Bloomberg News

U.S. Solar Manufacturers Request Duties on Chinese Imports

October 20, 2011

(Updates with possible European claim in fifth paragraph.)

Oct. 20 (Bloomberg) -- U.S. solar-equipment makers asked the government to slap duties on more than $1 billion of Chinese imports, joining the wind-power industry in seeking compensation for alleged unfair state aid undercutting American competitors.

China uses cash grants, preferential loans, discounts on raw materials, tax incentives and currency manipulation among tactics to boost exports of solar cells, the main device used in solar panels, the U.S. unit of Bonn-based SolarWorld AG said yesterday in the complaint supported by six other U.S. solar companies. Suntech Power Holdings Co., LDK Solar Co. and Trina Solar Ltd., the three-biggest China-based makers of crystalline silicon panels, sell in the U.S., according to Bloomberg data.

“The illegal subsidies that China has put into the solar industry are no different than giving an athlete a bucket full of steroids,” Gordon Brinser, president of SolarWorld Industries America Inc. told a Washington news conference. China “is illegally seizing control of the U.S. solar market, manufacturing and our jobs.”

The allegations compound those by the U.S. wind-energy industry that China forces manufacturers to make products in the Asian country. Those charges prompted the U.S. to file a case with the World Trade Organization in December. The solar complaint may contribute to escalating trade tensions after the U.S. Senate last week passed a bill aimed at opening the way to impose duties to punish China for not revaluing its currency.

SolarWorld is probing whether to start a similar move in Europe, a company spokesman said. “We’re checking all options for similar proceedings in Europe,” spokesman Milan Nitzschke said today by telephone, declining to elaborate.

China Targeted

The case follows a plunge in prices for solar cells and panels and is one of the largest targeting China, with political implications as both nations race to develop clean-energy technologies.

The companies requested an antidumping investigation by U.S. authorities and that duties be imposed on imports to neutralize some of the Chinese advantage, according to a statement by Wiley Rein LLP, a law firm that filed the petition on behalf of the U.S. companies.

Three major U.S. solar companies have failed since August, including Solyndra LLC, which received a $535 million U.S. loan guarantee, unable to stay afloat as prices plunged amid competition.

The collapse of Fremont, California-based Solyndra renewed demands from U.S. lawmakers and union leaders that the Obama administration pursue unfair-trade complaints against China for subsidies to its renewable-energy companies.

The U.S. is stepping up efforts to make China comply with World Trade Organization rules. U.S. Trade Representative Ron Kirk said on Oct. 6 his office sent the WTO a list of almost 200 subsidy programs that China failed to disclose as required by the organization’s rules.

The U.S. Senate on Oct. 11 passed a bill aimed at punishing China for keeping its currency undervalued, a measure that Chinese officials said risks damaging trade relations and undermining the global recovery.

Suntech’s View

China’s Suntech, of Jiangsu, China, the world’s largest maker of solar panels, said trade complaints may hinder efforts by producers to challenge traditional forms of electricity generation.

“Protectionism would not only put thousands of jobs at risk, but it would inhibit solar technology’s ability to compete against traditional forms of electricity generation,” Suntech said yesterday in a statement. “A solar trade war would deal a major blow to the global economy and to our common goal of achieving a clean energy future.”

Prices Falling

The spot price of solar panels has fallen about 40 percent this year as manufacturers particularly in China ramped up their production capacity, according to Bloomberg New Energy Finance. The 10 largest silicon panel manufacturers have doubled their manufacturing capacity last year, the data show.

Many solar-equipment companies are losing money as the average operating margin fell to negative 5.9 percent in the second quarter compared with a positive 12 percent a year earlier, Bloomberg data show.

In the first seven months of this year, China shipped $1.4 billion of solar panels to the U.S., exceeding the $1.2 billion for all of 2010, according to U.S. International Trade Commission data.

Imports from South Korea, the Philippines and India also jumped. Solyndra’s statement said imports of Chinese crystalline solar cells and panels rose more than 300 percent from 2008 to 2010.

Complaint Details

SolarWorld’s complaint targets production of crystalline solar-cell and panel imports and excludes thin-film products such as those made by Solyndra, said Tim Brightbill, a lawyer at Wiley Rein LLP who is representing SolarWorld. He declined to name the six other U.S. companies backing SolarWorld’s petition to the Commerce Department and the trade commission.

The Obama administration in December filed a case at the WTO in Geneva over China’s support for wind-energy manufacturers, the first by the U.S. regarding green technology, after a complaint from the United Steelworkers union.

China provided $30 billion in credit to its biggest solar manufacturers last year, about 20 times the U.S. effort, Jonathan Silver, former executive director of the Energy Department’s loan program, told a congressional panel Sept. 14. Silver’s resignation was announced on Oct. 6.

“The environment-friendly green-technology policies introduced by the Chinese government are for the purpose of energy protection and ensuring sustainable development, which are in conformity with WTO rules,” Wang Baodong, the spokesman for the Chinese Embassy in Washington, said a year ago. Wang said on Sept. 22 that the debate over subsidies “is not a new issue.”

Solar Jobs

SolarWorld Industries America, based in Hillsboro, Oregon, has been lobbying lawmakers such as Senator Ron Wyden, an Oregon Democrat, to help protect its jobs at a factory in the state. The company, which has 1,100 U.S. employees, said Sept. 2 that it was closing its factory in Camarillo, California.

Representative Sander Levin of Michigan, top Democrat on the House Ways and Means Committee that deals with trade, said in a statement that he supports the U.S. companies’ actions.

“I am encouraged to hear that the U.S. solar industry is defending itself against China’s massive subsidies and other unfair trade practices,” he said.

Senator Sherrod Brown, an Ohio Democrat, yesterday sought to add $5 million to a spending bill for the U.S. Trade Representative’s office to investigate and combat China’s violations of international trade law.

“China’s gains in the solar market are coming at the expense of Ohio producers,” Brown said in a statement. “Ohio manufacturers can compete with anyone on a level playing field, but by subsidizing its solar industry and hoarding rare earths, China isn’t competing-it’s cheating.”

--With assistance from Natalie Obiko Pearson in Mumbai and Stefan Nicola in Berlin. Editors: Steve Geimann, Larry Liebert, Todd White

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Eric Martin in Washington at emartin21@bloomberg.net. Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.


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