SolarWorld v. The World (or at least China)

On November 9, 2011, the U.S. Department of Commerce announced that it will investigate claims advanced by a coalition of silicon solar manufacturers into whether Chinese solar manufacturers are engaged in illegal trade practices. The complaint, filed with the International Trade Commission, is commonly identified with the only known member of the coalition, SolarWorld. (According to the “Coalition for American Solar Manufacturing,” SolarWorld Industries America Inc., is “the largest U.S. producer of crystalline silicon solar cells and panels”.)

What, exactly, is the SolarWorld Complaint? Here is the summary found in the International Trade Commission’s Notice of Investigation:

The Commission hereby gives notice of the institution of investigations and commencement of preliminary phase antidumping and countervailing duty investigations . . . to determine whether there is reasonable indication that an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports from China of crystalline silicon photovoltaic cells and modules . . . that are alleged to be sold in the United States at less than fair value and alleged to be subsidized by the Government of China.

Okay, so even without the statutory citations (which I omitted), that is a bona fide mouthful, and you are probably regretting your decision to read it. In plain language, SolarWorld complains that:

• The Chinese government heavily subsidizes the production of photovoltaic solar cells and panels;
• Those subsidized Chinese PV cells and panels have been illegally “dumped” on the U.S. market, which means they have been offered for sale in the U.S. at prices that are both below the cost of manufacture and so low that it is impossible for U.S. solar manufacturers to compete; and,
• China has done this intentionally.

As this sustainablawger has previously written, Arkansas is poised to emerge as a leader in renewable energy – both on the development side and on the manufacturing side. The Arkansas-specific question is what impact the SolarWorld Complaint, if successful, will have on our emerging renewable energy industry.

The answer is a decidedly mixed bag. On the one hand, and as vividly illustrated by the Solyndra bankruptcy, it is beyond debate that the price of silicon-based PV products has dropped precipitously. The price decline – some 40% over the course of a year – is widely attributed to an influx of Chinese solar panels. While this decline is devastating to manufacturers, it does have the effect of increasing the availability of solar technology and solar energy to consumers, which in turn leads to the creation of “green” jobs for installers.

On the other hand, a combination of tariffs and government subsidies would protect and promote domestic solar manufacturers, and this is necessary if these manufacturers are going to compete on an international playing field. Arkansas has been particularly successful recently in attracting renewable energy manufacturers, so there is some reason to expect that Arkansas would benefit from emboldened domestic solar manufacturers.

What can we expect next? According to one of SolarWorld’s lawyers, Timothy Brightbil: “Within the next 45 days the International Trade Commission will decide whether, preliminarily, whether the U.S. industry has been injured in part due to the Chinese imports. The Commerce Department will calculate dumping and subsidy margins and try to come up with a number to offset the effects of those Chinese imports. And that margin could start to be applied about six months into the case. Then there will be a final determination.” The ITC will issue its preliminary determination by December 5, 2011.

 

(Department of Case Numbers: The SolarWorld Complaint can be found on the U.S. International Trade Commission’s website, www.usitc.gov, as the active investigation captioned, “Crystalline Silicon Photovoltaic Cells and Modules from China, Investigations Nos. 701-TA-481 and 731-TA-1190 (Preliminary).”)