US may use tariffs to protect domestic solar cell makers

In a move that may have direct repercussions for India, the United States has launched an investigation into imports of photovoltaic or solar cells to determine if they pose a threat to American industry.

The US has notified the other 163 members of the World Trade Organisation that it is considering putting emergency "safeguard" tariffs on imported solar cells, according to a WTO filing.

"The United States notified the WTO´s Committee on Safeguards that it initiated on May 17, 2017, a safeguard investigation on crystalline silicon photovoltaic cells," the WTO said in a statement on Monday.

This decision followed a request by Suniva Inc, an American manufacturer of solar cells, the United States said in a document sent to the WTO.

Photovoltaic cells are used to convert sunlight into electricity, for example in solar panels.

"A safeguard investigation seeks to determine whether increased imports of a product are causing, or threatening to cause, serious injury to a domestic industry," the WTO statement said.

If that is found to be the case then a WTO member may restrict imports of a product "temporarily", the trade body said. It added that during the probe, importers, exporters and other interested parties would be able to present evidence and views on the matter.

The move raises the stakes in a global battle to dominate the solar power industry, which has grown explosively in the past five years. As production has increased, prices have tumbled, favouring producers who can take advantage of economies of scale.

The United States, China and India are vying to be the market leader, and are looking out for any perceived breach of the international trade rules by their rivals.

Last September, the WTO ruled that India was illegally discriminating against US solar exports, while India launched its own WTO complaint about solar subsidies in eight US states.

The United States' ability to attract renewable energy investment has been adversely affected by the shift in energy policy under US President Donald Trump to favour conventional energy, putting China and India on top in the solar business, a report by British accountancy firm Ernst & Young said earlier this month.

The US decision to consider safeguard tariffs follows a petition to the US International Trade Commission (ITC) by Suniva, the filing said. The ITC will decide by 22 September whether the US industry has suffered "serious injury", and if that is the case it will submit its report to the Trump administration by 13 November, the filing said.

Suniva's petition said the volume of imports rose by 51.6 per cent between 2012 and 2016, while the value of those imports grew by 62.8 per cent from $5.1 billion to $8.3 billion.

"The petition alleges that increasing imports have taken market share from domestic producers and have led to bankruptcies, plant shutdowns, layoffs, and a severe deterioration of the financial performance of the domestic industry," the US filing said.