Dim prospects for a lasting end to solar’s trade wars

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So, once again SolarWorld has landed its catch. It has cast its bait and for the second time hooked its prize fish, in the form of the US government, which on Friday announced its latest round of anti-dumping duties on Chinese solar products.

The ruling was a response to a petition launched at the start of the year by SolarWorld Americas in which it claimed Chinese solar manufacturers have evaded earlier anti-subsidy and anti-dumping duties by using cells manufactured in Taiwan. In June the anti-subsidy element of the investigation introduced heavy preliminary duties on Chinese imports; few therefore can have been surprised that the anti-dumping part went the same way.

The big question the global PV industry must now address is where it goes from here.

Leaving aside SolarWorld’s debatable claim that it is acting in the best interests of the solar industries in the US or Europe, where it was the chief agitator behind the EU’s trade spat with China last year, the repeated pattern of petition followed by investigation and then either tariff (US) or fragile settlement (Europe) is unsustainable and ultimately does no one any good, probably not even SolarWorld.

Yet SolarWorld appears determined to pursue its anti-Chinese agenda as far as it must to achieve its aims.

This has become apparent in Europe, where, after making clear its dissatisfaction with last summer’s price undertaking, it said in June this year it had submitted a dossier of “evidence” to the European Commission of Chinese firms allegedly flouting the deal.

In the US, meanwhile, PV Tech has reported Taiwanese firms already starting to look for new territories to open factories to beat the latest duties. What’s to stop SolarWorld launching anti-dumping and anti-subsidy petitions against outsourced Chinese equipment made in Mexico or Malaysia or wherever Chinese and Taiwanese suppliers choose to relocate their operations? This is a scenario that could theoretically roll on, ad infinitum, to the benefit of nobody.

So what are the options? Rhone Resch, chief executive of the US Solar Energy Industries Association optimistically heralded a “silver lining” to last week’s ruling, claiming that a “negotiated solution” to the dispute between the US and Chinese remained on the cards.

Since last year, the SEIA has been leading efforts to try to reach a settlement with all parties to the dispute that avoids tariffs, in the same way that the EU agreed a minimum price undertaking with China as an alternative to duty payments. It has until the US government finalises the duties in December in which to reach its agreement, but so far SolarWorld has not engaged with these talks. Any agreement without a SolarWorld signature is likely to be vulnerable to further challenges.

Beyond the slim possibility of a lasting settlement between the US and Chinese (and for the EU-China deal to hold), the only other real option currently on the table is a positive outcome to the multi-nation negotiations that began earlier this month to reach an ‘environmental goods agreement’. Led by the US, Chinese and EU, the discussions are aimed ultimately at ending trade tariffs between 14 regional and national governments on a range of products including solar cells and modules.

This level of international cooperation could be bolstered by the formation of a global solar trade association, currently being scoped out by the European Photovoltaic Industry Association. In an interview with PV Tech this week, EPIA’s president Oliver Schäfer said one of the body’s main aims, should it be established, would be to try to solve the global trade conflicts that have wracked the industry in recent years.

As such, these two developments offer only glimmers of hope. The global environmental goods trade talks, for example, would not have any effect on the existing case in the US, and the global association would be toothless without buy-in from players in key markets such as the US and Japan. This has yet to be achieved.

But as things stand they look to be the only hopeful prospects for any kind of lasting solution to the trade war treadmill. Observers have suggested that early successes in the international trade discussions could eventually bring an end to the sort of punitive trade remedies demanded by the likes of SolarWorld and by complainants in other markets such as India where duties are being sought. Backed up by a global trade body, this could offer the industry a chance of escaping the damaging consequences of trade actions pursued by a few rogue players.

The alternative is a future dominated by an endless cycle of trade petitions and levies from which no one really wins. Protectionist policies will ultimately only stunt solar’s growth. That’s why a suspension of hostilities, negotiation and – hopefully – consensus remain the best hopes the global PV industry has of sustaining its momentum at a time when it is truly beginning to come into its own.

An international trade deal backed up by a global solar association remain the industry's best prospects for an end to damaging trade wars. Image: Steve Gibson, Wikimedia Commons.
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