Protectionism in the age of solar cells

The Trump administration has annouced its intention to slap some tariffs on products mostly coming from S. Korea and China. In certain corners of the economic world, this is a major story—mostly because it flies in the face of neoliberalism's first commandment—Thou shall not condone protectionism!

As two guys who are serious students of industrialization in general and USA industrialization in particular, Tony and I are pretty supportive of some sort of economic protectionism. Tony's approach is very straight-forward—he looks at the historical record and sees that every nation that successfully industrialized did it behind tariff walls.

My take is that because the financial markets are hopelessly corrupt, shortsighted, and technologically illiterate, they are unable to properly value the infrastructure of industrialization. When financialization first started, there were a few protests at the ability of real scoundrels to seize and then cash in on assets they rarely understood, who in the process of their plunder, squandered a system of wealth creation that had taken decades to create. They pissed away USA's industrial crown jewels for a tiny fraction of what they were worth with their get-rich-quick schemes. These protests probably crested with Oliver Stone's movie Wall Street—an effort so excellent, I suspect Stone didn't even know how good it was.

Along with the plunder came the justifications for why this did not matter. Around here, these loony economic expressions for how the world should work, but doesn't, are lumped under the garbage pile we call neoliberalism. And in the world of the neoliberals, there is no greater sin than "protectionism." Yet here we are with a president who believes that tariffs and such are probably a good thing. He's about 30 years too late, but he seems to think USA industry should be protected. One other thing, the Asians have been about as brazen in their theft of intellectual property as anyone—including USA from GB. The Chinese were caught red-handed dumping solar panels. The party injured by this was actually Germany but a couple of USA manufacturers won some settlement with the Chinese. Ironically, both USA victims are foreign-owned—one German, one Chinese.

I have included four essays on this subject after the break:

1. The Asians seem to think this is a major shift in USA trade policy. My guess is that they will figure out ways to adjust to new market realities.
2. Lindorff seems to think these tough new trade rules are a manifestation of an unhappy empire that wants to slap around China and Korea for the crime of wanting a different foreign policy than the folks from Foggy Bottom.
3. Reuters, which always believes protectionism is a bad thing, argues that tariffs on solar panels will most hurt the solar panel installers.
4. The folks at Rolling Stone just assume this is Trump's way of throwing some roadblocks in the way of new green technologies.

All of these folks have a point. And we will probably hear a lot more on this subject. This is a protectionist proposal in a neoliberal world—a world with thousand of economists well-trained and motivated towards shooting this thing down. As someone who participated in the debate over NAFTA, I am very interested to see how this debate will differ.

Asia fears solar panel, washing machine tariffs just the start for tough-on-trade Trump

Ju-min Park and Hyunjoo Jin, Reuters, 23JAN2018

South Korea and China protested against President Donald Trump putting steep import tariffs on washing machines and solar pannels, and they fear it could be the start of more protectionism. Trump campaigned on balancing US trade with other nations, but has yet to do much in terms of tariffs until now.

SEOUL (Reuters) - South Korea and China protested on Tuesday against U.S. President Donald Trump slapping steep import tariffs on washing machines and solar panels in a move that stirred fears in Asia of more protectionist measures coming out of Washington.

For all his rhetoric to win votes, Trump's actions on trade during his first year had been less alarming than many outside the country had feared - until now.

"It shows that the U.S. administration, after taking its time, it's now indeed starting to roll out measures restricting trade with the idea of living up to the promises made during the electoral campaign," said Louis Kuijs, head of Asia economics at global consultancy Oxford Economics, in Hong Kong.

"This could very well be just one step of many," said Kuijs, predicting steel and aluminum imports could be on Washington's target list.

The United States' stance has put a cloud over global trade at a time when its revival has fueled hopes for a stronger world economy. But, at least, economists believe the United States will avoid taking measures that could impact U.S. companies global supply chains, particularly for cars and electronics.

The tariffs on washing machines, meantime, have dealt a heavy blow to South Korea's Samsung Electronics and LG Electronics.

