In the 1800s, a satirical “Petition from the Makers of Candles, Lanterns, and Generally Everything Connected with Lighting” to the French Parliament requested relief from unfair competition they faced from the sun. Candlemakers wanted the government to require “the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses.”
That is essentially the same argument two U.S. solar panel manufacturers just used to secure new import taxes of up to 30 percent from the federal government. The twist is that it is not free sunlight they sought relief from, but affordable imports that allow millions of Americans to harness the power of the sun.
Two struggling companies that manufacture solar components in the U.S., Suniva and SolarWorld, asked the government to restrict imports from competing companies. Their petition was submitted to the U.S. International Trade Commission for review.
Under Section 201 of the decades-old Trade Act of 1974, the ITC was only able to consider the impact of imports on competing U.S. producers, without regard to the overall national economic interest. This is like a jury trial where only one side is allowed to present their case, with entirely predictable results.
This solar case pitted manufacturers Suniva, whose main shareholder is Hong Kong’s Shunfeng International Clean Energy, and SolarWorld, whose primary investors are from Germany and Qatar, against a broad array of U.S. companies that produce and install solar goods. These companies, many of which are American-owned, would be significantly harmed by higher prices. Although they were allowed to submit comments to the ITC, the agency was not able to consider how they might be injured by new trade barriers.
This dispute provides fresh evidence for President Ronald Reagan’s observation that protectionist trade policies pit one American worker against another, one industry against another, and one community against another.
The Trump administration has made it clear that it wants to boost manufacturing jobs. But in general, U.S. law doesn’t allow the ITC to consider the impact of imports on nationwide employment when considering requests for new import restrictions.
That can have dire consequences for U.S. workers. As the National Electrical Contractors Association explained to the ITC, “The number of Americans employed in the manufacturing of solar panels is dwarfed by the number employed in installing those panels.”
That’s particularly relevant given U.S. Trade Representative Robert Lighthizer’s assertion that “the Trump Administration will always defend American workers, farmers, ranchers, and businesses” while announcing job-killing taxes of up to 30 percent on imported solar modules.
Don’t tell that to U.S solar installers or to U.S. workers at struggling retailer Sears and prospective employees of pending new LG and Samsung factories in Tennessee and South Carolina who, along with the solar industry, also face punitive new job-killing trade restrictions.
Ironically, bankrupt Suniva and SolarWorld rely on imported components to manufacture in the U.S. According to its bankruptcy filing, Suniva owes millions of dollars to Chinese companies including Guangzhou Ruxing Technology, Jiangxi Haoan Energy Technology, Cniec Shaanxi Corporation, Asia Union Electronic Chemical Corp, and other global suppliers.
Apparently Suniva supports the use of imported products for itself, but not for its competitors. It’s no wonder a solar broker in California called Suniva “big stinking hypocrites.” This duplicity was on full display when Suniva’s executive vice president took to the pages of the Washington Post to make his case, claiming “we did it right” when it came to staying competitive in the American marketplace.
Because the government provides a whopping 30 percent tax credit for the installation of solar energy systems, a big chunk of increased costs generated by the new trade restrictions will be paid for by the federal government.
That doesn’t seem like an “America First” policy.
Since the ITC was prohibited from considering the overall impact of imports on the national interest, it wasn’t too surprising when the agency recently found that Suniva and SolarWorld are being injured by imports and recommended restrictions on imported solar goods to help them, on top of the millions of dollars in government subsidies they already have received.
The main beneficiaries of new solar taxes and restrictions on imported washing machines are likely to be trade lawyers and lobbyists seeking to win similar benefits for their clients. Companies that can’t win in the marketplace may now have a new opportunity to win special treatment from the government. If that outcome materializes, Americans can kiss #DrainTheSwamp goodbye.
Bryan Riley (@Riley4Freedom) is director of the National Taxpayer Union’s Free Trade Initiative.
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