- - Tuesday, November 22, 2011


“If only this wasn’t about a green industry.”

That’s what I kept thinking while slogging through the briefs recently filed with federal authorities in connection with charges that Chinese solar-cell firms are driving American rivals out of business with floods of illegally subsidized, predatorily priced imports.

After all, the Solyndra controversy is tarring green manufacturing as a whole as a stronghold of crony capitalism.

Yet for decades, practices like those documented in the new solar-cell trade complaint have been plaguing practically every U.S. industry facing foreign competition, stealing jobs and output and stunting the entire sector’s growth. And nowadays these transgressions loom especially large, because they keep undermining American growth and employment, and because only a manufacturing-led recovery can cure the structural ills of a finance- and housing-addicted economy.

The circumstances described by the U.S.-based solar-cell plaintiffs have become especially familiar ever since Washington decided to expand trade and investment indiscriminately with China, whose economic policies resemble free-market competition the way chess resembles modern combat, and which continually funds its commercial war chest with the ill-gotten gains of pervasive and largely unchallenged market-rigging.

Indeed, SolarWorld - a German-owned company with extensive U.S. manufacturing operations - and the more than 140 other U.S.-based solar firms supporting its complaint, aren’t actually competing against a Chinese industry as Americans use that word. They’re competing against the vast resources of the Chinese government.

Beijing has targeted the type of solar cells made by SolarWorld as a prime engine of future Chinese growth, innovation and, ultimately, national power. Unconcerned about the profit considerations that both drive and constrain genuinely private enterprise, it has by most accounts spent literally tens of billions of dollars building the industry.

And realizing their home market’s limits, China’s jobs-obsessed leaders decided to maximize employment in this capital-intensive industry (where labor costs mean little) with the huge production volumes needed to swamp much bigger export markets - like America’s.

The results (which experience has made all too predictable): Skyrocketing Chinese solar-cell exports to the United States, and consequent plunges in panel prices to levels unachievable by genuinely free enterprises. Moreover, the American solar industry’s public support is dwarfed by China’s programs, and it includes the patchwork of modest federal and state solar-usage incentives that benefit imported equipment, too.

Thus, domestic producers of such cells could maintain sales even in a booming market only by slashing prices below the break-even point. As SolarWorld Industries America President Gordon Brinser has explained, “The more product we sell, the more money we lose … .”

If its trade-law complaint prevails, tariffs will be imposed to offset the Chinese subsidies and artificially low selling prices. The Chinese defendants and solar-cell-consuming American interests complain that such levies will needlessly raise solar-power prices and thereby slow a needed national transition to renewable fuels.

The decision to investigate SolarWorld’s claims signals some awareness in Washington that America’s Middle East oil dependence shouldn’t be exchanged for Chinese solar-equipment dependence. The folly of concentrating ever more green manufacturing production in pollution-happy China seems increasingly clear as well.

Yet even though the U.S. solar industry has suffered major losses, its complaint could take months to decide. Moreover, for all its importance, China is hardly the only market-rigging U.S. trade competitor. Despite Americans’ common conceit about capitalism’s post-Cold War supremacy, government subsidization and the dumping it finances are how much international business is now conducted.

That is, hundreds of billions of dollars’ worth of U.S. industrial production employing millions of Americans year in and out face essentially the same threats as the solar companies. Ensuring their future, and the U.S. economic health they foster, will undoubtedly require responses more comprehensive and proactive than the piecemeal approach being tested in the solar-cell case.

Alan Tonelson is a research fellow at the U.S. Business and Industry Council, a national business organization whose nearly 2,000 members are mainly small- and medium-sized domestic manufacturers. The author of “The Race to the Bottom,” Mr. Tonelson also is a contributor to the council’s website, www.AmericanEconomicAlert.org.

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