Together they ship between 2.5 million to 3 million washing machines annually to the United States, with sales of around $1 billion, and they hold a quarter of a U.S. market that has been dominated by Whirlpool and General Electric Co .

South Korea's trade minister Kim Hyun-chong said the new U.S. tariffs violated World Trade Organisation rules.

"The United States has opted for measures that put political considerations ahead of international standards," Kim told a meeting of industry officials.

"The government will actively respond to the spread of protectionist measures to defend national interests."

China, the world's biggest solar panel producer branded the move an "overreaction" that would harm the global trade environment for affected products.

"The U.S.'s decision ... is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this," Wang Hejun, the head of the commerce ministry's Trade Remedy and Investigation Bureau, said in a statement on its microblog.

"China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous U.S. decision."

Mexico said it would use legal means to ensure Washington met international obligations, pointing to compensation envisaged under the North American Free Trade Agreement.

India has recently re-opened a U.S. dispute, alleging Washington has failed to comply with a ruling on solar power.

Vietnam has also challenged U.S. anti-dumping measures against exports of fish fillets, according to a WTO filing.

"Security and trade linked"

The decisions in the two "Section 201" safeguard cases for washing machines and solar cells came after the U.S. International Trade Commission (ITC) found that imported products were "a substantial cause of serious injury to domestic manufacturers."

The tariffs on washing machines exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for.

Trump ignored a recommendation from the ITC to exclude South Korean-produced washing machines from LG from the tariffs.

Washington will impose a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on additional imports. The tariffs decline to 16 percent and 40 percent respectively in the third year.

A 30 percent tariff will be imposed on imported solar cells and modules in the first year, with the tariffs declining to 15 percent by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.

"After a year's preparation, Trump is ready to take action to address the huge trade deficit with China and get even," said Zhang Yi, chief economist at Capital Securities in Beijing.

"Last year, we thought nothing would happen, but now China should not have any illusion about it. If the U.S is using Section 201 to hit you, they will hit hard," Zhang added.

Some analysts in Seoul believed Trump was intensifying pressure on its Asian ally to rely more on him when dealing with North Korea, while gaining leverage renegotiating a bilateral free trade pact that Trump has previously labeled as "horrible."

"Security and trade are linked to each other under Trump," said Choi Won-mog, an international trade law expert at Ewha University.

A filing published by the WTO on Jan. 12 showed Seoul had already asked for authorization to impose annual trade sanctions worth at least $711 million on the United States, in response to the dispute over washing machines.

South Korea also asked for permission to impose an open-ended amount of trade sanctions if Washington broke the same rules again with regard to other products.

Seoul has already demanded compensation because the United States had failed to meet a Dec. 26 deadline to comply with a ruling against duties of up to 82 percent it had earlier imposed on appliances made by Samsung Electronics, LG Electronics and Daewoo Electronics.

Both Samsung Electronics and LG Electronics expressed concern over U.S. tariffs, saying they would hurt American consumers and jobs.

LG Electronics shares ended up 0.5 percent after an earlier plunge, while Samsung Electronics was up 1.9 percent in line with the South Korean market's 1.4 percent gain. more

South Korea Slips Off the US Leash

by DAVE LINDORFF, JANUARY 23, 2018

The mainstream US media, when it comes to the idea of talks between the governments of North and South Korea, are focused on the idea that North Korean leader Kim Jong-un is trying to drive a wedge between the Republic of Korea and the United States. No doubt that is true, but this focus misses a major part of the story.

What we’re really seeing here is South Korean President Moon Jae-in making a bold move to assert South Korea’s independence from the United States.

Nobody should be surprised that Moon, who was swept into power thanks to a surge of voters (he won by 41.1% against two conservative parties which received 24% and 21.1%) last year on a promise to reach out to North Korea and attempt to bring the two warring halves of the Korean Peninsula (they are still technically in a state of war that began in 1950, nearly 68 years ago) back together.

