The WTO Says That U.S. Broke Trade Rules with Tariffs on China's Solar Panels

by Henry Kaplan | Jul 15, 2014 |

Last month, the U.S. Commerce Department hit imported Chinese solar panels with a big tariff, closing the loophole that allowed Chinese firms to sell solar panels in the states at cut-rate prices. The U.S. argues that those low prices are subsidized by the Chinese government, helping Chinese firms undercut manufacturers in the U.S. and other countries.

But yesterday, the World Trade Organization found that the U.S. had overstepped, saying that the U.S. didn’t make a strong enough case to justify the tariffs. From Reuters:

Under the 1964 Marrakesh accords, which also set up the WTO, these duties can only be levied when there is clear evidence that state-owned or partially state-owned enterprises passing on the subsidies are "public bodies."

The panel found that Washington had produced insufficient evidence for this, and was also at fault in its calculations of the value of the subsidies to Chinese firms producing items like kitchen shelving, grass cutters and even citric acid.

But John Upton suggests that despite the WTO’s decision, the U.S.’s tariffs will not be going away any time soon:

Trade Representative Michael Froman’s office said it “will evaluate all options to ensure that U.S. remedies against unfair subsidies remain strong and effective.” In other words, it is likely to appeal the ruling — something that could help keep the tariffs in place for at least another six to 12 months.

So it seems the U.S.’s policy towards these Chinese solar panels is far from settled.

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