By Doug Palmer
WASHINGTON (Reuters) - The Commerce Department said on Thursday it was launching an investigation that could lead to steep import duties on more than $100 million worth of wind energy towers from China and Vietnam.
The decision adds to the friction in clean energy trade between the world's two largest economies.
The Commerce Department is already investigating charges that Chinese solar panel manufacturers engage in unfair trade practices and will issue a preliminary decision on duties next month.
The Wind Tower Trade Coalition, a group of U.S. producers, had previously said it was asking for anti-dumping duties of 64 percent on imports from China and 59 percent from Vietnam .
But in its announcement, the department said China was alleged to undercut U.S. wind tower prices by 213.54 percent and Vietnam by 140.54 to 143.29 percent.
U.S. producers also want additional countervailing duties on wind towers from China to offset alleged government subsidies, despite a recent U.S. court ruling that struck down the use of such duties against "non-market economies" like China.
A separate U.S. government agency, the International Trade Commission, held a hearing on Thursday to probe whether U.S. companies have been materially harmed or threatened by the imports. The panel will vote next month on whether there is enough evidence of harm for the case to proceed.
SHUT OUT OF SHEPHERDS FLAT
Imports of the wind towers from China and Vietnam were an estimated $103.6 million and $51.9 million, respectively, in 2010. The towers, which can stretch more than 100 meters into the air, are made of individual pieces assembled on site. They support the blades and housing for the wind turbines.
Kerry Cole, president of Trinity Structural Towers, said domestic producers suffered a severe blow when they were shut out of the 338-tower Shepherds Flat project in eastern Oregon, which is due to be completed next year and is billed as the world's largest wind farm.
"All of it went to China ... This lone lost sale had ripple effects throughout the industry ... After losing this sale, domestic producers were desperate to fill their order books," putting them under tremendous pressure to cut prices, Cole said.
Domestic producers will continue to face "reduced business volumes, margins and reduced profits" unless the United States slaps duties on imports from China and Vietnam, Michael Barczak, vice president of sales for DMI Industries, told the ITC.
"Current production levels are low and because of imports are not projected to improve in future years. If these trends continue, a number of domestic producers will have to shut down plants or consolidate production," Barczak said.
U.S. SUPPLIERS "UNRELIABLE"
Lawyers representing Chinese and Vietnamese producers, as well as the U.S. operations of German manufacturing giant Siemens, argued that demand for wind towers was driven by more than just price.
For wind projects near the coast, it can be cheaper to import towers from Asia than to buy from a U.S. manufacturer and ship them across the country by rail, said Christopher Hauer, director of Siemens tower operations in the United States.
It also is critical manufacturers supply towers on time and to the specifications Siemens needs, Hauer said.
"Domestic manufacturers have proved themselves unreliable and unwilling often to provide supply. Siemens cannot afford to be left without supply alternatives," he said.
Max Schutzman, an attorney representing Chinese and Vietnamese producers, said petitioners offered "no real evidence" that they had been materially injured or threatened with material injury by the imports.
Chinese and Vietnamese producers have grabbed sales because of their "reliability, capacity, track record and their ability to deliver in a timely fashion," Schutzman said.
The Commerce Department agreed to launch the separate countervailing duty investigation even though a U.S. appeals court recently ruled it did not have legal authority to impose countervailing duties against "non-market economies".
That court decision could eventually force the Commerce Department to revoke existing countervailing duty orders against 23 Chinese products. However, department officials have said they are still considering their legal options.
(Reporting By Doug Palmer; Editing by Doina Chiacu and Cynthia Osterman)