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Don't Miss The Great Solar Debate: Where Does the Global Solar Industry Stand? Click Here to Register! ×

Here Comes Another Solar Trade Dispute

Ucilia Wang, Contributing Editor
February 07, 2013  |  7 Comments

Trade complaints are nothing unusual, but they seem to have become more common in the world of solar these days. The U.S. Trade Representative Ron Kirk said Wednesday he's taking the first step toward lodging a World Trade Organization complaint against India for a policy that blocks some U.S. companies from a growing market.

The national policy, launched in 2010, turned India into a potentially vast market for solar equipment makers around the world. The government set out to add 20 GW of grid-tied and 2 GW of off-grid solar energy generation by 2022. The plan generated a flood of excitement for solar manufacturers, but that euphoria was soon tempered by the rule that require project developers to use Indian-made silicon solar cells and panels. Developers who opt to use thin films, which are made with non-silicon compounds such as cadmium telluride, aren't restricted to use domestic products.

The rule was bad news for many of the world's largest solar cell and panel makers, many of whom use silicon and are located in China, Japan, the U.S. and Germany. U.S. companies such as SunPower and Suniva are shut out. The rules did help one U.S. company, First Solar, who began announcing sales deals to Indian developers toward the end of 2010. The Arizona company isn't subject to the "domestic content" rule because it makes cadmium telluride solar panels.

But that exemption may not last long. India is looking at adding non-silicon solar cells and panels to the domestic content requirement.                                              

The WTO complaint is the latest solar trade dispute to emerge. The growing number of trade complaints reflects this intense struggle by manufacturers to survive in the past two years. Supply has far outstripped demand, causing the prices of solar equipment to plummet and dozens of solar cell and panel makers to file for bankruptcy. Many of those who haven't done that have instead scaled back production and suspended plans to build more factories. Gaining a foothold in the next emerging market before others could do the same has become more critical than ever.

The stakes for resolving trade complaints also have become higher. The solar market is growing, and with that comes profits and jobs. Protectionist policies can pop up any time, but they are more likely to gain public support during tough economic times.

A group of glass makers recently filed an anti-dumping complaint with the European Commission against their Chinese rivals. Glass is typically used to cover and protect solar cells from the weather elements. Last year, a group of European solar cell and panel makers lodged a complaint against their Chinese competitors, contending that Chinese companies had received so much government subsidies that they were able to sell their products at below production costs.

The U.S. government wrapped up its investigation of two trade complaints last November and sided with the group of manufacturers, headed by SolarWorld. The investigation found that the Chinese solar cell and panel makers were getting unfair subsidies from the Chinese government and had been selling them at less than their production costs or less than what they sell at home. The U.S. government have since imposed tariffs on imported Chinese solar cells. But some Chinese companies have managed to avoid the tariffs by buying solar cells from countries such as Taiwan. At the same time, the fact that Chinese companies can't or don't want to use their own cells for the U.S. market has forced them to reduce production or scramble to find buyers elsewhere. And that hasn't helped their bottom lines.

The U.S. isn't alone in fighting India's domestic content rule. The European Union and Japan have criticized India's policy. WTO may be sympathetic to the U.S. than India. Last year, the trade organization ruled against some provisions of the domestic content rule from the Ontario province in Canada after receiving complaints from the European Union and Japan. But the Canadian government filed an appeal this week.

Meanwhile, China said it, too, has a trade complaint to investigate. The government is looking into whether silicon producers are selling their products at below production costs. It will then decide whether to impose tariffs on those imported silicon, which mostly comes from the U.S., Korea and Europe.

