Cheap solar panels imported from China and other countries have led to a boom in the U.S. solar industry, where rooftop and other installations have surged 10-fold since 2011.

But two U.S. solar manufacturers say the flood of imports has led one to bankruptcy and forced the other to lay off three-quarters of its workforce.

The International Trade Commission is set to decide Friday whether the imports, primarily from Asia, are causing “serious injury” to the companies. If so, the commission will recommend this fall whether the Trump administration should impose tariffs that could double the price of solar panels from abroad.

President Donald Trump has not cozied up to the solar industry, as he has for coal and other fossil fuels, but he is considered sympathetic to imposing tariffs on solar imports as part of his “America first” philosophy. A White House spokeswoman declined to comment Thursday.

Both sides of the dispute were making their case ahead of Friday’s meeting.

“Simply put, the U.S. industry cannot survive under current market conditions,” a lawyer for Georgia-based Suniva Inc. wrote in a petition filed with the commission. Suniva brought the case with Oregon-based SolarWorld Americas.

Opposition to tariffs

Governors of four solar-friendly states — Nevada, Colorado, Massachusetts and North Carolina — oppose the tariff, warning it could jeopardize the industry. They cited a study showing that a global tariff could cause solar installations to drop by more than 50 percent in two years, a crushing blow as states push for renewable energy that does not contribute to climate change.

“The requested tariff could inflict a devastating blow on our states’ solar industries and lead to unprecedented job loss, at steep cost to our states’ economies,” the two Republicans and two Democrats wrote in a letter Thursday to the trade commission.

A group of former U.S. military officials also urged the Trump administration to reject solar tariffs, noting that the Defense Department is the nation’s largest energy consumer and follows a federal law calling for the Pentagon to procure 25 percent of its energy from renewable sources by 2025.

Suniva called the case a matter of fairness. Even with better manufacturing methods, lower costs and “dramatically improved efficiency,” the company has “suffered substantial losses due to global imports,” Suniva said in its petition. The company declared bankruptcy this spring after laying off 190 employees and closing production sites in Georgia and Michigan.

SolarWorld Americas, meanwhile, has trimmed its workforce from 1,300 to 300, with more cuts likely.

“After nearly 30 factories have shut down in the wake of surging imports, the legacy of this pioneering American industry hangs in the balance,” said Juergen Stein, CEO and president of SolarWorld Americas.

“We believe that the promise of solar — energy sustainability and independence — can be realized only with healthy American manufacturing to supply growing U.S. demand,” Stein said in a statement to The Associated Press.

Trade group speaks out

In a twist, the main trade group for the solar industry opposes tariffs and calls the trade case “an existential threat” to the industry.

“The stakes are exceedingly high. We are talking about 88,000 people in this country who could lose their jobs if these tariffs are put in place,” said Abigail Ross Hopper, president of the Solar Energy Industries Association, which represents an array of solar companies.

A global tariff could cause a sharp price hike that could force the U.S. to lose out on solar installations capable of powering more than 9 million homes over the next five years — more than has been installed to date, Hopper said. States could lose out on billions of dollars of infrastructure investment, she added.

Suniva and SolarWorld have themselves to blame for their struggles — not pressure from overseas, Hopper said.

“Here is the real story of this case: We have two foreign-owned, poorly managed companies using U.S. trade laws to put U.S. manufacturers out of business and causing U.S. employees to lose their jobs,” she said.

Indeed, while Suniva’s U.S. operations are based in Georgia, the company’s majority owner is in China. SolarWorld Americas is a subsidiary of German solar giant SolarWorld, which declared insolvency last month.

If an injury finding is made, the trade commission would have until mid-November to recommend a remedy to the president, with a final decision on tariffs expected in January.
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German carmaker Mercedes-Benz has announced plans to invest $1 billion to start making electric vehicles at its manufacturing plant in the southern U.S. state of Alabama.

The luxury automaker said it will manufacture electric SUVs under Mercedes’ EQ subbrand at the plant in Tuscaloosa, Alabama in just more than three years. The expansion is expected to create 600 jobs.

Daimler-Benz, which has more than 30 plants worldwide, said the Tuscaloosa plant will become the first in the U.S. to produce electric vehicles, and only the sixth in the world to do so.

Construction is to begin next year on the 92,900-square-meter facility. Daimler also said it will build a new global logistics center and aftersales North American hub in Bibb County, Alabama, about 8 kilometers from the Tuscaloosa plant.
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The United States will present new proposals and begin to weigh into thornier issues of the North American Free Trade Agreement in the third round of negotiations starting in Ottawa Saturday, U.S. chief negotiator John Melle said Thursday.

