Last week the U.S. International Trade Commission (ITC) ruled that the American solar panel industry had been harmed by cheap imports though it did not specifically find that the competition was unfair.
The decision has stunned the solar industry which has relied on cheap panel imports to spur the growth of solar power in the United States. It’s not clear what remedies the commission will recommend to President Trump who will have final say about how to respond. But the president’s often articulated antipathy toward America’s existing trade arrangements suggests a punitive response such as a tariff or quota.
Such a response could slow the spread of solar power in the United States by raising the cost of deployment. This would happen just at the point when Mother Nature herself has underlined the need for low-carbon energy sources through the devastating effects of climate-change enhanced hurricanes on American territory in Texas, Florida and Puerto Rico. In fact, in Puerto Rico, hit by two major hurricanes in a row, the damage was so severe that according to The New York Times the island may be facing months without electricity.
The irony, of course, is that had Puerto Rico invested in distributed solar power, a source perfect for a sunny Caribbean island, it might still have had major problems, but not the kind that a devastated centralized power system has visited upon the island’s residents.
The case just decided by the ITC may or may not result in large consequences for U.S. solar deployment. But it highlights another issue which the rise of anti-free trade sentiment has exposed. How self-sufficient should the United States or any other country, for that matter, strive to be?
In a globalized world this seems like a retrograde question. After all, the smooth operation of the global logistics system has served consumers and businesses well for decades. Yes, there have been a few disruptions, but nothing so long-term as to seriously call into question the wisdom of dependence on foreign sources for critical goods.
And yet, the increasingly bellicose exchanges between Washington and Beijing even prior to the Trump presidency suggest possible difficulties ahead. China has a near monopoly on the world’s rare earth metals supply, critical for modern electronic devices, hybrid engines and certain military technology. And, back in 2010 the country reduced its rare earth metals export quota by 40 percent, possibly in reaction to an incident in the East China Sea.
China, of course, is also a major supplier of low-cost solar panels to the world. In addition, it has become a favored manufacturing hub for countless international companies which make everything from simple household items to sophisticated electronic equipment.
China, of course, is only one country of many which have become manufacturing centers for international companies. Mexico, Malaysia, Korea, Japan, and Taiwan come to mind.
The argument against self-sufficiency is that it costs more. If every country does what it does best, everyone will benefit from lower costs and higher quality. But do those low costs embody risks not accounted for, such as environmental and security risks?
If something is cheap but you cannot get it because of a trade or diplomatic dispute or possibly even a war between two nations, its low price doesn’t matter. And if the expertise to produce this now unavailable product is no longer found elsewhere or in one’s own country, then the price will no longer be cheap and the disruption will be proportionate to the importance of the product in the functioning of one’s society.
For this reason many countries protect their agricultural sector. Lack of food would be a catastrophic disruption. But does America want to revive its own solar panel industry? Won’t the solar and other renewable energy industries become critical to the well-being and security of every nation? And, isn’t the distributed nature of renewable energy generation a model to be heeded for the manufacture of devices that produce it?
The difficulty in such deliberations may be trying to separate critical industries from ones which are less important to maintaining the functioning of one’s society. And, we must also now admit that humans might not be the cause of the next big disruption in world logistics. Extreme weather could knock out the ability of industries concentrated in particular countries or areas to supply world markets.
Absolutes are dangerous. Even the most ardent advocate for expanding domestic and even regional and local production may crave a cup of coffee or a piece chocolate, something which may be impractical to produce domestically in most places. But the case of America’s solar panel imports raises the question of dependence for critical products on faraway producers who could at any time stop shipping their wares both for reasons we can imagine and ones we cannot yet discern.
Photo: “The Walmart Supercenter in Caguas, Puerto Rico is one of five Walmart facilities on the island equipped with solar panels” (2010). Source: Walmart Corp. Via Wikimedia.
