UPDATE 2-US panel okays China solar panel unfair trade probe
* U.S. companies seeking anti-subsidy, anti-dumping duties
* Preliminary decision on duties expected in first quarter
* China has launched counter investigation
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By Doug Palmer
WASHINGTON, Dec 2 (Reuters) - A U.S. trade panel on Friday approved an investigation into charges of unfair Chinese trade practices in the solar energy sector, setting the stage for possible steep U.S. duties and ratcheting up tensions with Beijing on the green trade front.
The U.S. International Trade Commission voted 6-0 that there was a reasonable indication that SolarWorld Industries America and other U.S. producers have been harmed by the imports or could have been.
The vote allows the Commerce Department to continue an investigation into whether the Chinese government provides illegal subsidies for its solar energy sector and whether Chinese companies are selling solar cells and panels in the United States at unfairly low prices.
Beijing has criticized the case as U.S. protectionism and launched its own investigation of U.S. programs to support the renewable energy sector, a move that SolarWorld President Gordon Brinser has dubbed "retaliatory."
The spat is one of several trade fights that have broken out on the environmental front, as governments seek to reduce dependence on carbon-emitting fossil fuels blamed for global climate change.
U.S. imports of the solar products from China totaled $1.5 billion in 2010, up from $640 million in 2009.
SolarWorld and its six coalition partners, who have chosen to remain anonymous, have alleged Chinese producers are undercutting U.S. prices by as much as 250 percent.
Another coalition of 25 U.S. solar companies opposes duties, saying they would threaten 100,000 jobs in the U.S. industry by driving up prices and depressing demand.
The group includes U.S. companies MEMC Electronic Materials Inc and Solar City as well as the U.S. arms of Chinese companies Suntech Power Holdings and Yingli Green Energy.
The group argues lower-priced imports help make solar energy competitive with other fuel sources, stimulating U.S. demand and sustaining jobs in the sector.
A preliminary decision on countervailing, or anti-subsidy, duties could come as early as January, although Commerce can delay a decision until March when it is set to announce preliminary anti-dumping duties in the case.
A final decision on duties is a year away. But preliminary duties -- in form of bonds or cash deposits that importers are required to post -- usually discourage trade.
SolarWorld is the U.S. arm of SolarWorld AG, one of Germany's largest solar product manufacturers. The parent company has not filed a similar case in the European Union.
Brinser blames the lower-priced Chinese product for the company's decision to close its Camarillo, California production facility and lay off about 200 workers.
"We've seen direct harm ourselves from (China's) irresponsible market behavior," he told Reuters on Thursday.
SolarWorld supports "healthy competition" that drives down prices over time, but Chinese government subsidies have pushed prices to artificially low levels by encouraging overproduction of solar cells and modules, Brinser said.
The U.S. industry produces about 2 gigawatts worth of solar energy products each year, roughly the same amount that is installed annually in the United States, he said.
China has at least 16 gigawatts of production capacity, and only installs about 1 gigawatt per year, Brinser said.
Shortly before the commission vote, a group of 59 U.S. lawmakers sent President Barack Obama a letter expressing their support for substantial duties on the Chinese imports.
"We urge you to take all available measures to expeditiously investigate these allegations and take swift and appropriate action based on those findings," they said.
SolarWorld is asking the Commerce Department to find "critical circumstances" in the case, which would allow duties on some imports to be imposed retrospectively. (Reporting by Doug Palmer; Editing by Andrea Ricci and Vicki Allen)