The study, commissioned by the Coalition for Affordable Solar Energy (CASE), examined the impacts that imposing a 50% tariff or a 100% tariff would have on the U.S. solar industry through 2014. Both scenarios are lower than the up to 250% tariffs sought by SolarWorld, the German-based solar cell company, in its petition to the U.S. Commerce Department and the U.S. International Trade Commission. For each scenario, the study provides both a low and high estimate to account for variability in modeling the price elasticity of supply and demand.
According to the study, a tariff of 100% would result in consumer losses between $698 million and $2,620 million. That would eliminate between 16,917 and 49,589 American jobs over the next three years. Similarly, a tariff of 50% would result in net consumer losses between $621 million and $2,287 million. That would cause between 14,877 and 43,178 job losses over the same period. These figures are all net of any potential gains in cell or module manufacturing. Jigar Shah, President of CASE said, "This analysis makes it clear that imposing even a 50% tariff, much less than SolarWorld has requested, would be devastating for American workers. We cannot allow one company's anti-China crusade to threaten the U.S. solar industry and tens of thousands of American jobs." [See WIMS 11/16/11].
Dr. Mark Berkman, author of the report and principal at The Brattle Group stated, "While the U.S. solar industry has many facets and is quite complex, we were able to model the industry by utilizing straightforward economic analytical methods. We started by projecting the reduced demand for solar systems resulting from price increases due to tariffs. We then analyzed projected job gains and losses under two scenarios, each using a 50% and 100% tariff on imported solar cells and modules. Even under the most conservative assumptions, we did not find a scenario where imposing a tariff would create more jobs than it eliminates."
According to the Brattle analysis, if no tariff is imposed "the aggregate demand for photovoltaic systems is expected to grow from 1,678 MW in 2011 to 4,894 MW by 2014. A 50% tariff will raise industry-wide prices and delay solar industry growth, with total MW demand falling to as low as 3,350 MW in 2014. A 100% tariff will delay this growth even more with demand falling to as low as 3,159 MW in 2014. It is a significant decline in the market for solar cells that is central to the decrease in jobs identified in this study." To measure job effects of solar module price increases, the Brattle analysis uses the same type of analytical model (IMPLAN) as government agencies, industry and economists to measure economic impacts.
Another aspect analyzed in the report is the effect of likely retaliation by the Chinese to any U.S. imposed tariff on imported solar cells from China. According to the report, "retaliation would likely take the form of a tariff on U.S. polysilicon exports. The U.S. is a major supplier of this component of photovoltaic modules, and removing Chinese demand for U.S.‐manufactured polysilicon is expected to result in around 10,881 U.S. job losses in the first year after tariffs are imposed." CASE's Shah said, "This is an eye-opening analysis. Even after accounting for job gains in solar cell manufacturing, the likely job losses in the rest of America's solar industry and economy are staggering."
Shah also noted that the findings of this study are consistent with a recent story ("Get-Tough Policy on Chinese Tires Falls Flat") in The Wall Street Journal in regard to tariffs placed on Chinese tires. As the Journal reported, "The measure was meant to whack imports of passenger and light-truck tires and give a boost to manufacturers and job creation in the U.S. Yet, for a variety of reasons, it has apparently done little of eitherand has surely raised prices for consumers." Shah added, "Imposing tariffs on imported Chinese solar modules will have the same perverse results."
Gordon Brinser, president of SolarWorld Industries America Inc., based in Oregon said, "This significant increase in imports demonstrates that the Chinese know they have violated U.S. and international trade rules and are trying to evade the consequences. Year to date, Chinese imports of solar cells and modules in 2011 are up 346 percent by quantity and 138 percent by value. Since 2008, Chinese imports have risen 939 percent by value and 1664 percent by quantity. This most recent surge of Chinese solar imports gives the U.S. Department of Commerce the evidence it needs not only to make a preliminary determination in our favor, but also to apply a critical-circumstances finding to address this last-minute import surge."
