May 18, 2012
-- by Dave Johnson
Which is better for an economy: millions of future jobs and trillions of future dollars, or a few people making a quick buck today by selling out their country? For decades America's 1%-backed conservatives have chosen the latter course, and we can see the results all around us. Now the Obama administration has imposed stiff tariffs on Chinese solar panels because China was "dumping" -- selling below cost -- to drive American manufacturers out of business. Will conservatives support their country and our companies or will they continue to side with our country's competitors?
US Imposes Stiff Tariffs
The Commerce Department yesterday concluded that Chinese solar panel companies are “dumping” product – selling below the cost of production – into the US market, and imposed stiff tariffs. NY Times, U.S. Slaps High Tariffs on Chinese Solar Panels,
The United States on Thursday announced the imposition of antidumping tariffs of more than 31 percent on solar panels from China.
... The antidumping decision is among the biggest in American history, covering one of the largest and fastest-growing categories of imports from China, the world’s largest exporter.
Industry Of The Future
Again and again technology revolutions come along and disrupt economies. Countries that jump on new technologies are the countries that win the industries and jobs and revenue. This is how the United States became the world power that it
is was. Railroads, steel, automobiles, airplanes, electronics, semiconductors, computers, the Internet, pharmaceuticals, biotech and software are a few examples. And in every case our government helped these new industries get off the ground. When these industries took root the payoff was enormous.
Green energy is one such technology of the future. Producing solar panels, wind turbines, etc. will bring millions and millions of jobs and trillions of dollars, and several countries are competing to win a share of this new industry.
China is fighting hard for those jobs and dollars. They are being smart and they are also pushing past the limits of the rules. From the NY Times story,
Alan Price, a partner who heads the international trade practice at Wiley Rein, the law firm representing the United States companies in both the solar and wind cases, said that China posed a particular threat to America’s developing green energy sector.
“China’s method is straightforward: it sets forth industry-specific Five-Year Plans and then uses all forms of national and local subsidies and other governmental support to quickly transfer jobs, supply chains, intellectual property and wealth, to the permanent detriment of U.S. and global manufacturers,” he said. “China’s ability to ramp up and overwhelm an industry is unique and particularly devastating with new and emerging technologies, where global competitors may be less established and can be knocked out more easily and quickly.”
To compete for a share of this new industry we need to be proactive. We need national efforts to develop the industrial commons, or ecosystem, that will foster green-tech industries. We also need government policies that promote a market for these products until they take hold, just as our defense industry did for aircraft and other new technologies. And we need to enforce the rules for international economic competition, which is what has happened with the tariff decision.
Decision Not Political
The NY Times story points out that this was not a political decision by the Obama administration,
The American decision was made by civil servants in a quasi-judicial process that is heavily insulated by law from political interference and does not represent a deliberate attempt by the Obama administration to confront China on trade policy. But that distinction has been largely lost in China, where the solar panel issue has been one of many causes embraced online by the country’s vociferous ultranationalists, who put heavy pressure on Chinese officials to respond forcefully to perceived snubs to China.
The rules say that if a country is dumping, then we must impost tariffs. The Commerce Department investigated and concluded that China has been dumping so they had no choice. If we do not enforce trade rules, they are meaningless and countries that cheat gain an advantage, driving out the honest players. That is how cheating, accountability and enforcement work. (Hint: this also applies to banking fraud laws.)
In the case of solar-panel tariffs, we were losing companies and jobs and facing losing the possibility of losing the entire industry to China. From Tariffs On Chinese Solar Might Help Prevent The Next Solyndra,
You have probably heard about a solar-energy company named Solyndra, but probably what you have heard is a bunch of negative, conspiratorial, anti-alternative-energy, anti-Obama stuff from the corporate/conservative spin machine. The real story is that our government is trying to help us capture some of the new green energy industry that will create the jobs of the future. But China is, too. And China doubled down, and then quadrupled down on government support. They even directly subsidize their companies so their products cost less. This helped put Solyndra out of business. But the Obama administration is doing something about it.
