Punitive duties on Chinese solar cells a 'costly step'

WASHINGTON - The US market would see similar costs and bigger risks as it had suffered in the tires case of 2009, if the government imposed punitive duties on China's solar cells, experts of a leading US think tank said in a report released on Friday.

Although trade remedy policies such as AD (antidumping duty) and CVD (countervailing duty) on imports were designed to shield US firms from foreign competition, they may produce more setbacks in other aspect of the economy, said Gary Clyde Hufbauer and Martin Vieiro, experts from Peterson Institute for International Economics.

US President Barack Obama claimed that the initiative on Chinese tires has saved 1,200 manufacturing jobs. But the two experts argued the total cost to American consumers from higher prices resulting from the tire safeguard tariffs was $1.1 billion in 2011. Thus the cost per job saved was at least $900,000. And the winners were mainly other countries' tire companies.

Since the solar measures are similar in size and the penalty tariffs are roughly the same, it is possible that the direct costs to consumers in the solar case will be similar to the tire costs, noted Hufbauer and Vieiro.

The Coalition for Affordable Solar Energy (CASE) also strongly opposed the AD and CVD actions. The industry group is made up of 700 members including manufacturers of solar panels, solar developers, system owners, retailers, installers, engineers, and companies involved in innovation, engineering and production.

CASE pointed out that the "US is a net-exporter of solar products to China by $200 million and to the world by about $2 billion; a trade war would put that at risk."

Besides, solar cells are upstream components in an industry where the majority of workers are engaged in downstream installation. Overall, the number of solar industry employees is approximately 100,000. Of those, about 52 percent work in installation.

Hufbauer and Vieiro also added that environmental policies designed to encourage renewable energy and limit the emission of greenhouse gases were hurt when alternatives to fossil fuels were made more expensive.

The solar cell case highlighted two big defects in the US law that governs AD and CVD cases, said Hufbauer and Vieiro. First, downstream users of the affected product have no legal standing in the process to argue the potential injury that they will suffer if penalty duties are imposed. Second, there is a legal vacuum when trade remedy policy conflicts with environmental policy.