The war of words is heating up in the ongoing US-China trade war over unfair subsidy allegations against Chinese solar panel makers, with unusually tough new sounds coming from both sides of the Pacific that indicate the protectionists may be losing some momentum. I’ll admit I was surprised by both of the latest developments, the first of which saw the Chinese solar panel makers finally come together to hold an unusual press conference in Shanghai denouncing planned punitive tariffs announced by the US last week ranging from 30 percent to 250 percent. (English article; previous post) The second development saw the trade group representing US panel makers issue its own statement that indicates another major US trade group representing the broader solar power sector may also be preparing to oppose the latest proposed punitive tariffs, which are set to take effect in October. Let’s take a look at the Shanghai press conference first, where the CEO of industry leader Suntech (NYSE: STP), after remaining low-key and relatively cautious throughout the dispute that began nearly a year ago, spoke out loudly against the proposed new tariffs, calling the unfair allegations untrue. A spokesman for the industry organization that organized the event further warned that China’s solar panel makers reserved the right to urge Beijing to take retaliatory action if the US actually does implement the new tariffs. Beijing has issued a steady stream of angry denunciations of previous US moves in this case, including one after last week’s decision; but industry executives themselves have tried to maintain a more positive stance by pointing out they are strong contributors to the US economy by providing jobs to upstream industries and also helping to promote the US solar power sector. This change of tactics by the Chinese panel makers is probably the result of their realization that their softer, more persuasive approach clearly didn’t work. Adding to the pressure against the US decision are the latest signs that a major US trade group, the Solar Energy Industries Association, may be preparing to enter the war on the side of the Chinese. That’s my interpretation based on a press release from another industry group, the Coalition for American Solar Manufacturing (CASM), which represents US solar cell producers who filed the original complaint against the Chinese companies. In the press release, CASM warns the Solar Energy Industries Association to respect a previous pledge to remain neutral in the dispute, and condemns the SEIA’s calls for a “premature settlement” of the matter. (CASM announcement) Clearly the bigger solar power association is listening to its power-producing members, who will suffer the most if they suddenly have to pay 30-250 percent more for their Chinese solar panels. Both of these developments show that the US solar panel makers are losing some of their advantage in this dispute, and pressure is mounting from both inside and outside the US for a settlement to avert a trade war. Now that people finally realize how high the stakes are, I would look for serious talks to begin soon that should offer a better than 50 percent chance of a settlement before October.
Bottom line: Growing pressure by forces opposed to punitive US tariffs against Chinese solar panel makers mean the chances of a settlement in the dispute are greater than 50 percent.
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