Are the U.S.-China trade tensions finally coming to an end?

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[Updated 09/24/2013, 2:00pm] SEIA offers a compromise between U.S. and Chinese solar industries to end the ongoing trade tensions. The proposal promotes a fair and negotiated settlement of outstanding issues; benefits end users; and encourages the rise of solar energy in the United States and globally.

The Solar Energy Industries Association (SEIA) is offering a compromise between the U.S. and Chinese solar industries. The proposal could serve as the centerpiece for a fair and negotiated settlement of outstanding issues, benefit end users, and encourage the rise of solar energy in the United States and globally.

SEIA believes any resolution of the solar dispute between the world’s two largest economies must recognize the interests of all stakeholders, including American consumers – and not just one segment of the industry. Highlights of SEIA’s proposal include: 

     

  • Chinese companies create a fund that benefits U.S. solar manufacturers directly and helps to grow the U.S. market. Money for the fund comes from a percentage of the price premium Chinese companies are currently paying to third-country cell producers to get around U.S. trade sanctions, reducing costs and supply chain distortion for Chinese companies.
  • The Chinese government agrees to end its antidumping and countervailing duty investigations on U.S. polysilicon exports to China, and removes the threat of artificial cost increases, benefiting not just Chinese solar companies but all users of solar energy.
  • In return, the U.S. antidumping and countervailing duties are phased out.
  • A safeguard mechanism designed to offset any surge of Chinese solar modules into the U.S. market. 
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A key issue is the proposal is the establishment of the Solar Development Institute, funded by Chinese manufacturers. The institute would focus its resources on expanding the U.S. solar market for all participants and growing the U.S. solar manufacturing base. The Institute would also serve as the primary vehicle for fostering long-term collaboration between the U.S. and Chinese solar industries, including joint research and development projects as well as collaboration on environment, health, safety and codes and standards initiatives.

A year ago, Bonn-based SolarWorld AG filed a complaint at the U.S. Commerce Department, claiming that Chinese manufacturers had benefited from government subsidies and had dumped their products onto the U.S. market at prices below the production cost. The Commerce Department ruled in favor of SolarWorld and set penalty rates for Chinese producers, including Suntech and Trina Solar. In July this year, China imposed anti-dumping duties of 53.3-57% on U.S. polysilicon; and last week China announced a 6.5% tarrif on U.S. polysilicon – coming on top of the existing anti-dumping duties. The compromise offered by SEIA could end the ongoing solar trade tensions between the U.S. and China.

SEIA President and CEO Rhone Resch commented: “This proposed settlement is a win all the way around. It would actually lower costs to Chinese manufacturers for the export of solar cells and modules to the United States, and it would improve U.S. manufacturers’ ability to compete fairly on an even playing field. It would also eliminate current and future litigation risks and costs for both Chinese and American companies. But just as importantly, SEIA’s proposed settlement would benefit American consumers, as well as all consumers of solar energy, by holding down costs.”

The proposed compromise is based on a precedent set during a trade dispute in 2002 between the U.S. and Brazil over claims of unfair American subsidies on cotton. The World Trade Organization (WTO) eventually ruled in favor of Brazil. As part of the settlement, a fund was established to compensate Brazilian farmers. Today, the U.S. pays about $150 million per year to Brazil’s cotton industry to avoid being punished by the WTO.

Recently, the European Union and China announced an agreement over their solar disputes. The EU-China agreement sets a minimum price for imports of the renewable-energy technology from China. In return, Chinese manufacturers are spared EU levies meant to counter dumping. SEIA has warned U.S. negotiators that a settlement similar to the recently-announced EU-China agreement will represent a blow to the U.S. solar industry because of an expected increase in solar prices. 

“While we are encouraged that negotiations to resolve the solar trade dispute are continuing in earnest, the discussions appear to be focused right now on a minimum price and/or quotas. This is a misguided approach. Any settlement which includes these components would represent a significant step backwards for the U.S. solar industry and the solar industry globally”, said John Smirnow, SEIA Vice President of Trade and Competitiveness.

Finally, as an additional step, SEIA thinks the U.S. government should ensure that federal public contracts are provided to domestic solar manufacturers in recognition of the importance of U.S. solar manufacturing to the nation’s long-term energy security.

Update 09/24/2013:

U.S. Senator Murray has released the following statement on SEIA’s proposal:

“It’s abundantly clear that the solar trade dispute between the United States and China is already costing jobs and stifling the critically important solar industry, so I’m pleased that American industry leaders have put forward a commonsense proposal to resolve this problem. The ever-expanding solar energy industry supports thousands of good-paying jobs in Washington state, and continued development of solar technology is vital for our environment and the economy, so I’ll continue working with all the parties involved to find an equitable solution for American businesses and consumers.”

Update 09/24/2013, 2:00pm:

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senator Jon Tester (D-Mont.) released the following statement SEIA’s proposal:

“We applaud the efforts of the Solar Energy Industries Association to resolve the solar dispute between the U.S. and China.  Without a doubt, this dispute has had a harmful effect on jobs in the U.S. and undercut our competitiveness in critical high-tech industries.  The best outcome for workers, manufacturers and consumers in Montana and across the country is to negotiate a settlement and bring the dispute to a close.  We are ready to work with all parties to resolve this important matter.