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U.S. ups the ante in China solar trade dispute

Posting in Energy

The U.S. federal government capped off its year-long investigation of Chinese solar manufacturers by slapping some companies with higher tariffs, escalating an already heated trade relationship.

The U.S. Commerce Department affirmed its earlier ruling that Chinese companies were in fact dumping solar cells in the United States at prices 18.32 percent to 249.96 percent below fair value. The department also determined that producers and exporters have received unfair subsidies from the Chinese government of 14.78 percent to 15.97 percent. The U.S. International Trade Commission is scheduled to make its final determination on or before Nov. 23.

As part of the final ruling, the department adjusted some of the tariffs imposed on Chinese manufacturers. Some companies will have slightly lower tariffs, while others will now have to pay higher duties.

China avoided a much tougher ruling that would have forced many companies to change its manufacturing structure.

The commerce department turned down a request to expand the tariffs to solar panels, a move some U.S. and European manufacturers say allows Chinese companies to skirt the duties. The manufacturers contend Chinese companies can avoid tariffs by buying solar cells from other countries and then make the panel in China for sale in the United States.

China reacted swiftly to the ruling, accusing the U.S. of inciting trade friction and demanding a repeal of the tariffs, the Associated Press reported.

The China-U.S. solar trade dispute has been steadily escalating since it first began a year ago, and has now spilled over into other industries.

The trade dispute began last October after a coalition led by German manufacturer SolarWorld raised complaints and asked the Commerce Department and U.S. International Trade Commission investigate China for unfairly subsidizing its solar industry. The following month, a group calling itself the Coalition for Affordable Solar Energy countered SolarWorld's request, arguing global competition is making solar energy more affordable, and that any protectionist action to block Chinese imports will harm the solar industry, which could lead to job cuts, and its customers.

Earlier this year, the department issued two new import duties on solar equipment made in China. In May, the department put a minimum 31 percent, 90-day retroactive tariff on Chinese-made solar panels after concluding China has committed unfair trading practices to the detriment of U.S. manufacturers. The department imposed a separate tariff in March of up to 4.73 percent on Chinese panels after determining the government provided unfair subsidies that allowed manufacturers there to undercut foreign rivals.

China responded to the preliminary tariffs with its own trade investigations. China’s trade ministry said in July it would investigate whether U.S. and South Korean suppliers sold solar-grade polysilicon below cost. A month later, China said the U.S. received subsidies for six renewable energy projects that violated free trade rules. Penalties were not issued in that case.

So far, warnings of job losses and rising installation costs for customers hasn't panned out. And the tariffs haven't stopped the freefall of solar panel prices. That's largely because the balance between supply and demand is still askew.

U.S. and European manufacturers aren't the only companies suffering from the glut of solar panels. Chinese manufacturers also continue to grapple with financial losses.

Photo: Suntech

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— By on October 11, 2012, 3:05 AM PST

Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure