Import Tariffs Imposition On Chinese Solar Panels Divides Canadian Solar Inc.,Industry Analysts Among Others

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Handful of Canadian solar companies support imposition of import tariffs on undercut Chinese solar panels, but industry analysts and Canadian Solar Inc, in particular, stand divided.

A majority of Canadian solar manufactures had given their approval to the Canada Border Services Agency (CBSA)’s preliminary ruling which set the stage  to slap import tariffs slapped on cheaply subsidized imported Chinese solar panels(although the tariff set is preliminary pending the final decision from the Canadian International Trade Tribunal, due in four months’ time),especially as China scrambles to find new markets from their saturated Chinese solar panel market amidst slowing growth back home. But industry analysts and in particular Canadian Solar Inc have warned of the negative impact that will hit Canada’s shift to renewable energy.

The four Ontario based companies that filed the complaints, namely Clipsal Energy Corp., Helene Inc., Sulfa Ontario Inc. and Solgate Inc. Claim that unfair competition from subsidized Chinese solar panels is already putting pressure on already thin margins and loss in market share, hence the imposition in tariffs was warranted based on the negative effects on their business.

But these companies only represent a drop in the ocean. Companies like Eco Alternative Energy in Sharbot Lake, Ontario argue that tariff imposition will only increase the cost of solar panels being available in the market and it will be left with no choice but to pass on the cost to the consumers, who in turn, may not be incentivized to install solar panels on their homes. Chris Stern, a consultant to the renewable energy, also echoes that statement, pointing out that a similar action has also resulted in a rise in price of solar panels in the US market, preventing more jobs being created, since solar installation provides more jobs that solar panel manufacturing itself.

TO GO WITH: China-US-energy-solar-trade,

But amongst the most prominent to speak out against the measure is Canadian Solar Inc,though privately, the company stands divided on this issue, as it manufacturers solar panels not only in Canada but also in China as well. On the one hand, whilst its imported Chinese manufactured solar panel will be hit with a 174% duty, but it’s locally made panels, which account for 90% of sales, won’t be affected.

Nevertheless,Canadian Solar Inc.(NASDAQ:CSIQ) CEO Shawn Qu believes that the imposition of tariffs will impact solar panel businesses badly.Authorities are not focusing on the bigger picture as they believe that imposition of tariffs is warranted based on the fact that the goods being produced are sold below the cost of production. In some cases that’s not true. In some cases, the cheaper panels sold from China is simply cause there is too much supply from the Chinese side, and even if the cost of freight is taken into account, it still is relatively cheap. Moreover the economy is on a slowdown there, and plus the cost of production is high, so that must have been factored in too. On top of that, most Chinese solar panels are private owners, so there is no chance of any involvement from the state.

Since the tariffs imposed are preliminary, it does not mean that they cannot be overturned.Unless the Chinese exporters, as well as some Canadian companies who have manufacturing facilities in China are able to present their case, and solidly prove that they do charge on market prices and based on economic fundamentals there, there is a strong chance that it can be overruled. Four months is a long time to do that, plus the added advantage that most stake holders oppose the measures, implemented based on a few whims in the market that aren’t competitive enough.

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