Doug Young
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| Trade War. photo via Bigstock |
Just days after China finalized anti-dumping tariffs on US makers
of polysilicon, the main ingredient used to make solar panels, the
US has announced it is opening a new anti-dumping investigation
into solar panels imported from China. The close timing of this
latest round of developments in a solar trade dispute between the
US and China may look worrisome on the surface, especially if they
had come a year ago. But in this case the solar signals seem less
confrontational to me, as both Washington and Beijing finally
realize the sector is too important for the world’s energy
security to jeopardize with more trade wars.
All that said, it’s still important to look at these 2 latest
solar signs and what they might mean. To quickly recap, the
dispute began about 2 years ago when the US accused China of
providing unfair state support to its solar panel makers, and
ultimately imposed anti-dumping duties on Chinese-made products
last year. China retaliated by opening its own anti-dumping
investigation into US-manufactured polysilicon, the main
ingredient used to make solar panels. All of this was happening as
the sector underwent a major downturn that is only now beginning
to ease.
Against that backdrop, China announced this week it would impose
punitive anti-dumping tarrifs against US-manufactured polysilicon,
finalizing an earlier decision and bringing its investigation to
close. (English article) The duties were rather
high, ranging from 53 to 57 percent, and will undoubtedly price
many US makers out of the market. But the move was largely
expected and didn’t contain any major surprises, after the US
levied its tariffs on Chinese-made panels last year.
Meantime, a newly announced investigation by the US seeks to
close a loophole in the first round of anti-dumping tariffs
imposed last year. That loophole allowed Chinese companies to
avoid the US tariffs if other countries supplied them with solar
cells, the central component used to make finished solar panels.
The US arm of German panel maker SolarWorld (SRWRF)
said earlier this month it was petitioning Washington to close the
loophole (previous post), and now the US
Department of Commerce and International Trade
Commission (ITC) have said they are launching a new
investigation. (English article)
The ITC will announce its findings by February 14. If it
determines that the Chinese companies are still receiving unfair
state report, the Commerce Department could issue preliminary
decisions on the matter in March and June this year. A new round
of tariffs would deal a blow not only to the Chinese
manufacturers, but also to Taiwanese companies that have become
one of the main suppliers of solar cells being used in the
finished Chinese panels to avoid US tariffs.
So, why am I cautiously hopeful that this latest investigation
won’t be as contentious as previous ones? Most importantly, I have
to believe that the ITC and Department of Commerce knew about this
loophole when they made their initial decision last year. Thus
they must have felt at the time that panels made with cells from
Taiwan and other countries weren’t receiving unfair support from
Beijing.
Secondarily, I also believe that Washington may be tiring of this
current trade war with Beijing, especially as both sides realize
the importance of solar power to their future energy security.
China has recently embarked on its own major campaign to build up
its solar power sector, and the US has been trying to boost solar
power now for several years. A continuation of this trade dispute
won’t benefit either side, and would probably hurt the chances of
western solar panel makers to win big contracts in the Chinese
solar build-up. Accordingly, I’m cautiously hopeful that the ITC
will return a negative finding next month in this latest
investigation, which would send a positive signal that Washington
wants to quietly end this ongoing solar spat.
Bottom line: A negative finding by the US in its
latest anti-dumping investigation into Chinese solar panels would
help to bring its clash with Beijing to a close and promote
development of the important sector.
http://www.altenergystocks.com/archives/2014/01/uschina_solar_wars_enter_second_round.html
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