Anti-Dumping duties on solar products of China by US

- AN ECONOMIC ANALYSIS

Dumping of solar products in USA by china• With a view to takeover solar industry in USA china started

dumping solar cells, solar modules and solar panels. • Chinese companies are also subsidized by their

government. Because of dumping many solar products manufacturers in US shut downed their companies.

• In response to this many companies filed petition against china solar cells exporters in 2011.

Policy response of government of US : Anti-Dumping• US Commerce starts investigations and laid anti-dumping

duty of 24.48% (on average) on Chinese solar cells imports from December, 2012.

• US solar imports from china decreased to $ 1.5 billion which was half of value of imports in 2011.

• But increase in value of solar products imports from Taiwan is more than doubled to 657 million dollars from 2011 to 2013.

• This is because anti-dumping duty was levied only on China manufactured solar cells and Chinese producers make use of Taiwanese solar cells.

Effects of initial anti-dumping duty in 2012• Because of initial anti-

dumping import value (USD) from china decreased, with a parallel increase in import value (USD) from Taiwan.

China 2011 2012 2013

Volume(units) 93,471,000 47,031,000 32,981,000

Value (USD) 3,124,578,000 2,082,753,000 1,494,531,000

Taiwan 2011 2012 2013

Volume(units) 21,921,000 41,125,000 16,040,000

Value (USD) 256,560,000 513,498,000 656,777,000

Policy response of government of US : Anti-Dumping• Again US solar companies filed in December, 2013. US

Commerce finds out that there is severe material injury to solar industry in US.

• Anti-dumping duty on Chinese imports now ranges from 26.8% to 78.42% and duties on Taiwanese solar products imports ranges from 12% to 28%.

Benefits of anti-dumping duties:• In short run this prevents US solar cell manufacturing

companies from losses.• In Long run this duty prevents from monopolizing solar

industry in US with Chinese solar products and make American solar products manufacturers competitive

Costs of anti-dumping duties:• Because of imposing duty on solar cells supply curve shift upward

and price of solar cells increases.• Due to increase in prices cost of production in some segments in

solar industry such as rooftop solar companies, utility scale solar developers and public utilities.

• Low prices are not only a consequence of dumping but due to efforts of industry to attain grid parity. Grid parity is a situation when an energy source can produce electricity at a price equal to electric grid. Because of anti-dumping as cost of production increases companies in solar power industry are unable to achieve grid parity. In addition to this, decrease in oil and natural gas prices, which decrease cost of production of grid electricity, makes solar power industry less competitive.

Costs of anti-dumping duties:• All this leads to decrease in producer and consumer

surplus.• This not only affects solar products industry but also

increases cost of production for companies which use solar power.

• Because of increase in cost of production supply curve shift upward and total surplus for consumers and producers decreases from ACE to ABD. Here there is a dead weight loss of government revenue-DEBC.

Alternatives – price floorOne alternative is to set a price floor.

If price floor is set then total surplus for producers and consumers decreases from ACE to ABFE and a dead weight loss of BFC. But here there is not tax revenue to government in this case.

ConclusionEven though there are so many costs associated with

anti-dumping duty in short term, these duties stabilize domestic market , make them grow and make American solar products industry competitive.