Timothy Brightbill is one of two partners at Wiley Rein representing a coalition of solar energy manufacturers in one of the largest-ever trade cases accusing China of unfairly dominating the American solar energy market. Brightbill filed petitions last week asking the Department of Commerce and the International Trade Commission to investigate China. The effort comes on the heels of the controversy surrounding California-based solar panel producer Solyndra, which filed for bankruptcy last month after receiving $528 million in federal loan guarantees. Solyndra has said that unfair competition from the Chinese is a reason it couldn’t survive.
Here, Brightbill explains what he hopes to accomplish and what he believes these investigations could mean for the US economy.
You’re asking the Commerce Department and the ITC to conduct antidumping and countervailing duty investigations—what do antidumping and countervailing mean?
These are two different kinds of trade law violations. Dumping is the practice of selling here in the United States for less than a company sells for in its home market, or less than its cost of production. That’s illegal under both US law and World Trade Organization law, if that dumping results in injury to a US industry. The second part is the countervailing investigation, also known as a subsidy investigation. We’ve given the Commerce Department more than 2,000 pages of evidence demonstrating that the Chinese government is heavily subsidizing the solar industry in China and that those subsidies are injuring the competing US industry as a result.
How do those subsidies by the Chinese government differ from the federal funding Solyndra received from the US government, which we’ve heard so much about?
Solyndra is not covered by this case. The company makes a different type of solar panel that is not covered, so we see it as not relevant to the case. Solyndra received some loan guarantees in the hundreds of millions of dollars. Anyone who is concerned about that should be even more outraged by what the Chinese government is doing. We have documented in our petition Chinese loans and loan guarantees of billions of dollars to single companies, and more than $40 billion to the Chinese industry as a whole. Moreover, the rules of international trade say that subsidies are illegal when they encourage exports, because that distorts the market, or when they injure a competing industry. The United States, when it provides incentives, is not encouraging US producers to injure other industries around the world. By contrast, China has an extremely small domestic solar market. More than 90 percent of China’s production is exported, so those subsidies very quickly become injurious.
Solyndra has cited the competition from cheap solar products from China as a reason it could not survive. Doesn’t that connect it to these investigations?
I think that the Chinese competition has harmed all sectors of the solar industry, including probably the thin film companies like Solyndra, as well as the more-traditional crystalline silicon companies that we represent. The evidence of harm is very strong: Chinese imports have increased by more than 350 percent, causing prices to drop by 30 to 40 percent in the past year, which is highly unusual. The industry is lowering its costs every year, it’s becoming more efficient, but a price decline of 30 to 40 percent is unprecedented. And in the past two years, seven US solar manufacturers have closed, gone bankrupt, or laid off workers.
So what is your goal in bringing these investigations?
The goal is to ensure that the US industry is able to compete against Chinese imports by eliminating these unfair trade practices in China. The important thing about this case is that the US solar market is just now getting to the point where solar energy costs are roughly equivalent to other energy costs, like fossil fuels. The reason why China’s behavior is particularly harmful is that it is looking to take away the US market at the very point where the growing use of solar energy should be leading to expansion, new investment, and thousands of new jobs in the United States.
There are seven companies who belong to the coalition that you’re representing, but only one, SolarWorld Industries America, is named. Why did the other six want to remain anonymous?
They have serious concerns about retaliation in the marketplace. That’s exactly why the Commerce Department allows these companies to remain confidential when they make trade allegations against another country. Some of these companies may want to try selling in other markets, or they’re competing against these Chinese companies, and they’re very concerned about what would happen if they publicly identified themselves. Even so, we think that some will become public in the days and weeks ahead.
How did you and your firm get involved in this?
Senator Ron Wyden of Oregon has a strong interest in this case. His office knew about the trade practice at Wiley Rein and recommended us. We then made our best case to SolarWorld. We went out to visit them and learn about their manufacturing, and explained how the trade laws could potentially help them—and SolarWorld decided to hire us.
If Commerce and the ITC agree with you that China has been dumping solar products and stop it from continuing to do so, won’t this drive up the cost of solar energy in the US?
No. The industry has been decreasing its costs every year, so the trade case would just return pricing to levels that are fairly traded.
Since some solar panels shipped here from China are assembled by American workers, could this put American jobs at risk?
There are only a small number of assembly operations in the United States that are based on using Chinese solar cells. If their business plans are based on using dumped and subsidized merchandise, that’s not viable for the long term, anyway. It would be much better to have a strong US manufacturing industry that makes these products from start to finish.
What comes next in these cases?
Trade remedy cases move fairly quickly—about one year from start to finish. In 45 days the ITC will make a preliminary determination of whether the US industry has been injured by the Chinese imports; then within six months the Commerce Department will calculate preliminary dumping margins or tariffs and start collecting those additional duties at the border. After 12 months, there will be final determinations by both agencies.