U.S. sets new import duties on Chinese solar products

WASHINGTON (Reuters) - The United States slapped new import duties on solar panels and other related products from China on Tuesday after the Commerce department ruled they were produced using Chinese government subsidies, potentially inflaming trade tensions between the two countries.

The U.S. arm of German solar manufacturer SolarWorld AG filed a petition complaining that Chinesemanufacturers are sidestepping duties imposed in 2012 byshifting production of the cells used to make their panels toTaiwan and continuing to flood the U.S. market with cheapproducts.

The new complaint seeks to close that loophole by extendingimport duties to also cover panels made with parts from Taiwan.

In a preliminary determination, the Commerce departmentimposed duties of 35.21 percent on imports of panels and otherproducts made by Wuxi Suntech Power and five otheraffiliated companies, 18.56 percent on imports of Trina Solar and 26.89 percent on imports from other Chineseproducers.

A preliminary decision on the anti-dumping section of the complaint is due by July 25. That section covers panels assembled in China from Taiwanese inputs or third-country cells made from Chinese inputs.

The anti-subsidy duties will hurt the Chinese solar industry, although the overall impact should be limited given the U.S. accounted for just about 10 percent of Chinese solar shipments last year, industry officials and analysts say.

"The import duties, which are in line with our expectations, will wipe out the price competitiveness of Chinese products in the U.S. market," said Zhou Ziguang, analyst at Chinese investment bank Ping An Securities in Beijing.

The Chinese government, which has been scrambling to boost domestic demand to offset declines in orders from Europe - previously the dominant buyer of Chinese solar products - on Wednesday expressed its "strong dissatisfaction" with the U.S. decision.

In a notice posted on its website, China's Ministry of Commerce said the United States had "ignored the facts" and abused trade rules in order to protect its own industry, adding that the use of trade measures "would not solve the development problems of the U.S. solar industry."

China retaliated against the original U.S. duties byintroducing anti-dumping and anti-subsidy duties on imports ofU.S. polysilicon, the key raw material in solar cells, and hasaccused the United States of trying to curb Chinese imports.

In the United States, the complaint has pitted SolarWorld Industries America, which makes crystalline silicon solar panelsat its factory in Hillsboro, Oregon, against U.S. solar companies that mainly focus on installation and who say imposingimport duties will only push up the cost of solar power.

"The ruling is a major setback for the entire U.S. solarindustry because it will immediately increase the price of solarpower and cost American jobs in one of fastest-growing sectorsof the U.S. economy," said the Coalition for Affordable Solar Energy.

The Solar Energy Industries Association said SolarWorld and Chinese manufacturers should try to settle the dispute beforethe industry was hurt.

But SolarWorld said it is not fair that Chinese solarproducers benefit from government aid from their own country,including discounted loans and free utilities, making it hardfor U.S. firms to compete.

"This is a strong win for SolarWorld and the domestic solarmanufacturing industry," said lawyer Tim Brightbill, fromWiley Rein LLP, representing SolarWorld.

Both the U.S Department of Commerce and the InternationalTrade Commission (ITC) have to issue final rulings in favor ofSolarWorld before the duties are finalized.In 2013, Chinese imports of the crystalline siliconphotovoltaic cells covered in the complaint, which typicallyform the basic element of solar panels and modules, were valuedat an estimated $1.5 billion, the Commerce Department said.

U.S. solar installations were worth more than $13 billion in2013, according to research firm GTM. About half the solar equipment installed in the United States last year was made in China. In the fast-growing rooftop solar market, that figure was 71 percent.

The value of imports of solar products from China fell byalmost a third from 2012 to 2013, while imports from Taiwan rosemore than 40 percent, although from a much smaller base, according to ITC data.

(Reporting by Krista Hughes in WASHINGTON, Charlie Zhu in HONG KONG and David Stanway in BEIJING; Editing by Chris Reese, Bernard Orr and Christopher Cushing)