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Asia-Pacific Business Tariffs on Chinese solar panels may hurt Canadian renewables industry

Last Thursday, the Canada Border Services Agency (CBSA) issued a preliminary ruling that cheap subsidized solar modules are being dumped into Canada from China. The agency set stiff provisional import duties to protect Canadian panel manufacturers. A final decision on any tariffs, to be made by the Canadian International Trade Tribunal, is expected in about four months.

Canadian Solar Inc.

New import tariffs on Chinese-made solar panels threaten to dent enthusiasm for solar power and slow the shift to renewable energy in Canada, some industry players warn.

A decision last week to impose duties on Chinese imports was hailed as a victory for Canadian solar panel manufacturers, but it is raising concerns that prices will spike, pushing up the costs of installation and depressing demand.

Last Thursday, the Canada Border Services Agency (CBSA) issued a preliminary ruling that cheap subsidized solar modules are being dumped into Canada from China. The agency set stiff provisional import duties to protect Canadian panel manufacturers. A final decision on any tariffs, to be made by the Canadian International Trade Tribunal, is expected in about four months.

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"The tariffs are the biggest step backwards Canada has made in the past 10 years towards replacing fossil fuels with renewables," said Dave Egles, president of HES Home Energy Solutions Inc., a Victoria, B.C.-based distributor of solar systems and other electrical products. He said the tariffs will cause a price increase of at least 10 per cent to his customers – firms that install solar panels. That will cause fewer people to install projects, which would have helped reduce greenhouse gas emissions, he said.

While the tariffs are designed to protect Canadian solar panel manufacturers – four of whom initiated the federal review by complaining about cut-rate Chinese panels – the damage to employment will outweigh any gains, Mr. Egles said. As many as 5,000 solar installers and ancillary workers could be out of work in the coming year, he said.

Ron Kortekaas, the owner of solar installation firm Eco Alternative Energy in Sharbot Lake, Ont., said the new tariffs will undoubtedly increase his costs, because he buys imported Chinese panels. Those higher costs will be passed on to customers, so "it will probably put a dent in our sales," he said.

The Ontario-based panel manufacturing companies that initially complained Eclipsall Energy Corp., Heliene Inc., Silfab Ontario Inc. and Solgate Inc. – say unfair competition from dumped Chinese panels means they are losing sales and market share, putting them under pressure to cut prices at a time when margins are already thin.

Heliene president Martin Pochtaruk said the preliminary CBSA ruling "is a positive step in the right direction to level the playing field in terms of competition." He also noted that several other countries – including the United States – have found that Chinese solar panels were dumped into their markets, and have put in place punitive tariffs.

Chris Stern, a former executive at North America-wide solar installer Pure Energies who is now a consultant to the industry, said similar U.S. tariffs have pushed up prices for consumers in that country. The Canadian duties will prevent "more jobs from being created as fewer people will be inclined to install solar," Mr. Stern said, noting that the installation business generates far more employment than panel manufacturing.

One key company in the sector – Guelph, Ont.-based Canadian Solar Inc. – is in an unusual position on both sides of the issue; it manufactures panels in Canada, as well as in China. Panels imported from Canadian Solar's Chinese plants will be hit with a 174-per-cent duty under the provisional ruling. Its Canadian-made panels, which make up more than 90 per cent of its sales in this country, will not be hit.

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Canadian Solar chief executive officer Shawn Qu said in an e-mail that the CBSA decision is "unfortunate," and that his company supports free trade. He said his firm's panel plants in Guelph and London, Ont., "have proven that we can be competitive with our 'Made in Canada' products."

Mr. Qu said he thinks the imposition of the tariffs could slow development of solar projects in Canada.

Thomas Koerner, general manager for the Americas at Canadian Solar, said the company has a global supply chain and "we don't believe any trade limitation is helpful in providing affordable renewable energy."

One problem, Mr. Koerner said, is that dumping is not defined as selling below the actual cost of the imported product, but as selling below the local manufacturer's cost structure. A company can be accused of dumping just because "you are able to produce [panels] somewhere else significantly cheaper, and the local manufacturers cannot," he said.

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