SolarWorld Says Unfair China Policies Rate Import Penalties

U.S. solar-energy manufacturers led by SolarWorld AG (SWV) said they were forced to close plants and lay off workers because of unfair Chinese government policies, as they tried to persuade regulators that the U.S. should continue to impose penalties on imports from the Asian nation.

Chinese exports of crystalline silicon photovoltaic cells and modules have flooded the global market, leading to a price collapse, Gordon Brinser, president of SolarWorld’s U.S. unit, said today at an International Trade Commission hearing in Washington.

China’s massive government-funded solar capacity has caused this material injury,” Brinser said. “The import surge has been devastating to the U.S. industry.”

The dispute has become a flashpoint in increasingly tense trade relations between China and the U.S., the world’s largest economies, as American elections loom. President Barack Obama and Republican challenger Mitt Romney, who face off in their first presidential debate tonight, have sparred over U.S. enforcement of China’s adherence to global trade rules. Members of Congress, looking to protect jobs in their districts, have also taken up the issue.

‘Alarming Rate’

“Chinese producers have continued to ship dumped and subsidized products into this country at an alarming and unacceptable rate,” a group of 18 Democratic U.S. House members led by Oregon Representatives Suzanne Bonamici and Kurt Schrader said yesterday in a letter to the ITC commissioners. “This is devastating to our domestic solar-manufacturing industry and costing us critical manufacturing jobs.”

Senators Ron Wyden and Jeff Merkley of Oregon, as well as Charles Schumer of New York and Sherrod Brown of Ohio, all Democrats, sent the commission an identical letter.

Tom Gutierrez, the chief executive officer of GT Advanced Technologies Inc. (GTAT), a Merrimack, New Hampshire-based supplier of solar-manufacturing gear, mostly for China, said seeking tariffs against the Chinese is shortsighted and will end up costing the U.S. jobs.

‘Counterattack’ Predicted

“The Chinese are going to counterattack,” he said in an interview. “Prices are going to go up, installations are going to be less profitable for the installation companies,” he said, predicting “significant loss of jobs.”

The problem is with the ITC process, Gutierrez said. “Nowhere in their equation are they able to account for collateral damage.”

The Commerce Department on May 17 announced preliminary duties ranging from 31 percent to 250 percent on imports of Chinese-made solar cells, after determining that the products were sold in the U.S. below cost. The agency in March set separate tariffs as high as 4.73 percent on the goods to counter subsidies from China. The department’s final ruling on anti- dumping and countervailing duties is scheduled for Oct. 10.

In order for the tariffs to be imposed, the ITC must determine that U.S. manufacturers have been harmed by imports from China. A final decision by the commission is scheduled for next month.

‘Highly Misleading’

SolarWorld’s assertion that it has been harmed by Chinese government policies is “simplistic and highly misleading,” Richard Weiner, an attorney with Sidley Austin LLP representing manufacturers including China’s Suntech Power Holdings Co. (STP), said at today’s hearing.

Opponents of SolarWorld’s position say solar-energy prices have declined partly due to U.S. government policies and competition from other sources of energy including natural gas.

“There are economic, political and regulatory forces in the United States that are driving down the cost of solar” energy, Kevin Lapidus, senior vice president for legal and government affairs at SunEdison LLC, a subsidiary of St. Peters, Missouri-based MEMC Electronic Materials Inc. (WFR) said at the ITC hearing.

The energy-related trade dispute between China and the U.S. has moved beyond solar gear. The Commerce Department is weighing anti-dumping and anti-subsidy duties on wind-tower imports from China. China has said that clean-energy policies in at least five U.S. states violate World Trade Organization rules.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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