7 Comments

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Probir Ghosh
Probir Ghosh
February 11, 2013
Focusing on short term disputes may land both USA & India many steps backwards in having some control of the end to end value chain for solar as well as any other key products and services both countries hope to trade in. The fact is, almost all countries have some kind of trade barriers and disputes. China is positioning itself to produce P-Si modules at 45 cents/w or less by 2015 as reported by GTM. Modules are now sold at 45 cents/w wholesale price due to large inventories, as supply is 2 times demand. So lifting domestic content by itself in India will not give any extra business to USA and will take away any sales in CdTe First Solar is making in India to the Chinese tier 1 and 2 companies. Most US manufacturers have mfg plants in China but have no or little sales in China, low prices are just one of the issues. It will be interesting to see what % of 10GW of solar PV China plans to install in 2013 will come from USA or other countries outside China. While in short term, developers for both USA and India would like to see the lowest module prices possible, it will be like "killing the goose that laid golden eggs",if manufacturing is making huge losses.Both the countires have to have robust manufacturing centers to have some control of a sustainable value chain. Even innovation w/o robust mfg will fade. Labour cost is a very small % of solar manufacturing cost, that can be wiped out by shipping & handling, & damage/replacement costs. If USA and India can each have a demand for solar PV that is at least 15% & 10% of global supply, (9&6GW by 2015?), a sustainable value chain can be established. The issues need to be resloved with a long term end to end value chain control/access in mind. Perhaps a limit on supply from a single source/country, with domestic supply of 50% preference subject to a 20% price subsidy that reduces to 0 by 2015, maybe one approach. I think both countries need to focus on exponentially increasing demand on a war footing.
Robert Hilbun
Robert Hilbun
February 9, 2013
This is a big problem in a paranoid/greedy world. Tear down all the damn boarders and let's bring this world together and eliminate all the tribal nationalistic bu#s(*t ..... put money into astroid and space mining, with manufacturing on moon. No no no a better idea, let's all maintain huge governments and militarys and fight one another endlessly over clean energy or whatever else we can think up.
Ronald STEENBLIK
Ronald STEENBLIK
February 8, 2013
@Commentator #2 (Annonymous) It was not the WTO that decided to impose anti-dumping and countervailing duties on imported Chinese solar cells, but the U.S. government on its own. In WTO parlance, that is called a unilateral trade remedy. It is the alternative to mounting a case at the WTO. A country against which such duties are applied can, of course, bring its own case to the WTO challenging the first country's findings or procedures. So far, China has not done that. The India case is more similar to the Ontario case, just ruled on in December. That is to say, it involves measures that allegedly restrict U.S. exports to that country. The Chinese case was about subsidized imports competing unfairly in the U.S. market. Of course, from a consumer's standpoint, subsidized imports are a boon. But the concern of the countries that established the WTO was primarily with import barriers, subsidies, and regulations adversely affecting sales, providing no real voice for consumers who might benefit.
ANONYMOUS
February 8, 2013
We can't bitch and complain about China from one side of the issues and take the other side against India on the other. The US should stay out of these so called trade disputes. The U.S. consumer will make the market decisions.
Liz Kirchner
Liz Kirchner
February 8, 2013
The Office of the US Trade Representative writes,"India has stated that it is considering expanding the scope of the domestic content requirements further to include solar thin film technologies, which currently comprise the majority of U.S. solar exports to India"...(and many other countries) in Phase II of JJNSM.
ANONYMOUS
February 8, 2013
I don't understand the WTO ruling reason. If China was/is willing to use it's trade surplus to subsidize the world solar market, wouldn't it be to the advantage of the rest of the world to take full advantage of that? Instead, the WTO ruled that China's forsight and will to saturate the market with low priced PV panels 'harmed' Solarworld's profit control, (as extreme competion does). It seems the WTO would be more honestly named, perforce, The US (and European) Trade Protection Organization. Either more disclosure is needed to clarify the unfairness of the government subsidy, or this trade organization deserves investigation. It seems to me the question is: Was the Chinese subsidy directed at destroying one corporation, specifically, or was it's purpose to dominate an entire world industry with lower prices. It seems that Solarworld has taken measures to damage itself. It was probably very unwise for the WTO to have taken measures to aid in this insanity.
Ronald STEENBLIK
Ronald STEENBLIK
February 8, 2013
Excellent article. I think a few words are missing here: "[The] WTO may be [more] sympathetic to the U.S. than [to] India."

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Ucilia Wang

Ucilia Wang

Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable...
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