Taking the seeming baby step that he has taken of inviting North Korea to compete in the Winter Olympics being held next month in South Korea might seem like a small thing, but it was actually a bold step for Moon. What most Americans don’t know is that South Korea is technically a kind of colony of the US, given that its military is still under the control of the United States. This is thanks to a UN Security Resolution passed in 1950 authorizing a UN military action against the North and designating the US as the lead authority of the UN operation — a controlling role that the US still clings to.

That situation explains the bizzare warning given about North/South two-party-only negotiations by former Obama-era US State Department Assistant Secretary for East Asian and Pacific Affairs David R. Russell, who is quoted in a Jan. 3, 2018 article in the New York Times by Mark Landler as revealingly saying, “It is fine for the South Koreans to take the lead, but if they don’t have the US behind them, they won’t get far with North Korea…And if the South Koreans are viewed as running off the leash [my emphasis], it will exacerbate tensions within the alliance.”

Imagine US diplomats telling NATO allies UK, Germany or France not to “run off the leash” in bilateral discussions say, with Russia! Sure, they too are on a leash to some extent, but nobody associated with the US State Department, would ever stick it in their faces like that.

Leo Chang Soon, a Korean-American historian and author of an important history of US and Korea, whose father faced an assassination threat for standing up, as vice president, to Korean dictator Rhee, “South Korea has been under the US leash since Syngman Rhee flew into Korea on General Douglas MacArthur’s plane to become the first president of South Korea (ROK) on September 2, 1945.”

In his must-read history of the US role in the Korean War and the subsequent neo-colonial control over South Korea titled Reflections on the Roots of US Involvement in Korea (Levellers Press, 2013), Chang writes:

Even a US general, the late Richard G. Stilwell, commented that the degree of operational control enjoyed since July 1950 by the United States in Korea is “the most remarkable concession of sovereignty in the entire world.”

Chang says that last year’s impeachment of conservative Korean President Park Geun-hye, the daughter of former South Korean dictator Park Chung-hee, in the face of massive protests known as the “candle movement” against her corruption and links to the giant South Korean chaebol industrial conglomerates, and the subsequent election of the liberal Moon, an advocate of rapprochement with the north and of a more independent relationship with the United States has “fundamentally changed the character of political dynamics in South Korea for years to come.”

Understandably, the US, used to running the show in South Korea, is not amused. Ignoring the opening between north and south, the US organized a meeting of allies in Vancouver, Canada called a “North Korea summit.” Invited were representatives of all 15 of the nations — like France, the UK and South Africa — that joined with the US in the “UN” military action against North Korea and its allies, China and USSR in the Korean War. Pointedly not invited to the meeting were either China or Russia, nations that would obviously have to play key roles in any peaceful settlement of the current Korean crisis. Both those countries blasted the conference as a sham.

The last thing the US government wants is the eventual unification of the two Koreas, which would inevitably wind up being a neutral nation under the influence of its two largest neighbors, China and Russia. As Chang notes, an end to the Korean War and the possibility of further hostilities on the Korean peninsula would be a huge blow to the US arms industry. South Korea buys billions of dollars worth of US arms every year, and also serves as a base for US troops and naval vessels, and now also for anti-missile systems that can target both China and Russia. All of this would be lost in the event of Korean unification, or even of an end to hostilities between North and South.

While the US government is doing its utmost to frighten Americans about the supposed capability of North Korea to hit US cities with its nuclear-tipped missiles, South Koreans, whose country would be devastated once again by a war between the North and the US, as it was by the Korean War in the early 1950s, when millions died, mostly from an incomprehensibly huge and brutal US bombing campaign, particularly of North Korea, but of the South Korea, too, seem confident it won’t happen again. While there are right-wingers in the South who hate and fear the North and oppose reunification, most South Koreans understand that North Korea’s nuclear program is about preventing a US invasion aimed at regime change, not at trying to attack the US or South Korea. There is tremendous anger and antipathy in South Korea — and among Korean-Americans in the US — at Trump’s name calling and threats to erase North Korea in a US nuclear attack on that long-suffering nation. Many have relatives who live in the north, and also remember the ruthlessness of America’s military in the ‘50s. Many Koreans also still recall that the US military oversaw the killing of some 100,000 Korean leftist and nationalists in the south after the war during the US occupation, and that Washington US generals in Korea okayed the slaughter of hundreds of students during an uprising in the South Korean city of Gwangju in 1980.

