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Tariffs on Chinese solar panels OK'd

  • Article by: DIANE CARDWELL
  • New York Times
  • November 7, 2012 - 8:07 PM

The U.S. International Trade Commission said Wednesday that Chinese business practices have been harming the domestic solar industry, meaning that tariffs of roughly 24 to 36 percent on most solar panels imported from China can go forward.

The decision, which comes after several related investigations and rulings beginning more than a year ago, was a victory for the U.S. panel producers who filed the case and have been struggling to survive in a market glutted with cheap Chinese imports.

The case was important for the health of the domestic industry, supporters say, and also for sending a message that the United States was willing to enforce its trade laws.

"This basically takes it from being just allegations of illegal activities in this industry to confirmation," said Gordon Brinser, the chief executive of SolarWorld Industries America, the lead company that brought the case. "This was a growing industry just a couple years ago that has been basically decimated by the Chinese manufacturers."

Opponents of the action, which include solar developers and installers, have argued that the tariffs would actually harm the domestic industry, making it more difficult for U.S. companies to do business abroad.

But whether the tariffs can help save the U.S. industry, which has been struggling to survive in a market glutted with cheap Chinese panels, is a matter of some dispute. Because the tariffs apply to panels made of Chinese-produced solar cells, Chinese companies are able to avoid the duties by assembling panels composed of cells produced elsewhere, even if their components come from China.

Although this has made production 10 to 15 percent more expensive, global giants like Suntech and Yingli can spread that cost over all of their merchandise, not just what gets shipped to the United States, said Shayle Kahn, the head of GTM Research, a unit of Greentech Media.

Ocean Yuan, the president of Grape Solar, an importer of solar panels in Eugene, Ore., said that low prices were unlikely to drive weak or indebted companies out of business quickly in China. That is because out of 70 cents a watt in costs for a solar panel, much less than half is for labor, materials, shipping and other variable costs. The rest of the costs are fixed costs, mostly interest payments on money borrowed to buy the highly automated Western equipment that does most of the manufacturing.

So as long as companies can cover their variable costs and earn at least some revenue to put toward interest payments, they will continue to operate even at a loss, Yuan said.

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