The Sino-European spat over trade in solar panels has continued to escalate in recent weeks, with officials in Beijing warning that Brussels’ planned anti-dumping duties could have severe implications for their bilateral relationship. Meanwhile, conflicting news reports have also emerged over the past few days regarding whether a negotiated settlement aimed at defusing the row may soon be on the horizon.
Tensions between Brussels and Beijing on the solar trade subject have been running particularly high ever since reports emerged earlier this month of the European Commission’s plans to impose duties on solar panel imports from China. (See Bridges Weekly, 8 May 2013) The provisional duties are set to average 47 percent, with a range of 37 to 68 percent.
The duties are expected to be approved by early June. The Commission must then determine whether to alter - or revoke - the final duties by December.
These particular duties are aimed at targeting the practice of dumping, which involves companies selling their products abroad at prices below normal market values, causing harm to the domestic industry of the importing country. They are the result of an investigation that the Commission launched last September in response to a complaint by the EU Pro Sun coalition, a group of 25 European solar panel manufacturers headed by the German-based SolarWorld. (See Bridges Weekly, 12 September 2012)
The same coalition of companies that lodged the anti-dumping complaint has also asked the Commission to determine whether China’s producers had received unfair subsidies; the results of that investigation are expected by August. (See Bridges Weekly, 14 November 2012)
The 27-country EU bloc is China’s main export market for solar panels, making up nearly 80 percent of all Chinese export sales, according to European Commission data. In 2011, for instance, the Asian country exported €21 billion worth of solar panels and their main components to the EU.
The US, for its part, already has both anti-dumping and anti-subsidy - also known as countervailing - duties in place on imports of Chinese solar cells, following a separate investigation conducted by the US Department of Commerce last year. (See Bridges Weekly, 10 October 2012)
As Beijing rhetoric ramps up, Berlin warns against duties
Since the news broke of the Commission’s decision, Chinese officials have stressed that the imposition of these duties could have major ramifications for Brussels-Beijing trade ties. Commerce Ministry spokesman Shen Danyang warned last week, for instance, that such a move would “seriously damage” the bilateral relationship.
“The abuse of trade remedy measures in a reckless and arbitrary manner will… do nothing to solve trade frictions and will also impede the progress of economic recovery and severely dampen confidence,” Shen said, in comments reported by Agence France Presse.
The implications of a trade fall-out with Beijing has also caused strains within the EU bloc, with Germany putting pressure on the European Commission to refrain from imposing the measures. The provisional duties, Economy Minister Philipp Rösler said on Sunday, are a “grave mistake.”
“I expect the Commission to do everything to prevent a trade conflict,” Rösler said, in comments reported by Reuters. Referring to China’s warning that the duties would affect bilateral ties, he urged the Commission “to seek a resolution with negotiations and dialogues instead of threats.”
Possible settlement?
Officials close to De Gucht have repeatedly said that, despite the anti-dumping investigation’s provisional findings, he would be open to a negotiated solution.
Rumours of a possible settlement have since emerged, after both the New York Times and Bloomberg reported on Tuesday that Beijing is involved in preliminary discussions with both Washington and Brussels on a solution that would effectively raise the price of solar panels being imported from China through export quotas and minimum prices on equipment.
However, US Trade Representative spokeswoman Carol Guthrie told Reuters on Tuesday that Washington is not yet actively negotiating a joint settlement. EU Trade Commissioner Karel De Gucht, in separate remarks reported by the news agency, has also said that Washington and Brussels have not “teamed up.”
Whether or not the two sides are indeed engaged in any individual discussions with China, however, was unclear at the time of this writing.
EU solar industry remains split
The solar row has also deepened divides within the EU domestic solar industry. While producers of solar panels and cells have long lobbied for the duties in order to level an allegedly unfair playing field, importers of these products that use them further down the production chain have argued that the measures could actually have damaging effects for renewable energy production as a whole.
“If the European Commission acts now against illegal dumping by Chinese solar manufacturers, this industry can survive and prosper,” said Milan Nitzschke, President of EU ProSun, in a statement earlier this month.
“If the EU does not act, EU ProSun predicts a Chinese solar monopoly with disastrous consequences for European manufacturers, suppliers, and customers.”
However, the Alliance for Affordable Solar Energy - a separate coalition of 450 European companies, including raw materials suppliers, installers, and project developers - has argued that the duties could end up hurting the EU job market and negatively impacting demand for photovoltaic products.
“If prices are artificially increased by punitive tariffs, the European solar market would simply come to a standstill with disastrous effects on green jobs,” said Wouter Vermeersch, CEO of the Belgian company Cleantec Trade.
ICTSD reporting; “U.S. and Europe Prepare to Settle Chinese Solar Panel Cases,” NEW YORK TIMES, 20 May 2013; “German minister calls EU move on China solar ‘grave mistake’,” REUTERS, 19 May 2013; “No ‘active’ U.S.-EU-China solar talks under way: USTR,” REUTERS, 21 May 2013; “China warns EU to drop telecom probe, solar panel tax,” AGENCE FRANCE PRESSE, 16 May 2013; “EU not coordinating with Washington on China solar dispute,” REUTERS, 21 May 2013.
