US PV makers charge China w/dumping

[Dr Mordrid]

IEEE Spectrum....

Today, Oct. 19, seven U.S. makers of PV panels filed a complaint with the government against China, asserting that its manufacturers have been selling their product in the United States for less than half its manufacturing cost. They are demanding that the U.S. government impose tariffs on Chinese photovoltaic imports of at least 100 percent. Under U.S. trade rules, the Commerce Department is required to respond.

The complaint is long overdue. Though its effect if successful--which is far from assured--would be to drive up solar prices in the United States, Chinese PV manufacturers have been dipping doubly, collecting generous subsidies both from their own government and from the countries where they sell their product.

According to a fine analytic report in today's New York Times, China accounts for three quarters of world PV production and exports 95 percent of it, much of it to the United States. Its low-cost exports have driven the cost of installing PV capacity to as low as $1.20 per Watt, according to the Times, contributing to the recent failure of three U.S. companies, layoffs and cutbacks at others, and difficulties for all makers of closely competing green technology.

The complaint filed today was led by Solar World Industries America, the U.S. subsidiary of a leading German PV manufacturer. (The homepage of Germany's Solar World has Larry Hagman, of "Dallas" fame, inviting his German fans to uncouple from the grid by becoming self-producers of energy.) China's aggressive entry into the world solar market has probably caused even more distress in Germany than in the United States: The Federal Republic's solar subsidies have been especially generous, and initially, its companies were leading the way in photovoltaics.

The reason it will be difficult for the solar seven to have success with their complaint is that the United States, like a great many other industrial countries, also subsidizes solar manufacturing. Though its subsidies are less numerous and comprehensive than China's, and though China has not always reciprocated by paying out subsidies to foreign manufacturers exporting green technology to the People's Republic, the ubiquity of subsidies makes such complaints a legal quagmire.
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[Brian Ellis]

Let me tell you a little story. In 2001, most TVs/monitors still used cathode-ray tubes and China had become the main supplier, because they were cheaper. I had to audit one such manufacturer because the UNEP multilateral fund had given a massive grant to replace a machine using ozone-depleting solvents to clean the shadow masks, a quite critical job. Instead of organic solvents, they used deionised and carefully filtered water for this very critical job, obviously very much cheaper to run. However, the machine used was massive and expensive. I determined that, based on a 5 year amortisation (the period the UN usually used for capital equipment), their running costs were about 60% of their old solvent-based system. I then looked at yield. With the new equipment, the yield was 99.98% with the new cleaning method, compared with less than 70% using the organic ozone-depleting solvents. The shadow mask is the most expensive component in a colour CRT and they were able to reduce their selling price as a direct consequence. Immediately, one of the very few CRT makers left in the West started to cry "unfair", they are selling at a loss. As a matter of curiosity, I contacted them and was able to get hold of the technical director and I asked him how they had replaced the traditional OD solvent. He told me that they used a drop-in non-OD organic solvent in the same equipment, but the new one was poorer than what they used before. Their yield had dropped to under 50% on the finer masks (<0.28 mm pitch). I informed him about the innovative Chinese non-solvent, aqueous, machine and he was staggered.

I had a similar experience with an aircon compressor maker, whose yield increased after changing their old solvent machine for a new non-emissive one and a different solvent, although their savings were not quite as dramatic.

The point I'm making is that the Chinese are truly innovative at cost-cutting by using better automated equipment in hi-tech industries, whether the equipment is home grown or imported (often from Europe to their custom specs.). I can't remember how many Chinese hi-tech plants I audited on this mission, perhaps about 18 or 20, but I was always impressed at their cost-cutting techniques, often by added automation. Low as their workers' wages are, they try to eliminate the human element (the weakest link in yield figures) as much as possible.

I'm not saying that this is the case with PV panels, but it may well be, combined with the economy of scale (their PV factories are enormous, compared with any in the West). Obviously, I cannot comment on whether subsidies upset the applecart, but it would be unfair to try and force the Chinese to cut their subsidies while the West still subsidise their own production. I don't think the WTO would buy that if the major difference is, as I suggest, lower-cost production techniques.

[Evildead666]

From the thread title I was expecting some text on dumping toxic waste or something.

[Dr Mordrid]

The govt. found in favor of the complaint

http://spectrum.ieee.org/energywise/green-tech/solar/us-trade-commission-finds-against-chinese-solar-exporters

The seven solar suitors who filed a trade complaint against China in late October, complaining that subsidized photovoltaic panels were being "dumped" at unfair prices in the U.S. market, causing material damage to U.S. PV producers, prevailed in the first round yesterday. The six-member U.S. International Trade Commission determined unanimously that there is a reasonable indication that "U.S. industry is materially injured by reason of imports of crystalline silicon photovoltaic cells and modules from China that are allegedly subsidized and sold in the United States at less than fair value."

Reacting to the announcement, a spokesperson for SolarWorld, the lead complainant among the seven solar manufacturers, observed that the commission had three options in voting: no harm, a threat of harm, or actual harm. Because all six commissioners found actual harm, SolarWorld told The New York Times, it was “the highest possible outcome we could get in this admittedly incremental milestone.”

Yesterday's preliminary ruling, according to Matthew Wald of the Times, could directly result in higher tariffs being imposed on Chinese PV exporters of 5-250 percent. Next the trade commission will determine, in roughly two months time, whether China's solar exports also have been subsidized. A ruling in favor of the U.S. industry could result in additional tariffs of 100 percent.
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[Evildead666]

As soon as they put any type of tariff on anything from China, China will put tariffs on stuff from the USA, if they even import anything they can't get elsewhere.

The USA will probably say it did something, and won't in reality.
The USA needs China more than China needs the USA.

[TransformX]

The U.S still dominates one very important field: food. More precisely, corn, which China is forced to import.
Things aren't always as simple as they seem.

[Umfriend]

So what, no sensible economic law or analysis objects to a party being dominant (except perhaps for natural monopolies).

[Dr Mordrid]

The US has several ways to mess with this kind of thing, starting with the Sherman Anti-Trust Act of 1890 and going far and wide from there. Even "natural" monopolies can get in difficulties. Application usually depends on interpretation, and politics.

In this case the administration is being stung by the failure of Solyndra which was largely because they had both an overly complex product (and high costs as a result) and competition from cheap Chinese panels. If being able to point fingers at China allows the Administration to deflect the public ire from their poor choice of where to put $500M in taxpayer bucks, so be it.