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Commerce orders 31% duties against Chinese solar panels

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China cheats in trade across the board, but the Department of Commerce just ordered 31% anti-dumping duties against China’s solar panel makers to neutralize predatory pricing.

The DOC International Trade Administration Fact Sheet is here.  The products covered by the investigation included “crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials.”

The decision is a big deal.  Keith Bradsher, who covers China economy issues for the NY Times, writes:

The anti-dumping decision is one of the largest in American history, covering one of the largest and fastest-growing categories of imports from China, the world’s largest exporter. The department said the United States bought $3.1 billion worth of Chinese solar cells last year, giving China more than half the American market for the devices.

Countervailing duties, in a relatively small amount, were previously awarded in this same case.  This anti-dumping duty decision was scheduled to occur later.  Bradsher writes:

The solar tariffs, which are retroactive to 90 days before the decision, are in addition to anti-subsidy tariffs of 2.9 percent to 4.73 percent that the department imposed in March. The combined anti-dumping and anti-subsidy tariffs are likely to mean a substantial increase in the price of solar panels here.

I appreciate Bradsher’s terminology of “anti-subsidy tariffs” for countervailing duties.  I have been on a mini-campaign correcting reporters who falsely characterize the duty awards as “punitive tariffs.”  Punitive Tariffs is not correct, because they are not awarded to punish, but rather to offset cheating by other countries (through subsidies or dumping).

Solar World and other solar companies in the U.S. filed the case.  Their lawyer summarized the cheating.

Alan Price, a partner who heads the international trade practice at Wiley Rein, the law firm representing the U.S. companies in both the solar and wind cases, said that China poses a particular threat to America’s developing green energy sector.

“China’s method is straightforward: it sets forth industry-specific Five-Year Plans and then uses all forms of national and local subsidies and other governmental support to quickly transfer jobs, supply chains, intellectual property, and wealth, to the permanent detriment of U.S. and global manufacturers,” he said. “China’s ability to ramp up and overwhelm an industry is unique and particularly devastating with new and emerging technologies, where global competitors may be less established and can be knocked out more easily and quickly.”

Those who say that China is moving to a market economy are simply wrong.  China has increased its control of the economy in the last decade.  Any predictions that they will change are speculative and wishful thinking.  We need to be reality based.

8 Responses to “Commerce orders 31% duties against Chinese solar panels”

  1. Tom T says:

    They are headed in the right direction here but enforcement is the key. These imports may well have been the real cause for the failure of the loans backing Solyndra.

    I am from Texas and have seen mid east oil producers (the oil cartel) drop prices on world oil any time there was an impetus to get off of oil and on to energy sources more under domestic control. Each time the fledgling solar or other substitute industries were undercut by cheap and easy oil (until recently) so that the oil industry killed these fledgling industries. China is not playing by an old playbook. They have just been playing like pros while the U.S. and the globalist “free traders” have played like newbies.

    It is a shame that our US Trade Representative is so slow at reacting when damage is done immediately on the respective industries. Perhaps part of his pay should be based on performance (he might owe the taxpayer money) instead of a salary.

    Nevertheless, a step in the right direction. Too bad the play was way too late to save the taxpayer’s investment in Solyndra.

    Tom T.

  2. China Watcher says:

    Dumping money in Solyndra or any other start-up is an invitation to cronyism, waste and even fraud. This was done with Fisker and A123 systems in the electric car sector with predictanble results. It’s an unwise use of taxpayer money. Better to rebuild the government’s now shriveled up role in R&D and make the expensing (immediate 100% tax write-off) of investments permanent. In fact, right now, it would be good policy to add a bonus to the expensing in areas like energy production, distribution and efficiency. Give Americans a reason to invest in this country and then let them compete. In a cash-driven political system like this one, targeted subsidies are not a sound choice.

    • Jim Schollaert says:

      Our Mr. Anonymous (‘China Watcher’) continues to tout the same tireless line as the Chinese government. Their bromide for America’s role in the global economy is to continue “innovating”. Which innovations China of course pirates and expropriates in the blink of an eye, as history shows. China has fed itself handsomely on American innovation for decades, while America loses its jobs, wealth, and innovation edge. Anyone deeply involved in manufacturing innovation will tell you that innovation usually happens in conjunction with manufacturing, by those steeped in the process where the rubber meets the road.

    • Jim Schollaert says:

      Our Mr. Anonymous (‘China Watcher’) continues to tout the same tireless line as the Chinese government. Their bromide for America’s role in the global economy is to continue “innovating”. Which innovations China of course pirates and expropriates in the blink of an eye, as history shows. China has fed itself handsomely on American innovation for decades, while America loses its jobs, wealth, and innovation edge. Anyone deeply involved in manufacturing innovation will tell you that innovation usually happens in conjunction with manufacturing, by those steeped in the process where the rubber meets the road.

  3. Tom T says:

    China Watcher, Solyndra was the U.S. ineptly trying to copy China’s game play. China changed the rules by subsdizing silicon, the competing technology, and undercut Solyndra. Now there is a bit of action by the USTR on the solar panel issue.

    All of the energy industries seem to be boom or bust. There is an oil embargo and oil goes up, substitutes come in and then there is more oil on the market so the price comes down busting the economics of the alternates. Recently it was the horizontal drilling on the shale formations that brought natural gas proven reserves up and the price from th 16s to 17s down to $2 and change, stifling many alternate energy economics.

    An industrial policy should not ignore market forces but should make them more smooth so capital investment can be planned, implemented, and not go bust at the whim of global markets and the oligopsonists who play their games that concentrate the wealth in thier hands.

    China has that and uses it strategically. The U.S. does not.

    Tom T.

    • China Watcher says:

      I have championed the use of unfair trade remedies for four decades and still do. For the same reasons, I hate to see American taxpayers’ money wasted on pet projects of dubious economic value, just to reward political allies. My point is that we need to get on with the business of strengthening our economy overall, to invest and produce again and to build wealth again. Jim Schollaert misreads what I wrote. I aim to recapture the import market first and do not preach reliance on innovation (I don’t even mention it!). But the mess we’ve made of our macroeconomic policies plays into the hands of the mercantilists. Until we fix that, we can’t expect miracles on the trade front.

  4. Tom T says:

    China watcher, the underlying economics of the Solyndra technology was undercut by China’s investment in their silicon production plants, hence the duties.

    Microeconomics is trumped by unfair trade (China trying to capture the solar power industry).

    Macroeconomics is being trumped by corruption and crony capitalism.

    This guy has it down pat:

    http://onpoint.wbur.org/2012/05/23/charles-ferguson

    Tom T.

  5. Burl Finkelstein says:

    This is a great step in fixing a problem but not sufficient to do much for the remainder of American producers. If American producers lose the domestic market they usually disappear, look at machine tools consumer electronics and textiles. Solar panels are a favorite of the administration and got special action to keep them in the US.
    The rest of the producers in the US are left to fend for themselves or dry up and go away in the face of competition who cheats.

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