Will The Trade Complaint Really Help U.S Solar Companies?
Yesterday’s announcement of the US solar companies’ petition asking the US to impose tariffs on Chinese solar panel imports, has resulted in a rash of responses, both for and against, showing the complexity of the situation.
It comes down to where you stand in the solar supply chain. If you’re a panel manufacturer, you’re suffering greatly from China’s very low prices, but if you’re a component supplier you benefit by exports to China. If you’re an American that wants to put solar on the roof, you benefit from low prices.
The NY Times points out that a similar situation occurred when Japanese carmakers threatened the US auto industry in the 1970s and 80s. Although the US firms were successful in winning trade cases to limit Japanese imports, it didn’t translate into a business win.
In response to trade rules set by the US, Japanese car manufacturers simply set up shop in the US - that created jobs in the US but didn’t improve the competitive landscape for US automakers.
Chinese solar companies could well follow the same path – some have already opened plants here. Many believe this trade complaint will only accelerate that. It would create thousands of solar jobs in the US, bring manufacturing home, and make cheap solar widely available to Americans.
But would it help the US-based solar firms?
2010 was actually a record year for US solar exports, most of which go to China and Germany. The US was a net exporter of solar PV components - we exported $1.9 billion more than we imported.
China could easily shift more of its solar equipment purchases away from the US and buy from Germany. US solar equipment company GT Advanced Technologies (Nasdaq: GTAT) ships about $1 billion worth of products to China a year, for example.
“Trade experts expect the American solar panel industry to win its case, which could lead to tariffs early in 2012,” reports the NY Times, because ”the United States still classifies China as a nonmarket economy, which sets off special rules for evaluating antidumping and antisubsidy cases that heavily favor American companies. American companies have won almost all the antidumping and antisubsidy cases they have filed against Chinese companies for the last 20 years.”
Meanwhile, China-based Suntech (NYSE: STP), the world’s largest solar panel manufacturer, moved some production to Arizona last year. The 100-person factory assembles the final solar panel here after importing the solar cells from China. Now, Suntech can label its solar panels as “Made in U.S.A” and qualifies for federal “Buy American” subsidies!
China was quick to respond to the trade complaint, warning the US not to take protectionist measures that could harm the global economy, reports Reuters.
“If the U.S. government files a case, adopts duties and sends an inappropriate protectionist signal, it would cast a shadow over world economic recovery,” an unnamed official said in a statement on the Chinese Commerce Ministry’s website, says Reuters.
“The Chinese government hopes the United States will scrupulously abide by its promise to oppose trade protectionism, avoid adopting protectionist measures on Chinese solar cell products, jointly protect a free, open and fair international trade environment, and adopt more rational means of handling trade frictions.”
“The U.S. has no reason to criticize other countries’ efforts to improve the world’s environment, and should instead strengthen cooperation with other countries in the solar energy sphere to jointly respond to climate and environmental challenges,” the official said.
Read the NY Times article:
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