Pentagon cannot buy Chinese solar panels anymore

Ahead of Chinese President Hu Jintao`s state visit here, his American counterpart Barack Obama, under a "Buy American" provision, has blocked the Pentagon from buying solar panels with a `Made in China` tag.

Updated: Jan 10, 2011, 20:51 PM IST

Washington: Ahead of Chinese President Hu
Jintao`s state visit here, his American counterpart Barack
Obama, under a "Buy American" provision, has blocked the
Pentagon from buying solar panels with a `Made in China` tag.

The military appropriations law signed by Obama on
January 7 contains a little-noticed "Buy American" provision
for the US Defence Department purchases of solar panels, a
clause that is likely to dismay Chinese officials preparing
for the Hu-Obama summit, The New York Times reported.

Hu is scheduled to visit the United States from January
18-21 for talks with Obama and other American leaders.

The United States is the world`s largest importer and
China the largest exporter of goods simmering resentments
over trade in green-energy technologies could be a distraction
at the Obama-Hu summit, the report said.

China has emerged as the world`s dominant producer of
solar panels in the last two years. It accounted for at least
half the world`s production last year, and its market share is
rising rapidly. The United States accounts for USD 1.6 billion
of the world`s USD 29 billion market for solar panels.

The perception that Beijing unfairly subsidises the
Chinese solar industry to the detriment of American companies
had drawn concern in the US Congress.

The new Buy American provision prevents the Defence
Department from buying Chinese-made solar panels.

The American military is a rapidly growing consumer of
renewable energy products, because it is extremely expensive
and frequently dangerous to ship large quantities of fuel into
remote areas of war-torn Iraq and Afghanistan.

The solar panel provision is carefully written to help
it comply with the free trade rules of the WTO, which would
make it hard for China to ask a WTO tribunal to overturn the
provision, the report quoted trade lawyers as saying.

Chinese leaders have strongly criticised such
provisions in the past, particularly one in Obama`s economic
stimulus package in early 2009 that applied to government
procurement of steel and construction materials.

While the US and Europe have focused on subsidising
buyers of solar panels, China has emphasised subsidies for
solar panel manufacturers. It then exports virtually all of
its panels to the US and Europe, often helped by the American
and European consumer subsidies, the Times said.

Ocean Yuan, the chief executive and president of Grape
Solar, a company in Eugene, Oregon that distributes mostly
mainland Chinese solar panels but also American, Japanese and
Taiwanese panels, said that imported panels typically cost 20
per cent less than American-made panels.

Grape Solar sold USD 500,000 worth of Chinese-made solar
panels to the American military shortly before Christmas, Yuan
said, adding that he expected future contracts to specify
American-made panels.

PTI