Brinser continued saying, "The Chinese have made it clear that, contrary to various World Trade Organization agreements they signed 10 years ago, they will employ any means necessary to dominate the American and international solar markets. Rather than reward the Chinese for cheating, Commerce and the International Trade Commission need to take every possible action to enable American manufacturers to compete fairly."
Brinser, speaking for CASM issued a statement in response to the new CASE economic analysis saying, "SolarWorld and the other members of CASM strongly support the creation of American jobs in the solar industry. This highly speculative study ignores the illegality of China's actions and fails to consider the harm those actions have caused to high-tech manufacturing jobs in the solar sector. We do know that thousands of good-paying American manufacturing jobs have already been lost to illegal Chinese dumping and subsidies for solar products. Our goal is to build America's solar manufacturing base and the good jobs with benefits, innovation and competition that come along with it."
On January 30, CASM, led by SolarWorld recognized the U.S. Department of Commerce for taking expedited action against what they called "a massive, evasive surge of Chinese solar cell and panel imports" ahead of Commerce's first preliminary determination on duties, now scheduled for March 2, 2012. Commerce's finding of "critical circumstances" means that if the agency imposes preliminary countervailing duties on March 2, the duties will apply to all imports of cells and modules from Chinese exporters that were brought into the United States starting December 3, 2011.
CASM said this critical-circumstances ruling marks the first time that Commerce has issued such a finding in advance of a preliminary countervailing duty determination. Aside from the determination on anti-subsidy (also called countervailing) duties, the agency is scheduled to issue a separate preliminary ruling on anti-dumping duties on March 27. Commerce will issue a separate critical-circumstances ruling in the anti-dumping investigation. Separately, the U.S. International Trade Commission issued a unanimous preliminary determination on December 2, that the imports are harming the U.S. solar manufacturing industry.
Brinser said, "After several years of massive imports of illegally subsidized and dumped Chinese solar products, the U.S. solar manufacturing industry and its workers greatly appreciate the Department of Commerce's finding that importers of Chinese products have mounted a massive surge in product to evade accountability to U.S. and international trade law. Recognizing that an attempt at circumvention can happen, the trade law allows Commerce to act against such abusive behavior. We value Commerce's decision, and we hope that it will send a clear message to the marketplace about Commerce's commitment to using all of its tools to combat unfair trade. We filed these trade cases as a key step to rekindle growth in America's renewable energy manufacturing and jobs. SolarWorld and CASM believe that free trade is trade free of illegal governmental intervention. Robust and legal international competition, not predatory pricing that relies on massive and improper subsidies, will produce the best products and sustainable price declines over the long term. Today, we are one step closer to these aims."
The Coalition for Affordable Solar Energy (CASE), is a coalition of American solar companies representing 97% to 98% of the U.S. solar industry jobs, and believes free trade and industry competition are critical to making solar electricity affordable for everyone. CASE is united in its commitment to creating jobs through the growth and development of the American solar industry.
The Coalition for American Solar Manufacturing (CASM) is made up of seven companies, including SolarWorld that manufacture solar cells and modules in the United States as well as more than 150 employers of more than 11,000 workers who have registered their support for CASM's case as associate members. These member companies have plants in nearly every region in the United States, including the Northwest and California, the Southwest, Midwest, Northeast and South and support several thousand U.S. manufacturing jobs.
Access a release from CASE and link to their report (click here). Access the CASE website for more information (click here). Access a release from SolarWorld and CASM and link to their Solar Import report (click here). Access the CASM statement in response to the CASE study (click here). Access the CASM statement on the Commerce Department action (click here). Access the Department of Commerce Preliminary Determination of Critical Circumstances (click here). Access the Department of Commerce Monthly Shipment Q&V Analysis for Critical Circumstances (click here). Access the CASM website (click here). [#Energy/Solar]
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