Momentum Builds Toward U.S.-China Solar Settlement

Commerce already imposed final antidumping and countervailing duties on crystalline silicon photovoltaic cells from China in orders issued in 2012 (see 12120633 and 12120630). But the duties did not include solar products made from solar cells produced in a third country. Unsatisfied, domestic industry requested AD/CVD investigations on crystalline silicon photovoltaic products from China in December to close the purported "loophole" (see 14010301). In its preliminary determination issued in July, Commerce set cash deposit requirements on Chinese solar product exporters ranging from 26.33-165.04 percent (see 14073011). The agency also in June set a countervailing duty (CVD) cash deposit requirement on solar product imports, after preliminarily finding illegal subsidization of Chinese producers (see 14060914). In the meantime, China has retaliated with its own duties on U.S. solar products.

Lawmakers, mostly Democrats, and officials throughout the solar industry have continued to pressure a negotiated settlement. U.S. domestic solar producers, led by SolarWorld, support a suspension agreement that eliminates unfair trade practices and is “enforceable,” said Tim Brightbill, a partner at Wiley Rein representing SolarWorld in the case. “Past agreements with China have included a minimum price component and a quota component,” said Brightbill in an interview. “And the recent EU agreement with China included those two components.” The European Union brokered a deal with Chinese exporters in July 2013 that set a minimum price for Chinese solar product imports into the European market (here). EU officials also waived provisional antidumping duties for products exported by the Chinese companies that endorsed the agreement, and reportedly capped Chinese-built solar product exports to the EU at 7 gigawatts annually (here).

Chinese officials did not include a detailed public proposal alongside its Aug. 15 letter, confirmed the lawyers and an industry representative. “What isn’t publicly known is the substance of anything else they gave to the U.S. government, in terms of details of an agreement,” said Frank Sailer, partner at Grunfeld Desiderio, who represents Chinese and Taiwanese solar export companies involved in the case. “Typically in a non-market economy case, they like to get a price undertaking and a quota of some kind and then who gets part of the quota and how that would be monitored will be subject to industry debate.” Lawyers representing the Chinese government in the case did not respond for comment.

U.S. and Chinese stakeholders, along with government officials, must approve a settlement 30 days prior to the Dec. 15 final determination date scheduled by Commerce, said the attorneys. Brightbill insisted the Chinese government and exporters are responsible for providing an agreement that all parties will accept. “The burden is on them to come forward with a concrete proposal,” said Brightbill. Commerce is currently reviewing the Chinese government letter, said an agency official, while declining to comment further.

Momentum toward a settlement builds off years of U.S. industry complaints and lawmaker pressure. Most recently, House and Senate members sent two separate letters in April and May that urged the Obama administration to ratchet up pressure to negotiate a settlement (see 14052916). The lawmakers argued ongoing litigation threatens U.S. jobs and consumer access to economical solar power. The solar dispute has also exposed rifts within the U.S. solar industry. SolarWorld and other producers have been at odds with the Solar Energy Industries Association, which consists of many solar sector organizations across the commercial spectrum, from installers to engineers. SEIA recently unveiled a proposal that would put in effect an agreement for five years, while eliminating all AD duties for at least the initial year (here).

Both camps in the domestic solar industry support a negotiated settlement that brings China into compliance with trade rules. SEIA President Rhone Resch appeared to downplay domestic solar industry disagreement in early August. “From the first day SolarWorld initiated trade litigation in 2011, SEIA has been steadfast in its support for the rules-based global trading system, including trade remedy proceedings,” said Resch in a blog post (here). “Reliance on litigation alone is failing the U.S. solar industry by raising costs, disrupting U.S. manufacturing supply chains and providing no long-term solution to the growing U.S.-China solar trade conflict.” The SEIA proposal has gained minimal traction, however, said Brightbill. SEIA, which is not a party to Commerce's AD/CVD case, did not comment.

If a suspension agreement is reached, the investigation would be effectively paused, although upon request, Commerce and the ITC could issue final determinations without orders. If the suspension agreement is ever violated, the investigation would pick up where it left off and an order finalizing duties could be issued. Industry lawyers said an agreement could cover solar cells from China currently subject to antidumping and countervailing duties set in 2012, although that might be complicated by the fact that AD/CVD law only provides for suspension agreements on ongoing investigations and not finalized AD/CVD orders. “Whether there are mechanisms that allow Commerce to consider both cases, not separately but as part of a bigger deal, remains to be seen,” said Sailer, adding that the suspension agreement may also include countervailing measures. “I can’t imagine that the settlement would not be comprehensive.” -- Brian Dabbs