This Case Could Upend America’s $29 Billion Solar Industry

Ten years ago an engineering professor at Georgia Tech started a company outside Atlanta with the hope of manufacturing solar panels in America. And for a while it worked. The company, Suniva, grew into one of the largest panel makers in the U.S., with 350 employees. But it was always dwarfed by rivals in Asia, which have flooded the U.S. with cheap panels, driving prices down 60 percent over the past five years. By 2014, Suniva was outsourcing some of its assembly work to federal prisons to cut costs. In 2015 it sold a 64 percent stake in itself to a solar company in Hong Kong, Shunfeng International Clean Energy Ltd., for $57.8 million. The money was supposed to fund an aggressive expansion, but it didn’t last long. Last year, Suniva lost $29 million. On April 17 it declared Chapter 11 bankruptcy.

Days later, Suniva invoked an obscure law to ­initiate a government trade investigation that has the power to upend the $29 billion U.S. solar industry. Unlike typical trade complaints, which often hinge on charges that companies or countries are violating specific trade rules, this particular law allows the president to unilaterally impose broad tariffs simply if surging imports are hurting U.S. manufacturers. The law has been around since 1974, but for years companies didn’t bother filing such cases, knowing the president would turn them down. The last ­successful case, involving steel imports, was in 2002. Now they have a sympathetic audience. “With Trump, there’s a good reason to think he’d consider it,” says Michael Moore, an economics professor at George Washington University who’s an expert in international trade policy. “If I was a Chinese company, I’d be thinking it was a credible threat.”

Suniva is asking for import duties of 40¢ per watt for solar cells, which currently sell for 25¢ to 33¢ a watt. If the company prevails, the price of panels imported into the U.S. could double, potentially crippling demand for solar power. Suniva’s ­majority owner, Shunfeng, makes its own panels in China and opposes the trade case, but it lost its say once the bankruptcy began. Suniva’s biggest creditor, New York-based SQN Capital Management LLC, made filing the trade case a prerequisite for a $4 million loan Suniva is using to finance the Chapter 11 case.

The U.S. International Trade Commission has until Sept. 22 to conclude its investigation and send its recommendations to Trump. Even if the ITC doesn’t find in Suniva’s favor, some trade experts say the law gives the president broad leeway to act. And the case gives him a chance to score political points on three core priorities: He can slap a tariff on China, argue he’s protecting U.S. jobs, and even undermine the economics of a competitor to coal.

While cheap foreign panels have squeezed U.S. manufacturers, they’ve been a boon for rooftop installers, solar farm developers, and others that employ 85 percent of the industry’s 260,000 workers. U.S. solar installations have surged ninefold in five years, thanks largely to low-cost imports.

Much of the industry opposes Suniva’s filing, arguing that without cheap imported panels, solar installs would likely decline. Abigail Ross Hopper, chief executive officer of the Solar Energy Industries Association, the industry’s main trade group, calls the case “an existential threat.” The group estimates 88,000 jobs would be obliterated by the changes Suniva seeks. The U.S. unit of SolarWorld AG, a bankrupt German panel manufacturer, joined Suniva as a co-­petitioner in the trade case in June. The companies say tariffs are critical to protecting the 38,000 U.S. solar manufacturing jobs. “U.S. solar manufacturing jobs and the industry as a whole are on the brink of extinction,” says Matt Card, a Suniva executive vice president. “This is about saving an industry.”

The trade law Suniva is invoking gives U.S. industries a powerful tool to combat foreign competitors. Unlike common dumping and countervailing duty cases, the law offers companies a “global safeguard” that can result in broad, uniform protection against imports—not just tariffs on specific countries or companies. Under the 1974 law, to trigger that safeguard, Suniva has to prove only that imports have caused it “serious injury”—not that foreign competitors did anything unfair or illegal. The cases, relatively popular in the 1980s and 1990s, fell out of favor after a string of losses, including disputes over imported electric shavers, apple juice, and crabmeat.

With Trump, all bets are off, says Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. Although the president backed off plans to withdraw from the North American Free Trade Agreement and campaign promises to label China a currency manipulator, he has taken a more nuanced approach, targeting certain sectors for trade action, including initiating a Department of Commerce probe into whether imports of steel and aluminum pose a threat to national security.

The governments of Canada, China, Malaysia, and Mexico—whose solar factories would be affected by any tariffs—have filed as interested parities in the Suniva case, most likely in anticipation of some action being taken, says Bill Reinsch, a trade expert and fellow with the Stimson Center. “Anybody is more likely to win with Trump than with previous presidents,” he says. “They should be worried.”

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