The stepped-up negotiations come with four more rounds of talks left after Ottawa and a self-imposed year-end deadline to finish the talks before Mexico launches campaigning for its July presidential election.

“With progress made in several issue areas in the first two NAFTA negotiation rounds, USTR (United States Trade Representative) looks to move forward with additional new text proposals in round three of the negotiations,” Melle said in comments emailed to Reuters.

“At this point in the negotiations, more challenging issues will start taking center stage,” he added, without elaborating.

Third round

The first two rounds of talks between the United States, Canada and Mexico focused on consolidating language on chapters covering small- and medium-sized enterprises, competitiveness, digital trade, services and the environment.

Now, negotiators will begin to weigh into more contentious issues such as rules of origin — how much of a product’s components must originate from within North America — labor standards aimed at increasing Mexican wages and mechanisms for resolving trade and investment disputes.

In its negotiating strategy for revising NAFTA ahead of the start of the talks in July, the United States said it would emphasize reducing the U.S. trade deficit as a priority.

It also said it wanted to eliminate an arbitration system for resolving trade disputes, known as Chapter 19, that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.

Canada has suggested it will walk away from the talks if Chapter 19 is tossed aside.

Dispute resolution, sunset clause

Politico reported Thursday that the United States was considering dropping a binding mechanism in NAFTA for resolving government-to-government disputes in favor of an advisory system.

The proposal would be a major shift away from a decades-old push by the United States to build an international system of enforceable trade rules, Politico reported.

Canada and Mexico have dismissed a proposal by the Trump administration to add a five-year sunset provision to NAFTA.

U.S. Commerce Secretary Wilbur Ross said last week such a provision was needed because forecasts for U.S. export and job growth when NAFTA took effect in 1994 were “wildly optimistic” and failed to live up to expectations.

Mexico’s Foreign Minister Luis Videgaray told Reuters Sept. 15 that the sunset clause was unnecessary because the pact’s members can trigger a renegotiation or leave it at any time.

Since U.S. President Donald Trump has repeatedly attacked NAFTA and threatened to tear up the agreement, Mexico has pushed to secure more access to the European Union, Brazil, Israel, Singapore, Australia and New Zealand.

Polls show support for NAFTA

A Reuters poll of economists Thursday found that Mexico and Canada will survive current talks with the United States on trade relatively unscathed.

Meanwhile, a separate poll by IPSOS published Thursday showed broad-based support among Americans, Canadians and Mexicans for NAFTA.
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When officials from Myanmar’s commercial capital Yangon toured six European countries in June, they were hoping to drum up investment in transport, energy and education.

Instead, they were bombarded with questions about the country’s treatment of the Rohingya Muslim minority, who have long complained of persecution by the Buddhist majority in the oil-rich, ethnically divided, western state of Rakhine.

“In each of every country, that issue was always brought up,” Hlaing Maw Oo, secretary of Yangon City Development Committee, told Reuters after the 16-day trip.

The situation in Rakhine has worsened dramatically since then, with more than 400,000 Rohingya fleeing to Bangladesh to escape a military counterinsurgency offensive the United Nations has described as “ethnic cleansing.”

Western trade and investment in Myanmar is small, but there were hopes that a series of reforms this year would pry open an economy stunted by international sanctions and decades of mismanagement under military rule.

With most sanctions now lifted, an expected flood of Western money was seen as a key dividend from the transition to civilian rule under Nobel laureate Aung San Suu Kyi. Regional diplomats saw it balancing China’s growing influence over its neighbor.

But Aung San Suu Kyi has been beset by international criticism for saying little about human rights abuses against the Rohingya, and lawyers, consultants and lobbyists say the European and U.S. companies that had been circling are now wary of the reputational risks of investing in the country.

Louis Yeung, managing principal of Yangon-based investment firm Faircap Partners, said one of his business partners — a listed, U.S.-based food and beverage company — decided to hold off its plan to enter the Myanmar market for three to five years, citing factors including slower-than-expected reforms and the Rohingya crisis.

“Their conclusion is that it wasn’t the right time for them,” he said. “They want to see more traction from the government and Rakhine is not helpful.”

On hold

The pressure has been growing in recent months, even on existing investors, with rights group AFD International calling on foreign firms to stop investing in Myanmar.

