Solar panels produced by Solarworld AG are seen located in a field near to the company's plant in Freiberg, Germany, on Wednesday, June 12, 2013. Solarworld AG is among companies battling competition mainly from China that pushed solar panel prices down about 20 percent last year after slumping by half in 2011. Photographer: Krisztian Bocsi/Bloomberg

Washington / Los Angeles - The Us took a step on Friday towards potentially extending import duties on Chinese solar energy products to also cover panels made with parts from Taiwan in a case that could have a major impact on the fast-growing American solar market.

The US International Trade Commission (ITC) found there was reason to think the imports could harm the local solar industry, putting Washington on a path towards widening the reach of the steep duties it slapped on products from China in 2012 and potentially escalating a tit-for-tat trade spat.

The US arm of German solar manufacturer SolarWorld had complained that Chinese manufacturers were side-stepping the duties by shifting production of the cells used to make their panels to Taiwan and continuing to flood the US market with cheap products.

“Step by step, US solar producers are returning to a day when they no longer are forced to compete with the government of China,” said Mukesh Dulani, the president of SolarWorld Industries America, which makes crystalline silicon solar panels at a factory in Oregon.

SolarWorld said it had the support of other solar manufacturers operating in the US in pushing for a broadening of the duties.

But the Coalition for Affordable Solar Energy (Case), which represents about 50 US solar companies that mainly focus on installation, said installers would suffer if there was another jump in the cost of modules.

Case said those prices had already gone up 10 percent since the complaint was filed on December 31.

“By raising the cost of solar for American homeowners, SolarWorld is poised to inflict critical damage on an industry which last year added more than 20 000 solar installation, sales, and distribution jobs to the US economy,” Case president Jigar Shah said.

Lawyer Richard Weiner, a partner at Sidley Austin who is representing the Chinese solar industry, said SolarWorld was trying to shut competition out of the US market but did not have the capacity itself to supply all the goods needed. “We remain convinced that fairly traded imported solar products from China and Taiwan are vital for America to continue its shift away from fossil fuels,” he said.

Taiwanese solar manufacturers had never engaged in dumping practices in the US, the Taipei Economic and Cultural Representative Office in the US said, adding that prices on Taiwan-made solar cells were 8 percent above the global average due to their “excellent quality”.

The ITC’s preliminary decision means the US Commerce Department will continue with its investigation into whether the products are being sold in the US below their fair value, or if their manufacturers receive inappropriate levels of subsidies. It could eventually suggest duties.

The department is due to make a preliminary decision on subsidies from China next month and a preliminary decision on dumping in June.

The value of imports of solar products from China fell by almost a third from 2012 to last year, while imports from Taiwan increased more than 40 percent, although from a much smaller base, according to ITC data. Commerce Department figures show solar imports from China were worth just over $2 billion (R22bn) in 2012, while imports from Taiwan totalled $510 million.

China, which has criticised the US over the new investigation, has slapped anti-dumping and anti-subsidy duties on imports of US polysilicon, solar’s key raw material.

China’s solar manufacturers have taken over the global solar market by offering cheaper modules than their peers, but the glut of solar equipment has led to a pricing slump over the past four years, throwing many companies into crisis. - Reuters