In March, the Commerce Department announced that it would be investigating Chinese solar firms suspected of illegally dumping low-cost panels onto the international market. Some of the same companies are also suspected of employing Uyghur forced labor in making their products. That announcement has gotten pushback from even President Joe Biden’s close allies, who worry that new tariffs on Chinese solar imports will harm the U.S. solar industry. Ryan gets Senator Elizabeth Warren’s thoughts on the trade war, then talks with Lori Wallach, director of Rethink Trade at the American Economic Liberties Project.
Ryan Grim: There’s something of a solar power boom underway in the United States: 2022 will likely be a record year for new solar projects, and tax credits and state renewable energy requirements have been big reasons for that expansion.
Newscaster: The industry is booming. Solar jobs increased 167 percent over the last decade, and now employs more than one-quarter million American workers.
RG: And what could really unleash the clean energy boom are the subsidies included in the bill that was known as Build Back Better.
Hundreds of billions of dollars worth of private capital are sitting on the sidelines looking for a return on clean energy investments. But, for now, they need public subsidies to make the numbers work, given that they’re taking on a heavily subsidized and entrenched fossil fuel industry.
Democrats in the Senate, though, have recently begun to express optimism that a new deal might actually be pretty close. A few weeks ago, we closely analyzed Senator Joe Manchin’s comments about a looming energy bargain at an oil industry conference, and this week he appeared on a panel at the World Economic Forum in Davos. I wanna play his entire answer to a key question here, because, in between the lines, you can see where this might wind up.
Zanny Minton Beddoes: Sen. Manchin, I’m going to turn to you, because you are, for obvious reasons, absolutely central to any progress being made on President Biden’s domestic agenda.
Question one: Do you think any other legislation, meaningful legislation, will get passed before the midterms?
Sen. Joe Manchin: First of all, we oughta look at what we’ve been able to accomplish so far, which has been tremendous — and in a bipartisan way. Everyone overlooks that, thinking we haven’t done anything. President Biden has had more success than most any president in the first term. We should agree to that.
Next of all: Yes, I do. I believe there’s an opportunity, there’s a responsibility and opportunity, that we can do something. First of all, inflation is harming every person in America. So we should be looking at getting our financial house in order, paying down our debt, we should be looking at, also, our drug pricing. There’s no reason in the world why we can’t negotiate for Medicare having better pricing, and also for different types of medicines, especially whether it be for diabetes and things of this sort that they need for insulin, that that should be something that’s life-saving and very affordable.
ZMB: And —
JM: Next of all, the third thing is going to be energy and climate. The United States of America has an abundant supply of natural gas and oil. And we can use our fossil [fuels], and the cleanest technology humanly possible, to make sure that we are reliable, and we have security. If you have that, then we’re going to be able to replace some of the more polluting energy in the world and help backfill all of EU. We have the ability to go down two paths: a passive investing in something, a technology that’s going to be needed for the transition that will happen, but eliminating one. And, for the other one, that’s the European model that Germany followed, it wasn’t successful. We should not repeat that.
The United States has the ability to be an energy leader and also a supporter of our allies around the world that are having problems right now.
ZMB: So just to be clear: To those people outside the United States who worry that the ambitious climate agenda of the President hasn’t really gone very far, you’re saying that there will be progress?
JM: We have done an awful lot and that’s not cracked, what we have done already in the bipartisan infrastructure bill. That’s more than it’s ever been done. And we have so much more that we can do. But you can’t do it by abandoning the fossil industry that gives us the ability to have reliability, and security — not just for our nation, but what the world is needing today, all of our allies and friends. You can’t abandon that.
And right now we have a little bit of a discussion going on —
JM: — of which way this is going to go. But if we’re going to spend hundreds of billions of dollars investing in the new technology that’s going to be needed for the transition of a carbon-free or carbonless environment and an energy sector, then you have to be able to make sure that can intersect and take care of this. You can’t replace one until you have something to replace it with.
RG: Also, can we linger for a moment on the fact that Manchin doesn’t just hold the future of American clean energy development in his hands, but since what America does influences everyone else, the entire world has to ask this senator from West Virginia for permission to move forward?
