Will President Trump keep his promise to defend US manufacturing, even if it COSTS jobs?
A report issued by the Trump administration in March promised a more aggressive approach to unfair international trade practices, including expanded use of Section 201 of the Trade Act of 1974. Under Section 201, the President may impose sanctions to protect American businesses from dumping low-cost products on the U.S. market.The report refers to this as a “vital tool for industries needing temporary relief from imports to become more competitive.” Section 201 was most famously used by the steel industry in 2002 to obtain a three-year moratorium on imported steel.
Bankrupt Manufacturer Seeks Sanctions
Solar cell manufacturer Suniva, which declared bankruptcy last week, is now looking for the relief promised by the administration under Section 201. Because Chinese manufacturers of solar panels have flooded American markets with panels at prices too low for U.S. manufacturers to compete, Suniva filed a petition with the Trade Commission seeking “… a recommendation to the President of four years of relief of an initial duty rate on cells of $0.40/watt, along with an initial floor price on modules of $0.78/watt. Petitioner also seeks other equitable remedies that will effectively assist the domestic industry to make a positive adjustment to import competition. Finally, petitioner seeks a recommendation from the Commission to the President that the United States negotiate with trading partners to address the global supply imbalance and overcapacity in CSPV cells and modules.” This will “…allow the domestic industry to survive long enough that it can benefit from actions of the U.S. government, and foreign governments and producers to address the massive excess global capacity that has depressed global CSPV cells and modules prices to unsustainable levels.”
Experts React to Filing
Jade Jones, a senior solar analyst with GTM Research, explained the impact on module pricing: “That would bring us to module price levels seen in the last oversupply cycle. So similar to prices in 2012. That would also make the U.S. the highest priced market in the world, with module prices more than double other regions.”
In a statement from CEO Abigail Ross Hopper, the Solar Energy Industries Association reacted negatively to the action. “We strongly urge the federal government to find a resolution that bolsters the competitiveness of American solar cell and panel manufacturing, which employs approximately 2,000 people in the U.S., without erecting new trade barriers. SEIA opposes any resolution that restricts fairly-traded imports of solar equipment through new tariffs or other barriers that endanger the livelihoods of the 260,000 American solar workers and their families living in every state in the Union.”
Prepare for Irony
The irony of this case is not lost on observers of the solar industry and international trade. What we are looking at is not merely a case of an American manufacturing company standing up to Chinese dumping of cheap solar panels on the U.S. market. That battle was fought in 2012, and the commerce Department slapped Chinese manufacturers with tariffs of as much as 36% for their unfair practices. This case is very different.
This action would COST American jobs, not protect them.
As stated by the Solar Energy Industry Association, the jobs in the U.S. solar industry are in installation and operations, not in manufacturing. American solar manufacturing, like most other manufacturing industries, is not doing well in the states. They cannot compete with cheap and exploitative labor practices overseas. Installation, however, cannot be outsourced. Additional sanctions against Chinese panels would only delay the inevitable collapse of a non-competitive industry while damaging a flourishing one.
Suniva in NOT American-owned. It is owned by the Chinese.
To add insult to injury, Suniva is not even owned by Americans. Shunfeng International Clean Energy Ltd. acquired 63 percent of Suniva in 2015. Shunfeng (whose subsidiary Suntech took a major hit in the anti-dumping action of 2012 and went bankrupt in 2013) purchased the troubled solar company in a clear attempt to do an end-run around anti-dumping regulations while tapping into superior U.S. research and development. The strategy backfired though, and Shunfeng has recently upgraded its reported loss in 2016 of around US$133 million to US$348 million.
It doesn’t take a genius to see that Chinese companies are playing both sides of the fence in the U.S. solar market. Chinese money is so deeply embedded in the U.S. economy that any sanctions on the part of the current administration could have countless unanticipated consequences. This may explain the softening of the hard-line rhetoric on the part of the President- and his new found friendship with the Chinese leaders.
