US Solar Companies File Trade Complaint Against China

UPDATE: Under pressure from Congress to do more to confront China on economic issues, the Obama administration notified the World Trade Organization of nearly 200 Chinese subsidy programs – particularly in solar and wind – and many of them may violate free trade rules.

Many of the subsidies were identified as part of a year-long  inquiry into how the Chinese government helped bankroll the rapid growth of its solar and wind industries.

Read the NY Times article.

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The US solar industry is preparing a trade complaint to be filed with the Department of Commerce and the US International Trade Commission, alleging that China’s subsidies to its solar companies violate global trade regulations and give those companies an unfair competitive advantage.

The trade complaint, which will be one of the largest targeting China, has significant political implications in the international race to develop clean energy technologies.

China’s $30 billion in subsidies for solar manufacturers dwarfs those of the US by 20 times, according to Jonathan Silver, executive director of the US Dept of Energy (DOE) loan program.
The subsidies make it impossible for US companies to compete – in the first seven months of 2011, China exported $1.4 billion worth of solar panels to the US, $200 million more than during all of 2010.

In response to Chinese subsidies of other industries, the US has imposed restrictive import tariffs. They’ve done so for tires as an example, to prevent imported tires from overwhelming the US marketplace.

At issue are so-called countervailing duties, which serve to level the playing field between foreign and domestic manufactured goods. Democrat Senator Ron Wyden of Oregon, home to SolarWorld Industries America, one of the complainants, is asking that countervailing duties be assessed against Chinese solar imports.

The complainants say that one impetus behind the filing is the  Solyndra bankruptcy – a story that won’t go away.  House Republicans persist in their efforts to paint the $535 million DOE in a negative light, when the real culprit is the inability of US solar companies to compete on price with the Chinese.

One big reason they can’t compete on price is because China provides extravagant subsidies, which enable their solar companies to produce at very low cost.

China, however, "frequently provides both zero-cost financing, occasionally free land and other kinds of incentives and subsidies" to its wind and solar companies, to capture a market which will be worth trillions of dollars," notes Jonathan Silver, executive director of DOE’s loan program, at a Congressional hearing last month.