Taiwan has become the victim of a lengthy trade war between China and the US, after a recent US International Trade Commission decision that imports of solar panels from China and Taiwan have hurt the US solar industry — a decision that will bring heavy import duties on products from both nations. However, it is Taiwanese manufacturers who will suffer the most.
The decision means that the US Department of Commerce will issue antidumping and countervailing orders on Taiwanese and Chinese solar products at rates determined last month. The department had earlier determined that Chinese products were dumped at a margin ranging from 26.71 percent to 165.04 percent, while those from Taiwan were dumped at rates from 11.45 percent to 27.55 percent. The Commerce Department is expected to announce its final orders later this week or at the beginning of next month.
However, a preliminary review of Chinese solar panel imports from May 2012 to November 2013 found that Chinese manufacturers had reduced their dumping, which could lead to a reduction in final duties.
The rate cuts will create a means for China to evade the department’s proposal of a duty of at least 70 percent on Chinese solar imports, which would be a significant setback for the US arm of German solar manufacturer SolarWorld, which in December 2013 accused Chinese solar photovoltaic panel makers of sidestepping import tariffs and dumping products in the US.
SolarWorld won round one in June last year after the department proposed significant duties for Taiwanese and Chinese imports. It later filed a new complaint, accusing Chinese companies of continuing to trade unfairly and avoiding import duties by sourcing solar cells from Taiwan.
Over the past few years, Taiwanese solar cell makers generated about 30 percent of their revenues from exports to the US, thanks to the heavier duties their Chinese rivals faced. Not only did they gain from direct US customers, they gained Chinese customers who wanted to ship their products to the US.
However, if Chinese solar cell manufacturers face lower import duties — perhaps as low as 15 percent — Taiwanese manufacturers will be hurt. Their Chinese rivals will no longer need to buy products from them, while US customers might begin to switch to lower-priced Chinese cells.
Not a single Taiwanese solar cell maker will be able to keep their cost advantages and compete with their Chinese rivals such as Trina Solar and Canadian Solar, Taiwan-based market researcher TrendForce has said.
According to an analysis by Sinopac Securities, Chinese solar companies’ manufacturing costs are about 10 percent lower than those of Taiwanese firms.
Most Taiwanese manufacturers will be forced out of the US market, the world’s third-largest solar market, TrendForce said.
Only companies such as Tainergy Tech Co and Solartech Energy Corp, which have quickly expanded capacity overseas, are likely to survive, the researcher said.
Yuanta Investment Consulting said it has a “neutral” view on Taiwan’s solar sector amid the growing concern that local firms’ profitability will be hurt.
The government appears uninterested in helping safeguard the interests of local firms. Taiwanese solar cell makers will have to speed up their overseas expansion and seek new foreign markets if they hope to have any chance of staying competitive — and alive.
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