China cheats, and we don't usually do anything about it. They let companies pollute, don't do much about worker safety, pay low wages, and make people work long hours. So-called "free trade" lets companies cost us more than 50,000 factories in the Bush years, and millions of jobs. And it empowers companies here to tell their workers to shut up and behave and accept wage and benefit cuts, or they'll send their jobs to China, too. We continue to just let China take jobs, factories and industries because powerful interests, like Wall Street, make tons of money off of it.
So the decision is made, our country is engaging in the economic war that has been underway against us. Will our country's conservative take our country's side?
Solyndra, Chevy Volt And The Anti-Green Propaganda Campaign
They have used the failure of solar-panel manufacturer Solyndra -- partly due to Chinese dumping -- to paint green tech in general as a bad investment. They have even tried to turn the public against the Chevy Volt, claiming that it "ran out of juice in the Lincoln Tunnel" when it actually just kicked over to the gas-engine charger, and that the car is "flammable" because on test battery got too hot -- as compared to cars that run on gasoline! (Gasoline car-fire data at the link.)
These anti-dumping tariffs change the dynamics of this oil-backed anti-green campaign. Now when conservatives slam Solyndra or the Chevy Volt and otherwise join in this anti-green-energy campaign they are taking China’s side against American companies at a time when the country is engaged in economic conflict. This presents a tough choice to the conservative movement, do they continue to accept oil and coal company funding and side against their country and support China, or will they return to their pro-American roots and side with their country in a time of conflict.
Installers Hit Hard?
Low prices from trade-cheaters are always attractive. But if we want a slice of the jobs, factories, industries and economy of the future we have to fight back when our competitors cheat.
The solar-installer industry is worried they will be hit hard by this because prices for solar panels could increase sharply. BusinessWeek: U.S. Solar Tariffs on Chinese Cells May Boost Prices,
The tariffs “will increase solar electricity prices in the U.S. precisely at the moment solar power is becoming competitive with fossil fuel generated electricity,” Shah said in a statement. “This new artificial tax will undermine the success of the U.S. solar industry.”
[. . .] The U.S. decision to impose import duties on Chinese solar panels will raise their price to $1.11 per watt, according to calculations by Bloomberg New Energy Finance, a London-based researcher owned by Bloomberg LP. That price is 17 percent higher than the current spot price of non-Chinese panels.
On Thursday, the U.S. Commerce Department issued a preliminary decision levying steep tariffs against Chinese solar manufacturers, finding they illegally dumped cheap photovoltaic cells on the American market. But the companies that install those solar panels on residential and commercial rooftops – and which have benefited from a 75% plunge in photovoltaic prices in recent years – are split over the impact of the tariffs on their burgeoning business.
The government could remedy the impact on domestic customers and installers several ways, including:
- by using the new tariffs to fund tax credits and other incentives that help homeowners and businesses make the move to solar power,
- by imposing a large "carbon tax" that is refunded on a per-capita basis. This would mean high users of carbon-based fuels would pay in, the revenue is divided up evenly to everyone over 21 and paid out with a monthly check, and people could use this money to both cover their own added energy expenses and to purchase solar and other alternative energy products to lower their carbon-energy footprint,
- and by setting a national renewable energy standard, requiring power producers to use a certain percentage of solar, wind and other alternatives, creating more of a market for green tech.
Oil And Coal And "Buggy-Whip" Technologies
Of course the oil and coal companies will continue to fight this shift from their "buggy-whip" technology, and will use their tremendous influence over our government to try to hold off the inevitable. But the tide is shifting. The fact that China is fighting so hard and putting so much investment into this sector shows its value to the world economy in the future. The fact that our government is responding shows that we have a chance to win a share of the jobs and revenue that green tech promises to bring.
Posted by Dave Johnson at May 18, 2012 2:47 PM
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