SolarWorld Makes Case Against China as U.S. Eyes Trade Penalties

U.S. solar-energy manufacturers told regulators yesterday that China is unfairly supporting its domestic industry and defended punitive tariffs 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 AG’s U.S. unit, told an International Trade Commission hearing in Washington.

“China’s massive government-funded solar capacity has caused this material injury,” he 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 have sparred over U.S. enforcement of China’s adherence to global trade rules.

The ITC will determine by early November whether the U.S. manufacturers led by SolarWorld have been harmed by imports. If the commission decides the imports have injured the manufacturers, duties set by the U.S. Commerce Department can continue. The department imposed preliminary duties in May and is scheduled to announce a final ruling Oct. 10.

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,” 18 Democratic U.S. House members led by Oregon Representatives Suzanne Bonamici and Kurt Schrader said yesterday in an Oct. 2 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.

The Commerce Department determined in May that Chinese-made solar sells were being sold in the U.S. below cost and imposed preliminary duties of 31 percent to 250 percent. In March, the agency set separate tariffs as high as 4.73 percent on the goods to counter Chinese subsidies to its manufacturers.

Industry Split

The dispute has split the U.S. solar industry, with installers, developers and some manufacturers opposing the duties on Chinese imports.

Tom Gutierrez, the chief executive officer of GT Advanced Technologies Inc., 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.

“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.”

Opponents of SolarWorld’s position say solar-energy prices have declined partly due to U.S. incentives as well as 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. said at the ITC hearing.

Beyond Solar

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 the Asian nation.

China has said that clean-energy policies in at least five U.S. states violate World Trade Organization rules. It also filed a WTO complaint against the U.S. in May, alleging that anti-subsidy measures negatively affected $7.3 billion in Chinese goods.

Additionally, since March, the U.S. Trade Representative’s office has filed WTO complaints against China for limiting exports of rare-earth elements and levying duties on American autos, primarily from General Motors Co. and Chrysler Group LLC.

“China is often in compliance with the letter of its WTO commitments, yet falls short of the spirit of the WTO,” sometimes favoring domestic goods over those produced by international competitors, John Frisbie, president of the U.S.- China Business Council, said in comments filed with USTR on Sept. 17.

“These shortcomings create an unlevel playing field for many foreign companies” that are trying to establish operations in China, as well as those already operating there, he said. The Washington-based organization’s members include companies such as General Electric Co., FedEx Corp. and Wal-Mart Stores Inc.

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