The focus of Part II of this series was to begin to establish what, exactly, is legal and what’s illegal when it comes to subsidies and manufacturing in the context of international trade law and CASM’s international trade petitions against China. That continues here in Part III, in which some of the key evidence amassed by CASM, SolarWorld Industries America, and its legal representatives at Wiley, Rein LLP are presented.
Contrasting US, China Silicon Solar PV Subsidies
As Wiley, Rein’s Brightbill pointed out, US solar energy subsidies are focused on stimulating demand for solar energy systems; in large part, they provide incentives for ‘consumers’ to invest in buying and having them installed. That doesn’t provide any advantage to domestic manufacturers of solar energy systems vis-a-vis their overseas competitors. Whether the silicon-solar-PV panel being installed was made by a US or Chinese manufacturer, or a manufacturer in another country, doesn’t factor into such subsidies; hence, no unfair advantage is afforded to domestic manufacturers.
China’s subsidies, in contrast, are overwhelmingly directed at stimulating China’s domestic manufacturers and the manufacturing of silicon-solar-PV cells and panels. Furthermore, CASM asserts in its trade petitions, China’s subsidizing the export of silicon-solar-PV panels to the harm of US industry and businesses. Such subsidies are expressly forbidden by WTO rules and associated member country legislation.
Brightbill referred to the following Department of Energy chart, which illustrates the comparative size of China and US solar subsidies. Intuitively, the larger a country’s subsidies are in relation to another’s, the greater advantage is being conferred on market participants in those countries with the larger subsidy programs. However, again, it’s important to note that it’s the nature of the domestic subsidies that is the essential determinant as to whether or not any subsidy results in harm to counterparts in another WTO member nation.
Any Harm Done?
In order for the ITC and Commerce Dept. to rule in CASM’s favor, the petitioners have to show that that US manufacturers have been harmed as a result of China’s subsidies. The huge difference in comparative size of the US and China’s respective subsidies for silicon solar PV is a reliable indicator that foreign imports may be being dumped in the US market, with resultant harm to US manufacturers. The crux of proving this critical point of their anti-dumping and countervailing duty petitions relies on additional evidence, however.
In support of CASM’s claim that China’s subsidies to manufacturers have harmed — and continue to harm — their US counterparts, Brightbill noted that Chinese exports to the US have shot up 350% from 2008 to year-end 2010. By 2010, Chinese silicon solar PV manufacturers had captured 48% of both the US and global markets, as is illustrated in the graphic below, courtesy of the Washington Post.
Updating this further, Chinese import growth accelerated significantly in 2011. US imports of Chinese silicon solar PV in the first eight months of 2011 exceeded exports from all of 2010 by 157%. There were instances in 2011 where single-month import totals exceeded those for all of 2010, Brightbill noted.
Moreover, contrary to what might be expected, Chinese manufacturers have stepped up their imports since CASM filed its petitions, Brightbill continued. That’s lead Wiley, Rein to request that any punitive countervailing duties the ITC and Commerce Dept. may levy against Chinese imports be assessed retroactively, back six months to around mid-November 2011.
US Solar Industry Bankruptcies
Another clear indication that damage is being done by Chinese manufacturers dumping product in the US and China’s subsidy program is the growing list of domestic manufacturers that have gone bankrupt or are now operating at substantial losses, Brightbill continued. Though there are at least several more, including Michigan’s Energy Conversion Devices, I’ll mention just two.
A good place to start is Solyndra, the developer of a once-promising concentrated PV technology that declared bankruptcy on Aug. 31, 2011. Infamously, solar and clean-energy opponents here in the US latched on to Solyndra’s bankruptcy filing, attempting to scandalize the Obama administration with allegations that the White House abused and overstepped its authority in the granting of $535 million DOE loan guarantee to the company.
The driving force behind CASM and the ITC and Commerce Dept.’s anti-dumping and CVD petitions, SolarWorld Industries America and its parent company, Germany’s SolarWorld AG, is also hurting as a result of the sharp, steep drop in silicon solar PV prices brought about by a tsunami of cheap, Chinese imports.
SolarWorld Industries America closed down its manufacturing facility in Camarillo, California, but the company is hanging on and doing it’s best to keep a newly built, state-of-the-art, $500-million facility in Hillsoboro, Oregon open, according to Brightbill. This is a facility, he noted, that was built without the benefit of a single dollar in US federal government subsidies.
Additional Evidence: Huge Spike in Imports, Plummeting Prices
There are additional indications that Chinese manufacturers are dumping silicon solar PV panels in the US, and that US manufacturers are being damaged as a result. That can be found in the precipitous and extraordinary price drop of silicon-solar-PV panels — around 50% — that has occurred in just the past year, Brightbill pointed out.
The massive flood of cheap, Chinese, silicon-solar-PV panels, and an extraordinarily sharp, steep price drop is no coincidence, CASM and supporters assert. Nor has it been the result of market-driven demand. It’s the result of China’s centrally planned, coordinated, and controlled subsidy program, subsidies that violate international trade law, they say, a claim that the US ITC and Commerce Dept. are now investigating.
Additional evidence CASM has amassed in support of its international trade petitions will be presented in Part IV of this series. Also to be explored is the broader, longer term economic and social ramifications of China’s subsidy program, particularly as it relates to the future of US manufacturing, economic development, and job creation.
To be continued shortly…