The blossoming trade warbetwee China and the United States has just been warmed-up a notch. A new body comprising seven US-based solar cell and module makers calling themselves the Coalition for American Solar Manufacturing (CASM) filed an official complaint with the U.S. Department of Commerce and the International Trade Commission(ITC) on October 19， accusing the Chinese solar industry of illegally dumping crystalline silicon cells into the fast-growing US solar market at artificially low prices.Fronted by SolarWorld Industries America， the CASM seeks tariffs of more than 100% on US$1.6 billion of Chinese-made solar cells and modules.The group claimed imports of heavily subsidized Chinese solar panels has driven down the cost of the technology， forcing the cutting of jobs and closure of seven U.S. solar factories in the past 18 months.The U.S. solar companies said Chinese producers can aggressively undercut American prices because they receive massive cash grants and other subsidies in China such as tax breaks， discounted raw materials， discounted land， power and water， multibillion-dollar preferential loans， export assistance grants and preferential export insurance.SolarWorld petition shows that Chinese exports to the United States rose more than 300 percent from 2008 to 2010， and have skyrocketed in 2011. In terms of solar modules， the US was in deficit with China by over US$1 billion in 2010. CASM estimated U.S. imports of solar cells and modules at more than US$1.6 billion in the first eight months of this year， compared to about US$1.2 billion last year and less than US$50 million in 2006. The group said the stunning ramp-up in exports was due to Chinese dumping margins “well in excess of 100 percent.”The group wants the Department of Commerce and the International Trade Commission to impose a duty on all panels imported from China sufficient to bring the price back up to where the U.S. makers can be competitive， and profitable， again.The Department of Commerce will have twenty days to decide whether or not to pursue an investigation that will likely take a year to complete. If it supports the CASM allegations， it could begin applying import duties to Chinese photovoltaic products to balance out the cost advantage implied by government assistance.BackgroundSolarWorld is the U.S. arm of Germany’s SolarWorld AG， which is one of Germany’s largest solar products producers and has sought to expand into the growing U.S. market. SolarWorld shut in September its Camarillo， Calif.， production plant amid a steep drop in solar panel prices.China exports 95 percent of its production， much of it to the United States， which has helped push wholesale solar panel prices down from US$3.30 a watt of capacity in 2008 to US$1.80 by last January and now to US$1.20. A typical solar panel might have a capacity of 230 watts.Including installation， the American solar power market is worth about US$6 billion a year. So far， though， solar power generates only about one-tenth of 1 percent of the United States’ electricity because it is still more expensive than fossil fuels. Any price increase in the technology， particularly an effective doubling of the price of Chinese imports through tariffs， is not likely to improve that ratio.U.S. solar panel maker Solyndra filed for bankruptcy in September， burdened with US$783 million in secured debt and squeezed by falling prices caused by an industry glut.Its downfall has become a politi- cal embarrassment for the Obama administration， which had promoted the company as an example of how it planned to spur development in clean energy technology and provided a government guarantee on the US$535 million loan that Solyndra has said it may not repay in full.This trade friction comes at a sensitive time in U.S.-Chinese trade relations. China’s Commerce Ministry earlier urged the United States not to “politicize” economic issues and said that legislation in the U.S. Congress aimed at pressing the Chinese to let the yuan currency rise more quickly violates international trade rules.In addition， the United States pressed China to explain why its “national firewall” blocks so many U.S. companies from selling in China via the Internet.Trade relations with China have become a hot issue ahead of the 2012 U.S. presidential and congressional elections. The Senate last week passed a bill aimed at Beijing’s currency practices， although the bill faces an uphill battle in the House to become law.Responses from relevant partiesThe White House declined to comment on the solar trade filing. But President Obama recently appeared to support the American solar industry’s concerns. In a White House news conference on Oct. 6 he said， “Even if the technology was developed in the United States， they end up going to China because the Chinese government will say， ‘We’re going to help you get started， we’ll help you scale up， we’ll give you low-interest loans or no-interest loans， we will give siting， we will do whatever it takes for you to get started here.’ ”The CASM position does not enjoy explicit support from the USbased Solar Energy Industries Association (SEIA)， which has some 1000 members working at all levels in the PV industry – many of whom will stand to benefit from the additional demand stimulated by low prices of solar cells， modules and panels. In addition， many US companies， including suppliers of lasers and other photonics equipment， have benefited from the large purchases of production tools by Chinese manufacturers that have been building out their capacity.Pre-empting the CASM petition， SEIA published a statement saying that while it supported the right to an investigation into unfair trading practices， such allegations would need to be investigated thoroughly and that the accused parties also had the right to defend themselves.The Chinese government issued a statement on the website of the country’s Commerce Ministry， criticizing the complaint and warning the U.S. not to introduce new duties.“If the U.S. government files a case， adopts duties and sends an inappropriate protectionist signal， it would cast a shadow over world economic recovery，” the statement read.“The Chinese government hopes the U.S. will scrupulously abide by its promise to oppose trade protectionism， avoid adopting protectionist measures on Chinese solar cell products， jointly protect a free， open and fair international trade environment， and adopt a more rational means of handling trade frictions.”In an indication that any attempt by the U.S. to block imports of Chinese solar panels could spark a trade war， the statement also noted the U.S. has put in place its own subsidies and support mechanisms to accelerate the development of its domestic solar industry.A Chinese panel maker， Suntech Power Holdings， rejected the accusations， calling the group’s request nothing but “protectionism” that would “not only put thousands of jobs at risk， but also inhibit solar technology’s ability to compete against traditional forms of electricity generation and deal a major blow to the world economy.”A Chinese solar company manager， speaking on condition of anonymity， said that in any trade case filed by the American industry， “We would be well prepared and are confident we could defend it.”Some trade experts have warned that the Obama administration needs to tread carefully because the United States also has programs to support the sector.Many American companies receive subsidies from federal， state and local programs — as in the instance of Solyndra’s US$528 million in federal loan guarantees. SolarWorld is in the process of obtaining US$4 million in research assistance from the federal government. An Energy Department report in July said that federal subsidies for solar power totaled US$1.134 billion in the 2010 fiscal year， up from US$179 million in 2009.The filing， which the Commerce Department must review under federal rules， is certain to be controversial. For one thing， if successful， it would drive up the price of solar energy in the name of trying to breathe life into a flagging American industry. High costs have already kept solar power from becoming more than a niche energy source in the United States.The case also coincides with criticism by Congressional Republicans of the Obama administration’s efforts to support American clean energy companies. Republicans argue that federal loan guarantees of more than a half-billion dollars to the nowbankrupt solar company Solyndra show the folly of the administration’s efforts to guide industrial policy in that field.The filing might also add fuel to the anti-China sentiments that are running high in some Washington corridors and have started to seep into the presidential campaign.While the United States hasn’t formally taken on China before on solar subsidies， it has battled the Chinese on another renewable energy front: wind. And it won. Late last year， the United States， in a claim initiated by the United Steelworkers， filed a formal complaint claiming China was in violation of WTO rules and regulations by providing subsidies to wind power equipment manufacturers who agreed to use key parts and components made in China. Ultimately， China agreed to stop the subsidy program.
