THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

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No. 85 of 2014 

FRIDAY, DECEMBER 12, 2014     

 

   

Filed from Portland, Oregon  

     

Click  here for Monday's EGA quote from Debra Waggoner of Corning.
IN DEFENSE OF U.S. SOLAR PRODUCERS

"We can't allow the innovation economy to be undermined by innovative cheating on trade."

Sen. Ron Wyden
December 8, 2014
CONTEXT
Oregon's senior senator and the chairman of the Senate Finance Committee, Senator Ron Wyden (D), testified on Monday at the International Trade Commission.  The issue before the Commission, the one on which they must soon make a final determination, has to do with imports of solar panels and the effect of those imports on the U.S. industry.   (More specifically, the products at issue are "crystalline silicon photovoltaic cells, modules, and laminates and/or panels consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled in other products including building integrated materials.")

Senator Wyden was testifying because those products are made by - and the case was brought by - SolarWorld of Hillsboro, Oregon.  As the company's website proclaims, SolarWorld is "America's largest solar manufacturer since 1975."  And as Senator Wyden explained in his testimony, "The solar industry is an anchor of Oregon's manufacturing base and is a central driver of Oregon's innovation economy."

Hammered by imports from China, a number of U.S. solar panel producers went out of business until offsetting tariffs were applied in 2012.  But then new issues arose.  SolarWorld summarized the situation a few months back in their July 25 press release:

"In late 2012, the U.S. manufacturing industry, led by SolarWorld, won duties averaging 31 percent to offset illegal, export-intensive government subsidies for Chinese producers and to counter their pricing at artificially low levels to seize market share from domestic manufacturers within the U.S. market.  But many Chinese producers evaded the duties by commissioning manufacturers in other countries to partially or fully produce solar photovoltaic cells for assembly into solar panels back in China.  State-controlled media said at least 70 percent of U.S. imports from China contain Taiwanese cells.  To close that loophole SolarWorld filed the current cases December 31, 2013."

And so far, SolarWorld is winning that case.  The Commerce Department announced preliminary anti-dumping duties last summer, but those would of course go away if the International Trade Commission were to decide that a U.S. industry is not being materially injured or threatened with material injury by the imports from China and Taiwan.  The Commission is tentatively set to vote on that question early next year, on January 20, 2015.

There is no doubt as to how Senator Wyden would like that vote to go.  Here is the final full paragraph with today's quote:

"I am back [at the ITC] today to ask that this Commission secure the integrity of its original findings and conclude that Chinese and Taiwanese unfair trade has resulted in material injury and threatens additional material injury to U.S. producers, including those in Oregon.  A strong determination from the Commission, coupled with antidumping and countervailing duties covering the full scope of unfair trade, will ensure the growth and resurgence of the domestic industry.  U.S. innovation and efficiency started the world-wide growth of solar and will continue to fuel that growth so long as unfair trade practices are fully addressed.  Let us not allow the innovation economy to be undermined by innovative cheating on trade.  Trade enforcement must keep pace with the times."

COMMENT
Two of the more recent quotes in this series came out of our November 20 event on the EGA, the Environmental Goods Agreement being negotiated in Geneva.  And indeed, we have not yet finished with that session.  There will be at least one more TTALK Quote from it.  The event was useful and very upbeat.  Every speaker highlighted the trade and environmental benefits that a successful agreement on trade in environmental goods might produce.  And, in our view, all of them were correct.

That is not to say, however, that environmental goods are immune from the controversies that plague other sectors.  They are not, and these cases on solar products make that point quite emphatically. 

Trade cases like these are always complicated, and today's supply-chain driven world makes them more so.  We will leave the determinations offsetting tariffs and injury to the experts at the Commerce Department, specifically the International Trade Administration (ITA), and the International Trade Commission.  ITA is expected to make its final determinations next week, and, as we have said, the ITC is expected to vote on injury in January.

Congressional Input.  But there are things here that merit comment, starting with the political input.  Hearings like the one at the ITC last Monday are largely dominated by the interested parties and their lawyers.  It is not unusual, though, for politicians to weigh in, and indeed Senator Wyden was not the only elected official to do so.  Congressman Richard Nolan (D) of Minnesota also addressed the Commission. 

Mr. Nolan represents Minnesota's 8th Congressional District, effectively the northeast quadrant of the state, including Duluth on Lake Superior and the Mesabi and Vermillion iron ore ranges.  The district is also is home to a Silicon Energy facility, another firm harmed by imports from China and Taiwan.   As Mr. Nolan put it:

"The situation was extremely disturbing in light of the fact that the people of my district had worked so hard to diversify our economy by attracting Silicon Energy to Northern Minnesota - a region critically short of jobs and historically dependent upon mining tourism and timber.

"We have a natural resource-based economy - timber, taconite, and tourism - and what is better for our region than solar energy, a true natural resource."

We applaud both Senator Wyden and Representative Nolan for fighting for their constituents.  For a member of the House or Senator, that's part of the job. 

The China Factor.  For a very long time now, America's has been the largest economy in the world.  It still is by a large margin.  In individual sectors, however, that is no longer the case.  The world's largest market for automobiles today is China.  And China is also the world's largest producer and the largest user of solar panels.  And certainly the Chinese government is involved or the U.S. wouldn't be imposing countervailing - as well as antidumping - duties on solar products from China.  China's global dominance in this arena may not be legally relevant to the issue before the International Trade Commission today, but it does have relevance for U.S. trade policy going forward. 

This brings us to our only quarrel with the testimonies mentioned here.  Both Senator Wyden and Representative Nolan talked about fairness.   Senator Wyden said:  "It isn't that American solar can't compete, it is because China isn't playing by the rules." 

Representative Nolan said, "I understand the goals of what is termed 'free trade' - but in my judgment the goal we should be striving for to preserve and create good jobs here in America is 'fair trade.'"

Our view is that, beyond adherence to agreed international rules, "fairness" is a difficult concept in international relations, including trade relations.  We would suggest that the United States should aim for successful trade, just as her competitors do.  Of course, properly implementing one's own laws must be part of a strategy for successful trade.  But more is required.  And indeed more is being pursued, as in the TPP negotiations over rules for state-owned enterprises.  Obviously, there are many other elements as well.  All we are suggesting here is a shift in emphasis.   
SOURCES & LINKS
Senator Wyden at the ITC is a link to Senator Wyden's testimony Monday at the International Trade Commission's hearing regarding imports of certain solar energy products.  That testimony was the source for today's quote.

Representative Nolan at the ITC is a link to the testimony of Congressman Richard Nolan at the International Trade Commission this past Monday.  Portions of that testimony are referenced in Comment Section above.

SolarWorld is the Welcome page of this company's website. 

SolarWorld Reacts to defensive tariffs is a link a SolarWorld press of July 25.  This document provides a brief history of U.S. Government affecting imports of solar panels from China and Taiwan and the rational for the current case. 

Hearing Announced is a link to the ITC's formal announcement of the hearing discussed above.

Investigation Time Line is a page from the U.S. ITC's website with a time line for this investigation, including the projected date for a final vote.

Silicon Energy is the website of this Minnesota firm mentioned in the Comment Section above.

China No Threat is a Reuters news story with a perspective different from the one put forward by Senator Wyden and Representative Nolan.

World Record is a note on China's  production and use of solar panels from Earth-Policy.Org.


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