Some leaders in the US, notably Rep. Tulsi Gabbard (D-Hawaii), have spoken out against Trump’s threats. Gabbard, a major in the Army Reserve who served in Iraq, has even gone so far as to explain that North Korea’s nuclear weapons are clearly meant as a defense against the threat of US “regime-change” efforts, and has also said that US government attempts to demand denuclearization of North Korea as a precondition for peace talks are futile.

She is right. Kim Jong-un has seen how the US dealt with Muamar Ghaddifi in Libya, once he gave up nuclear weapons, and with Saddam Hussein, who had none, and sees possession of credibly deliverable nuclear bombs as his best bet for staving off US military action against his regime.

There is also the reality that China is not going to allow the US to gain control over North Korea, which would put US troops on its border. It was the threat of that happening back in 1950 that led a much weaker China, just a year after its forces had won their long revolution and taken power in Beijing, to join the battle on North Korea’s side when Gen. Douglas’s forces appeared likely to crush the North Korean army.

The situation in Korea is unprecedented at this point. The Democratic Peoples Republic of Korea (the North) now has as many as 20 nuclear weapons, including hydrogen bombs, that can probably reach the US mainland on North Korean missiles. Meanwhile, the Republic of Korea in the south is showing signs of shaking off at least some of the control the US has long exercised over its relations with the North. At the same time, under President Trump, behind all the bluster the US is pulling back from its prior efforts to behave as the world’s “lone superpower,” and is being forced by a resurgent Russia and a China that is both a dominant economic and an increasingly potent military rival, to recognize the limits of US military and economic power.

Since there really is no way the US can simply have its way militarily against a nuclear-armed North Korea, at some point the US is going to have to either negotiate with the DPRK, or let South Korea do it, with the four or more surrounding powers, China, Russia, Japan and the US, playing supporting roles.

The sooner the US recognizes that reality the better. more

Job creator, or job killer? Trump angers solar installers with panel tariff

Ayesha Rascoe, Nichola Groom, JANUARY 22, 2018

WASHINGTON/LOS ANGELES (Reuters) - U.S. President Donald Trump signed into law a steep tariff on imported solar panels on Tuesday, a move billed as a way to protect American jobs but which the solar industry said would lead to thousands of layoffs and raise consumer prices.

The 30 percent tariff on solar panels is among the first unilateral trade restrictions imposed by the administration as part of a broader protectionist agenda to help U.S. manufacturers, but which has alarmed Asian trading partners that produce lower cost goods. The administration also introduced a tariff on imported washing machines.

“You’re going to have people getting jobs again and we’re going to make our own product again. It’s been a long time,” Trump said as he signed the order.

But the solar industry countered that the move will raise the cost of installing panels, quash billions of dollars of investment, and kill tens of thousands of jobs, raising questions about whether Trump’s move will backfire by triggering mass layoffs.

“We are not happy with this decision,” said Abigail Ross Hopper, president of the U.S. Solar Energy Industries Association, on a conference call with reporters on Tuesday. “It’s just basic economics - if you raise the price of a product it’s going to decrease demand for that product.”

The leading solar trade group predicted that the tariffs could cut forecasted solar installations this year by nearly 20 percent, to 9 gigawatts from 11 gigawatts, and lead to the loss of 23,000 jobs in the United States, the world’s fourth-largest solar market after China, Japan and Germany.

Research firm Wood Mackenzie estimated that over the next five years the tariffs would reduce U.S. solar installation growth by 10 to 15 percent.

The U.S. solar industry employs more than 260,000 workers - about five times more than the coal industry - with the vast majority involved in installation rather than panel manufacturing.

U.S. Republican Senator John McCain of Arizona, a big solar power producing state, said in a Twitter post that the tariffs amount to “nothing more than a tax on consumers.”

