US DoC Announced AD & CVD Verdict

After months of deliberations, the United States has finally confirmed the imposition of heavy anti-dumping and anti-subsidy duties for Chinese solar cell manufacturers

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After months of deliberations, the United States has finally confirmed the imposition of heavy anti-dumping and anti-subsidy duties for Chinese solar cell manufacturers. The US Department of Commerce (DoC) has given its approval to the investigations carried out in May following the complaint from SolarWorld and its partners. The DoC has determined that Chinese solar cell manufacturers were engaged in unfair competition by selling their products in the United States at artificially low prices at dumping margins between 18.32% and 249.96% while they received countervailing subsidies between 14.78% and 15.97%.

The move comes just weeks before the US elections when President Obama has already received severe criticism from his opponent Mitt Romney for not being tough in his dealings with China.

The effect of the anti-dumping and countervailing duties will be limited to any solar cells or modules that use Chinese-manufactured solar cells. If a Chinese solar cell or module manufacturer uses solar cells produced outside of China, then these duties will not be imposed on that manufacturer.

The Anti-dumping (AD) investigations had revealed that the leading Chinese solar panel manufacturers Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) and Trina Solar Limited (ADR) (NYSE:TSL) have received the final dumping margins of 31.73% and 18.32% respectively. Fifty-nine other companies, including LDK Solar Co., Ltd (ADR) (NYSE:LDK) and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) have a final margin of 25.96%, while all the remaining exporters’ final margins were 249.96%.

In its separate press release, Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) has stated that it will receive a net anti-dumping tariff of 15.42%, which will make it lower than what was proposed in the initial investigations.

The countervailing duties (CVD) investigation had determined that Suntech and its ten affiliates will have a final net subsidy rate of 14.78%, while that of Trina Solar will be 15.97%. All the remaining manufacturers and exporters, including Yingli Green Energy, JA Solar and LDK, will have a final net subsidy rate of 15.24%.  A number of companies have released statements quoting total rates, and most included an export subsidy of 10.54%, which is subtracted from the AD duties calculation to avoid double application.

Reacting to the statement, E.L. McDaniel, Managing Director of Suntech America, has said, “Unilateral trade barriers will not make any one company more competitive, but will make solar less competitive against other forms of electricity generation.” He also pointed out that “These ill-conceived taxes on solar products were the outcome of an unrealistic analysis that compared, for example, Suntech's costs of production to the theoretical costs of production in Thailand, a country with less than 100MW of PV production capacity.”

Trina Solar’s Chairman and CEO Jifan Gao has also said that “we disagree with the Department of Commerce's conclusions in this case.”

From here, the decision will now move forward to its final stage at the US International Trade Commission (ITC), which is going to make its decision by 23^rd November. If the ITC affirms that the Chinese solar panels pose a threat to the US solar industry, then AD and CVD will be imposed; otherwise, they will be “terminated.”