A small group of investors in U.S. oil major Chevron filed an unsuccessful motion at its annual general meeting urging it to pull out of its production-sharing contract with a state-run firm to explore for oil and gas, while Norwegian telecoms firm Telenor, which runs a mobile network in Myanmar, issued a statement calling for human rights protection.

Chevron declined to comment on its investment in Myanmar, while Telenor did not respond to several requests for comment.

Bernd Lange, chair of the European Parliament Committee on International Trade, said last week his delegation postponed a visit to Myanmar indefinitely, saying the human rights situation “does not allow a fruitful discussion on a potential EU-Myanmar investment agreement.”

Khin Aung Tun, vice chairman of the Myanmar Tourism Federation, told Reuters that global firms planning to hold conferences in Myanmar were now considering other locations.

“People were just starting to see Myanmar as a ‘good news’ story,” said Dane Chamorro, head of South East Asia at Control Risks, a global risk consultancy.

“Now you can imagine a boardroom in which someone mentions Myanmar and someone else says ‘hold on, I’ve just seen something on Myanmar on TV: villages burned down, refugees, etc.'”

In an interview published in Nikkei Asia Review on Thursday, Aung San Suu Kyi acknowledged it was “natural” for foreign investors to be concerned, but repeated her view that economic development was the key to solving poor Rakhine’s long-standing problems.

“So, investments would actually help make the situation better,” she said.

In China’s orbit

Myanmar’s $70 billion economy should be a strong investment proposition for Western firms. It boasts large oil and gas reserves and natural resources such as rubies, jade and timber.

Wages are low and its youthful population of more than 50 million is eager for retail and manufacturing jobs.

In April, Myanmar passed a long-awaited investment law, simplifying procedures and granting foreign investors equal treatment to the locals. A game-changing law allowing foreigners to buy stakes in local firms is expected later this year.

“The investment conditions were improving,” said Dustin Daugherty, ASEAN lead for business intelligence at Dezan Shira & Associates, a consultancy for foreign investors in Asia.

Myanmar’s economy may not suffer much, however, if Western firms shun the country — or even if their governments were to reimpose some sanctions, although that appears unlikely for now.

Aung San Suu Kyi has sought to deepen relations with China at a time when Beijing is keen to push projects that fit with its Belt and Road initiative, which aims to stimulate trade by investment in infrastructure throughout Asia and beyond.

Myanmar trades with China as much as it does with its next four biggest partners: Singapore, Thailand, Japan and India.

None of that top five participated in previous sanctions.

Trade with the United States is only about $400 million and U.S. investment is just 0.5 percent of the total. Europe accounts for around a 10th of investment, while China and Hong Kong make up more than a third, and Singapore and Thailand another third.

Than Aung Kyaw, Deputy Director General of Myanmar’s Directorate of Investment and Company Administration, told Reuters that European investors might have “second thoughts,” but he expected Asian investors to stay put.

China is already in talks to sell electricity to energy-hungry Myanmar and pushing for preferential access to a strategic port on the Bay of Bengal. In April, the two countries reached an agreement on an oil pipeline that pumps oil across Myanmar to southwest China.

“It is going to feed Aung San Suu Kyi straight into the hands of [Chinese President] Xi Jinping,” said John Blaxland, director at the ANU Southeast Asia Institute and head of the Strategic and Defense Studies Center.
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Thousands of small factories in China, making everything from steel to chemicals, are scrambling for access to the country’s clogged rail network as Beijing curbs the use of diesel trucks in an effort to tackle air pollution.

The Ministry of Environmental Protection (MEP) last month gave tens of thousands of companies in 28 cities until Nov. 1 to halve their use of diesel trucks over the winter months, when pollution is at its worst.

The ministry, in a policy document, also set more stringent, permanent targets for more than 20 power and steel companies, including Zhengzhou Xinli Power, Xingtai Iron & Steel and Hebei Risun Coke, directing them to send at least half their shipments by rail.

Trucking is a cheaper and preferred mode of transport for heavy industry in China, especially for inland companies moving goods over relatively short distances and those far from railways.

Some provinces have taken even tougher stances on trucks.

In Hebei and central Henan, some steel producers must deliver as much as 90 percent of their products via rail on a permanent basis, up from around 50 to 60 percent currently.

The moves are the latest in Beijing’s years-long battle to tackle the pollution that blankets the north as houses turn up the heat between November and March, drawing on the nation’s power plants, which are mainly fueled with coal.

China is also forcing steel mills and other factories to shut up to 50 percent of capacity across the north to try and prevent toxic air during the winter.

