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US Imposes Anti-Dumping Duties On Chinese Solar Cells

by Leroy Baker, Tax-News.com, New York

22 May 2012


Despite concerns that its decision may raise prices and harm the United States alternative energy sector, the Department of Commerce (Commerce) has announced a preliminary determination to impose antidumping duties (ADs) on imports of crystalline silicon photovoltaic cells, whether or not assembled into solar cells, from China.

On October 19, 2011, SolarWorld Industries America Inc, with the support of six other solar manufacturers including Helios Solar Works and MX Solar USA, filed anti-dumping and countervailing duty petitions with Commerce and the US International Trade Commission. The petitions alleged that Chinese manufacturers were illegally dumping solar cells and panels in the US market and receiving subsidies that are illegal under World Trade Organization (WTO) rules.

In reply, Commerce has now confirmed that, for the purpose of AD investigations, dumping occurs when a foreign company sells a product at less than fair value, and it has determined that Chinese producers/exporters sold solar cells in the US at dumping margins ranging from 31.14% to 249.96%. US imports of solar cells from China increased from USD639.5m in 2009 and USD1.5bn in 2010, to some USD3.1bn last year.

In addition, Commerce preliminarily determined that “critical circumstances” exist. As a result of this preliminary determination, US Customs and Border Protection will be instructed to require a cash deposit or bond based on these preliminary rates, applicable to all entries of Chinese solar cells made up to 90 days prior to the date of publication of the preliminary determination notice.

An affirmative preliminary determination in the companion countervailing duty (CVD) investigation on solar cells from China had been previously announced on March 20 this year. On that date, Commerce also announced a clarification of the scope of the investigations, finding that it covers not only imports of solar cells produced in China and solar modules/panels produced in China from Chinese-made solar cells, but also imports of solar modules/panels produced outside of China from solar cells produced in China.

Commerce is currently scheduled to make its final determination in early October 2012. If Commerce makes an affirmative final determination, and the US International Trade Commission (ITC) makes an affirmative final determination that imports of solar cells from China materially injure, or threaten material injury to, the US industry, Commerce will issue an AD order. The ITC will make its final injury determination on or before November 19, 2012.

As could be expected, the 210-company Coalition for American Solar Manufacturing reacted positively to the above news, calling it “a very positive first step”.

"The verdict is in," said Gordon Brinser, president of SolarWorld. "In addition to its preliminary finding that Chinese solar companies were on the receiving end of at least 10 WTO-illegal subsidies, Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the US market.”

"Commerce's ruling in the SolarWorld case is a bellwether decision," added Steve Ostrenga, chief executive officer of Helios. "It underscores the importance of domestic manufacturing to the US economy and will help determine whether the country will be a global competitor in clean technologies or outsource them China. It is also critically important for thousands of US workers."

Others in the renewable energy sector were not that convinced and pointed to the future effect on the market. Environmentalists are disappointed with this decision because lower cost solar panels make solar energy more competitive with fossil fuels, and there are and will be, more US jobs to be had on the installation side of the solar business than in manufacturing solar cells.

The president of the Coalition for Affordable Solar Energy (CASE), Jigar Shah has therefore responded by stating: “SolarWorld received one of its biggest subsidies yet – an average 31% tax on its competitors. Fortunately, these duties are much lower than the 250% tax that SolarWorld originally requested, (but) this decision will increase solar electricity prices in the US precisely at the moment solar power is becoming competitive with fossil fuel generated electricity.”

“At the same time, CASE recognizes that today’s decision is ‘preliminary’. Between now and a final decision before the end of the year, there are many issues that will be addressed and whose resolution would lead to a significantly lower tariff,” he added. “CASE will continue to fight SolarWorld’s anti-consumer and anti-jobs efforts to ensure a better result for America’s solar industry."

It was pointed out that the vast majority of the 100,000 jobs in the American solar industry are in sales, marketing, design, installation, engineering construction and maintenance of solar projects. These jobs depend on affordably-priced solar panels, and companies would have to lay-off workers if solar panel prices rise as a result of this investigation.

According to Kevin Lapidus, Senior Vice President Legal and Government Affairs for SunEdison, for example, “the US solar industry has been growing, adding new solar electric systems, creating jobs and investing billions of dollars in the US energy infrastructure. By increasing the price of modules and therefore the price of solar energy, these tariffs will undermine the success of the US solar industry and reduce the ability of solar energy to compete with electricity generated from fossil fuel.”

As could also have been expected, China’s Ministry of Commerce has reacted furiously to the news, calling the ruling unfair and unjustified, and commenting that it highlights a tendency for trade protectionism within the US.

While China has argued that the concurrent application by the US of AD duties determined using a non-market economy methodology and (anti-subsidy) CVDs on the same products are inconsistent with WTO rules (in which last year it was supported by the WTO’s Appellate Body), Commerce Ministry spokesman, Shen Danyang, also said the US had discounted the defence and evidence presented by Chinese manufacturers when computing the ADs in this case.

TAGS: environment | tax | business | energy | tariffs | anti-dumping | World Trade Organisation (WTO) | China | manufacturing | trade disputes | United States | import duty | trade

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