U.S. may slap tariff on China's solar firms

| Tuesday, Jan. 31, 2012

Chinese solar panel companies are receiving illegal subsidies on "massive" imports of their products in the United States, the Commerce Department's International Trade Administration said on Monday in a preliminary determination.

Federal officials notified U.S. importers of solar panels and parts used to make solar panels from Wuxi Suntech Power Co., Ltd.; Changzhou Trina Solar Energy Co., Ltd.; and all other Chinese producers or exporters that a tariff could be imposed on imports retroactive to early December.

The preliminary determination is not enforceable but includes regulators' initial findings that they have a "reasonable basis to believe or suspect" the allegations are valid. The determination states that the increase in Chinese-made solar panel imports has been "massive over a relatively short period of time," based, in part, on an imports increase of 15 percent or more.

Industry officials in the United States urged caution in interpreting the findings before they are final.

"Everything is preliminary," said Shayle Kann, a solar industry analyst with GTM Research in Boston. "This is a big first step but only a first step in a long process."

SolarWorld Industries America Inc., an Oregon solar panel manufacturer whose parent company is based in Germany, filed a formal complaint in October against the Chinese solar panel companies.

"This is yet another step in the right direction toward clearing a trade obstacle for rekindling the growth of U.S. renewable energy and manufacturing jobs," SolarWorld spokesman Ben Santarris said. "However, we have much of the case yet to go."

A spokesman for Suntech's parent company, which is registered in the Cayman Islands and has an assembly plant in Arizona, said the preliminary determination was "an expected part of the process."

"It is not uncommon for the U.S. Department of Commerce to preliminarily find critical circumstances; importantly, the decision must first be confirmed by the U.S. International Trade Commission before becoming effective," said Walker Frost, communications manager.

The Tribune-Review revealed in December that Goldman Sachs and other large investment banks in the United States helped fund Chinese solar companies accused of making low-cost products that have undercut American solar panel makers, forcing several into bankruptcy. Among the firms that filed for bankruptcy protection was California-based Solyndra LLC, which had $535 million in Department of Energy loan guarantees and became the target of critics of President Obama's "green" energy investment strategies.

The Coalition for American Solar Manufacturing, a trade group representing SolarWorld and more than 150 U.S.-based companies, said this is the first time Commerce officials have issued a preliminary determination before holding hearings.

The agency took the additional step of saying that if it upholds the findings and imposes tariffs, it would make them retroactive to Dec. 3, said Jun Jack Zhao, a U.S. trade official. That means the tariffs would be applied to all Chinese-made solar cells and modules brought into the United States since then, whether whole panels or parts made in China and assembled in the United States.

The preliminary determination will appear in the Federal Register over the next several days, Zhao said. The agency plans to make a preliminary ruling March 2 on the illegal subsidy claim and another on March 27 on whether there has been illegal dumping.

The American manufacturers' coalition was optimistic, saying action is necessary to protect thousands of American jobs.

But the Coalition for Affordable Solar Energy, which opposes the duties, issued a report yesterday that says imposing tariffs on Chinese solar products could eliminate up to 60,000 American jobs in assembly, installation, sales and marketing. The study, commissioned from The Brattle Group, contends that a 100 percent import tariff would result in consumer losses of $700 million to $2.6 billion in higher costs for solar panels.

Solyndra, the first American solar panel maker to get DOE-guaranteed loans, closed Aug. 31 and filed for bankruptcy protection in September. The firm reported debts of $783.8 million and assets of $859 million as of Jan. 1, 2011, according to papers filed in U.S. Bankruptcy Court in Wilmington, Del.

Chief Financial Officer W.G. Stover, in court documents, blamed Solyndra's demise on attractive funding subsidies and extended payment terms provided to its foreign competitors by their governments.

But Solyndra was outsourcing significant portions of its solar panel business to companies in China and Asia, according to a Tribune-Review investigation that analyzed bills of lading from U.S. ports.

Solyndra, which began shipping solar panels in July 2008, tapped more than 60 foreign manufacturers to provide it with panels and related assembly goods, the Trib found through an analysis of shipping records maintained by ImportGenius, an international company that records imports into U.S. ports.

During a 12-month period, the Trib found that Solyndra received 154 shipments of goods, primarily from companies in China, Malaysia and Singapore. The shipments weighed more than 2.83 million pounds.

That is a higher reliance on foreign products than some other companies involved in the DOE's "green" energy program, the Trib analysis found.

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