The main beneficiaries include U.S.-based solar manufacturers Suniva and SolarWorld - both controlled by foreign parent companies. They petitioned for the trade relief arguing they could not compete with the cheap imports that have caused panel prices to fall more than 30 percent since 2016 and asked for the equivalent of a 50 percent tariff.

Suniva on Monday said the tariffs were “necessary,” while SolarWorld said it was “hopeful they will be enough.”

Bankrupt Suniva is majority-owned by Hong Kong-based Shunfeng International Clean Energy, and SolarWorld is the U.S. arm of Germany’s SolarWorld AG.

Shunfeng rose 2.6 percent after the announcement and SolarWorld was up 22 percent.

Other U.S. solar stocks were mixed. SunPower Corp, which manufactures panels in Asia, was down more than 6 percent and residential installer SunRun Inc. was up about 6 percent. The tariffs were broadly in line with investor expectations, creating some relief in the market, analysts said.

Both SunPower and Sunrun said they disagreed with the decision to impose tariffs.

WINNERS AND LOSERS

Research firm CFRA said it expects the tariffs to increase solar system prices by about $0.10 per watt. It reckons First Solar, a U.S. company with offshore panel manufacturing whose technology is not included in the tariff, would be the biggest beneficiary, while China manufacturers such as JinkoSolar would be the biggest losers.

Globally, solar capacity soared to almost 400 GW last year from under 10 GW in 2007, according to the International Renewable Energy Administration.

China, the world’s biggest solar panel producer, branded the move an “overreaction” that would harm the global trade environment for affected products.

“The U.S.’s decision ... is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” Wang Hejun, the head of the commerce ministry’s Trade Remedy and Investigation Bureau, said in a statement on its microblog.

“China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous U.S. decision.”

South Korea’s trade minister Kim Hyun-chong said the new U.S. tariffs violated World Trade Organization (WTO) rules.

“The United States has opted for measures that put political considerations ahead of international standards,” Kim told a meeting of industry officials. “The government will actively respond to the spread of protectionist measures to defend national interests.”

Trump dismissed the prospect of a trade war and said during the signing that “a lot of manufacturers” will come to the United States to build solar plants.

CFRA analyst Angelo Zino said he expected any added manufacturing jobs would be “minimal” given the 18 months to two years it takes to build and ramp up a new production facility and the industry’s shift toward automation. more

Trump's Tax on Solar Power: Here's What You Need to Know

How the 30 percent tax on imported panels is likely to kill jobs and boost America's reliance on coal

By Tim Dickinson, 24JAN2018

President Donald Trump has imposed a 30 percent tax on imported solar panels, a move that's expected to pull the plug on tens of thousands of American jobs, while slowing the rush to renewable energy and rewarding fossil-fuel producers. Here's what you need to know:

The technology exists to combat climate change – what will it take to get our leaders to act?

America First?

The solar tax announcement came down Monday from the Office of the U.S. Trade Representative – during the government shutdown – followed by a quiet White House signing ceremony Tuesday. Solar manufacturers in the U.S. had been "decimated" by unfair trade, Trump said, arguing the new tax means "those companies will be coming back strong."

The lack of fanfare was from the White House was curious. Taxing solar imports is one of the first concrete implementations of Trump's "America First" trade agenda. And Trump himself had been badgering senior staff to, "Bring me some tariffs!"

But taxing solar panel imports is not a clear political victory for the president – underscoring the reality that U.S. trade policy is far more complex than Trump's bumper-sticker sloganeering. "It boggles my mind that this president – any president, really – would voluntarily choose to damage one of the fastest-growing segments of our economy," Tony Clifford, chief development officer of Standard Solar, a leading installer, told reporters. "This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries."

American Plants, Foreign Owners

The solar trade dispute came to a head last year, when two distressed companies that manufacture solar panels in the United States filed a trade complaint to the U.S. International Trade Commission (ITC), an independent federal agency. The flood of cheap solar panels produced by Chinese-owned solar firms across Asia, the companies argued, had unfairly undercut their businesses.

