A trade group of the Chinese solar industry in turn accuses the White House of turning commercial complaint into “a publicity show initiated by the Obama administration for the coming election,” reports the New York Times.

And a new American trade group has formed, representing buyers and installers of solar-energy systems that argues any Commerce Department restrictions on Chinese solar panels would slow the adoption of clean energy technology in the US and could cost thousands of American jobs and slow the adoption of solar energy.

Solar power is a hot topic with solar panel maker Solyndra going bankrupt having received more than $500m in federal loan guarantees. While use of solar energy in the US is growing, Chinese solar panel have raised their US market share from almost nothing 5 years ago to more than 50% currently.

The complex issues of manufacturing policy, job creation, and climate change puts the solar panel dispute into a “once-in-a-generation case.”  It contributes only about 1/10th of 1% of American electricity, but the amount of new solar wattage installed in the US has grown more than 7% p.a.  since 2008, according to GTM Research in Boston.

Seven American manufacturers filed a legal petition in October seeking the Commerce Department investigation and asking tariffs of more than 100% be imposed on solar panels from China. The filing accuses the Chinese industry of using billions of dollars in government subsidies to help gain sales in the American market and dumping panels at very low prices.

China, whose government has been a big promoter of green-energy companies, already accounts for 3/5ths of the world’s solar panel production, giving it enormous economies of scale. It exports 95% of its production, much to the US, rather than use it in China. That helped push wholesale solar panel prices sharply — to $1/1.20 W capacity today, from $1.80 in January, and $3.30 back in 2008.

Besides Solyndra, two other American solar companies representing 1/6th of American manufacturing capacity in the sector went bankrupt in August. Four others laid off workers and cut output since last year spring.

Chinese industries have lost almost all antidumping and antisubsidy cases against them for decades, because the USA classifies China as a non-market economy, meaning special rules are used that  favour American industry.

Most big Chinese solar panel manufacturers have subsidiaries in the US that are the legal importers. They, not the American installers of solar panels, would incur the initial costs of any tariffs and be expected to be pass it along to customers orChinese companies might find themselves vulnerable to higher anti-dumping penalties in future.

Leader for the petition was SolarWorld Industries America, a unit of German manufacturer SolarWorld. Six other American solar panel manufacturers have signed on to the case,  but exercised the option to keep identities secret.

Secrecy makes it hard for Chinese industry’s lawyers to figure out if  companies filing the case have themselves received  US  government subsidies.  SolarWorld Industries America acknowledges receiving a few million dollars in subsidies for research, but none for exports. Government subsidies that promote exports are the ones likely to violate international trade rules.