This article is from the archive of our partner National Journal

In a decision that could likely fuel the brewing solar trade war with China, the Commerce Department issued a preliminary ruling on Thursday in an antidumping case against Chinese solar firms, slapping tariffs of 31 percent up to 250 percent on Chinese solar products.

The ruling is on a case led by a Oregon-based subsidiary of German firm SolarWorld and seven U.S. solar companies, which charges that Chinese manufacturers of solar cells are dumping products in the U.S. market at artificially low rates in order to capture the market. Commerce is expected to make a final decision by October.

"This is a win for all of us who believe that free trade doesn't mean trade free from rules," Sen. Ron Wyden, R-Ore., chairman of the Finance Subcommittee on International Trade, Customs, and Global Competitiveness, told National Journal shortly after the announcement. "When you have a system that has rules that are enforced, the focus of global commerce is going to be on who can produce the best product at the best competitive price. And the alternative is to have whoever is best at skirting the rule. This isn't the final judgment, as you know, but I think this is a big win for those of us who believe in a rule-based trade system."

The company that has been leading the fight hailed the decision too.

"The verdict is in," Gordon Brinser, president of SolarWorld, said in a statement. "In addition to its preliminary finding that Chinese solar companies were on the receiving end of at least 10 WTO-illegal subsidies, Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the U.S. market. We appreciate the Commerce staff's hard work on this matter."

Chinese solar-panel makers such as Suntech Power Holdings and Trina Solar, which have denied such accusations, will face tariffs from 31.14 percent to 31.22 percent, while others will face tariffs of 31.18 percent. Solar manufacturers Chinawide could face tariffs of up to 249.96 percent for dumping solar products in the U.S. market.

These tariffs come on top of countervailing tariffs issued by Commerce last month, when it ruled that the Chinese government is illegally subsidizing solar-panel exports to the United States. In its preliminary verdict in the subsidies case, Commerce indicated its intention to impose a duty of 4.73 percent on U.S. imports from Trina Solar, 2.9 percent from Suntech, and 3.59 percent from all other remaining Chinese manufacturers.

Like the countervailing tariffs, the antidumping will be retroactive 90 days from the date the notice is filed in the Federal Register, which should be in the next several days.

But despite the push from SolarWorld and support from other solar firms, which have lauded the decision from the Commerce Department, some developers fear that these tariffs could raise prices for the solar market across the board.

"This decision will increase solar electricity prices in the U.S. precisely at the moment solar power is becoming competitive with fossil-fuel-generated electricity," said Jigar Shah, president of the Coalition for Affordable Solar Energy, which opposes the tariffs.

"The global market for solar cells and modules is more competitive than ever, and companies around the world, including SolarWorld, have been forced to cut prices to compete," Shah added. "Ultimately, free global competition is good for American consumers and American workers. That's why all of the major segments of the American solar industry, including solar manufacturers, have united to oppose SolarWorld's reckless and hypocritical campaign to raise solar prices."

Wyden said that the tariffs, if they're ultimately put in place, would help both the U.S. and global solar industry because it would provide more certainty.

"I think certainly investors are going to say that when solar manufacturers are treated fairly, that will make it more attractive in terms of investment opportunities in the days ahead," Wyden said.

He also dismissed claims that the action would prompt a trade war with China, which is already brewing over other trade concerns dealing with rare-earth minerals.

"I just don't think it adds up," Wyden said. "The best way to avoid trade wars is to have clear rules and carry them out."

This article is from the archive of our partner National Journal.

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