Salient Green - US, EU and Japanese responses to rising solar imports -

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1 Salient Green - US, EU and Japanese responses to rising solar imports - Llewelyn Hughes Crawford School of Public Policy, ANU Jonas Meckling University of California (Berkeley) 20 August, 2015

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4 European Union Sept. 2012: EU initiates anti-dumping & anti-subsidy investigation June 2013: EC declares provisional anti-dumping duty of 11.8 percent on imports of solar panels, cells and wafers from China, from June 6 to August 6. Duty raised to 47.6 percent if settlement not reached. Aug. 2, 2013: Settlement ( price undertaking ) upon commitment by about 90 participating Chinese solar companies (representing 75% of imports) to charge minimum price in EU of 56 cents per watt. Undertaking limits duty-free Chinese imports to 7 gigawatts per year, giving European manufacturers can compete for 3-5GWs.

5 United States Oct. 2011: SolarWorld petitions USDOC and USITC claiming China's photovoltaic manufacturers dumping Dec. 2011: Solar World submits subsidy allegation, claiming PRC provides glass to Chinese producers below fair price May 2012: USDOC finds China liable for undercharging on sales of crystalline silicon PV cells and panels in the US market. Imposes 31% tariff. Dec. 2012: USDOC issues an antidumping duty order on crystalline silicon photovoltaic cells and countervailing duty order on crystalline silicon photovoltaic cells from China

6 Increasing Trade Disputes Source:(Lewis(2014(

7 Japan! No government response to rising imports! No industry demands for protection against rising imports

8 Global Installed Solar Base Source:REN21(2014(

9 Rising Chinese PV Production/Exports Source:(GTM(Research(2013(

10 Reorganization of Global Module Production Source:(Deutch(and(Steinfeld,(2013(

11 ! How did European, US, and Japanese industry towards rising imports from China?! How well does this predict the policies adopted in each of these markets?

12 Import Competition and Protectionism! Standard Approach! Import competition ->! demand for trade protection! Demand for protection weakened by firm productivity and degree of internationalization! Expectations in National Solar Markets! Chinese exports to EU/US/Japan markets! Demand for protection! Trade protectionism

13 PV(Value(Chain(&(Trade(Preferences(! Positioning of firm in value chain also determines preferred trade policies of firms

14 Support(or(Oppose(ProtecGon? Source:(Meckling(&(Hughes,(2015(

15 Data(&(Methods(! Firm Characteristics: position in value chain, ties with China! Member lists from industry associations in US, EU, Japan markets! Global database of PV manufacturers & corporate websites! Random sample for downstream firms! Trade Preferences of Firms! Member lists from industry associations & association position! 29 interviews with executives from major firms across US/EU/Jpn.

16 Data(&(Methods( Company Geographical3informationPreferencSource Industry3 Associatio Region Headquarter s3country GTM DATABASE LIST 1 E-Solar (Eversol-West Holdings) Japan Japan? n.a. Source Vertically3 Segmented? Vertically3 Integrated? Value3Chain3Participation Silicon Wafers Cells Module s Peripher Projects al3 Equipm Primary3product Diversified3or3 Pure3Play** list& x - x Pure Play 2 Fuji Electric Japan Japan? JPEA 3 Honda Soltec Japan Japan? n.a. 4 Kaneka Solartech Co., Ltd. Japan Japan? JPEA 5 Kyocera Japan Japan? JPEA 6 M. Setek Japan Japan? n.a. 7 Mitsubishi Electric Japan Japan? JPEA 8 Mitsubishi Heavy Industries Japan Japan? JPEA 9 Sanyo (Amorton) Japan Japan? JPEA 10 Sanyo/Panasonic Japan Japan? JPEA 11 Sharp Japan Japan? JPEA 12 Solar Frontier Japan Japan? JPEA 13 Sumco Japan Japan? n.a. JPEA MODULE PRODUCER MEMBERSHIP 14 Upsolar Japan China China JPEA 15 Itogumi Motech Japan Japan JPEA 16 Yingli Green Energy Japan China China JPEA 17 S Power Japan Japan JPEA 18 Canadian Solar Japan orth Americ Canada JPEA 19 Clean Venture 21 Japan Japan JPEA list& x - - Diversified list& x - - Diversified list& x - x Diversified list& x x x - x Diversified list& x - x - - Pure Play list& x x - Diversified list& x x - no data Diversified list& x Diversified list& x x x no data no data Diversified list& x x x - Diversified list& x x - list& x Pure Play list& x x - - Pure Play list& x x x - Pure Play list& x x x x x - Pure Play list& x - - Pure Play list& x x x x x Pure Play list& x Pure Play

17 Linking(Firm(Preferences(&(Policy(Outcomes(

18 EU( (Firms(and(Mixed(Demands(for(ProtecGon( AFASE(is(a(lobby(group(founded(by(the(largest(Chinese(solar(manufacturers(and(their( importers,(which(tries(to(scaremonger(the(whole(solar(sector.(afase s(sole(objecgve(is(to( prevent(angcdumping(duges(so(that(chinese(manufacturers(can(congnue(to(violate( internagonal(trade(law(with(impunity ( Around(70%(of(the(PV(supply(chain(ś(value(in(the(EU(market(is(created(in(Europe.(The(value( added(created(by(the(upstream(and(downstream(acgviges(in(the(eu(is(immense,(at( (40(billion( euro,(providing(employment(for(265,000(eu(jobs(along(the(solar(pv(value(chain(according(to( EPIA."( July(22,(2013:(Graham(Watson,(Member(of(the(European(Parliament(and(UK(Liberal(Democrat:("The(solarcpanel( industry(is(tearing(itself(apart...all(this(incfighgng(is(bad(for(business,(bad(for(those(who(pay(the(bills(and(c(given( the(need(to(drive(down(prices(in(view(of(solar(pv's(central(role(in(the(green(energy(switch(c(terrible(for(the( planet.(

19 US( (Firms(and(Mixed(Demands(for(ProtecGon( Founded in October Initially represented seven US cell and panel manufacturers spearheaded by SolarWorld America; grew to 256 official members by November Key supporters included both vertically integrated firms such as SolarWorld and non-integrated firms such as Helios, both of which data shows did not have China ties. Founded in November Data shows 57 of a sample of 76 firms were downstream installers and project developers. Founder Jigar Shah: decision will increase solar electricity prices in the U.S. precisely at the moment solar power is becoming competitive with fossil fuel generated electricity.

20 Japan( (Firms(and(Demands(for(ProtecGon( Vertically integrated. Long-term supply arrangement with Solargiga Energy (China) Vertically integrated. Fab in China. Vertically integrated. Fabs in Japan. Vertically specialized module manufacturer. Japan- Taiwan JV Main fab in Taiwan, fab also in Suzhou Japan Photovoltaic Energy Association

21 Summary(! Real differences emerged in the responses European, US and Japanese firms adopted towards the rise in Chinese PV module manufacturing! These differences reflect the different positions firms occupy in the global value chain! Trade cases are unlike those of the past protectionist demands mitigated by the rise of global value chains

22 ! How did European, US, and Japanese industry towards rising imports from China?! How well does this predict the policies adopted in each of these markets?

23 Implications! So why this difference?! EU: independence of European Trade Commissioner + opposition of Germany! United States: low barriers to provision of trade remedies + Congressional interests! Japan: horizontal integration and firm incentives! What to do about it?! WTO-EGS negotiations don t solve the domestic remedies problem.! Prices falling faster than governments willingness/ability to protect?! Raising barriers to trade remedies in renewables?