14th November 2011

Bridges Trade BioRes | APEC Leaders Pledge to Increase Cooperation on EGS Trade

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Asia-Pacific leaders adopted the “Honolulu Declaration” on Sunday, pledging for more trade cooperation on environmental goods and services.  The commitment came less than a week after the US Department of Commerce launched an investigation into Chinese solar subsidies and trade practices in response to a petition filed by seven US solar manufacturers last month.

The Honolulu Declaration, adopted over the weekend at the 2011 Asia-Pacific Economic Cooperation Leaders’ Meeting, pledged to develop a list of environmental goods and services next year on which APEC members will reduce tariffs to five percent or less. In addition, APEC Leaders pledged to remove non-tariff barriers including local content requirements.

US President Barack Obama, who hosted the APEC Leaders in his home state of Hawaii, had been pushing to increase trade in green goods among Pacific Rim partners. China resisted the push, noting that such a goal was beyond the reach of developing nations (see Bridges Weekly, 9 November 2011).

China pushes back

Meanwhile, the prospect of the solar subsidy case moving forward in Washington appears to have put Beijing on the defensive. President Obama potentially added to these tensions in an interview with a television station in Oregon in early November.

“We have seen a lot of questionable competitive practices coming out of China when it comes to the clean energy space, and I have been more aggressive than previous administrations in enforcing our trade laws,” Obama stated in the interview.

Obama added that the US would look into possible violations by China of international trade laws and “potentially bring actions if we find that the basic rules of the road have been violated.”

A Chinese Foreign Ministry spokesman emphasised the positive aspects of China’s solar industry, telling a news conference on 4 November that it was a priority for Beijing in order to address climate change and energy security. He also said that he hoped solar energy would boost Sino-US co-operation.

The Chinese Commerce Ministry took another tack, calling the investigation a “lose-lose” situation for both countries. In a statement to the Wall Street Journal, the ministry cautioned that if the US took action on the complaint, imposing stiff anti-dumping and countervailing duties on imported Chinese solar panels, the move would strongly affect US equipment and raw materials exports to China.

China’s largest solar power plant developer, CECEP Solar Energy, announced on Monday that it would be putting on hold a US$500 million planned installation of China-made solar panels in California, New Jersey, and Texas. The company’s general manager Cao Huabin cited the threat of higher US duties on solar panels imported from China as the core reason for the decision.

“If solar panel prices increase by, say, 30 percent in the United States following the move, then we would certainly drop the plan because there’s no profit to be made,” Cao told a news conference in Beijing.

While the US Department of Commerce has decided to move forward with the investigation, the US International Trade Commission (ITC) still needs to give its approval for the investigation to proceed. An ITC investigation panel is expected to vote on the decision on 2 December.

The ITC held a hearing on 8 November pitting a group of seven petitioners, led by SolarWorld Industries America, against those opposed to the investigation. To counter the petitioners, which have formally joined together as the Coalition for American Solar Manufacturing, the respondents launched the Coalition for Affordable Solar Energy (CASE). The group includes three leading Chinese solar companies, as well as Canadian and US firms concerned that a trade row will raise solar panel prices.

CASE’s co-founder Jigar Shah echoed China’s insistence that the solar subsidy case could harm the US as well as China.

“The vast majority of the existing 100,000 jobs in the solar industry are in sales, marketing, design, installation and maintenance,” he said in a statement. “These jobs depend on affordably priced solar panels and companies would have to lay off workers if panel prices rose as a result of this petition.”

More information

The Honolulu Declaration can be accessed here.

ICTSD Reporting; “U.S. and China on Brink of Trade War Over Solar Polar Industry,” NEW YORK TIMES, 9 November 2011; “China shelves US solar project in trade row,” REUTERS, 7 November 2011; “SolarWorld cheered by Obama comments on China,” REUTERS, 2 November 2011; “US solar industry split on China’s subsidies,” USA TODAY, 8 November 2011; “China Warns of ‘Lose-Lose’ Situation on US Solar Probe,” WALL STREET JOURNAL, 4 November 2011.

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