U.S. Consuming Industries and Solar Cell/Panel Tariffs

By CITAC Staff

Imports work to reduce the cost and increase the choices of consumers, including manufactuers, construction companies and developers.  Our trade policy needs to consider the costs to our economy of protection, even when dealing with unfair trade.

An April 23  LA Times article lays out the arguments on both sides, which is all too often not done.  When both sides are considered, we see that the costs of preclusive tariffs on imports of solar cells and panels will probably outweigh the benefits.  Unfortunately, that is usually the case, which is why antidumping and countervailing duty laws and procedures need to be re-examined and reformed. 

When duties are imposed by the Commerce Department, one key item of information is missing: the amount of the duties.  Commerce only releases the amount of “deposit” required, which may be more or less than the final duties.  Those duties are only revealed years after the entry.  US importers responsible for paying the duties cannot pass on the duties in full, because the products they imported will already have been sold into the US market.  When a large bill comes from Customs, the importer must pay it without hope of reimbursement—indeed, reimbursement is strongly discouraged under the US system. 

The only safe course for US importers faced with AD/CVD actions is to stop importing altogether.  This denies the competitive benefits of imports in the US market.

The solar cells and panels case is a good example.  Cells and panels from China are accused of being dumped and subsidized.  The Commerce Department, which investigates these allegations, is predisposed to find dumping, and nearly always does.  Subsidies by China are also usually found, but even the Commerce Department generally has trouble finding extensive subsidies—they really are not there.  However, because the final duties are not known for a long time, imports will dry up as long as the duties are a possibility.  Imports will decline dramatically if not disappear.

The effect of declining imports on the market is clear—solar energy competes with other forms of energy and will wither if the costs of construction and installation go up in comparison with other forms of electric generation.  There will be fewer solar projects.  This will cost jobs in construction, transportation, installation and maintenance in the solar energy field.  While the federal government says it wants to encourage development of renewable energy, the Administration’s own Commerce Department is effectively discouraging it.

While some claim that dumping and subsidies must be stopped at all costs, the reality is that we do not face such a stark choice.  Antidumping and countervailing duty laws and procedures can be reformed to that they effectively take the impact of dumping and subsidies out of the market without stopping imports.  Most countries outside the United States have trade remedy laws that do this much more effectively, and in a much more balanced way, than the United States.

Since imports work for everyone, we owe it to ourselves to balance the impact of trade restrictions on the American economy.  It is not hard to do—all it takes is the will to see both sides of the trade debate.