The US International Trade Commission (USITC) has unanimously agreed that solar imports have caused “serious injury” to local manufacturers. Suniva and SolarWorld are calling for duties of US¢ 40/ Wp on imported cells and a floor price of US¢ 78/ Wp on modules. But USITC may consider all possible remedies including new tariffs, minimum prices or import quotas. Solar industry in the US is against the suggested trade remedies, which they say will lead to market contraction and substantial job losses. USITC has the deadline of November 13 for finalizing its recommendations to the President, who has the authority to accept, reject or modify the recommendations.
The reason for a rare use of Section 201 for this investigation is that existing anti-dumping duties on solar imports from China and Taiwan were easily circumvented. But Section 201 is viewed as a relatively blunt instrument, open to challenge under international trade laws. The last Section 201 investigation on steel imports in the US in 2001 resulted in tariffs, which were later withdrawn following a successful challenge by China at WTO.
It appears unlikely that the solar trade case will stand up to scrutiny in the long-term or that it will lead to a genuine long-term solar manufacturing revival in the US. Analysts have pointed out that trade barriers would have a huge negative impact on the downstream solar industry without any guarantee of positive impact on the manufacturing industry. It is also abundantly clear that protectionist measures such as anti-dumping duties in the US and Europe or Domestic Content Requirement (DCR) in India have almost completely failed to meet their objectives.
The Indian government may feel compelled to support domestic manufacturing believing that the solar industry can absorb anti-dumping duties in light of steep fall in solar equipment costs. But duties on imports from four countries (China, Taiwan, Malaysia and the US), currently under investigation, can be easily circumvented. Leading Chinese suppliers such as Trina Solar and GCL Poly have manufacturing facilities in other countries such as Thailand and Vietnam, which are not part of the investigation. As in the US, any trade barriers in India are likely to result in market uncertainty and downsizing, not ideal conditions for making new manufacturing investments in an industry facing global oversupply.