Solar PV Trade Disputes Escalate as German Group Files Dumping Charges against China

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Trade disputes between China — whose manufacturers have come to dominate the global market for silicon solar photovoltaic (PV) cells and panels — is intensifying, and appears poised to escalate into a full-blown trade war.

Led by SolarWorld AG, German solar PV companies earlier today filed a World Trade Organization (WTO) petition with the European Commission (EC) asserting that Chinese manufacturers are dumping solar PV cells and modules in the EU market, a predatory market practice proscribed by WTO rules, according to news reports. Both SolarWorld and the EC declined to comment.

The escalating trade dispute highlights the strategic importance solar energy’s come to acquire, not only in terms of economic growth and job creation, but also with regard to energy security and environmental sustainability. That’s true not only in the European Union (EU) and China, but in the US and other nations looking to shift away from polluting fossil fuels and insulate themselves from the rising cost, price volatility, resource depletion, environmental degradation, and political and military imbroglios associated with fossil fuel production and consumption.

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The Rising Strategic Importance of Solar Power

SolarWorld AG is following in the tracks laid down by its US subsidiary SolarWorld Industries Americas, which has led a group of US solar PV manufacturers — the Coalition for American Solar Manufacturing (CASM) — in filing successful anti-dumping and illegal subsidy complaints against Chinese silicon PV imports into the US. Per World Trade Organization (WTO) due process, the Dept. of Commerce, having found in favor of CASM’s claims on both counts, has imposed and is enforcing import duties on Chinese imports of silicon PV cells and panels. Commerce’s final ruling is expected in October.

The EC-WTO trade case is likely to have a much more profound and pronounced effect on the global solar PV market than the two petitions filed in the US. The EU continues to be the world’s largest market for solar PV, accounting for 74% of global installations in 2011, according to the European Photovoltaic Industry Association (EPIA).

“We have always said that we will ask the European Union to take urgent action against unfair competition from Chinese solar manufacturers,” CASM stated in a press release. “We can confirm that SolarWorld is working together with leading European manufacturers to urge the European Commission to act. We will not reveal any specific dates, however the European industry initiative will communicate its intentions in the coming days.”

Increasing Tension

The EC filing comes in the wake of record growth in solar PV installations and a precipitous 50% decline in silicon PV cell and panel prices that have been driven in the main by a massive build-up in Chinese production, some 95% of which is exported. That’s putting serious strains on competing solar PV manufacturers in other WTO member countries, including the US and EU, which are resulting in a growing string of bankruptcy and insolvency filings.

China has identified solar PV as an industry of strategic national importance and has supported Chinese silicon PV manufacturers with massive subsidies. As laid out in its latest Five-Year Plan, Chinese government subsidies for silicon PV are set to continue, and increase in more innovative solar PV market segments, including thin-film solar PV.

Filing of the EU trade complaints against Chinese PV imports is sure to heighten divisions within the solar energy industry, which in general break out along the industry’s business lines. Downstream of solar PV manufacturers, those financing and installing solar PV systems and projects have generally come out against imposing duties or tariffs on Chinese imports. Producers of polysilicon — the intermediate material from which silicon PV cells and panels are made — as well as silicon PV manufacturing equipment vendors are generally in this camp as well. Opposing criticism and the level of rhetoric is rising.

“Today Germany-based SolarWorld has once again demonstrated that it is willing to undermine the world’s solar industry in a desperate effort to avoid competition in the marketplace,” the Coalition for Affordable Solar Energy (CASE) stated in a press release. “The entire global solar industry – manufacturers, suppliers, installers and consumers — has benefited from the sharp decline in the price of solar cells, and our industry’s future success is predicated on our ability to continually improve the economics of solar electricity generation.

“SolarWorld desperately needs that trend to halt to remain competitive. Like a crazed agent provocateur, SolarWorld is fueling global solar industry infighting for its own selfish interest. On behalf of tens of thousands of US solar workers, we are very disheartened by SolarWorld’s unnecessary and destructive actions and urge the EU to reject their petition.”

Chinese Retaliation

Solar energy industry participants fear reprisal from the Chinese government, which has launched retaliatory WTO trade complaints habitually in recent decades in such cases. That’s proving to be the case in this instance, as well. China recently announced it’s initiating its own WTO investigations into claims that US and South Korean polysilicon manufacturers are dumping product in the Chinese market.

Nevertheless, CASM continues to stand fast and enlarge its campaign to put an end to what it claims are business practices and government subsidies that threaten to drive competitors in other countries out of business and put essentially all the world’s solar PV manufacturing capacity in Chinese hands.

“Today’s announcement by the Chinese government proves once and for all that the it is intent on unfairly and illegally allowing its manufacturers to dominate the global solar industry,” SolarWorld Industries America. “While it was not unexpected, the announcement of retaliatory investigations into U.S. polysilicon production is harmful to the international trade system.

“The Chinese government has been telegraphing this move since last October. It is a common Chinese tactic and an abuse of international trade rules. It represents yet another cynical attempt by the Chinese government to bully the U.S. government by injecting politics into a judicial investigation that is sanctioned under international trade rules, as today’s announcement tacitly confirms. Fortunately, when the Chinese government has attempted such blatant retaliatory actions, its actions have been declared illegal by the World Trade Organization.

“The American people understand the Chinese do not play by the rules and are demanding action. In one recent poll, more than two-thirds of voters think China’s violations of international trade rules are costing the U.S. jobs. As a result, 62 percent of voters favor getting tough on China’s illegal trade practices,” Brinser concluded.

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