And speaking of tiny state senators, Chris Coons, from Delaware, who’s a close ally of Biden’s, followed Manchin up by talking about the need to think strategically when it comes to energy independence.
Now, that phrase has long been code for drilling for more oil and drilling more natural gas, but as the world transitions to clean energy, the term is taking on new meaning.
Today, it also means having access to the raw materials needed to make solar panels, and batteries, and wind turbines, and so on, as well as the manufacturing capacity to make all of that — neither of which the U.S. currently has at scale.
Manchin responded this way:
JM: Putin has weaponized energy. And I’m concerned that China could do the same with critical elements of minerals.
The North American continent has the ability to be the energy juggernaut of the world. If we have Canada, the United States, and Mexico, with the amount of critical minerals that we have deposits in those three countries on one continent working together seamlessly, we will absolutely reduce our dependency on Asia, on China, right now, who does 80 percent of the processing, has a total control — almost a monopoly, if you will — on the critical elements that we need.
We can’t move into electric vehicles being dependent on foreign supply chains. The United States, that’s not who we are. That’s not how we became who we are.
RG: In other words, saving the planet from a climate apocalypse might not be enough to get American political elites to deal with the crisis. But put it in terms they understand: great power, competition, geopolitics, empire, and all of a sudden it starts to seem like it’s worth doing.
Of course, the U.S. doesn’t do its global strategy without input from multinational corporations, and if you live in the Washington, D.C. area you’ve noticed that our city has been plastered with ads from a coalition saying that it represents the American solar industry pressuring the Biden administration.
The campaign is in reference to a Commerce Department announcement back in March announced that it would be investigating Asian solar firms to determine whether they were in violation of rules against “dumping” — that is, dropping huge amounts of illegally subsidized, low-cost solar equipment into the international market in a way that could harm domestic solar production in the U.S.
They’re also investigating whether Chinese companies are circumventing duties by pretending that they are being produced somewhere else, which is an issue for a number of reasons, but one of them is the use of Uyghur forced labor — Western China, with its large Uyghur population, is a hub for solar panel production.
The investigation has exposed a tension between the clean energy installation boom on one hand, and the longterm question on the other of whether China will be able to lock in its monopoly on the critical components of the clean energy industry. That’s the point Manchin was making, and he’s not wrong.
And not for nothing: China has built this monopoly by burning cheap, dirty coal to produce the components for the clean energy industry, which is nobody’s idea of actually doing something about climate change.
The lobbying campaign is having an impact. Here’s Sen. Tom Carper of Delaware, another close Biden ally:
Sen. Tom Carper: The Commerce Department’s investigation threatens to hamstring one of the strongest weapons in our fight: clean, renewable energy. The prospect of as much as a 250 percent — 250 percent — tariff on solar products will have an immediate, disastrous impact on a leading renewable energy source for our nation. Effectively, we would be punishing the very green industry that’s helping to lead the charge to curb emissions and further reduce our nation’s reliance on fossil fuels.
Now, earlier this week I spoke with Sen. Elizabeth Warren about the Commerce Department probe, and her view was 180 degrees from Sen. Tom Carper’s.
Sen. Elizabeth Warren: We need to have a solar industry here at home. If the pandemic showed us nothing else, it demonstrated how fragile supply chains and offshoring basic manufacturing threatens our security. Tariffs are a part of making certain that we have a manufacturing base here in America. It needs to be done carefully and with the right targets.
But the point of American trade policy should not simply be to maximize the profits of a handful of giant corporations. It should be to produce goods that we need here in the U.S. so that we have more resilient supply chains and good union jobs in this country.
RG: When it comes to trade policy, arguably the most influential voice among progressives belongs to Lori Wallach, who spent years at Public Citizen doing trade policy and is now the director of the Rethink Trade program at the American Economic Liberties Project.
Lori, welcome to the show.
Lori Wallach: Thank you very much for inviting me.
RG: So, to start, the U.S., as I understand it, actually kind of invented solar panels back in like the 1950s and was making progress over the next couple of decades in developing actual manufacturing capacity here in the United States. So what happened?
