Solar Panel Tariffs – No Benefit, Only Problems

Tom Gutierrez, GT Advanced Technologies
October 03, 2012 | 7 Comments

Testimony at the October 3 hearing before the U.S. International Trade Commission (ITC) confirmed the misguided nature of government-imposed solar panel "dumping" tariffs and highlighted the dangers of antagonizing one of our strategic trade partners. With mere days to go before ITC's final determination on the contentious tariffs issue, key members of the U.S. solar industry used the hearing to voice serious concern about the policy's effects.

Since the time German-owned SolarWorld first petitioned the ITC for an investigation into China’s trade practices in this space, a range of U.S. solar companies have warned against imposing tariffs. Nonetheless, the ITC earlier this year imposed tariffs on solar panel imports from China on a preliminary basis, and now SolarWorld is using the same playbook before the European Union.

The effect on reducing imported Chinese solar panels into the U.S. market has, at most, been minimal. Indeed, most Chinese-made solar panels that enter the U.S. market come from very large, “Tier 1,” manufacturers that have vast cross-border capabilities. These Chinese companies quickly applied a “tolling” strategy whereby their solar panels have final components installed in Taiwan or some other country and then get imported to the U.S. Thus the “new normal”: we’re still buying Chinese products – they’re just “tolled” through Taiwan. To critics, this is technical sleight of hand; to the global market, it’s survival.

The reality remains that U.S.-imposed tariffs have done little to protect SolarWorld and other companies that fundamentally can’t compete on their own. Instead it has antagonized a strategic trade partner who is now threatening to impose their own tariffs on imported polysilicon material, which would hurt U.S. producers. And, it has introduced additional cost into the equation for solar power which is counterproductive to the continued growth and stability of an industry, which is creating jobs for workers in the U.S. and around the world.

As a supplier to the global solar market, we at GT Advanced Technologies have shared our opinion with the ITC. The U.S. government’s final determination on October 9 could reduce the tariffs somewhat from the preliminary levels and we expect a possible overturn of the “critical circumstances” provision that allows for retroactive imposition of duties. But the tariffs will likely remain.

We hope ITC officials are willing to analyze the real impacts of these troubling tariffs, and elect instead to let companies compete in the global marketplace as they should: on their own two feet.

Tom Gutierrez is CEO of GT Advanced Technologies, a leading global provider of advanced production equipment and technology in the solar and LED industries, headquartered in Nashua, N.H.

Lead image: Solar Panel via Shutterstock.

7 Comments

ANONYMOUS
October 4, 2012

Well open your eyes everyone, you lost the economic war with China, they bought everything or we sold out to them in the name of huge profits on the backs of people that are treated with a lot less dignity than here in North America. The private sector has engaged in outsourcing because it costs as little as 1/20 to produce an item there as it does here. And here we are paying prices for these items as if they were made in North America. One only has to remember the news coverage of the plant in China that builds the Apple items. Did anyone there see respect for the human labor force? Is this the kind of acceptance we here in North America should embrace in the name of greedy profits instead of our own at home economy? Where is the sustainability of our own countries communities? Look around the past auto industry communities, is there anything left that builds for the auto industry? Can you buy a made in USA or Canada auto part anymore?

We here in North America need to fight back with automation in factories here at home!

Gerry Wootton
October 4, 2012

'I don't think of China as a 'trading partner'' - I though China was one of Government Motors best markets.
'Their mfg costs are completely detached from their pricing structure.' - and that's the only way to run a business. Marketing consists of meeting the customer's needs not the producer's. If pricing structure were attached to mfg costs, desirable items like smart phones would sell for less than they do; however, as that example shows, there's a much bigger opportunity to make money when they are detached. Also, marketing guys would gag on the assertion that pricing is joined at the hip with manufacturing cost. There are four ways to go: 1) let the customer set the price, 2)let the market set the price, 3) let the industry set the price, 4) let the government set the price (or 3/4 - let the industry 'help' the government set the price) - which one is best is a matter of opinion.
Especially in an emerging market, market share is the most important objective - as they say, 'short term pain, long term gain'. The American 'manage the quarterly result' approach can't win that battle.

ANONYMOUS
October 4, 2012

My only question is this, who was the genius at the DOC or ITC that decided to not apply tariffs to panels but only cells from China (It seems even Tom doesn't quite have a clear understanding of the precise verbiage. Let me clarify, they can mine the poly in China, cast the ingots, cut the wafers, send the wafers to Taiwan and then send the cells back and assemble the panels with non Chinese cells, do final assembly in China and sell it with out the tariff, to be exact.)Maybe it was a genius at Solarworld? The biggest ado about nothing I've seen, the only effect is prohibiting smaller Chinese manufacturers to to export to the US.

How about implementing a system where we reward including local content in our incentive and rebates structures, or would that simply be to easy. Why not encourage customers and installers alike to select a manufacturer who does responsible global business without dreams of globalization and world domination. They do it in Africa and India as a way of stimulating local manufacturing, encouraging international companies to build manufacturing plants here as it gives their product a better chance of being selected by the client as he is rewarded for buying "American"or local. But we also have to be realistic and understand that jobs in manufacturing in solar pale in comparison and number to the jobs that have been created and will keep on being created in the down stream economies of the solar business. Steady on everyone !!

Joe Morinville
October 4, 2012

One simply need read the quotes from Chinese panel manufactures own press releases to assess whether the tariff is warranted or not.

In their own words they have admitted to dumping at below their mfg costs to take the US market. Their mfg costs are completely detached from their pricing structure. their current mandate from central planning is to sell at any cost regardless of losses and the Chinese govt, after already subsidizing the mfg of components and end products, AND manipulated currency to better position their products in the US market, has now had to bail out most of their Chinese panel mfg companies. Million and tens of millions of additional Chinese govt bailout money is flowing in to further support this destructive action of dumping under-manufactured-cost panels on the US with the sole purpose of putting every US producer out of business.

Only a fool could look at the data with open eyes and not see the glaringly apparent violations.

John Kontolefa
October 4, 2012

I don't think of China as a "trading partner" as they don't buy anything form the US other than raw material, goods made with intellectual property that they don't yet have, and debt as a place to park all their trade deficit dollars.

These tarriffs are ridiculous though. There is nothing going on with solar panels that hasn't already been done to US manufacturers of consumer goods, machine tools, electrical equipment, etc.

What is needed is a comprehensive overhaul of business tax, finance and regulatory compliance practices to allow manufacturing to prosper. We also need to recover tax revnues lost to profit shifting overseas.

ANONYMOUS
October 4, 2012

To an outsider there's something strange about watching the great capitalists of the world squealing because the competition is too tough.
Farmers all over the world who suffer under the US jackboot feel sorry for you.

Paul Arrondelle
October 4, 2012

Wow what a surprise - an equipment manufacturer defending the actions of their biggest market. I would guess that this opinion will change radically as soon as the Chinese manufacturers of equipment start dumping into GT's area though!

There is a great deal of miss-information out there, with vested interests defending the deplorable actions of the Chinese companies in question. The use of quote marks around the word dumping above demonstrates that. The reality is very simple; these manufacturers have attempted (and in some places succeeded) in bankrupting all competition by selling below cost of production. It is as easy as that. It isn't to do with economies of scale, efficiencies in production or any other excuse, it is because Chinese banks have deep pockets and their government is prepared to play the long game.

We have to send the message clearly and with a unified front - this behaviour is not acceptable. Short term gain will ultimately be replaced by long term loss for all involved if we do not do this.