The commitment made by the U.S. to abide by the World Trade Organization's (WTO) global trade rules was violated by 2012's decision to impose anti-dumping and countervailing duties on Chinese solar panels, the WTO ruled Monday.

A WTO panel judged the U.S.'s actions rule-breaking and that it amounted to illegal protection of its own solar producers, refusing to accept Washington's evidence that state-owned or partially state-owned enterprises in China accused of passing on the subsidies were, in fact, "public bodies."

Trade diplomats working on the $7.2 billion Chinese case have instead called on the U.S. Department of Commerce (DOC) to adapt its measures to bring them in line with the WTO agreements to which the nation is bound.

In response to the ruling, China's Ministry of Commerce issued the following statement: "China urges the U.S. to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises."

The initial trade case, launched in 2012 and led by SolarWorld, was in response in the U.S. to alleged state-support offered by the Chinese government to its solar companies that allowed them to drastically undercut their global rivals on cost.

However, while the WTO ruled in favor of the Chinese, some aspects of China's complaint were thrown out by the WTO - offering a crumb of comfort for U.S. trade representative Michael Froman. "With respect to the other findings in the panel report, the Administration is carefully evaluating its options, and will take all appropriate steps to ensure that U.S. remedies against unfair subsidies remain strong and effective," he said.

Solar industry responds
The ruling prompted two of the largest solar organizations in the U.S. into immediate response. The Solar Energy Industries Association (SEIA) - the national trade association of the U.S. solar industry - was notably cautious, issuing the following carefully worded statement: "We are continuing to follow developments closely, but the WTO's decision is not expected to impact either the 2012 U.S. solar countervailing duty (CVD) order against China, or any new CVD tied to the ongoing investigation until 2016, at the the earliest.

"It is also important to remember that this decision is subject to an appeals process, which could take approximately 120 days. Assuming the decision is upheld on appeal, the U.S. would then have approximately one year to implement the decision. But even then, it is not clear whether the decision will result in any substantive modification of a solar CVD order against China."

Jigar Shar, president of the Coalition for Affordable Solar Energy (CASE), was more vitriolic, stating: "CASE agrees with the WTO that some important parts of the protectionist 2012 U.S. solar tariff are inconsistent with our trade commitments to others. Even more importantly, they hurt American solar workers and slow the deployment of clean energy," said Shah, who reserved particular opprobrium for the DOC.

"Yet the American solar industry once again faces uncertainty and unnecessary price hikes due to a new round of legal actions at the DOC. June's countervailing duty determination is increasing module prices by 14%, and the DOC may attempt to further hike rates and expand solar tariffs with a preliminary anti dumping determination next week."

Shah added that this ruling by the WTO should prompt the Obama administration to reconsider the wisdom of additional solar tariffs, urging the president to "bridge the divide" between all parties concerned.

This ruling from the WTO is unrelated to the ongoing U.S. trade complaint against India, where stringent domestic content requirements in the country's solar sector have also drawn criticism from the U.S.