WTO Rules Against U.S. Tariffs on Chinese Solar Panels

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The World Trade Organization rules that some U.S. tariffs on Chinese solar panels violate global trade agreements. Many in the industry oppose the tariffs on the grounds they will hurt U.S. solar development and jobs.

 

The World Trade Organization (WTO) ruled today that some punitive U.S. import duties on Chinese solar panels and other products violate global trade rules.

This is just the latest episode in the solar trade war saga. The U.S. originally imposed tariffs on Chinese solar panels in 2012. Last month the U.S. Department of Commerce imposed additional tariffs, to close a loophole whereby Chinese panel manufacturers were able to avoid U.S. tariffs by using Taiwanese cells to make their panels.

While some in the solar industry have expressed concern about cheap Chinese panels flooding the market, that’s only part of the story.

The Solar Energy Industries Association (SEIA), the Coalition for Affordable Solar Energy (CASE), and others point out that those cheap panels have helped spur widespread solar adoption in the U.S. They’ve made possible a lot more installations — and that’s where a large percentage of U.S. solar employment is found, in jobs that can’t be outsourced. Imposing higher tariffs could adversely affect U.S. solar projects, argues GTM Research.

Today’s ruling may put a damper on those in the tariff camp.

In its determination today, the WTO panel “recommended that the United States bring its measures into conformity with its obligations” under the WTO Agreement on Subsidies and Countervailing Measures. The judges did reject some of the arguments from China against the U.S. tariffs but ruled that those tariffs were unfairly high and inconsistent with the U.S.’s obligations under the Marrakesh agreement signed in 1994.

The industry responded cautiously, noting that a lot remains uncertain about the future of solar tariffs.

Rhone Resch, president and CEO of SEIA, issued a statement about the ruling: “We are continuing to follow developments closely, but today’s WTO decision is not expected to impact either the 2012 U.S. solar countervailing duty (CVD) order against China or any new CVD tied to the ongoing investigation until 2016, at the earliest. It’s also important to remember that this decision is subject to an appeals process, which could take approximately 120 days. Assuming the decision is upheld on appeal, the United States would then have approximately one year to implement the decision. But even then, it’s not clear whether the decision will result in any substantive modification of a solar CVD order against China.”

CASE President Jigar Shah also released a statement: “CASE agrees with the WTO that some important parts of the protectionist 2012 U.S. solar tariffs are inconsistent with our trade commitments to others. Even more importantly, they hurt American solar workers and slow the deployment of clean energy.

“Yet the American solar industry once again faces uncertainty and unnecessary price hikes due to a new round of legal actions at the Department of Commerce. June’s countervailing duty determination is increasing module prices by 14%, and the Department of Commerce may attempt to further hike rates and expand solar tariffs with a preliminary anti-dumping determination next week.

“Today’s WTO announcement and the broader trade dispute should prompt the Obama Administration to reconsider the wisdom of additional solar tariffs. The Administration should work to bridge the divide between all parties involved, and help to negotiate a win-win settlement that supports growth across all sectors of the U.S. solar industry.”