Ignoring free market principles will cost US solar jobs

Published in The Hill

Just when the American solar industry is poised to stand on its own two feet, subsidy-free, a blatant attempt to manipulate American trade law by foreign owned firms, threatens to destroy that progress.

Earlier today, the International Trade Commission ruled on a Section 201 case, brought by two bankrupt solar manufacturers who are petitioning for a massive increase in tariffs on imported panels. The companies allege that an influx of cheap foreign panels have critically damaged American solar manufacturing. After the Trade Commission found that there is “substantial injury” under the Trade Act of 1974, the case will now go to President Trump who can then decide whether to impose retaliatory tariffs on all imported panels.

It may seem like an open and shut case for a president who has repeatedly called for tariffs, but this case is distinguishable in that it may well cause massive economic damage to the wider domestic solar industry and a number of associated jobs.
The requested tariffs, used in this manner, are a classic form of market manipulation. Here, they will actually hurt American consumers, innovative industries, and the broader free market, the very ones that tariffs are historically supposed to help. This will all be done to protect a select few interests that have been otherwise unable to successfully compete.

The two firms bringing the case, Suniva and SolarWorld, ironically are foreign owned. So we’re actually talking about American tariffs that will primarily benefit overseas companies at the expense of our economy. Suniva has been singled out by independent analysts as “a manufacturer producing a costly technology-variant at low volumes on a figuratively ancient production line [that] cannot compete against modern facilities producing cheaper technologies at scale.”

More concerning is that Suniva’s ITC claim is being financed by SQN, a London based venture capital fund, which appears to have little interest in reviving U.S. solar manufacturing, and instead seems to be primarily motivated by recovering as much of its investment as possible from the bankrupt company.

SQN attempted to recoup their investment by offering to sell Suniva’s equipment to a Chinese firm, who declined the offer. If SQN had been able to sell the equipment and recoup their investment, they offered to drop the ITC case. How a bankrupt manufacturing company, without any equipment, was supposed to restore American jobs and solar manufacturing remains unclear.

The solar industry, utilities, free market groups, and state lawmakers have come out overwhelmingly against the tariffs, which threaten to raise panel prices by more than 50 percent hindering much of the recent growth in solar installations. The industry is starkly opposed to the tariffs in part because so little of it actually manufacturers the panels. Of the 260,000 Americans employed in the rapidly growing industry, the Wall Street Journal estimates that less than 1,000 actually manufacture the solar panels.

As advocates of market-based polices, we believe that the solar industry works best when market forces are left to decide which companies flourish and which do not.

The case is also likely to stir up strong international concerns. Section 201 cases are rare since they apply the tariffs globally instead of in response to manipulation by a specific country. The last time the ITC ruled in favor of a Section 201 case was in 2002. Then the U.S. was forced to withdraw the tariffs after a challenge at the WTO.

Distorting market fundamentals through tariffs will cost jobs and economic investment in the United States. The president should reject this claim, as the plaintiffs are manipulating trade law to take advantage of the system at the expense of American jobs, clean energy and taxpayers’ wallets, all to benefit a few overseas investors.

Tim Doyle, Vice President of Policy & General Counsel, American Council for Capital Formation.