LW: So you’re spot on. The United States, not only did, but currently leads the world in solar technology innovation. But, as with so many things that we create, the production of them ended up shifted offshore.
And today, 80 percent of the world’s solar panels are made in China, an even larger share of this silicon wafer, which is the building block for the panels, but also for microchips, are made in China and actually in the part of China where there’s a lot of Uyghur forced labor, which is very problematic.
How it happened is a combination of targeted subsidies on all aspects of production, the building of new coal-fired — irony — plants to create free energy, to melt the sand and make the silicon, and various predatory trade practices like dumping, selling stuff below the actual cost to produce even with the subsidies. And there’s also some knocking off of U.S. technology along the way.
So, at this point, China has kind of cornered the market through a lot of trade cheating, and the U.S. production is almost totally wiped out.
RG: And so right now, there’s this big public fight that has been characterized as kind of between the solar industry and the Biden administration. But how would you frame it? How would you describe who the different players are that are fighting here?
LW: So, back in 2012, during the Obama administration, there was a trade case where various struggling U.S. producers —because there still are some — filed what’s called a trade law case. And under these U.S. laws, you get an investigation, that is basically an independent agency, the United States International Trade Commission, does a study to try and figure out if the reason the U.S. industry is getting clobbered is because of various forms of trade cheating, like those subsidies and other tricks.
And in 2012, tariffs were imposed to basically counteract the trade cheating and the subsidies in China. And there was some hope that that would bring the U.S. industry back to life, because as we’ve learned the hard way during this pandemic, we need lots of different supply chains. We can’t have just one source. We need redundancy, otherwise, we end up with shortages, price hikes, etc.
But, a bunch of these Chinese companies that were subject to these penalties for trade cheating, which basically takes the thumb off the scale, it just makes it equal to what the actual real cost of production would be, so that the U.S. firms could compete, those firms picked up and move their production largely to four other Asian countries: Malaysia, Vietnam, Thailand, and Cambodia. And so now, this fight is about companies, largely Chinese firms, that are operating in those countries who are trying to, it’s called, circumvent the trade cheating order by dumping the stuff that is still with lots of Chinese company imports into the United States. And it’s basically a fight between whether we will have a domestic solar green energy manufacturing sector, which we need for climate goals, we need for our own reliability of the supply chain, we want for working people to have good, clean, green energy jobs, who are going to be coming out of coal and other kinds of employment. And the fight is basically whether the U.S. trade cheating laws are going to be applied so that we can actually grow that domestic industry.
And the odd thing is the actual fight — all of this press, all of this public relations — is coming over thing called the Solar Energy Industries Association, SEIA, and that is actually the companies that install the great big utility-sized installations of solar — it’s not the folks who are up on your roof deck — and it’s the financiers. Because when they do these huge projects — they are billion-dollar projects. So it’s not your local neighborhood solar installation company, its mass project installers and then, ironically, it’s a bunch of the Chinese manufacturers for our in this company that is claiming somehow it is not in the U.S.’s interest to start making it here.
RG: And so these installers are now saying: Hey, we have these gigantic projects that are basically financed, they’re permitted, they are ready to go, and now we can’t get parts coming in from China or through Southeast Asia from China, wherever they’re actually originating from or going through. And so we can’t build.
So what is actually going on here? Because I’ve seen some reporting that yes, this is true, that these companies are — and perhaps for political reasons — holding back shipments. But I also have seen some reporting that actually Europe is just outbidding the United States because, for obvious reasons, Europe is now moving with great haste towards a clean energy economy, because they’re basically trying to get off of Russian gas as quickly as possible.
So what is going on? Is it true that there are solar projects that were about to get ribbon-cut, and now they’re not happening?
LW: So both things are true, which is to say because we have such a monopoly problem, where 80 percent of the supply is coming from Chinese companies in those four other Asian countries, when the U.S. government accepted, agreed to do an investigation, to actually find out if this circumvention business was happening, basically Chinese firms who are evading the original trade fairness ruling, the companies basically cut off the U.S. suppliers. And because we don’t make enough here, because it’s not made enough anyplace else in the world, they have that monopoly power to be able to do that.
