--Commerce Department to impose countervailing duties on Chinese solar panels and solar cells --Department found the companies received unfair government subsidies --Duties range between 2.9% and 4.73% --Both sides claim victory as the investigation continues (Adds comment from Suntech executive in seventh paragraph and opponent of trade case in ninth paragraph and other details.) By Tom Barkley and Cassandra Sweet Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The U.S. Commerce Department announced a preliminary decision Tuesday to impose modest import duties of below 5% on Chinese solar panels, while continuing its probe into allegations by struggling U.S. producers that they are the victims of unfair competition. In the high-profile case, the department backed claims made last October by the U.S. unit of Germany-based SolarWorld (SWV.XE) and six other U.S. firms that Chinese solar-panel suppliers had received unfair Chinese government subsidies. However, the department proposed relatively low countervailing duties of between 2.90% and 4.73% on the Chinese imports. The lower-than-expected duties sparked a stock rally among large Chinese solar-panel makers. Shares of Suntech Power Holdings Co. Ltd. (STP) jumped 12% to $3.52, while Trina Solar Ltd. (TSL) shares rose 10% to $8.57. Both sides claimed victory in the Commerce Department's decision Tuesday. "Today's announcement affirms what U.S. manufacturers have long known; Chinese manufacturers have received unfair and WTO-illegal subsidies," Steve Ostrenga, chief executive of Helios Solar Works, said in a statement. Helios is one of the firms that filed the trade case with SolarWorld. Opponents of the case also said they were pleased that the new duties are lower than expected. "This initial decision reflects the reality that Suntech's global success is based on free and fair competition," Suntech Chief Commercial Officer Andrew Beebe said in a statement. The Commerce Department will impose countervailing duties of 2.9% on Suntech panels made in China. "This is far more reasonable than most of us were expecting," said Jigar Shah, president of the Coalition for Affordable Solar Energy, which supports the Chinese solar firms in the case. "The Department of Commerce really found the government of China not guilty." Jesse Pichel, an analyst with Jefferies & Co. said that he had expected duties of between 8% and 12%. He warned that although the countervailing duties are "better than expected," Suntech and other Chinese solar firms could be subject to anti-dumping tariffs, which analysts expect could be between 10% and 100%. The U.S. is investigating allegations that the solar panels and solar cells are being dumped, or sold at less than normal value, with an initial announcement on antidumping duties expected soon. SolarWorld and the other U.S. firms are hoping the department levies much larger anti-dumping tariffs on Chinese solar panels in the next phase of its investigation. Antidumping tariffs are often "significantly higher" than duties imposed to counteract excessive government subsidies, said Timothy Brightbill, a SolarWorld attorney. The Commerce Department expects to make a final decision on the countervailing duties in June. Before the duties can take effect, the International Trade Commission would have to find that U.S. producers are being harmed by the imports. The independent government panel is expected to vote in July. The case has exacerbated trade frictions with Beijing, while dividing the U.S. solar-power market at a time when solar-panel makers have been struggling with plunging prices amid an oversupply of panels, primarily from China. Imports of the panels from China more than doubled in value last year to $3.12 billion. President Barack Obama has taken heat from Republican rivals for the upcoming elections for his policies to counter Chinese competition and for his clean-energy policies, under which solar-panel maker Solyndra LLC received more than $500 million in federal loans before filing for bankruptcy. The president plans to visit a Sempra Energy (SRE) solar-power plant in Nevada on Wednesday as part of a trip focused on energy. China's Ministry of Commerce has criticized the U.S. investigation as an example of "protectionism," while Chinese solar-panel makers and some of their U.S. clients have warned that antidumping tariffs could result in financial losses for some U.S. consumers and job losses for workers in the industry. Suntech, Trina, Yingli Green Energy Holding Co. Ltd. (YGE) and other large Chinese solar-panel makers have denied dumping panels in the U.S., and have also denied accusations they received unfair government subsidies. -By Tom Barkley and Cassandra Sweet, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com
