Less than a week after China launched a WTO case targeting the EU solar sector (see Bridges Trade BioRes, 5 November 2012), the EU began anti-subsidy investigations into Chinese solar products reaching the EU market. The EU is concerned that Chinese solar manufacturers have access to government-sponsored credit at below-market rates, with loans that may be written off if they cannot be paid back.
The EU is already undertaking anti-dumping investigations, initiated in September this year (see Bridges Trade BioRes, 13 September 2012). The practice of “dumping” involves companies selling their products abroad at prices below normal market values, causing harm to the domestic industry of the importing country.
The two cases cover the full range of photovoltaic products, from solar panels to cells and wafers used in their production. They were launched on request of EU ProSun, an 25-member industry group led by Germany’s Solarworld AG. The anti-subsidy investigations will take 9 months, and if negative impacts of subsidisation are found, the EU must determine, within 13 months, whether to apply duties for a five-year period. While anti-dumping duties are relatively common, anti-subsidy duties are rarer, as injury is more difficult to prove and the applied anti-duties tend to be lower. In addition, anti-dumping investigations target sensitive political practices.
Competition in the solar sector is fierce, and profits have dropped sharply at a time when green subsidies are being cut back. The 40 percent drop in the global price of solar panels between 2006 and 2011 has largely been attributed to huge growth in Chinese solar panel production. Some analysts say that oversupply by Chinese solar panel manufacturers is to blame for damage to profits of European and US counterparts, with share prices experiencing a similar plunge. In 2011, China exported 60 percent of its solar products to the EU, which represented seven percent of China’s overall exports to the trade bloc. The investigations cover imports worth EUR 21 billion in 2011.
US anti-dumping and anti-subsidy duties receive final approval
The US, which initiated similar anti-dumping and anti-subsidy investigations related to Chinese solar products around a year ago, recently set duties at between 18 percent and 250 percent (see Bridges Trade BioRes, 15 October 2012). On 7 November, the US International Trade Commission unanimously voted to apply these anti-dumping and anti-subsidy duties for five years.
The investigation and duties have stirred controversy within the US solar industry, pitting solar panel manufacturers - which requested the investigations - against solar developers and installers as well as solar exporters to China.
However, while leading to major trade tension, may not have much impact on the basic problem of oversupply. “The economics of today, and supply and demand of today, aren’t going to change because of [the duties],” said Aaron Chew, a renewable energy analyst at the Maxim Group. Reportedly, China is also able to circumvent the duties by assembling components into cells in Taiwan or South Korea.
‘EU Raises Duty Threat on Chinese Solar Panels With Subsidy Probe,’ BLOOMBERG, 8 November 2012; ‘EU to investigate Chinese solar panel subsidies,’ BBC, 8 November 2012; ‘EU steps up solar power trade battle with China,’ REUTERS, 8 November 2012; ‘US approves five-year duties on China solar products,’ The China Post, 9 November 2012; ‘Solar Tariffs Upheld, but May Not Help in U.S.,’ NYT, 7 November 2012.
