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Senator asks Obama to curb Chinese solar panels

By Doug Palmer

WASHINGTON (Reuters) - A Democratic senator on Thursday urged President Barack Obama to use U.S. trade laws to restrict surging imports of solar panels from China in a sign that high U.S. unemployment is increasing trade tensions.

"The American solar industry is facing unparalleled challenges and without the leadership of your administration this industry may disappear leaving behind additional workers without employment," Senator Ron Wyden said in a letter.

"Letting that happen is unacceptable."

The plea came just days after solar panel maker Solyndra LLC filed for bankruptcy, becoming the third U.S. solar firm to succumb to pressure from China in recent weeks.

Solyndra said it had been unable to bring down its costs quickly enough to compete with cheaper panels from China despite receiving more than $535 million in U.S. federal loan guarantees.

"Chinese imports of solar panels are surging and are on pace to increase 240 percent this year, compared to 2010," Wyden said. "Furthermore, imports of Chinese solar panels increased 1,593 percent between 2006 and 2010."

The Oregon Democrat said the Obama administration had "ample tools" to restrict the imports, including possible anti-dumping or countervailing duties.

The administration should also consider an emergency safeguard tariff like the one Obama successfully imposed on tires from China two years ago, he said.

"Furthermore, China's subsidization of solar panel production provides the grounds for your Trade Representative to pursue litigation at the World Trade Organization," Wyden said.

"I urge you to work with the domestic industry and to quickly use these authorities to prevent an industry from being decimated by unfair, foreign competition," Wyden added.

The Washington law firm of Stewart and Stewart, which played a key role in the tires safeguards case, has estimated that Chinese state-owned banks have provided nearly $34 billion in financing to Chinese solar producers since 2009.

"Much of this lending is at rock-bottom rates, with interest rates as low as one, two, or even zero percent. Other government subsidies ... include free land, tax preferences, subsidized export credit insurance, and concessional export credit financing," the firm said in a recent newsletter.

Wyden said he would pursue an legislative alternative if the administration is not prepared to act on its own.

Meanwhile, a second Senate Democrat, Sherrod Brown of Ohio, renewed his call for legislation aimed at forcing China to raise the value of its currency after new government data showed the U.S. trade gap with China rose again in July.

The gap totaled $160 billion through the first seven months of the year, compared to $145 billion in same period in 2010, the Commerce Department said.

"Our widening trade deficit with China underscores the need to stand up for Ohio manufacturing by cracking down on Chinese currency manipulation," Brown said.

Many U.S. lawmakers accuse China of deliberately undervaluing its currency against the dollar to give Chinese companies an unfair price advantage.

(Reporting by Doug Palmer; Editing by Will Dunham)

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