The World Trade Organisation (WTO) says that the USA violated global trade rules when it imposed tariffs on solar panels imported from China.
The ruling was made by the WTO in response to a complaint made in 2012 by China after the US government imposed countervailing duties on solar panels as well as wind turbine towers and other products manufactured in the Asian country.
A WTO panel found that the USA's actions amounted to illegal protection of its own solar panel producers. China has called on the US government to adapt its measures in line with WTO rules.
In response to the ruling, The Chinese government issued a statement saying, "China urges the US to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises."
The ruling is the latest development in the long-running trade spat between the US and China, which began in 2012 when SolarWorld issued a complaint that Chinese solar firms were "dumping" products on the US market to gain market share. SolarWorld, and several other solar panel manufacturers, believed that the Chinese firms were receiving subsidies that enabled them to sell their products at below-cost prices. The US government investigated the claims and imposed duties on Chinese goods.
The ruling could be subject to an appeal, and prompted several responses from the solar sector. Thomas Koerner, General Manager of Canadian Solar's Americas division said that the WTO's ruling made sense. "The imposition of countervailing and potential anti-dumping duties is not only disruptive to a fair trade business environment but also damaging to an industry which seeks to support the United States' commitment to renewable energy deployment and sustainable development.
"We urge the government of the United States to reevaluate its preliminary determination of countervailing duties and the misguided trade dispute at large, in order to uphold the universal values of free trade and competitiveness which have fostered the environment in which we've witnessed consistent growth, year after year."
Coalition for Affordable Solar Energy (CASE) President Jigar Shah said: "The World Trade Organization's announcement is a step in the right direction and we applaud the 14 governments' efforts to reduce tariffs and lower the barriers for trade of environmental goods, including solar products.
"While we would welcome a broad trade agreement on environmental goods, it does not address the current countervailing duty and anti-dumping solar trade cases at the Department of Commerce. Policymakers must not lose sight of the immediate harm to the American solar industry caused by new preliminary countervailing duties, which are raising module prices by 14 per cent, jeopardizing projects across the country and slowing job growth."
Sian Crampsie
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