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Sustainability, CleanTech and Climate Change Alert

U.S. Manufacturers of Wind Towers Likely Flying High Following Commerce Department’s Affirmative Preliminary Countervailing Duty Determination on Chinese Imports

Monday, June 11, 2012

Did you ever know that you're my hero,
And everything I would like to be?
I can fly higher than an eagle,
For you are the wind beneath my wings.

“Wind Beneath My Wings”
By Nashville songwriters Jeff Silbar and Larry Henley

You often don’t know when you start something where it will end up. It’s doubtful Messrs. Silbar and Henley thought their 1982 love song would become the most popular song for funerals. Similarly, it is unlikely that the Wind Tower Trade Coalition ever dreamed it would be so successful when it filed its countervailing duty petition on utility scale wind towers from China. The coalition, composed of Broadwind Towers, Inc. (Manitowoc, WI), DMI Industries (Fargo, ND), Katana Summit LLC (Columbus, NE), and Trinity Structural Towers, Inc. (Dallas, TX), received good news on May 30, 2012 when the U.S. Department of Commerce (Commerce) released its preliminary affirmative determination in its countervailing duty investigation of Utility Scale Wind Towers from China, the official version of which was published in the June 6, 2012 Federal Register, see (http://www.gpo.gov/fdsys/pkg/FR-2012-06-06/pdf/2012-13502.pdf).

Commerce preliminarily determined that the mandatory respondent companies referred to collectively as CS Wind received a preliminary net subsidy rate of 13.74 percent and that the other mandatory respondent companies referred to collectively as the Titan Companies received a preliminary net subsidy rate of 26 percent. All other Chinese producers/exporters of the subject wind towers received a preliminary net subsidy rate of 19.87 percent. These margins are much higher than those preliminarily determined by Commerce in its countervailing duty investigation of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People’s Republic of China (http://www.gpo.gov/fdsys/pkg/FR-2012-03-26/pdf/2012-7273.pdf see also http://sustainability-counsel.com/2012/04/03/sun-subsidies/ ). The driver in the higher wind tower subsidies appears to be substantial Chinese subsidies to steel inputs.

While these are only the preliminary countervailing duty rates, and could change by the final determination, the U.S. utility scale wind towers industry must regard this as a good start in the right direction. The preliminary determinations in the parallel antidumping investigations of utility scale wind towers from China and from Vietnam are still pending and are expected this summer. High rates in these investigations certainly would create a strong crosswind against imports of the subject trade towers and provide the needed lift sought by the U.S. industry in bringing these cases. At least that is how the preliminary dumping rates against China turned out for the U.S. producers of solar cells, see http://sustainability-counsel.com/2012/05/30/sun-dumping/.

This preliminary determination means that U.S. Customs and Border Protection will collect a cash deposit on entries of the subject wind towers after June 6, 2012 based on these preliminary rates. The utility scale wind towers at issue are the steel towers that support the nacelle (an enclosure for an engine) and rotor blades for use in wind turbines that have electrical power generation capacities in excess of 100 kilowatts. What specifically is not included within the scope of these investigations are nacelles and rotor blades, regardless of whether they are attached to the wind tower, and any internal or external components that are not attached to any section of the wind towers.

The Chinese government vigorously opposes the wind towers and solar cells countervailing duty actions, and recently included these ongoing investigations with 20 other countervailing duty cases in a May 25, 2012 request to the United States for consultations, which is the precursor to a legal challenge in the World Trade Organization. The Chinese government’s reaction is not surprising given what many regard as a hypocritical position, given the U.S. wind production tax credit, which promises more than $1 billion a year to support wind-power projects in the United States (on top of numerous other federal clean-technology subsidy programs).

For additional information on the filing of the petitions on wind towers and solar cells see http://sustainability-counsel.com/2012/01/06/the-wind-and-the-sun/.

Gregory C. Dorris

Written by

Gregory C. Dorris
Phone: 202.220.1224
Fax: 202.220.1665
dorrisg@pepperlaw.com


The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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