International trade tensions between the US and China have risen to become priorities at the national level recently, prompted by the October filing of anti-dumping and countervailing duty petitions by the Coalition of American Solar Manufacturing (CASM).
In his State of the Union address on Tuesday evening, Pres. Obama announced the creation of a Trade Enforcement Unit that will investigate illegal trade practices and subsidy programs by countries, notably China, which along with the US is legally bound by domestic laws enacted in compliance with World Trade Organization (WTO) agreements.
To better understand the narrow and broad issues associated with CASM’s petitions, Clean Technica has been running a series of articles based on an interview and correspondence with the lead lawyer for SolarWorld Industries America in the CASM case, Wiley, Rein LLP’s Tim Brightbill.
This article gives equal time to the opposition, which has been substantial. It’s based on an interview with Kevin Lapidus, senior vice president of legal and government affairs for MEMC SunEdison, and the Podesta Group’s Ed Rothschild. Lapidus also serves as a board member of the Coalition for Affordable Solar Energy, a coalition of US solar industry participants which has been conducting a government and public outreach campaign to discredit CASM’s claims and international trade petitions.
CASE’s opposition to CASM’s anti-dumping and countervailing duty petitions center on three key points, Lapidus explained: US solar industry jobs; US solar energy exports; and US renewable energy policy.
Solar Energy & US Jobs
Solar energy has rapidly emerged as an important engine of job creation in the US, a development that couldn’t have come at a better time, as job creation has been relatively slow and hard to come by since the near collapse of the banking system and severe recession of 2008-2009.
More than 100,000 Americans are now employed in the domestic solar energy industry, Lapidus noted. Industry employment increased “6.8% last year and it’s forecast to grow 24% in 2012,” he told Clean Technica. Solar “is a growing industry creating jobs, and the solar trade case is likely to undermine that job growth.”
The key to assuring continued good job creation is to decrease prices further, especially in light of the reduction, lapse or elimination of government subsidies and incentives that have fostered the growth of solar energy to this point, not only in the US, but worldwide, he continued. “[Solar energy] is a very price-elastic market. Other incentives are decreasing.”
The incentives the solar energy industry benefits from today have moved solar energy significantly closer to grid parity with fossil fuels, Lapidus noted, but they were enacted for the purpose of supporting a nascent industry and market. “Today’s incentives will be removed down the line. [Solar] will be a commercial market, and the progress that’s been made toward grid-parity has been what’s made the solar market boom,” he said.
The key to further progress, in turn, is to continue to reduce the price of solar (PV) cells, modules and panels, as well as manufacturing and balance-of-systems costs, Lapidus asserted. The imposition of countervailing duties on Chinese silicon solar PV imports will increase the cost of solar PV modules and panels, the result being that the overall cost of installing solar energy systems is going to increase. That’s going to result in the cancellation of many US projects currently scheduled for development. That, in turn, will effectively stifle job creation, he explained.
Furthermore, CASE finds fault in CASM’s argument that it’s seeking to shield the American solar energy industry, its employees and potential job creation in coming years. “If you look at jobs in the US solar industry, 52% are in installation. These are exactly the kinds of jobs we need in the US.”
Seventeen percent of jobs in the US solar industry are in sales and distribution, he continued, while 24% are in manufacturing. That’s manufacturing of all components of solar PV systems – inverters and other parts, as well as solar panels, he pointed out.
“When you really boil it down, CASM’s case accounts for 2-3% of the job market. They’re attempting to preserve their 2-3% of the job market. That’s not fair, it’s not right, and it’s not helpful to the large majority of the industry and its employees.”
Point 2: US Solar PV Exports
CASE’s second key point in discrediting CASM’s silicon solar PV trade petitions centers on broadening the perspective to include US exports of solar PV equipment and technology, as well as US imports of crystalline silicon Chinese cells, modules and panels. As reported here on Clean Technica, US solar industry exports totaled $5.6 billion in 2010.
Moreover, the US solar energy industry posted a trade surplus of between $300-$400 million with China in 2010, as well as a global trade surplus. “This case threatens exports as well,” Lapidus pointed out.
Then there’s the contagion effect to consider, he continued. “SolarWorld, which essentially is a German company, has started a trade war. India’s latching on to the issue and is threatening to investigate imports from the US and China.” The problem with trade wars, he concluded, is “that you don’t know the dispersion pattern of the dominoes; you just know it’s bad.”
Expanding on this, Lapidus asserts that SolarWorld’s leading the CASM trade petitions here in the US is the tip of the spear, that it’s just one element of a broader business strategy crafted by parent SolarWorld AG’s top executives in Germany to eliminate or at least seriously damage competition from Chinese manufacturers of silicon solar PV. “Now, they’re considering the same kind of case in the EU,” Lapidus pointed out.
Undermining US Clean Energy Policy
The third pillar supporting CASE’s opposition to the international silicon solar PV trade case against China is that it undermines US federal and state renewable energy policy.
“The Obama Administration and many US states have been strong supporters of solar and renewable energy,” Lapidus stated. “The problem is the cost of modules and solar energy will go up and undermine growth of the industry and the viability of solar energy. It will undermine a key policy goal of the US.”
There’s a twist of bitter irony to the situation, he added. “The irony here is that after years of criticism that solar was too expensive, we’re now driving to grid parity. We’re actually delivering on our social compact, and it’s all about the cost of solar. Thus, the trade case and SolarWorld’s actions are going to set the industry back years,” Lapidus asserted.
He noted that the solar industry is set to build $12 billion of US solar projects in 2012. “We need these things, and the industry is delivering. A time when we’re achieving policy, export and job goals is no time to undermine policies that are delivering on the social compact.”
An Alternative Means of Resolution?
The Podesta Group’s Ed Rothschild raised the point that the framework for the Commerce Dept. and ITC investigations and determinations are very narrowly defined within the context of domestically enacted international trade law in compliance with WTO rules. They’re focused “only on production [and export] of silicon solar cells, not the potential to undermine the industry and growth,” he said.
Picking up on this point, Lapidus said that CASE wants to “educate policymakers, the business community, the media and the public about the negative effects of this case and encourage a negotiated solution to this issue,” that includes industry participants as opposed a narrowly defined determination based on international trade law and the Commerce Dept.
Is there a precedent, or precedents, for a negotiated resolution? “Yes, there have been government-to-government resolutions,” Lapidus responded. Years ago, a trade dispute between Canada and the US to do with lumber imports lead to a “restructuring of the market that ensured the continued viability of parties on both sides.”
Though it hopes that countervailing duties are not imposed, Lapidus says that CASE isn’t prejudging the ITC-Commerce Dept. process. “We’re waiting for the decisions. This is the preliminary phase of the process, which will include the ITC revisiting the issue and the final Commerce Dept. determination, which will come at the end of the year.”
Unfortunately, he added, a certain amount of damage has and is being done. Whether or not it will be deep and lasting enough to derail a US solar energy industry that’s emerging as a key engine for future economic and job growth, time, along with the result of the ITC and Commerce Dept. investigations and ruling and ensuing actions by government and industry in China, the US and other key solar energy markets around the world will tell.
* Photo Blind Justice Atop Bath’s Guildhall, Freefoto.com
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