The truck restrictions follow bans earlier this year on transporting coal by diesel trucks in major port cities.

A shift to using more of the country’s 120,000 km of railroads, one of the world’s largest networks, is also a cornerstone of Beijing’s Belt and Road initiative, which aims to revive old trade routes linking Chinese companies with overseas markets.

The scale of the change under way is immense. Highways accounted for 77 percent of more than 43 billion tons of freight transported last year, compared with 8 percent for rail.

“It’s another indication of how seriously they’re taking the environmental impact, although it’s a blunt way of doing it and some trips won’t make sense by rail,” said Jonathan Beard, head of transportation and logistics in Asia for Arcadis, a design and consultancy company.

The Ministry of Rail declined to comment. The MEP and the state planner that oversees rail freight prices did not respond to requests for comment from Reuters.

‘Railway Armageddon’

Companies were already preparing for a grim winter, having been ordered to slash output as part of measures to clean up the air in Chinese cities.

Now, many are struggling to get space on the rail network by the Nov. 1 deadline.

Major state-owned companies like Sinopec and Aluminium Corp. of China have long-term access to the railroad, leaving little room for smaller companies. Many of the factories are also hundreds of miles away from any station.

There are also concerns that bottlenecks could create chaos, cutting off supplies of critical raw materials and hurting the ability of companies to get products to market, executives interviewed by Reuters said.

Rail is also more expensive and takes longer for some routes.

An executive from Xingtai Iron & Steel estimated that using rail will add as much as 40 yuan per ton, or 10 percent, to his costs. The executive and others interviewed by Reuters requested anonymity as they were not authorized to speak to the media.

“We might resort to reducing production in the winter if we cannot get enough supplies and have difficulties sending our products due to the railway Armageddon,” said a manager with Yanzhou Coal Mining Co’s coke plant in Shandong province, which produces two million tons per year.

In Shandong, the nation’s eastern industrial and agricultural heartland, the rail bureau proposed hiking freight rates by 1 cent per ton per kilometer at an internal meeting with key clients two weeks ago, according to the Yanzhou Coal manager.

That is equivalent to an almost 10 percent increase to move products to Jiangsu, about 100 miles to the south. It is not clear whether the plan has been submitted to the state planner for approval. The state planner sets freight prices.

“Some of our clients are only 40 miles away from us,” said a sales manager with Xingtai Iron & Steel’s steel wire subsidiary.

“Trucking is more flexible than rail and cheaper,” the manager said. “For our clients in Zhejiang and Jiangsu, about 500 miles away, rail takes almost a week but trucking takes one or two days.”

Under orders

Rail traffic has increased this year due to increased shipments of coal. Rail is the most popular mode of transport for coal, which accounted for a third of traffic last year. China’s rail network is mainly run by China Railway Corp.

State-owned companies such as China National Coal Group and coal miner China Shenhua Energy also own some specific routes, giving them lower transportation costs.

Many are bewildered by the enormity of the undertaking ahead. A manager with Longyu Chemical Co. in central Henan province said he had no access to rail.

“I honestly have no idea how we are going to deal with it this winter,” he said. “The trucking freight rate is also rising because of the crackdown on diesel trucks.”
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More than a third of migrant fishermen in Thailand clearly were victims of trafficking over the past five years, and even more workers in the industry were possibly trafficked as well, according to a report published Thursday.

Routinely underpaid and physically abused, three-quarters of migrants working on Thai fishing vessels have been in debt bondage, working to pay off an obligation, said the study by the anti-trafficking group International Justice Mission (IJM).

Thailand’s multibillion-dollar seafood sector came under fire in recent years after investigations showed widespread slavery, trafficking and violence on fishing boats and in onshore food-processing factories.

The politically unstable country, which is under military rule, has vowed to crack down on trafficking and recently introduced reforms to its fisheries law.

The IJM study of 260 fishermen from Myanmar and Cambodia found 38 percent were clearly trafficked and another 49 percent possibly trafficked.

Only 13 percent reported fair labor conditions at sea and no exploitative recruitment, it said.

Three-quarters reported working at least 16 hours a day, and only 11 percent said they were paid more than 9,000 Baht ($272 U.S.) per month, the legal monthly minimum wage in Thailand.

One fisherman was quoted in the report as saying he was held in debt bondage, owing 20,000 Baht ($604) to his brother, who worked as a supervisor overseeing fishermen.

