Revised Duties Imposed by U.S. on Chinese Solar Equipment

The U.S. Commerce Department revised penalties it will impose on solar-energy equipment imported from China, increasing anti-subsidy duties it had previously announced while adjusting tariffs on goods being sold at below cost.

In a final determination yesterday, the agency set penalty rates for Chinese producers, including Suntech Power Holdings Co. and Trina Solar Ltd., after determining the companies had benefited from government subsidies and had “dumped” their products onto the U.S. market at below the cost of production.

The duties, the result of a complaint brought by the American unit of Bonn-based SolarWorld AG, threatened to exacerbate trade relations between the world’s two largest economies. The countries have sparred over government support for clean energy as President Barack Obama and Republican challenger Mitt Romney each pledge tough action on China ahead of next month’s U.S. election.

“Commerce’s decision raises the industry’s chances of reclaiming equal footing,” said Gordon Brinser, president of SolarWorld Industries America, based in Hillsboro, Oregon. “Only fair competition can provide sustainable gains in technological efficiency, cost reduction and end-user pricing.”

The Commerce Department said yesterday imports of crystalline silicon photovoltaic cells made by Trina Solar would be subject to duties of 15.97 percent, up from a 4.73 preliminary rate imposed in March, to counter Chinese government subsidies. Duties imposed on similar goods produced by Suntech, the world’s largest solar-power equipment maker, were increased to 14.78 percent, up from 2.9 percent in March.

‘Subsidy Margins’

An anti-subsidy tariff of 15.24 percent was imposed on solar goods from other Chinese exporters.

“We’re pleased with the margins calculated by the Commerce Department, particularly the subsidy margins which increased significantly on the entire Chinese industry,” Timothy Brightbill, an attorney for Wiley Rein LLP in Washington who represents manufacturers led by SolarWorld, said in an interview.

The U.S. will also impose anti-dumping duties of 18.32 percent on the value of Trina Solar imports, a reduction from the 31.14 percent penalty imposed in a preliminary finding in May. Suntech faces anti-dumping duties of 31.73 percent, slightly higher that a rate of 31.22 percent set in May.

“Unilateral trade barriers will not make any one company more competitive, but will make solar less competitive against other forms of generation,” Mick McDaniel, managing director of Suntech’s U.S. unit, said in a statement.

Dumping Deterrence

An additional 59 Chinese companies will be subject to an anti-dumping penalty of 25.96 percent, based on a determination by the Commerce Department of how much below cost they were selling their goods. All other Chinese producers will be subject to a 249.96 percent rate to deter dumping.

Actual tariffs collected will be reduced by an adjustment because the companies are subject to both dumping and subsidy penalties.

The Commerce Department determined that most of the duties should be retroactive, beginning 90 days before the date of the preliminary findings. The U.S. International Trade Commission next month is scheduled to decide whether China’s policies have caused U.S. solar-energy manufacturers harm, a move that will determine whether the duties announced yesterday will stand.

Yesterday’s penalties exempt tariffs when a portion of a panel is made outside of China, leaving a potential loophole, according to Senator Ron Wyden, an Oregon Democrat who heads the Senate Finance Committee’s trade subcommittee.

Additional Measures

“I will be monitoring the impact of this determination closely and will pursue additional measures if necessary to protect American manufacturers and workers,” Wyden said in an e-mailed statement.

Critics of SolarWorld’s complaint disagreed.

“We are gratified that the scope of today’s decision is limited only to solar cells made in China and that the Department did not significantly increase the tariff from its preliminary decision in May,” Jigar Shah, president of the Coalition for Affordable Solar Energy, a group that opposed SolarWorld’s complaint, said yesterday in a statement.

Penalties on imports have split the U.S. solar industry, pitting a group of manufacturers led by SolarWorld against developers and installers of the goods, who benefit from lower-priced imports.

Brinser of SolarWorld told the U.S. ITC on Oct. 3 that the Chinese government has provided unfair support for its domestic solar-manufacturing industry, leading to a price collapse that has caused U.S. plants to shut.

Opponents of the complaint including SunEdison LLC, a subsidiary of MEMC Electronic Materials Inc., say SolarWorld failed to adapt to a rapidly changing business climate, marked by a decline in U.S. government incentives and increased competition from other energy sources including natural gas.

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