And then the second thing that happened is maybe it was all political, but also it became much more lucrative to be able to ship that stuff to Europe, where the price being paid for the same equipment is almost double what it was before the Russian invasion of Ukraine, because the Europeans are very keen to become less reliant on Russian energy. So it is super-profitable, politically possible because of the monopoly that we need this trade investigation to bus stop so we can have domestic production, and the underlying result is: yes, there probably are some big installations for utilities, that is now hard to get this supply.
The problem is, unless we actually break that monopoly and end the trade-cheating so we can actually have a robust industry here — and, by the way, other countries are doing the same thing. We’re not the only ones who’ve been slammed by this. Unless that happens, we will be perpetually in this situation at the mercy of a handful of companies, which, by the way, just for my friends who are very worried about what this means for solar, we don’t want to be reliant on a situation where not only is there a handful of sources, but the stuff is being made with forced labor out of Uyghur, effectively concentration camps, and the silicon is being made in coal fired plants. So that when you actually get the solar panel, you’d have to be using it for longer than it’s going to last to get even with the fact that you’ve got this energy source that’s coal-fired high carbon. So it is, sort of in every ground, a situation we have to break.
RG: So how often have Chinese industries done this before?
LW: This has been a pattern that has repeated over, and over, and over, where unless the U.S. actually rigorously enforces its trade laws to stop — it’s called countervailing. You add the price that is being cheated on in the country that is dumping stuff below the cost of production, or you make up the difference in the subsidy, so that the price of the good coming into the U.S. actually reflects what it would cost to make it there, if all this cheating wasn’t done. It’s not based on what it cost to make it here, by the way. But what it would cost to make it there without cheating.
And what’s interesting is, despite all the hysteria and hype from the Solar Energy Industries Association, it turns out that actually the companies are sort of the best players. So there’s one called Canadian Solar. It is operating in China, even though it’s called Canadian Solar. That company’s penalty is only a 13 percent penalty. Because if you listen to the Solar Energy Industries Association, listen to the big installers and financiers, they say, oh my god, there’ll be 250 percent tariffs, everything will shut down. Uh uh.
If you’re not actually doing outrageous stuff, which Canadian Solar was not, it’s 13 percent. And that’s basically countervailing against the subsidies. Now if you are a company, like one that’s called All China Solar, which has 200 percent penalty from 2012, that is because you are are cheating in every possible way; you are basically owned by the Chinese government, you are not paying for energy, for real estate, you have your workers subsidized, you have your silicon subsidized, you’re getting free sand, which is the component that goes into actually making the wafer, the base ingredient. And you basically have to break every dang rule, and then some — you’re using Uyghur slave labor in the production, so you’re not paying, because people are in forced labor in concentration camps. That’s what it takes to get the 200 percent that they’re now running around saying it’s gonna happen.
In fact, 13 percent for Canadian Solar, this is the real, actual government decision that is in place now; a bunch of other companies 20 percent, you really have to break the rules to get the crazy rates. But 13 percent or 20 percent? That just makes it fair, so that a U.S. company just doesn’t get literally cheated out of potential competition.
RG: It sounds like the premium that Europe is paying now is much higher than those, let’s say it’s 13 percent or 20 percent, that you get a duty slapped onto these Chinese panels coming in. Seems like that’s actually less than you’re gonna pay over what you were paying last year anyway, because of Europe. Is that right? Or would it be on top of that?
LW: Well, here’s the other thing that folks should know if they’re as worried about climate as I am: The circumvention penalty, if there is circumvention that’s found, because, let’s be clear, this whole tempest in a teacup is about a government study. There are no tariffs about to be imposed. The hysteria has gotten caused by a government investigation being started. [Laughs.] So if the investigation finds, again, technically it gets called “circumvention,” sneaking around basically using these other countries to bring in stuff that is under penalty, then if that is found, then the way they do the actual tariff is not on the entire good, it’s only on the percentage of the value of the input that’s been circumvented.
