Manufacturers see higher China solar duties ahead

WASHINGTON Wed Mar 21, 2012 5:48pm EDT

1 of 5. Workers stand atop scaffolding as they work on a building covered with solar panels, located near the factory of the Yingli Green Energy Holding Company, also known as Yingli Solar, in the city of Baoding, Hebei Province, in this June 20, 2011 file picture.

Credit: Reuters/David Gray/Files

WASHINGTON (Reuters) - Solar panel manufacturers are still optimistic of winning substantial duties on solar panel imports from China, despite an initial U.S. government ruling that many found surprisingly low, the lead attorney for the industry group said on Wednesday.

The U.S. Commerce Department, which announced preliminary "countervailing" duties of less than 5 percent on Tuesday, is expected to impose a bigger set of "anti-dumping" duties when it takes its next crack at the case in May.

Plus, it plans to probe several alleged Chinese programs not covered by Tuesday's decision. So, final countervailing duties announced in June could be significantly higher.

"We have good reason to believe the final numbers are likely to increase," said Timothy Brightbill, an attorney at Wiley Rein who is representing the Coalition for American Solar Manufacturing in its bid to win protection against allegedly unfair Chinese competition.

Although President Barack Obama has no role in deciding the case, he has made promotion of renewable energy and cracking down on unfair Chinese trade practices two major themes of his re-election campaign.

On Wednesday Obama visited Boulder City, Nevada, the site of the Copper Mountain Solar 1 Facility, which, with nearly 1 million solar panels, is the largest photovoltaic plant operating in the United States.

"We're also enforcing our trade laws to make sure countries like China aren't giving their solar companies an unfair advantage over ours," he said to applause from the small crowd.

"Just yesterday our administration determined China wasn't playing fair when it came to solar power, and so we took the first step towards leveling the playing field."

The U.S. industry group, in its petition filed last year, asked for anti-dumping duties of more than 100 percent to offset alleged unfair pricing practices and additional unspecified countervailing duties to offset alleged government subsidies.

PICTURE COULD CHANGE

The U.S. Commerce Department, in its first whack at the case, set preliminary countervailing duties of 2.90 percent on SunTech Power Holdings, the world's biggest producer of photovoltaic solar panel, and 4.73 percent on Trina Solar, another major Chinese producer.

All other Chinese solar panel producers and exports received a preliminary rate of 3.59 percent.

The announcement surprised industry analysts who thought the Obama administration could set the preliminary countervailing duties as high as 20 percent to 30 percent.

It also boosted the stock prices of Chinese companies targeted in the U.S. industry case.

Brightbill said the picture could change significantly in the coming months.

"We know that Commerce's subsidy investigations are ongoing and that Commerce has only recently begun its investigation of some of the Chinese subsidy programs," Brightbill said.

Commerce also told petitioners it plans to follow up Tuesday's announcement with decisions on several alleged subsidy programs, such as for glass and aluminum extrusions, that were not covered by the initial ruling, Brightbill said.

In addition, "we still have the anti-dumping case to come and it's very typical for the anti-dumping margins to be higher than the subsidy margins, often significantly higher," he said.

Scott Lincicome, an attorney with White & Case who is not involved in the solar panels case, said there were a number of reasons the initial countervailing duties were low.

One could be that "the sheer volume" of Chinese solar cell and panel exports, which totaled nearly $3 billion to the United States last year, diluted the effect of any subsidies the Chinese companies received, he said.

Also, generally low interest rates in many countries around world might make it hard to prove Chinese companies received a significant advantage from government-set lending rates, as the U.S. industry has alleged, Lincicome said.

Normally there is a tendency for countervailing duties to fall between the preliminary and final rulings, which is set for early June in the solar case, he added.

The department's probe of additional alleged Chinese subsidy programs could reverse that trend. In addition, the anti-dumping investigation could lead to significant duties, Lincicome said.

(Additional reporting by Matt Spetalnick in Washington and Jeff Mason in Boulder City, Nevada; Editing by Lisa Shumaker and Cynthia Osterman)

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Comments (10)
Mott wrote:
This rate doesn’t serve any practical purpose and public can see through this.

Mar 20, 2012 8:38pm EDT  --  Report as abuse
Wassup wrote:
Your Marxist government at work. China is this administrations perferred partner in trade if it can sink Wal-Mart.

Mar 20, 2012 8:42pm EDT  --  Report as abuse
Anthonykovic wrote:
The duties are surprisingly low, essentially negligible given how cheaply China manufactures almost everything. This is very much a “free trade” policy that Obama has adopted. Good thing Obama adopted this policy: only some Americans would benefit from US-built solar panels, but ALL Americans will benefit from less-costly green energy.

Mar 20, 2012 10:16pm EDT  --  Report as abuse
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