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International Trade Commission Report Analyzes Competitiveness of U.S. Solar Industry

Posted August 07, 2017

Demand for renewable energy has risen dramatically over the past decade, making solar one of America’s fastest growing industries that last year accounted for almost 40% of new generation on the nation’s power grid, but U.S. solar panel makers have increasingly struggled to compete with a flood of cheap imports from low-cost manufacturers in Asia.

Suniva, a Georgia solar-panel and solar-cell maker, filed for bankruptcy in April, and then immediately petitioned the U.S. International Trade Commission – an independent federal agency with broad responsibilities on trade matters – to impose substantial tariffs on the cheaper, foreign-made panels that now dominate worldwide supply. Another bankrupt solar-panel maker, SolarWorld of Oregon, joined the “Global Safeguard Relief” petition under the little-used provisions of Section 201 to the Trade Act of 1974

Interestingly, although the two firms are based in the United States, they actually have overseas ownership: Suniva is majority-owned by a company in Hong Kong and SolarWorld’s owners are headquartered in Bonn, Germany.

Both companies are seeking higher tariffs on imports of crystalline silicon photovoltaic cells and modules (CSPV), “whether or not partially or fully assembled into other products” on the grounds that since the Obama administration enacted anti-dumping and countervailing duties against Chinese exporters, “additional new global overcapacity has continued to drive U.S. market prices to levels that challenge responsible economic operations for U.S. manufacturers.”

According to some experts, the trade remedies imposed by the U.S. government in 2012 and 2014 failed to raise prices because China has “engaged in a musical chairs-type effort in recent years to avoid tariffs on their products by periodically shifting production to Malaysia, Thailand and other Southeast Asian nations.”

If successful, the safeguard action would effectively double the price of imported panels, a move that opponents – including utilities, free-market advocates and clean energy groups – say could have devastating effects on a robust sector of the economy that employs more than 260,000 people nationwide. Some companies have reportedly begun stockpiling cheap panels while they can, and others say projects are being put on hold in light of the uncertainty.

Last week, the USITC released a report analyzing the competitiveness of the solar industry in the United States that will be used to inform its August 15 hearing on the injury phase of the Section 201 investigation. A final recommendation is expected in late September, after which President Trump will have until November to make a final decision whether to impose new tariffs for a period of four years on solar imports.

Based on responses from 56 U.S. companies that accounted for an estimated 82.6% of U.S. imports of CSPV cells and modules last year, as well as responses from almost a hundred foreign companies, the Commission found that total U.S. imports of products under investigation, based on quantity, were “more than five times higher” in 2016 than in 2012, and says a similar trend was observed for imports based on value. The largest increases in U.S. imports of CSPV products were observed for Malaysia, China and Korea, but the report also lists Taiwan, Vietnam and the Philippines as significant exporters of solar products bound for the U.S. market.

The “employment‐related indicators” for U.S. solar panel makers fluctuated, the report notes, showing that the overall number of production and related workers employed by domestic CSPV module producers declined from 2012 to 2014, but increased to a level that was actually 3.6% higher in 2016 than 2012.

Domestic importers and installers opposed to the investigation predict severe job losses could result if the administration rules in favour of providing import relief from all foreign sources of solar products. The Solar Energy Industries Association recently estimated that 88,000 jobs could be lost as a result of the trade protections requested by petitioners.

GTM Research, an electricity analytics company, assessed the potential impact of relief being sought in the petition for imported solar imports – $0.40 per watt tariff for cells and a floor price of $0.78 per watt on modules – and found that such pricing could lead to the end of as much as two-thirds of U.S. solar projects through 2022.