The ongoing trade tension between the United States and China regarding solar energy ramped up another notch on September 20, when China’s Ministry of Commerce announced they are activating preliminary anti-dumping duties on polysilicon imports for photovoltaic solar panels (PVs) from some U.S. manufacturers. The move marks the second time China has increased costs on duties for the U.S. solar industry this summer, as China also implemented a substantial duty increase in July. When combining the two, Chinese duties have grown as high as 63.5 percent against U.S. polysilicon imports. The increases are widely considered by energy professionals (such as the New York Times last week) as retaliation for similar U.S. tariffs set in place last year on all Chinese PV imports, when the U.S. argued that China’s PV prices were set below market value.

As noted in Solarreviews, China’s Ministry of Commerce released a statement on September 18, justifying the enforcement of anti-dumping duties, “ …during the investigative period of this case, there were subsidies to the products under investigation and China’s domestic industry was substantially damaged and there was a casual relationship between the subsidy and substantive damages.” The duties were imposed two days later.

William Perry, Partner with Dorsey & Whitney LLP and former member of the U.S. International Trade Commission, spoke with Solarreviews about how he believes the situation has dramatically escalated, “China has, in effect, launched an all-out trade war on solar products.” He went on to add, “…the solar case is now a political issue between the two countries.”

On a positive note, the Solar Energy Industries Association (SEIA) believes it has a fair solution for the swelling hostility between the two nations. SEIA President and CEO Rhone Resch was quoted in an SEIA press release at length about mutual benefits from the peace offering:

“This proposed settlement is a win all the way around. It would actually lower costs to Chinese manufacturers for the export of solar cells and modules to the United States, and it would improve U.S. manufacturers’ ability to compete fairly on an even playing field. It would also eliminate current and future litigation risks and costs for both Chinese and American companies. But just as importantly, SEIA’s proposed settlement would benefit American consumers, as well as all consumers of solar energy, by holding down costs.”

The SEIA breaks the resolution down into four points:

• Chinese companies would agree to create a fund that benefits U.S. solar manufacturers directly and help to grow the U.S. market. Money for the fund would be generated through a percentage of the price-premium Chinese manufacturers are currently paying to third-country cell producers to get around U.S. trade sanctions, reducing costs and supply-chain distortion for Chinese companies.

• The Chinese government would agree to end its antidumping and countervailing duty investigations on U.S. polysilicon exports to China, and remove the threat of artificial cost increases for a key raw material (polysilicon) in the solar value chain. The move would not only benefit Chinese solar companies, but all users of solar energy.

• The U.S. would also phase out antidumping and countervailing duties orders.

• The introduction of a safeguard mechanism designed to offset any surge of Chinese solar modules into the U.S. market.

The increased duties come at a tough time for U.S. solar developers, since installations have remained strong throughout 2013. A separate analysis from the SEIA reports that over 800 megawatts of U.S. solar energy installations took place in the second quarter of 2013 alone, while over 4,400 megawatts will be installed over the course of 2013 â€" a 30 percent jump over 2012’s total.

As of now, there have been no Chinese or American reactions to the resolution from SEIA. It’s safe to say that both countries would appreciate a reduction (or outright elimination, as SEIA suggests) of foreign duties for the sake of spurring additional sales â€" but to what extent will either side budge? Given the stubborn nature of both countries’ actions, finding a middle ground may pose a greater challenge than the SEIA estimates.

Photo Credit: U.S.-China Solar Dispute/shutterstock

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Kristopher Settle

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