With no end in sight to the solar products trade dispute between the United States and China, the Solar Energy Industries Association (SEIA), the sector's national trade association, has offered a compromise between the two countries' solar industries.

"This proposed settlement is a win all the way around," said SEIA President and CEO Rhone Resch. "It would actually lower costs to Chinese manufacturers for the export of solar cells and modules to the US, and it would improve US manufacturers' ability to compete fairly on an even playing field."

"It would also eliminate current and future litigation risks and costs for both Chinese and American companies," he added. "But just as importantly, SEIA's proposed settlement would benefit American consumers, as well as all consumers of solar energy, by holding down costs."

Late last year, the US Department of Commerce and International Trade Commission finalized antidumping duties (ADs) and countervailing duties (CVDs) against Chinese producers/exporters that, they ruled, have sold solar cells in the US at dumped prices. Calling the rulings "erroneous," and commenting that they highlight a tendency for trade protectionism within the US, the Chinese Ministry of Commerce subsequently, from July this year, imposed ADs and CVDs on imports of solar-grade polysilicon from the US.

SEIA disclosed that it has been working to resolve the current conflict and head off an escalation of trade sanctions, and, in particular, has warned US negotiators that any settlement similar to the recently-announced EU-China agreement would increase solar prices. SEIA has looked for a solution that would recognize the interests of all US stakeholders, solar manufacturers, solar product suppliers and American consumers.

The SEIA's proposed solution would include a phasing out of both the Chinese and the US ADs and CVDs, together with an agreement by Chinese companies to create a fund that would benefit US solar manufacturers directly and help to grow the US market. The proposal also calls for a safeguard mechanism designed to offset any surge of Chinese solar modules into the US market.

Money for the fund would come from a percentage of the price premium Chinese companies are currently paying to third-country solar cell producers to get around US trade sanctions, reducing costs and supply chain distortion for Chinese companies. To avoid the US AD/CVD orders on imports of solar cells from China, Chinese manufacturers are assembling third-country cells into modules in China and then importing these products into the US free of the AD/CVD orders.

A key provision of the settlement therefore calls for the establishment of the Solar Development Institute, which would be funded by Chinese manufacturers and would serve as the primary vehicle for fostering long-term collaboration between the US and Chinese solar industries. The Institute, in turn, would focus its resources on expanding the US solar market for all participants and growing the US solar manufacturing base.

SEIA's proposal is based on a precedent set during a 2002 trade dispute between the US and Brazil over allegations of unfair American subsidies on cotton. The World Trade Organization eventually ruled against the United States and – as part of the settlement – a fund was established to compensate Brazilian farmers. Today, the US still pays about USD150m a year to Brazil's cotton industry.

"While we are encouraged that negotiations to resolve the solar trade dispute are continuing in earnest, the discussions appear to be focused right now on a minimum price and/or quotas," said John Smirnow, SEIA Vice President of Trade and Competitiveness. "This is a misguided approach. Any settlement which includes these components would represent a significant step backwards for the US solar industry and the solar industry globally."

Source: Tax News