Suniva and Solar World were not wrong about solar panel dumping: The ITC ruled, unanimously, that the companies had been harmed by low-cost imports, and recommended in October that tariffs be imposed. Under U.S. trade law, the ITC's recommendation is non-binding. The final decision to impose an import tax fell to the president himself – leading to Monday's decision.

At first glance, Trump appeared to have been given a golden political opportunity to protect American manufacturers and U.S. jobs. But the big picture is far muddier: Despite manufacturing in the United States, the two companies at the heart of the trade dispute are not American. Suniva, which operates in Georgia, is Chinese owned. Solar World, producing in Oregon, is a German concern. Both operations are highly automated – employing only hundreds of Americans. And both have been kept afloat by large taxpayer subsidies – about which Republicans have long cried foul.

The Solar Boom

If the flood of cheap imported panels harmed a few domestic manufacturers, the same imports created a much greater solar boom in America. Solar energy has become cost-competitive with coal. It is now being adopted even in red states that lack renewable energy mandates – purely on the economics. Florida Power & Light, for example, recently announced it has shuttered an aging coal plant in favor of four new solar farms, featuring more than 1 million panels combined.

The solar industry today employs 260,000 Americans – more thantwice the number of jobs in the coal industry – including in unexpected places like Mississippi and Alabama. That total covers more than 38,000 American manufacturing jobs, for workers who make "racking" equipment needed to mount solar panels or high-tech inverters required to integrate solar power to the electrical grid.

Trump's "Lose-Lose" Decision

Trump's solar tariff lasts four years. It starts with a 30 percent tax on imported solar panels in the first year. The tax drops by five percentage points each year afterward. (The decision also allows the first 2.5 gigawatts of imported panels to enter America, tax free – or about a fifth of what the U.S. imported in 2016.)

Trump's tariff numbers left many in the industry scratching their heads. The tax was lower than what the ITC had advised (up to 35 percent) and the tax-free exemption was more than double ITC's recommendation. MJ Shiao, a top solar analyst for GTM Research, said that many will see the decision as a "lose-lose": It will slow solar deployment in America without guaranteeing a future for domestic solar panel manufacturing. (Despite their ostensible victory, both Solar World and Suniva were tepid in their endorsement of Trump's decision. They had been seeking an import tax of 50 percent.)

A Victory for Coal

In fact, the biggest winner from Trump's decision appears to be a party that wasn't involved in the trade case at all: The fossil-fuel industry. According to GTM, Trump's tariff will block 7.6 gigawatts of solar from being installed through 2022 — roughly twice what's currently installed in Arizona — primarily by deterring utilities from building new solar farms. In turn, this will extend reliance on older, more polluting generations like coal-fired power plants.

Clean Gigawatts and Jobs Squandered

Trump's solar tax will cost 23,000 jobs this year, according to the Solar Energy Industries Association, and ultimately prevent 1.2 million homes from being powered by solar. "This case will not keep foreign-owned Suniva and SolarWorld afloat," argued Abigail Ross Hopper, the solar trade group's CEO. But it will, she added, "create a crisis in a part of our economy that has been thriving" and "ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs."

Ironically, Trump's decision hits workers in "new and emerging state solar markets" in red America hardest, "with southern states like Texas, Florida, and South Carolina among the most impacted by the tariffs," according to GTM.

Trump's decision to tax solar power is seen as a betrayal by solar advocates who supported his candidacy. Debbie Dooley is one of the founders of the Tea Party, and was an ardent Trump supporter. ("Tears of joy started falling from heaven right after Trump was sworn in. #MAGA," she tweeted during the inauguration.)

Dooley is also a solar activist who runs the "Green Tea Coalition," which promotes solar power as part of a "freedom" agenda. "I strongly oppose this horrible decision," Dooley tells Rolling Stone, "because it is going to cause many Americans employed by the solar industry to lose their jobs, many of whom are veterans." While Dooley says she is "very disappointed" in Trump, she remains committed to the solar fight: "The future," she insists, "is in renewable technology." more