Solar Tariffs: US Takes Middle Road 太阳能关税：美国采取折中路线

By newsdoug on March 21, 2012

US decision avoids solar trade war After months of haggling and suspense, the US has finally made its decision in the contentious anti-dumping case against Chinese solar cell makers and found a middle ground in the form of a relatively light punishment accompanied by signals that Beijing needs to ease its unfair support for this industry. In the end, the Obama administration probably realized that it needed to take some kind of punitive action to satisfy critics of China’s strong support for its solar sector, especially in an election year. But at the same time, he also probably realized it’s in no one’s interest to deal a fresh blow to this already struggling sector developing sustainable energy alternatives to replace the world’s current dependence on fossil fuels. According to media reports, after a months-long investigation dating back to last summer, the Obama administration has finally decided to levy punitive tariffs of up to 4.7 percent — a relatively modest amount — on Chinese panels exported to the US. (English article) I suspect this relatively modest figure was probably the result of behind-the-scenes talks with Beijing, which has probably quietly agreed to scale back some of the indirect subsidies, such as cheap bank loans and tax rebates, that were the source of the complaint. Reaction from actual companies has been guarded so far, but looks cautiously optimistic that a crisis has been averted for now. Industry leader Suntech (NYSE: STP) indicated that the relatively benign tariff of 2.9 percent imposed on its products vindicated its assertion that it wasn’t receiving unfair government subsidies. (company announcement) It also pointed out that it has manufacturing facilities in the US, pointing to a trend that may see many of China’s solar panel makers set up production bases in the western markets that are their biggest customers to show they can also help to contribute to those local economies. Another solar company, Yingli (NYSE: YGE) was similarly cautious in its reaction, simply thanking its customers and reiterating that it is not unfairly subsidized and that punitive tariffs are bad for the entire industry. (company announcement) Investors were certainly cheered by the decision, with Suntech and Yingli shares both up around 13 percent on Tuesday. I should emphasize that this decision is just preliminary, but there’s no reason it shouldn’t become final if everyone finds it agreeable. That said, I would expect to see Beijing make some face-saving moves in the next couple of months to show it is quietly scaling back many of the practices that led to this complaint in the first place, which could include ending export tax rebates and pushing companies to seek new financing from true commercial banks rather than state-controlled Chinese lenders. If that happens, look for this conflict to quietly fade, letting the industry focus its sights on returning to profitability and improving its technology.

Bottom line: Preliminary US anti-dumping tariffs against Chinese solar panel makers look largely symbolic, and are likely to be followed by similar conciliatory moves by Beijing.

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