Wed, Feb 19, 2014 - Page 8 News List

EDITORIAL: Government must back solar firms

Last year was relatively good for Taiwan’s solar companies as some manufacturers — helped by industry consolidation, particularly in China — finally swung into the black after chronic losses. However, the revival seems unsustainable and there is a bumpy road ahead to full recovery.

The latest uncertainty stems from renewed solar disputes between China and the US that pose a threat to the local industry’s resurgence. On Saturday, the US’ International Trade Commission (ITC) ruled that Taiwanese and Chinese firms have hurt US industry through the practices of Chinese solar-module makers. The manufacturers continue to export their products to the US while circumventing year-old duties — averaging 31 percent — by assembling modules from cells made by Taiwanese companies.

Taiwanese firms could face punitive tariffs on exports to the US if US Department of Commerce investigations find them guilty of dumping. The Department of Commerce is expected to decide whether Taiwanese solar-cell and module makers are exporting products at below market prices in June.

The impact could be severe. The US is the biggest export destination for local solar-cell and module makers. Almost half of the 6.5 gigawatt in solar cells shipped to China last year were re-exported to the US, according to research firm TrendForce Corp.

On Monday, during the first trading session after the ITC’s preliminary ruling, stock prices of Taiwan’s major solar-cell makers Gintech Energy Corp and Solartech Energy Corp plummeted to the 7 percent daily limit. Shares of the nation’s two biggest solar-cell makers, Neo Solar Power Corp and Motech Industries Inc, fell 6.7 percent and 6.87 percent, respectively.

For China, the impact could be even worse and it seems that the Chinese government understands the risk much better than its Taiwanese counterpart.

Since the complaint to close the re-export loophole — filed on Dec. 31 last year by the US arm of Germany’s SolarWorld AG — the Chinese government has worked closely with Chinese solar companies to develop countermeasures against potential punishment from the US and is striving to minimize adverse impacts from the renewed trade row. One of their proposed tactics is to represent Taiwanese firms in the Department of Commerce’s probes.

Chinese solar-cell makers Yingli Green Energy Holding Co Ltd, which is also the world’s No. 1 solar-cell maker, and Hanwha Solar One made the proposal to the US anti-trust watchdogs last month.

The Taiwanese government’s lukewarm response to both the US investigation and China’s attempt to intervene on local firms’ behalf is a stark contrast to that of the Chinese government. Taiwanese solar companies are fighting the international trade war all alone. The Taiwanese government did not provide assistance to local manufacturers until representatives from the Taiwan Photovoltaic Industry Association asked for help.

Local solar companies urged the government to help them safeguard their right to defend themselves in the US anti-dumping probes, as the corporations are not capable of waging a global trade war and fear that behemoth Chinese solar companies may try to avoid severe punishment by sacrificing the interests of Taiwanese companies.

Taiwan needs to make the Department of Commerce understand that local solar-cell makers do not practice product-dumping. Local solar-cell manufacturers export their products to the US at prices 8 percent higher than the industry average and 11 percent more expensive than their Chinese competitors, according to the Taiwan Photovoltaic Industry Association. It is crucial to have local firms heard by the US trade officials at the present stage of investigations. This is something the nation’s government must do to help local industry.

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