So, let’s just say, in Malaysia or in Vietnam, 50 percent of the value is created by the assembly, by the metal frames, by whatever, and 50 percent of the value is coming from the silicon chips or the wafers or whatever is the particular piece that’s actually being shipped in from China, then the penalty is only on that percentage. So it is a windfall profit for these companies to break their contracts with the U.S. firms and go sell in Europe right now. Because the penalty is not necessarily going to end up being prohibited.
But there is no penalty! This is literally an investigation. So at this moment, there is no reason but to make a bigger profit to stop selling this stuff here and ship it to Europe.
RG: And so there was recently an announcement from a, correct me if I’m wrong, South Korean solar manufacturing company that operates out of Georgia, that they’re going to be heavily investing in expanding production in the United States. Do you have any sense of whether that was in response to these trade moves being made by the Biden administration?
LW: I think it is exactly the instance of showing how it works when trade law is properly enforced. So the Korean firm already had a plant in Georgia, and they announced a huge investment to expand it enormously. And they, in their announcement, basically said given various developments in the supply chain, they were going to make a lot more solar equipment here.
And so what are those developments? Number one: This investigation. But the other thing that’s going on is at the end of June, all products made with Uyghur forced labor, all products coming from the part of China where these concentration camps are located, will be banned from entering the U.S. unless a company can prove that there is no forced labor involved. So this is the Uyghur Forced Labor Act. It was passed by Congress last year. It goes into effect in a month. And under that law, the presumption is if a good is coming from that part of China where all of the solar equipment is made, then you have to prove it’s not forced labor.
So, already, these companies who would be subject to the circumvention investigation, the Chinese companies who are a part of this: U.S. solar energy industries, installers, financiers, and the Chinese Manufacturers’ Association. Those guys already know, come June, they could be in trouble because they know where their sourcing is; they could be bringing in goods that will now be banned.
Because the argument the Industry Association is making is: There’s so much uncertainty, that’s what’s causing this disruption. Well, there’s no uncertainty. Number one: The companies know if they’re circumventing or not, because they know where their stuff is coming from. And if they’re bringing in stuff that’s subject to trade cheating rules, and they are then assembling it in another country, they know they’re circumventing and they can know what the penalty is, because they know what the underlying penalty is, which will be the penalty charged on whatever percentage of their good is comprised of the stuff that’s under tariff. [Laughs.] Number two: They know, come the end of June, they either need to have a clean supply chain, or their stuff is going to get impounded. So it is both an attack on this investigation of trade cheating, and it’s an attack on enforcement of our trade laws. But also, it’s basically a sideways protest of what will be a ban on Uyghur forced labor goods. And this is all to pressurize the Biden administration to basically not enforce our trade laws, not enforce labor rights, not enforce human rights. And it’s a false paradigm. It’s a false choice. It’s not an either/or. We need to have this domestic manufacturing for our climate goals.
RG: And, speaking of China’s strategy, have you read Rush Doshi’s book from last year, “The Long Game”?
LW: I have not read it in detail. I have looked at it. Honestly, it scared me so desperately in the first several chapters, I have to take it in small doses.
RG: [Laughs.] It is frightening in a lot of ways. But in the book, the full title is “The Long Game: China’s Grand Strategy to Displace American Order.” And Doshi now, I think, works in the Biden administration. But what I really took away from this book was China’s unique ability, compared to us, to actually kind of set strategy and then implement it, [and] that may end up being an advantage — it may be a disadvantage if they set the wrong strategy and execute the wrong strategy. But we don’t seem to have a kind of parallel ability to do that: either to kind of set a strategy because the whipsawing of elections, but also, we can’t really implement it, because private interest groups in our country have played such a bigger role in our public policymaking than they do in China, for instance.
And this is an interesting example that this trade policy might end up being the right one, but the way it’s come about — I’m hoping you can explain a little bit about how it came about — is just so kind of perfectly like American in the way that our system works now. It’s like: One of these solar companies went into bankruptcy and a creditor came in, backed by a vulture fund, that basically took it over and then used the company to start threatening Chinese companies that they would file one of these petitions, one of these trade petitions, unless they got paid a $55 million fee. Basically a ransom: You pay us and we won’t go forward with this petition anymore, because that didn’t get paid, and so now they’re going forward with this petition. The petition might be great. But the way it came about, it just seems like this is just no way to run a country.
