Obama Proposes Expanding China Solar-Cell Levy to New Suppliers

Dec. 8 (Bloomberg) — The Obama administration is
considering an expansion of duties on Chinese solar products
that has triggered complaints from a South Korean parts supplier
that says it would be hurt.

The plan calls for the U.S. Commerce Department to impose
tariffs on all solar panels assembled in China, regardless of
the source of their component cells. Currently, $1.5 billion
worth of panels with cells made in China are subject to a duty,
and many companies shifted production of the cells to other
nations in response.

The proposal highlights the challenge of applying U.S.
trade penalties on products in a far-flung, global supply chain.

“It’s bizarre, and we think it’s unprecedented,” said
Carolyn Byun, U.S. head of legal for Hanwha Solar, a South
Korean company with factories in Malaysia and China. “This
really has no justification. We need to know ahead of time how
things are going to play out.”

SolarWorld AG, a Bonn-based company with a plant in
Hillsboro, Oregon, got the U.S. Commerce Department in 2012 to
apply tariffs on imports of solar cells from China. After the
tariffs kicked in, imports of panels with cells made in Taiwan
boomed, and SolarWorld said in a complaint a year ago that
Chinese makers had shifted production to skirt the U.S. tariffs.

Earlier this year, President Barack Obama’s Commerce
Department issued a preliminary decision that proposed expanding
the tariffs to imports of cells from Taiwan. A final decision is
due by Dec. 16.

Proposed Expansion

Companies such as Hanwha and Suniva Inc., a Norcross,
Georgia-based solar-cell maker, had avoided taking a position on
the U.S. tariffs, while tracking the cases closely.

Hanwha ended its neutrality when the Commerce Department
issued a memorandum on Oct. 3 saying all solar panels assembled
in China would face U.S. tariffs, no matter the source of the
cells. The change is necessary to prevent another manufacturing
center from becoming a base of production, supplying cells for
the low-cost solar panels assembled in China and shipped to the
U.S., according to lawyers for SolarWorld.

“We did not make a specific filing asking for it, but we
strongly supported this,” Tim Brightbill, a Washington lawyer
for the company, said. It will ensure “these duties on China
and Taiwan are enforceable,” he said in an e-mail.

The change would target Hanwha, which makes cells in
Malaysia that are assembled into solar panels in China and
shipped to its distribution and installation business in the
U.S.

Hanwha Merger

Hanwha Solar Holdings Co., based in Seoul, today said it
will merge its U.S.-listed photovolaic maker Hanwha SolarOne
Co.
, which has plants in China, with Thalheim, Germany-based
Hanwha Q Cells, which it acquired in 2012 and has plants in
Germany and Malaysia. The combined operations will be the
world’s largest maker of solar power cells. Hanwha Solar owns Q
Cells and holds 45.7 percent of Hanwha SolarOne.

The company will use a Q Cells factory in Malaysia to avoid
U.S. and European import duties. “The anti-dumping issue
creates significant opportunities for a geographically diverse
company,” said D.K. Kim, SolarOne’s chief commercial officer.

Under the U.S. proposal, Hanwha’s Malaysian-made cells may
face a 43 percent tariff, more than many cells made in China,
Byun said. The company has started a last-minute effort to get
Commerce to step back, she said.

For its U.S. installation business, “it’s no longer
competitive to use our modules anymore,” Byun said.

Commerce will review all comments it receives on the scope
issue and address those in its decision next week, the
department said in an e-mailed statement in response to
questions about its proposal.

To contact the reporter on this story:
Mark Drajem in Washington at
mdrajem@bloomberg.net

To contact the editors responsible for this story:
Jon Morgan at
jmorgan97@bloomberg.net
Steve Geimann

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