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| China’s Feud With West on Solar Leads to Tax | China’s Feud With West on Solar Leads to Tax |
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| Escalating a long-simmering trade dispute with the West over solar panels, China plans to impose tariffs that could exceed 50 percent on a material it imports from the United States and South Korea to make the panels, its Ministry of Commerce announced on Thursday. | |
| The decision, which goes into effect next week, is a blow to the American industry, which analysts say counts China as its largest customer for solar-grade polysilicon, the main ingredient in solar panels. | |
| The Obama administration and the European Union have been trying to negotiate settlements with China in the world’s largest antidumping and anti-subsidy trade cases. | The Obama administration and the European Union have been trying to negotiate settlements with China in the world’s largest antidumping and anti-subsidy trade cases. |
| Last fall, the United States put in place tariffs of roughly 24 to 36 percent on the Chinese imports after finding that Chinese companies were benefiting from unfair government subsidies and selling their products below the cost of production, a practice known as dumping. | Last fall, the United States put in place tariffs of roughly 24 to 36 percent on the Chinese imports after finding that Chinese companies were benefiting from unfair government subsidies and selling their products below the cost of production, a practice known as dumping. |
| In June, the European Union imposed modest tariffs of 11.8 percent on solar panels from China, but those are set to rise to 47.6 percent in August if Beijing does not stop what the Europeans say is dumping. Soon after, Beijing said it would investigate whether European wines had been sold at below cost in China. | In June, the European Union imposed modest tariffs of 11.8 percent on solar panels from China, but those are set to rise to 47.6 percent in August if Beijing does not stop what the Europeans say is dumping. Soon after, Beijing said it would investigate whether European wines had been sold at below cost in China. |
| United States trade officials declined to say how China’s move might affect those negotiations but expressed disappointment. A spokeswoman for Michael Froman, the United States trade representative, said they were in discussions with China related to global issues in solar technology, including panels and polysilicon, and this step did not move the ball forward, “but we will continue to engage.” | United States trade officials declined to say how China’s move might affect those negotiations but expressed disappointment. A spokeswoman for Michael Froman, the United States trade representative, said they were in discussions with China related to global issues in solar technology, including panels and polysilicon, and this step did not move the ball forward, “but we will continue to engage.” |
| China dominates the world market in solar panel production, exporting about $30 billion a year in panel shipments to the West, but it imports a majority of polysilicon from the United States, Europe and Korea. Its decision to tax United States companies heavily but levy lower rates on some Korean producers and leave Europe out is being widely seen as retaliation for the American trade case, originally brought in 2011. | China dominates the world market in solar panel production, exporting about $30 billion a year in panel shipments to the West, but it imports a majority of polysilicon from the United States, Europe and Korea. Its decision to tax United States companies heavily but levy lower rates on some Korean producers and leave Europe out is being widely seen as retaliation for the American trade case, originally brought in 2011. |
| “China is slapping tariffs on polysilicon because it is unhappy that the United States exercised its legal rights and stood up for our remaining solar manufacturers,” said Senator Ron Wyden, Democrat of Oregon, and chairman of the Committee on Energy and Natural Resources, whose home state is a center of solar panel production. “I am confident that these retaliatory tariffs will be shown to be without merit.” | “China is slapping tariffs on polysilicon because it is unhappy that the United States exercised its legal rights and stood up for our remaining solar manufacturers,” said Senator Ron Wyden, Democrat of Oregon, and chairman of the Committee on Energy and Natural Resources, whose home state is a center of solar panel production. “I am confident that these retaliatory tariffs will be shown to be without merit.” |
| The tariffs are preliminary and could be changed or even eliminated if the United States were to successfully challenge them with the World Trade Organization, said Timothy C. Brightbill, a lawyer representing the companies that brought the United States trade case, adding that the process could take a year or two. | The tariffs are preliminary and could be changed or even eliminated if the United States were to successfully challenge them with the World Trade Organization, said Timothy C. Brightbill, a lawyer representing the companies that brought the United States trade case, adding that the process could take a year or two. |
| But that could prove too late for the domestic polysilicon business, industry officials say. “It’s a big setback for U.S. poly because the duties are going to start being collected next week and the rates are prohibitive,” said John Smirnow, vice president of trade and competitiveness at the Solar Energy Industries Association, the main industry trade group. “It could effectively act as a bar to U.S. polysilicon exports to China in the short run. They’re losing their largest export market.” | But that could prove too late for the domestic polysilicon business, industry officials say. “It’s a big setback for U.S. poly because the duties are going to start being collected next week and the rates are prohibitive,” said John Smirnow, vice president of trade and competitiveness at the Solar Energy Industries Association, the main industry trade group. “It could effectively act as a bar to U.S. polysilicon exports to China in the short run. They’re losing their largest export market.” |
| Whether that will help or hinder Chinese companies is unclear. Globally, panel manufacturers have been squeezed, some to the point of bankruptcy, by China’s rapid expansion of its production capacity over the last four years. That has drastically reduced prices and fed a boom in solar development, but now companies worry that an increase in the cost of raw materials could make it more difficult to compete. | Whether that will help or hinder Chinese companies is unclear. Globally, panel manufacturers have been squeezed, some to the point of bankruptcy, by China’s rapid expansion of its production capacity over the last four years. That has drastically reduced prices and fed a boom in solar development, but now companies worry that an increase in the cost of raw materials could make it more difficult to compete. |
| At the same time, the United States tariffs might not raise the cost of panel production by much, at least not in the long term, said Shayle Kann, the head of GTM Research, a unit of Greentech Media. United States exports of polysilicon have been declining — to about $700 million in 2012 from worth roughly $1 billion in 2011, according to a commerce department official — as China develops its own production. | At the same time, the United States tariffs might not raise the cost of panel production by much, at least not in the long term, said Shayle Kann, the head of GTM Research, a unit of Greentech Media. United States exports of polysilicon have been declining — to about $700 million in 2012 from worth roughly $1 billion in 2011, according to a commerce department official — as China develops its own production. |
| And it can still buy from Europe and the Korean companies with lower tariffs, rather than companies like the American company Hemlock Semiconductor, whose tariff was set at 53.3 percent. | And it can still buy from Europe and the Korean companies with lower tariffs, rather than companies like the American company Hemlock Semiconductor, whose tariff was set at 53.3 percent. |
| “We will continue to collaborate with government leaders as this situation progresses and support any efforts to find a mutually acceptable resolution,” said Jarrod Erpelding, a spokesman for Dow Corning and Hemlock Semiconductor. | “We will continue to collaborate with government leaders as this situation progresses and support any efforts to find a mutually acceptable resolution,” said Jarrod Erpelding, a spokesman for Dow Corning and Hemlock Semiconductor. |
| Earlier this year, Hemlock announced it was laying off 400 employees because of the economic impact of panel oversupply and the trade dispute. “No country or industry wins when trade disputes escalate,” Mr. Erpelding said. | Earlier this year, Hemlock announced it was laying off 400 employees because of the economic impact of panel oversupply and the trade dispute. “No country or industry wins when trade disputes escalate,” Mr. Erpelding said. |