Effects of Anti-Dumping Duties
Trade wars are generally counterproductive, as they lead to more losses than gains in general. USA and China have been battling it out in the solar products for around 3 years now, with brutal losses in both sides. It has increased inefficiency and costs on both sides as Chinese producers look to exploit loopholes in US sanctions and the administration tries to plug them by using blunt instruments such as anti-dumping duties. The duties have been imposed on all imported solar panels made in China and even those using cells made outside China. Taiwanese producers have been burned by this new rule even as the Chinese start to build module factories outside China to escape this new law.
While a few solar module makers such as Solarworld in USA and REC in Singapore have benefited, there have been thousands of losers in small module assemblers in the USA. This has also resulted in high costs for US solar home owners, who have to pay almost 5-10% more for panels as compared to the rest of the world.
Now, a giant Corning factory which was to be built in Tennessee has been abandoned due to this trade war. Almost 1000 good high paying blue collar jobs will be lost, as retaliatory trade sanctions by China on USA made polysilicon has made this factory unviable. While major polysilicon makers from Europe such as REC and Wacker have escaped high and harsh anti-dumping duties, Hemlock has borne the brunt of the Chinese sanctions. Hemlock has decided not to expand its polysilicon capacity in this new site, as it cannot export this solar panel raw material to China anymore. The company has decided to officially close this site after letting it hang fire for more than a year.
The US government recently imposed anti-dumping duties against the Chinese solar panel companies with the total quantum of duties to reach around 35-36% for most the Tier 1 Chinese solar panel players. This is more than what was expected by the solar industry and has led to a vociferous protest from sections of the Chinese government. Not surprisingly, a large chunk of the USA Solar Industry too has protested these duties. Many of the solar companies are in the installation segment where cheaper solar panels from China means more profits and more sales. What is not very well known outside the solar industry is that a major percentage of sales of US polysilicon companies and solar equipment firms goes to China. US Polysilicon Companies like Hemlock as well as factories of European companies like Wacker, REC fear the worst. Chinese polysilicon companies have closed down due to their higher costs due to stiff competition from non-Chinese players. The Chinese government has a big reason to retaliate against the US solar poly companies now that its solar panel organizations have been hit. The overall effect of the duties on Chinese solar panel companies will not be that big as they already have plans to circumvent the US duties which have been prepared long time ago. All it would do is raise the prices of the solar panels slightly .It would not make the surviving US solar panel companies competitive as the Chinese solar panel prices are far below that of US made solar panels. US Solar equipment companies like Applied Materials and GT Advanced Technologies too might face the ire of the Chinese government and companies who could look at alternatives in Europe
I think it would be prudent of USA to agree on a deal with China over trade of solar products like the EU-China deal. This would lead to an overall increase of jobs in both countries, as well expansion of solar energy and reduction of greenhouse gas emissions. Using blunt instruments of anti-dumping on such an important trade item of green energy is stupid, especially since it is being used for such a long time. It is distorting trade and incentives leading to mal-investment and increasing costs for everyone.
Google+On Wednesday Dec. 17, Hemlock Semiconductor officials announced that its Clarksville site, located roughly 45 minutes northwest of Nashville, is closing permanently because of sustained adverse market conditions created by oversupply of polysilicon and ongoing challenges presented by global trade disputes. Hemlock Semiconductor President Denise Beachy, who was in Tennessee on Wednesday, said the decision is a very difficult one because it affects employees. “We’ve reached the conclusion that it’s not economically viable to run the site under these conditions,” Beachy said during a phone interview.
