Tuesday, a few blocks off the National Mall, a hearing will determine the fate of 88,000 American jobs threatened by unwarranted tariffs. The U.S. International Trade Commission must decide whether an influx of lower-cost solar panels, mostly produced in Asian countries, has an excessively harmful effect on domestic manufacturers that make comparable solar cells.
The outcome is critical not only for the immediate jobs impact, but also because it will set a precedent for how similar cases will be handled in the future, and not just in the solar industry — it offers our first real look at how the Trump administration will consider the trade-off between manufacturing jobs and all other types of jobs in this country.
The case was brought forth by two companies, Suniva and SolarWorld, which together employ a little over a thousand workers. They are seeking temporary protective tariffs because they claim there are too many imported solar panels that are too cheap.The commission will assess whether there has been injury done and whether it was a direct result of the inexpensive imports, and it will then make a formal recommendation to the president if it has determined that a trade remedy — a tariff increase — is appropriate. The tariff the two companies have requested on imported cells would effectively double their cost, which would obviously be a disaster for the broader solar industry.
Overall job growth in the solar industry is one of the brightest spots in the economy — and smart job growth policy should account for this matured market. Earlier this month, my organization CRES Forum, held a panel discussion to get into the weeds and understand exactly what jobs in the solar industry look like, how the U.S. solar industry is linked to the global economy and why the case before the commission matters. We learned that in 2016, there were over 260,000 jobs in the U.S. solar industry. One in every 50 new jobs created was in the industry, which is growing at 12 times the rate the rest of the economy. And growth in the solar industry is estimated to eventually lead to one million new jobs created across the supply chain through 2050.
If prices on such a key input in the solar equation skyrocket overnight, it would be hard to compete with other energy industries, like wind or natural gas. The Solar Energy Industries Association believes that the Suniva case constitutes a critical threat to the solar industry at large. If it results in a significant tariff being imposed, 88,000 overall jobs will be put needlessly in jeopardy in 2018 alone. Compared with the 1,000 manufacturing jobs these two companies support. This is a no-brainer.
Let’s remember that solar energy production creates jobs at many stages in the process — not just manufacturing. Indeed, most jobs are actually in system design, project development, installation, operation and management.
And solar development also drives jobs for other industries, which tend to be inherently local and based in manufacturing and contracting. An effective commercial-scale solar project is a massive undertaking requiring steel infrastructure, landscaping, civil engineering and substantial manpower to lay transmission lines.
We should also be apprehensive of any trade move that could undermine the solar industry because voters recognize solar power as a key part of clean energy future. When asked in a recent poll sponsored by CRES Forum, likely voters — irrespective of political party, ideological or demographic background — overwhelmingly supported the advancement of new, clean and reliable energy sources and candidates that support a clean energy platform.
The fact is that jobs in all sectors are vulnerable to tampering or retaliation in the trade arena. In the past, when the U.S. has sought to use tariffs or legal means to protect their own industry against foreign competitors, it has ended poorly and been a tragedy for international negotiation. For example, foreign countries like China and India have retaliated by imposing tariffs on U.S. exports or filing discrimination cases against U.S. states and their policies.
So we know retaliatory tariffs are not the most effective way to set trade policy. Instead we should seek coherent trade policy informed by free-market trade principles. The recent North American Free Trade Agreement (NAFTA) renegotiation principles outlined by the Trump administration in July are an encouraging starting point for trade with our Canadian and Mexican neighbors. Our hope is that a renegotiated NAFTA 2.0 can serve as a model for additional bilateral trade deals and other negotiations at the World Trade Organization level.
Trade needs to be free and fair to American consumers and workers. In this case, the International Trade Commission should avoid setting policy by catering to special tariff requests. Instead, the administration should continue an “all of the above” approach to energy by supporting the solar sector as a whole and set trade policy in a positive, comprehensive and forward-looking manner.