Bridges Weekly Trade News DigestVolume 16Number 44 • 19th December 2012

US Commerce Department Announces Final Duties on Wind Tower Imports from China, Vietnam

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The US Commerce Department has determined final anti-dumping and countervailing duties on wind tower imports from China, as well as anti-dumping duties for the same products from Vietnam, the government agency announced on Tuesday. The news is the latest development in a long-running series of spats between Beijing and Washington over their policies regarding their respective renewable energy policies.

The investigation comes as a result of a petition filed almost a year ago by the Wind Tower Trade Coalition, a group comprised of four companies based in the US states of Nebraska, North Dakota, Texas, and Wisconsin. The coalition had argued that Chinese and Vietnamese practices had made it difficult for US wind tower producers to remain competitive, and that such duties were therefore necessary to level the playing field.

“Five major US producers, two of whom were petitioners in this investigation, have shut down tower operations and left the industry,” Paul Smith, president of Broadwind Towers, told the US International Trade Commission last week ahead of the Commerce announcement. “Others have been forced to curtail production, shutter facilities, and lay off workers, all as the result of the surge of dumped and subsidised imports.”

The specific products at issue in this investigation were utility scale wind towers, which are the steel towers that support the nacelle - an enclosure for an engine. Also under review were rotor blades for use in wind turbines that have electrical power generation capacities in excess of 100 kilowatts. The Commerce investigation did not include nacelles and rotor blades, regardless of whether they are attached to the wind tower; nor did the US agency include in its review any internal or external components not attached to the towers.

Commerce had announced preliminary countervailing - or anti-subsidy - duties on the products in May; preliminary anti-dumping duties were determined in late July. (See Bridges Weekly, 6 June 2012)

In its final determination announced on Tuesday, Commerce found that imports from

China and Vietnam were being dumped at margins of 44.99 percent to 70.63 percent and 51.50 percent to 58.49 percent, respectively. Meanwhile, the US agency ultimately determined that producers/exporters from China have received countervailable subsidies of 21.86 percent to 34.81 percent.

Dumping involves the practice of companies selling their products abroad at prices below normal market values, causing harm to the domestic industry of the importing country. The difference between the price - or cost - in the foreign market and the price in the importing domestic market is known as a “dumping margin.”

According to Commerce, the China anti-dumping rates will be adjusted to account for the export subsidies found in the countervailing duty investigations. The cash deposits collected to account for the determined dumping will therefore be reduced by the relevant export subsidy rates.

In other words, while the dumping margins for China were between 44.99 percent to 70.64 percent, US customs officials will only collect cash deposits of between 34.33 percent to 60.02 percent, in order to account for the effect of the export subsidies that were found in the countervailing duty investigation - and thus not charge twice for the same violation.

The US International Trade Commission (ITC) will vote by 31 January on whether or not to approve these duties, Commerce said. If the ITC finds that imports of utility scale wind towers from China and/or Vietnam do indeed “materially injure, or threaten material injury to” US domestic industry, the US Commerce Department will issue AD and CVD orders. However, if ITC does not find such injury, the investigation will be terminated.

Imports of utility scale wind towers from China were valued at an estimated US$222 million in 2011, according to US data. Vietnam imports of these products to the US were valued at US$79 million in the same year.

Long-standing disagreements over renewable energy

Washington and Beijing have often found themselves at odds over their renewable energy support policies, with disagreements on the subject arising repeatedly between the two trading partners over the past year. The news of Commerce’s final determinations comes quick on the heels of another high-profile case reviewed by the US agency, which had involved allegations of dumping of and illegal subsidies for imports of Chinese solar cells. (See Bridges Weekly, 10 October 2012)

In that case as well, Commerce had also deemed that the Chinese producers under review had dumped their products onto the US market and/or benefitted from unfair subsidies - a finding that was contested by Beijing.

China, meanwhile, has conducted its own investigations of the US’ support for domestic renewable energy programmes, finding in May after an internal investigation that such government assistance violates WTO rules that prohibit unfair subsidies and favourable national treatment for domestic producers over foreign ones. (See Bridges Weekly, 30 May 2012)

While a response from Beijing officials regarding Commerce’s final wind tower duties had not been released as Bridges went to press, China has long maintained that these probes go against the mutual interests of both trading partners regarding cooperation in new energy.

The wind tower duty investigation “is also not in line with the trend of international cooperation in coping with the global climate change and energy security challenges,” the Ministry of Commerce’s (MOFCOM) Bureau of Fair Trade said in January, shortly after the launch of the probe. (See Bridges Weekly, 15 February 2012)

When the preliminary countervailing duties were announced earlier this year, Chinese government officials lambasted these as protectionist, and had cautioned that these may harm trade and economic cooperation between Beijing and Washington. (See Bridges Weekly, 6 June 2012)

ICTSD reporting; “US wind tower producers plead for duties on China, Vietnam,” REUTERS, 16 December 2012.

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