Blog #11: Trade War in Solar Takes Shape

The United States and China are gearing up for a trade war that could catch American users of solar energy in the crossfire. The Commerce Department in Washington on Wednesday opened an investigation sought by American manufacturers who accuse the Chinese of “dumping” solar panels into the United States at prices, aided by government subsidies, lower than the cost of making and distributing them. Anticipating that move, the government-controlled Chinese solar industry has been unusually vitriolic this week. Meanwhile, a new American trade group was formed this week, representing buyers and installers of solar-energy systems. It argues that any new Commerce Department restrictions on Chinese solar panels would slow the adoption of clean energy technology in the United States and could cost thousands of American jobs. The use of solar energy in the United States is growing fast, but Chinese solar panel manufacturers have been growing even faster, raising their American market share to more than half now, from almost none five years ago. Whatever action the American government might take, it could prove too late to save the American solar panel industry. Most of the big Chinese solar panel manufacturers have subsidiaries in the United States that are the legal importers, so they — not the American installers of solar panels — would incur the initial costs of any tariffs.

This is not a new practice by China. Recently there was a case where China was dumping steel in US and European markets at a time when the steel industry was cutting back. China flooded the market and created a monopoly. The act of dumping is illegal because other businesses simply can’t compete with the cheaper products and massive quantities offered by the exporting country. Also, dumping causes unemployment. This situation is a little different. Although China is dumping solar panels it comes at a time when the US needs cheaper solar panels to speed the adoption of clean energy technology since the initial investment is extremely expensive.

http://www.nytimes.com/2011/11/10/business/global/us-and-china-on-brink-of-trade-war-over-solar-power-industry.html?src=me&ref=business