In debt to brother

“I fear for my life as he has killed in front of me before,” he was quoted as saying. “I don’t dare to run. He would kill my children.”

Field researchers surveyed the 260 fishermen in 20 Thai fishing localities in 2016, collecting information on fishing jobs they had held in the previous five years.

Thailand, the world’s third-largest seafood exporter, had more than 42,000 active fishing vessels as of 2014, and more than 172,000 people were employed as fishermen, the study said.

The study was funded by the Walmart Foundation, the charitable arm of giant U.S. retailer Walmart. With release of the study, the foundation announced a grant to help the IJM improve law enforcement efforts against human trafficking in the Thai fishing industry.

Neither Walmart nor the charity would specify the value of the grant.

Walmart spokeswoman Marilee McInnis told the Thomson Reuters Foundation by email that “combating forced labor remains a key challenge throughout the world.”

“Regardless of where it occurs in the global supply chain, Walmart is committed to help eliminate forced labor through transparency and collaboration,” she wrote.

Gary Haugen, the chief executive of IJM, said in a statement that “no person should have to live under the oppression or ownership of another.

“As consumers, we shouldn’t have to wonder if the products we’re purchasing are the result of violent injustice,” he said.
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The Standard & Poor’s rating agency cut China’s credit rating Thursday due to its rising debts, highlighting challenges faced by Communist leaders as they cope with slowing economic growth.

The downgrade added to mounting warnings about the dangers of increasing Chinese debt, which has fueled fears of a banking crisis or a drag on economic growth. Moody’s Investors Service cut its own rating for China in May.

S&P lowered its rating on China’s sovereign debt by one notch from AA- to A+, still among its highest ratings. The agency had given a warning sign of a possible downgrade in March 2016 when it changed China’s outlook to negative.

“A prolonged period of strong credit growth has increased China’s economic and financial risks,” S&P said in a statement. “Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

The ratings cut, announced after Chinese financial markets closed for the day, could raise Beijing’s borrowing costs slightly, but the more significant impact is on investor sentiment.

Phone calls to the Chinese Finance Ministry were not answered. After the Moody’s downgrade in May, the ministry said the agency had used improper methods and misunderstood China’s economic difficulties and financial strength.

Communist leaders have cited reducing financial risk as a priority this year. They have launched initiatives to reduce debts owed by state companies, including by allowing banks to accept stock as repayment on loans. But private sector analysts say they are moving too slowly.

Beijing relied on repeated infusions of credit to prop up growth after the 2008 global crisis.

That helped propel total nongovernment debt to the equivalent of 257 percent of annual economic output by the end of last year, according to the Bank for International Settlements. That is unusually high for a developing country and up from 143 percent in 2008.

Chinese economic growth fell from 14.2 percent in 2007 to 6.7 percent last year, though that still was among the world’s strongest.

The government is trying to make the economy more productive by giving market forces a bigger role. It is trying to shrink bloated industries such as steel and cement in which supply exceeds demand, which has depressed prices and led to financial losses.

Beijing is trying to steer the economy to slower, more sustainable growth based on domestic consumption instead of investment and exports. But growth has dipped faster than planners wanted, raising the risk of politically dangerous job losses. Beijing has responded by flooding the economy with credit.

Official efforts to rein in debt “could stabilize the trend of financial risk in the medium term,” S&P said. “However, we foresee that credit growth in the next two to three years will remain at levels that will increase financial risks gradually.”

S&P kept its outlook for China stable. It said that reflected expectations the country will “maintain robust economic performance over the next three to four years.”

“We may raise our ratings on China if credit growth slows significantly and is sustained well below the current rates while maintaining real GDP growth at healthy levels,” S&P said. “A downgrade could ensue if we see a higher likelihood that China will ease its efforts to stem growing financial risk and allow credit growth to accelerate to support economic growth.”

 
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On the sidelines of the United Nations General Assembly in New York on Wednesday, business and political leaders around the world met to urge cooperation on such issues as trade, investment and international technology to help boost globalization. Without integration between nations, such issues as the environment, economic development and the well-being of societies suffer. VOA’s Daniel Schearf reports from New York.
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U.S. central bank officials will hold off on the third interest rate hike of the year. But the Federal Reserve says it will go ahead with plans to unload its massive portfolio of Treasuries and mortgage bonds. The decision to delay the rate hike and reduce (or normalize) the Fed’s $4.5 trillion balance sheet had been widely expected. The more pressing question is who will lead the central bank when Fed Chair Janet Yellen’s term ends next year. Mil Arcega has more
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