The European Union and China reach an amicable agreement on PV imports, but not everybody is happy.
The European Union has reached an amicable agreement in its trade spat with China over the dumping of Chinese-made solar panels on the European market. But this does not mean an end to the ongoing saga, as European manufacturers see the agreement as more capitulation than compromise and plan to challenge the deal in the EU General Court in Luxembourg.
In a statement issued by the European Commission on July 26, EU Trade Commissioner Karel De Gucht said that he was satisfied with the offer of a price undertaking submitted by China’s solar panel exporters, as foreseen by the EU’s trade defence legislation, and that this was the amicable solution that both the EU and China were looking for.
“We are confident that this price undertaking will stabilise the European solar panel market and will remove the injury that the dumping practices have caused to the European industry. We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” the Commissioner said, adding that he intended to table this offer for approval by the European Commission.
EU ProSun, the EU solar industrial initiative that filed the original complaint against Chinese dumping practices, said in a statement that it would challenge the latest agreement in the EU General Court in Luxembourg. EU ProSun President Milan Nitzschke said that the agreement between the European Commission and China was contrary to European law and that it would threaten the very existence of the European solar industry, which has already lost 15,000 jobs.
In an attempt to explain the EU position, the Trade Commissioner said that the European Commission was faced with a situation where it was unable to accept injury to the European market caused by Chinese dumping, but at the same time it was not interested in a solution that would result in a shortage of supply in Europe, with consequent negative effects on the downstream industry and on consumers.
According to a statement from the Commissioner, the deployment of solar panels in the EU is an important element of European policy aimed at achieving 2020 renewable energy and CO2 reduction targets. As a result, demand for solar panels in Europe has been buoyant and exceeds Europe’s capacity to supply the technology, so the EU will continue to be reliant on solar panel imports, even after the injurious effects of the dumping are eliminated and the industry has recovered. The Commissioner believes that when the undertaking enters into force, European suppliers will see the shield against Chinese dumping go up from the 11.8% currently in place to 47.6% for those exporters who are not participating in the undertaking. The industry counterargument is that, with an expected solar market of 10 gigawatts in 2013, the EU has effectively awarded 70% of the market to products subsidized by the Chinese government, while the remaining 30% will be shared between European and other manufacturers from around the world, who will have to compete under market conditions.
In its original anti-dumping investigation, the European Commission found that Chinese dumping practices were life-threatening to the European solar industry and that a tariff of 47.6% should be introduced to protect European manufacturers. In order to cause the least possible disruption to the market, the tariff was phased in with an interim tariff of 11.8% which was set to jump to 47.6% on August 6, but this has now been avoided by the new agreement.
The Chinese responded to the original decision to introduce the tariff by opening an anti-dumping investigation into imports of polysilicon and wine from the EU. This move, seen as a tactical ploy by the Chinese aimed at heightening disagreements on the issue between individual EU Member States, would mainly affect France and Southern European nations, who had supported the tariff, with minimal effect on Germany and the UK, who opposed it. It is hoped that these related cases will be dropped as part of the settlement. Meanwhile, the EU will also continue a separate investigation into the possible illegal subsidies granted to Chinese solar manufacturers - so it seems likely that there will be further developments in this case.
Some independent observers have supported the position of the European manufacturers1, believing that the best that can be said of the compromise is that it has averted an all-out trade war, but that in reality the new price commitment deal is possibly even worse than the unilateral tariff initially proposed by Mr De Gucht, as it will inflict the same harm as an outright tariff (the higher purchase price will mean a fall in the number of installations and will penalize not only consumers but also installers and European polysilicon manufacturers) without generating the revenue that the tariff would have brought.
As regards the other sectors dragged into the PV dispute - specifically the wine and polysilicon industries, it can only be hoped that this deal will indeed preclude any further action from the Chinese side. Whatever the eventual outcome in this affair, it is generally felt that the Chinese have strengthened their hand and will be able to enter into future trade disputes on a firmer footing with more experience of exploiting European divisions to their own advantage, which can only be bad news for Europe.
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