What is the Suniva / SolarWorld Trade Case, and what does it mean for the solar industry?
Oct. 19, 2017 | By Marya Friedman
Quick overview of this controversial tariff case so far to get you up to speed:
Why the trade case took place & who was involved
Earlier this year, two solar companies – Suniva and SolarWorld – felt they had suffered irreparable damage from imported solar panels, and decided to take action in the form of a petition to the USITC (United States International Trade Commission) requesting imposition of a solar tariff – now known as the Suniva / SolarWorld Trade Case. It’s worth noting that just prior to the case, Suniva had filed for bankruptcy protection, and SolarWorld had declared bankruptcy1.
So exactly what damage did the two companies claim to experience? According to Suniva and SolarWorld, the import of cheaper panels resulted in a loss of business for them and a subsequent loss of jobs.
Based on their interpretation of their business woes, it is Suniva and SolarWorld’s hope that the ITC will protect American-made panels, by placing a tariff on imported panels, bringing prices back up to 2012 levels. In order to back their case for imposing a tariff, the two solar companies initially had a study released on their behalf suggesting the possible benefits of the tax. The study claims that the tariff has the potential to create 114,800 more jobs in the U.S.2 according to our Green Street analyst in attendance, Suniva and SolarWorld later lowered that number in the Remedy Hearing to a minimum of 35,000 jobs. Regardless of the changing number, the ITC, remains skeptical of this claim, which to Chairman Commissioner Rhoda Schmidtlein, “sounds more like a wish list” than a reality.
The vast majority of the solar industry – and even politicians outside of the industry – are more than merely skeptical of Suniva and SolarWorld’s claims. As Senator Martin Heinrich (D – NM) remarked at the most recent trade case hearing, Suniva and SolarWorld’s proposed tariff would nearly double the price of solar panels in this country, stunting the growth of the entire American solar industry and threatening the survival of hundreds of companies.
Upon completing impact studies, GTM Research and the Solar Energy Industries Association are both staunchly opposed to the tariff. GTM Research found that the tariff would cause “unprecedented demand destruction,” jeopardizing up to 2/3 of American solar installations through 20223. SEIA found that the tariff would cause up to 88,000 people, roughly 1/3 of the entire solar industry, to lose their jobs4. A bipartisan coalition of solar developers, installers, politicians, and manufacturers down the supply chain – both foreign and American – has come together to fight the tariff and its potentially devastating impacts5.
What happened during the case?
There are essentially 3 major milestones in the trade case that you should know about:
- Petition (May) – In this phase, Suniva and SolarWorld made their case to the ITC, citing the rarely-used Section 201 of the 1974 Trade Act to request that the ITC launch a “global safeguard investigation” into the alleged damage they suffered. The two companies’ blanket accusation of injury applies to every foreign manufacturer of solar panels & modules, from any country.
– Upon initial examination, the ITC decided that the evidence of damage was strong enough to launch a full-fledged investigation to “determine whether crystalline silicon photovoltaic (“CSPV”) cells (whether or not partially or fully assembled into other products) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported articles.”6
- Investigation (May-September) – This was a very crucial stage where the ITC took a deeper dive into Suniva and SolarWorld’s claims.
– Suniva and SolarWorld had to effectively present their case to convince the ITC to make an “injury determination.” Ultimately, the Commission ruled in their favor, agreeing that foreign solar module & cell importations had directly led to job loss in the manufacturing of domestic solar panels. The next stage would determine the Commission’s subsequent course of action—the remedy recommendation.
- Remedy Hearing (October) – On October 2nd, the ITC heard from both sides about their suggestions for potential solutions to the injury caused to Suniva and SolarWorld by solar panel imports.
– Suniva and SolarWorld proposed both a hefty, 4-year tariff and quota on solar cell & module imports, citing the need for a levelized playing field to allow for effective competition. They argued that after this 4-year jumpstart to American panel manufacturing, their prices would be low enough to remove trade restrictions once again.
– The solar developers, installers, manufacturers, and others who comprise the opposition proposed a licensing fee on imported solar cells & modules that would go directly to American panel manufacturers, in addition to funding and technical expertise from the National Renewable Energy Laboratory (NREL). They argued that this financial and technical support would stimulate R&D and boost development. A step-down tariff and quota, they contended, would only provide brief relief to Suniva and SolarWorld, not a long-term competitive edge.
The next important date for this case is October 31st. This is when the ITC officially votes on the outcome of the hearing. Then, the Commission has until November 13th to send a remedy recommendation to President Trump. At that point, the decision will be in President Trump’s hands—he has full discretion to approve, deny, or change the proposed remedy.
Overall, the case has led to an incredible amount of controversy in the industry, most appropriately summarized by the ITC Chairman, “I just want to congratulate everybody, it seems like your industry is on a wild ride every day.”
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