The US International Trade Commission on Friday voted unanimously in favor of proceeding with the Suniva/SolarWorld Section 201 trade case, finding Chinese solar imports are “a substantial cause of serious injury to the domestic industry,” despite the claims and evidence of virtually the entire US solar industry.
Unsurprisingly, the resulting fall-out from the International Trade Commission’s (ITC) decision has been a heady mixture of anger and disappointment.
Section 201 trade case History 101
I’ve been covering this trade case for most of the year and it’s been a rough ride. In April of this year, Chinese-owned/US-based solar cell manufacturer Suniva filed a case with the ITC, which was then formally accepted in May, leading to the initiating of an ‘Antidumping and Countervailing Duty Investigation’ that would conclude in September. The underlying premise of the trade case — which quickly received the support of German-owned SolarWorld, who joined as a co-petitioner — was that China was flooding the US market with solar cells and modules, making it impossible for US-based manufacturers to compete.
Suniva’s request of the ITC was the introduction of a a tariff and price floor on solar equipment — specifically, a $0.40/watt tariff for cells and a floor price of $0.78/watt on modules.
The response from nigh on the whole of the US solar industry was immediate and firm.
The Solar Energy Industries Association (SEIA) immediately responded, claiming that the US solar industry would lose an estimated 88,000 jobs, or approximately a third of the current workforce, if the ITC found in favor of Suniva.
“These new estimates show the potential damage to the solar industry as a result of this petition,” said Abigail Ross Hopper, SEIA President and CEO at the time. “Rather than help the industry, the action would kill many thousands of American jobs and put a stop to billions of dollars in private investment.”
Jumping into the fray, GTM Research published research which concluded that the country’s solar industry would be immediately devasted if tariffs were introduced, claiming that the industry could see two-thirds of expected installations over the next five years completely erased.
In July a new coalition of companies and groups was formed, the Energy Trade Action Coalition, which was made up of a group of companies, associations, and organizations dedicated to fighting the trade petition including, surprisingly enough, two conservative groups, The Heritage Foundation and ALEC.
“Tariffs meant to protect one industry can, and often do, have significant damaging effects on other domestic industries,” said Tori K. Whiting, Research Associate at The Heritage Foundation at the time. “Imposing tariffs under Section 201, as Suniva and SolarWorld request, would be a step backward by adding another layer of federal subsidies which is something the Heritage Foundation opposes in all instances.”
As the months passed, the trade case continued and the rhetoric heated up. A report prepared for Suniva and SolarWorld in defense of their Section 201 trade case claimed that “an effective remedy in the Solar 201 Safeguard case” would result in a net increase of over 114,800 new jobs across all segments of the US solar industry. However, the response to this highly-suspicious report was clear, and Abigail Ross Hopper of the SEIA came out strongly, saying that, “The notion that doubling the price of solar panels would somehow increase demand and create jobs is preposterous.”
Hearings were held during August and concerns were raised, especially in light of the possibility that the ITC would rule in favor of Suniva and SolarWorld based less on the merits of the case and more so as to please their new boss, Donald Trump, who in late August told his staff, “I want tariffs.”
So it is with very little surprise that the ITC voted unanimously, 4-0, in favor of Suniva and SolarWorld, finding that “increased imports of crystalline silicon photovoltaic cells … are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article.”
Thankfully, there is a next phase of this saga which opens the door for some hope to the US solar industry. The ITC will now proceed into the remedy phase of the investigation, and hold public hearings on October 3, before presenting all its findings in November.
Bad Business Practices Rewarded
It should come as no surprise that Suniva and SolarWorld are very happy with the way things have turned out — despite the fact that all of this stems from the fact that neither company could successfully run their business despite a booming US solar industry. This point was made by the SEIA back in August in a report presented to the ITC in advance of their hearings. The SEIA highlighted the fact that utility-scale projects use 72-cell modules — a product that neither Suniva nor SolarWorld were able to produce in sufficient quantities required by the growing US solar market: “In the utility segment, the petitioners were unable to manufacture and supply 72-cell modules required to meet demand,” SEIA said. “Therefore, to meet utility-scale demand, increasing CSPV imports were pulled into the U.S. utility market — they did not “flood” the market — to supply developers with necessary products.”
“SolarWorld and Suniva failed to fully qualify their product with major purchasers. Suniva and SolarWorld both experienced complaints from a litany of dissatisfied customers over late shipments, damaged products and general product unreliability.”
“Suniva is gratified that the ITC has found that a surge of imports into the US has decimated the American CSPV cell and module manufacturing industry,” Suniva said in a company statement. “We brought this action because the US solar manufacturing industry finds itself at the precipice of extinction at the hands of foreign market overcapacity.”
“On behalf of the entire solar cell and panel manufacturing industry, we welcome this important step toward securing relief from a surge of imports that has idled and shuttered dozens of factories, leaving thousands of workers without jobs,” added Juergen Stein, CEO and president, SolarWorld Americas. “In the remedy phase of the process, we will strive to help fashion a remedy that will put the US industry as a whole back on a growth path.”
A Less Than Happy Response
The rest of the US solar industry is much less impressed with the ITC’s decision and has not shied away from saying so.
“The ITC’s decision is disappointing for nearly 9,000 U.S. solar companies and the 260,000 Americans they employ,” said Abigail Ross Hopper of the SEIA. “Foreign-owned companies that brought business failures on themselves are attempting to exploit American trade laws to gain a bailout for their bad investments.”
“While we continue to believe that this is the wrong decision, based on Suniva and SolarWorld’s mismanagement, we respect the commission’s vote and we will continue to lead the effort to protect the solar industry from damaging trade relief. We expect to be front and center in the ITC remedy process, and in the administration’s consideration of this deeply-flawed case.”
“The ITC decision to find injury is disappointing because the facts presented made it clear that the two companies who brought this trade case were injured by their own history of poor business decisions rather than global competition, and that the petition is an attempt to recover lost funds for their own financial gain at the expense of the rest of the solar industry,” said Paul Nathanson, spokesman for the Energy Trade Action Coalition (ETAC). “ETAC will continue to fight vigorously during the remedy phase, encouraging Administration officials and Members of Congress to help ensure that no remedies are imposed that would threaten the solar industry’s ability to compete with other energy sources.”
“In the event that imported modules are subject to an artificial floor price or significant import tariff as requested by the petitioners in this case, the module market, and Duke Energy’s plans to procure modules, will likely be significantly disrupted,” said Diane V. Denton, Managing Director of Federal Policy for Duke Energy. “If such a remedial floor price or tariff is imposed, we expect that the installed cost of solar projects will increase 30% or more and that demand for modules would contract precipitously. As solar energy is just approaching parity with the traditional grid resources in a number of states, a significant reduction in demand for new solar projects could deliver a serious blow to continuing development and evolution of this market.”
In fact, the negative response to the ITC’s decision nearly beggars belief — check out PVTech’s full rundown of response here.
Where To From Here?
As already mentioned, we now move to a remedy phase in which the ITC will determine whether to implement a price floor and/or tariff, and if so, what level those will take. The US solar industry will continue to fight and the next focus will be the public hearings on October 3, which will likely be at the center of a huge national spotlight.
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