China plans tariff on US, South Korean solar panel raw material

Duties on polysilicon imported from America, South Korea may top 50 per cent

PUBLISHED : Saturday, 20 July, 2013, 12:00am
UPDATED : Saturday, 20 July, 2013, 4:54am


Escalating a long-simmering trade dispute with the West over solar panels, China plans to impose tariffs that could exceed 50 per cent on a material it imports from the United States and South Korea to make the panels, the Ministry of Commerce said.

Announced on Thursday, the decision goes into effect next week and is a blow to the US industry, which analysts say is China's largest supplier of solar-grade polysilicon, the main ingredient in solar panels.

The Obama administration and the European Union have been trying to negotiate settlements with China in the world's largest anti-dumping and anti-subsidy trade cases.

Last autumn, the US put in place tariffs of roughly 24 to 36 per cent on the Chinese imports after finding that Chinese companies were benefiting from unfair government subsidies and selling their products below the cost of production, a practice known as dumping.

In June, the EU imposed modest tariffs of 11.8 per cent on solar panels from China, but those are set to rise to 47.6 per cent next month if Beijing does not stop what the Europeans say is dumping. Soon after, Beijing said it would investigate whether European wines had been sold at below cost in China.

US trade officials declined to say how China's move might affect those negotiations but expressed disappointment. A spokeswoman for Michael Froman, the US trade representative, said they were in discussions with China related to global issues in solar technology, including panels and polysilicon, and this step did not move the ball forward, "but we will continue to engage".

China dominates the world market in solar panel production, exporting about US$30 billion a year in panel shipments to the West, but it imports the bulk of the polysilicon from the US, Europe and Korea.

Its decision to tax US companies heavily but levy lower rates on some Korean producers and leave Europe out is being widely seen as retaliation for the US trade case.

"China is slapping tariffs on polysilicon, because it is unhappy that the United States exercised its legal rights and stood up for our remaining solar manufacturers," said Senator Ron Wyden, chairman of the Committee on Energy and Natural Resources.