Industry Group Proposes End to Thorny U.S.-China Solar Trade Dispute

A compromise offered by the Solar Energy Industries Association (SEIA) on Monday to resolve a worsening trade dispute between U.S. and Chinese solar industries proposes the creation of a Chinese fund to help grow the U.S. market and safeguards to offset surges of Chinese solar modules.

The move comes as Chinese provisional anti-subsidy duties on imports of U.S. polysilicon took effect on Friday. The duties of 6.5% set by Beijing affect only two named companies: Hemlock Semiconductor and AE Polysilicon. In July, after a separate investigation, the Chinese Ministry of Commerce (MOFCOM) slapped provisional anti-dumping duties on imports of U.S. solar-grade polysilicon of between 53.3% and 57%.

Meanwhile, the U.S. International Trade Commission (ITC) last November unanimously determined that imports of crystalline silicon photovoltaic cells and modules from China materially injured the U.S. industry, clearing the way for the U.S. Commerce Department to issue antidumping (AD) and countervailing duties (CVD) of between 31% and 250% on Chinese producers.

According to SEIA, “no end” is in sight to the ongoing solar trade row that is causing significant adverse and unintended effects across the global solar supply chain. “For example, to avoid the U.S. AD/CVD orders on imports of solar cells and modules from China, Chinese manufacturers are assembling third-country cells into modules in China and then importing these modules into the United States free of the AD/CVD orders,” it said. “In contrast, while U.S. solar cell and module producers have experienced some increase in U.S. module prices, as a result of the AD/CVD orders, given the premium Chinese producers pay for third-country cells, the price is still below levels needed to ensure a competitive U.S. module market.  Thus, the U.S. AD/CVD orders are effectively serving as a tax on U.S. consumers which largely benefits third-country cell producers.”

The proposed compromise calls for Chinese companies to agree to create a fund—using a percentage of the price premium Chinese companies currently pay third-country cell producers to get around U.S. trade sanctions—that would benefit U.S. solar manufacturers directly and help grow the U.S. market. It also calls on China to end antidumping and countervailing duty investigations on U.S. polysilicon exports to China, and on the U.S. to phase out antidumping and countervailing duties. Finally, it calls for the establishment of a solar development institute—also to be funded by Chinese manufacturers—that would focus resources on expanding the U.S. solar market.

SEIA CEO Rhone Resch said the proposed settlement would lower costs to Chinese manufacturers for exports of solar cells and modules to the U.S. and improve U.S. manufacturers’ ability to “compete fairly on an even playing field.” At the same time, it would eliminate current and future litigation risks and costs for companies from both countries.

The proposal is based on a precedent set during a 2002 trade dispute between the U.S. and Brazil over allegations of unfair U.S. subsidies on cotton. In that case, the World Trade Organization (WTO) eventually ruled against the U.S., and as part of the settlement, a fund was established to compensate Brazilian farmers.

Beijing recently resolved a separate row with the European Union (EU) by requiring various Chinese producers to sign a “price undertaking” agreement with the 27-member bloc to avoid lofty anti-dumping duties. Under that deal, participating Chinese exporters committed to minimum import prices. That means participating companies will be able to export up to 7 GW per year of solar products into the EU without having to pay anti-dumping duties, as long as the price does not fall below 56 cents/W. Non-participating Chinese companies will, however, be subject to the 47.6% average anti-dumping duty.

SEIA has warned U.S. negotiators in Washington that a U.S. settlement with China on terms similar to the EU-China deal “would represent a blow to the U.S. solar industry because of an expected increase in solar prices.” The industry group has said any resolution of the solar dispute “must recognize the interests of all stakeholders, including American consumers, and not just one segment of the industry.”

A new study released earlier this month by the Department of Energy’s National Renewable Energy Laboratory and the Massachusetts Institute of Technology suggests that China’s historical solar photovoltaic price advantage of up to 23% is driven by economies of scale and supply chain development—not direct government subsidies or low labor costs as is the prevailing belief.

Sources: POWER, MOFCOM, SEIA

—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)