So what’s your understanding of how this all even came about?
LW: Yeah. I’m not 100 percent clear that is the story behind this petition. So there was a petition by six companies last year. Again, the same thing, circumvention, and the core theme of it was that they all [knew] that they would get attacked if they filed a petition. So they basically did it anonymously. And the Commerce Department ended up dismissing that case, because the companies wouldn’t reveal, basically, their names and they all thought they would be attacked.
So one company named Oxen has now refiled. They were among those six. And that company is the company that is the name holder. And now they’re getting attacked left and right for all kinds of things with basically the Solar Energy Industries Association doing a very big dollar public relations and lobbying campaign, with few people understanding that this is ostensibly in the New York Times. It’s called the U.S. Solar Energy Industries Association, but it’s Chinese manufacturers in its membership. So Jinko Solar, JA Solar, Trina Solar, BYD, Long Ge Solar, Canadian Solar, these Chinese manufacturing firms are all members, with the industrial installers, with the financiers of the industrial solar installations business. And so it’s that sort of collective of Chinese manufacturers, financiers, and installers who are protesting one of the beleaguered U..S manufacturers actually trying to get labor law enforced.
RG: So what would it take? And you could tell in Washington when these coalitions come together, because they start advertising in places like Politico Playbook and Axios and going for these, like real insider publications, this extremely expensive kind of real estate, getting right in front of members of Congress, but let’s say that the Biden administration pushes ahead with this, what what would it actually take, in reality, to actually launch solar manufacturing again in the United States?
LW: So we can take, basically, the lesson from the Korean firm now announcing they’re going to invest in a lot more production domestically. We need to enforce our trade laws. So we stop imports that are made by cheating — so made with subsidies from governments; made using forced labor; made with very high carbon costs — we don’t want to have solar panels made from dirty coal-fired energy.
And we also have to have, domestically, the tax policies that create incentives to invest in manufacturing here. There were incentives. They have run out, those incentives are now jammed up in a part of the package that is stuck in the Senate. So stopping imports that would destroy, crush, U.S. companies operating fairly, in the tax policies, right?
And then part of the Biden administration’s supply-chain review is in advanced material. So we need to be making this polysilicon wafer to be able to have domestic microchip production, not just domestic solar production. And doing the tax policies properly is obviously a key part of it, as well as enforcing the trade laws. But also there are ways in which developed countries, for instance, Germany’s great at it, have actually coordinated industrial policies, which is what this supply chain review is talking about, to get the money behind domestic research, to coordinate different government agencies, to actually facilitate the creation of the resilience we need. I mean, we need this as a climate outcome. And we need this as an economic outcome.
RG: So where does this go from here? Like how does this fight resolve?
LW: It would be a disaster for climate, for human rights and labor rights, for the future of U.S. manufacturing resilience, for our own clean energy equipment, if the Biden administration reacted to this big corporate lobbying campaign and, as a result, allowed a flood of Uyghur forced labor, coal-fired, plant-made solar panels from China. That would continue to crush domestic manufacturing.
So hopefully, they are going to do the independent investigation as U.S. law requires since 1930, they are going to get the findings about whether or not these violations have occurred, and if they are, they are going to impose the penalties to equalize the playing field while also prioritizing the U.S. tax and industrial policies to make sure that while we’re making sure that imports aren’t crushing domestic production, we are also incentivizing — affirmatively — investment, in both makings the polysilicon which we need to have our domestic microchip industry as well as solar industry, but also making the actual solar equipment here.
And not just for here. We need around the world, different regions, different countries, being able to get into this business so that we can have the green energy revolution we need to save the planet. It’s not just for us; this has to happen worldwide. But we have to start here by simply enforcing our labor and trade rules.
RG: Well, Lori, thank you so much for joining me.
LW: Thank you guys. I am sorry that I have to hop.
[End credits theme.]
RG: That was Lori Wallach, and that’s our show.
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