Washington (Platts)--27Sep2012/138 pm EDT/1738 GMT

Eight members of Congress on Thursday urged the US Department of Commerce to close a loophole in its tariffs on Chinese solar panels that allows Chinese manufacturers to skirt the penalties by simply outsourcing the production of photovoltaic cells.

In a letter to Acting Commerce Secretary Rebecca Blank, the lawmakers, all Democrats, said the current tariffs exclude Chinese panels that are produced from non-Chinese cells.

As an example, the lawmakers said silicon crystals manufactured in China that are then made into wafers in China could then be manufactured into cells in a third country and brought back to China to be finished into panels. Those panels would be exempt from antidumping or countervailing duties that Commerce plans to finalize next month.
Congress intended to have the antidumping and countervailing duty laws provide effective relief to US industries that are materially injured by unfairly traded imports, wrote the lawmakers, led by Senator Ron Wyden of Oregon. That purpose will be thwarted if foreign producers can simply outsource a small part of their production in third countries to avoid duties intended to level the playing field.

Besides Wyden, who is expected to become the top Democrat and perhaps chairman of the Senate Energy and Commerce Committee next year, the letter was signed by Representative Sandy Levin of Michigan, the top Democrat on the House Ways and Means Committee. Other signatories included Senators Jeff Merkeley of Oregon and Sherrod Brown of Ohio, as well as Representatives Suzanne Bonamici of Oregon, Edward Markey of Massachusetts, Earl Blumenauer of Oregon and Diana DeGette of Colorado.

Commerce in March announced tariffs ranging from 2.9% to 4.73% on Chinese cells and panels to counteract China's subsidies for its domestic manufacturers. The US has said those subsidies are illegal under World Trade Organization rules.

In May, Commerce also announced preliminary antidumping duties on Chinese solar cell and panel imports ranging from 31% to 250%, saying it had evidence that Chinese manufacturers were dumping their solar products in the US at below-market prices. Commerce's International Trade Commission is scheduled to hold a hearing on the antidumping duties on October 3 and finalize them by October 10.

China in late May filed a WTO complaint, challenging the US tariffs and saying that its lower solar prices were due to advances in manufacturing. China has warned that the tariffs could spark a trade war between the two countries.

The tariffs and duties were prompted by a complaint filed by seven US solar companies, led by Oregon-based SolarWorld. In the complaint they filed last year, the companies alleged that China's national and local governments have illegally provided more than $40 billion in annual subsidies to solar cell and panel manufacturers, including cash grants, loan guarantees, lower-cost inputs, discounted export insurance and other aid.

--Herman Wang, herman_wang@platts.com --Edited by Kevin Saville, kevin_saville@platts.com

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