Information Technology Agreement Already Covering Solar Panels

Suntech founder Zhengrong Shi writes in the Financial Times about the recent solar panel trade disputes.

He objects to the idea of anti-dumping duties. And he calls for a “Clean Technology Agreement” modeled after the WTO “Information Technology Agreement” to get rid off these anti-dumping cases, citing a March 2012 proposal by Matthew J. Slaughter.

I am all for the idea of a “Clean Technology Agreement”. The Information Technology Agreement has been a success. And there is an urgent need to spread renewable energy even faster to counter climate change.

However, I have two problems with Shi’s proposal.

For one, if one looks closely at the Information Technology Agreement, as published at the WTO website, I fail to understand why solar panels should not be already covered by that existing text.

It says in Attachment A, Section 1, which lists the products covered:

8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light­emitting diodes; mounted piezo­electric crystals:

“Including photovoltaic cells whether or not assembled in modules or made up into panels.”

That sure sounds like solar panels are already covered to me. So Suntech would not need to wait until some “Clean Technology Agreement” or other gets adopted. They could rely on the already existing IT Agreement instead.

The other problem is that the IT Agreement only requires eliminating all customs duties. That does not mean that anti-dumping duties or subsidy countervailing duties are eliminated as well.

For instance, in the dispute between Japan and Korea about subsidies for DRAM chips (DS 336) Japan was not violating the IT agreement because it objected to subsidies. Dumping and illegal subsidies are unfair trade practices, and they are so even when the customs duties for some product or other are already down to zero.

One could of course imagine a “Clean Technology Agreement” that eliminates anti-dumping and subsidy countervailing duties as well, giving everybody in this particular sector the right to ignore the WTO rules on dumping and subsidies.

I don’t think there is much of a chance that such an agreement would be adopted. And I don’t think there is any need for it.

Zhengrong Shi writes:

Just like vehicles, TVs or iPhones, solar panel costs have steadily declined because of global competition.

That is the way it should be. Global competition should be enough to bring down prices. There is no need to allow dumping and illegal subsidies in the sector.

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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