In a widely anticipated ruling, the International Trade Commission voted unanimously on Friday to continue investigating government subsidies in the Chinese solar industry in response to an anti-dumping petition filed by seven American solar companies in October. From Reuters:

The U.S. International Trade Commission voted 6-0 that there was a reasonable indication that SolarWorld Industries America and other U.S. producers have been harmed by the imports or could have been.

The vote allows the Commerce Department to continue an investigation into whether the Chinese government provides illegal subsidies for its solar energy sector and whether Chinese companies are selling solar cells and panels in the United States at unfairly low prices.

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A preliminary decision on countervailing, or anti-subsidy, duties could come as early as January, although Commerce can delay a decision until March when it is set to announce preliminary anti-dumping duties in the case.

A final decision on duties is a year away. But preliminary duties — in form of bonds or cash deposits that importers are required to post — usually discourage trade.

Executive Ben Santarris of SolarWorld – the American solar panel maker which filed the trade complaint – told Renewable Energy World that those who oppose the complaint are looking too short-term and don’t understand what’s really at stake. In the same piece, however, Carbon War Room’s Jigar Shah echoes recent comments made in Forbes by solar executive Mike Hall and worries that the trade dispute could cost U.S. solar companies their relevance:

“If this happens today, it will create more uncertainty and make our ascendancy as a technology at risk,” said Shah, who also co-founded a coalition of solar-based companies opposed to the trade complaint. “There are actual companies that have bet their entire life savings into the development of solar projects that will be negatively hurt by this, and they will go out of business because the panel prices that they have locked in with a supplier will go up substantially. That puts some negative pressure on solar in the U.S.”

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There is a way out of this, says Shah. There is considerable political momentum to take a hard stance against China, and much of that is coming from Democrats. Oregon Sen. Ron Wyden in September wrote a letter to President Obama urging his administration to place tariffs on Chinese panels. President Obama himself recently weighed in on the issue, telling an Oregon television station that the U.S. would be aggressive in enforcing trade laws.

One hope for those who concede that laws may have been broken but that the cheap prices are too important to the American industry is for the ITC to rule in favor of SolarWorld but to implement a very low penalty on products coming into the United States, perhaps as low as 1 percent. It’s hard to imagine that SolarWorld would view such a scenario as a victory, but Shah says that type of outcome could allow America to take a stand for both trade laws and America’s solar industry.

While the ITC proceeds with its investigation, China’s Ministry of Commerce has answered the calls of their domestic solar makers and begun its own investigation into U.S. government support and subsidies for its renewable energy sector. The Ministry of Commerce put out a statement on its web site Saturday claiming that the ITC ruling smacks of protectionism. From Reuters:

“The ruling was made without sufficient evidence showing U.S. solar panel industry has been harmed and ignored defenses from Chinese firms as well as opposition from the U.S. domestic industries and other stakeholders,” the ministry said.

“China is deeply concerned with the decision, which does not tally with facts and highlights the United States’ strong tendency for trade protectionism.”

China also hit back by saying that the U.S. should “objectively analyze why some of its solar panel firms lack competitiveness.”