The European Commission has confirmed its intention to impose duties on imports of Chinese solar panels from Thursday (6 June), triggering an immediate response from China, which announced the launch of an anti-dumping and anti-subsidy probe into European wine.
Under pressure from Germany, which fears retaliation from China could hit its export-dependent economy, the European Commission had attempted to tone down the dispute by announcing an initial duty of 11.8%, far lower than the average 47% that had been planned.
The shift reflected the Commission’s desire to avoid a trade war, while also acknowledging opposition to duties from 18 of the EU's 27 member states, led by Germany and Britain.
EU Trade Commissioner Karel De Gucht, a Belgian lawyer and advocate of free trade, on Tuesday (4 June) defended the duties as an emergency measure to provide "life-saving oxygen to a business sector in Europe that is suffering badly from this dumping."
Chinese firms have captured more than 80% of the European solar panel market, from nearly zero a few years ago, and China's solar panel production is 1.5 times the global demand, according to the European Commission.
"This is not protectionism. Rather it is about ensuring international trade rules also apply to Chinese companies – just like they apply to us," De Gucht said.
China's Commerce Ministry said it noted the lower initial rate, but called on the EU to "show more sincerity and flexibility to find a resolution both sides can accept through consultations".
De Gucht: ‘The ball is in China’s court’
While the European Commission has the final say on trade issues, it does not want to be seen to be acting against the interests of member states.
"This is a one-time offer to the Chinese side, providing a very clear incentive to negotiate," De Gucht told a news conference. "It provides a clear window of opportunity for negotiations, but the ball is now in China's court."
De Gucht said the 11.8% duty would apply until 6 August. If no settlement is reached, the average rate will then rise to 47.6%, in effect blocking China's market access. In December, that rate will be put in force for five years.
One Chinese source close to the talks said: "If we face a loaded gun to our heads, it is not a fair negotiation, but at least it creates room for both sides to find a solution."
EU countries divided
The case has tested whether EU governments can unite behind the European Commission on global trade issues and overcome worries about retaliation.
Germany and Britain say their companies could be disadvantaged in China's growing markets such as financial services and telecoms if Brussels hinders Chinese business in Europe.
But France and Italy argue that Chinese firms are unfairly benefiting from state subsidies that allow them to flood Europe with cheap goods and undercut local producers.
The European solar energy market, the world's biggest, is dominated by Chinese suppliers including Yingli Green Energy, Suntech Power Holdings Co Ltd, Trina Solar Ltd and Canadian Solar Inc.
China hits back on French wine
Responding to the EU solar case, China announced the launch of an anti-dumping and anti-subsidy probe into European wine, a move that is expected to hit France and Italy hardest.
China's Commerce Ministry said it has “already received an application from the domestic wine industry, which accuses wines imported from Europe of entering China's market by use of unfair trade tactics such as dumping and subsidies".
"This is impacted upon our wine industry, and [they have] asked the Commerce Ministry to begin and anti-dumping and anti-subsidy probe," the ministry added.
"We have noted the quick rise in wine imports from the EU in recent years, and we will handle the investigation in accordance with the law."
China imported 430 million litres of wine last year, of which more than two-thirds came from the EU, according to Chinese customs figures.
Imports from France alone came to 170 million litres.
MEP Daniel Caspary, a German lawmaker from the centre-right European People’s Party (EPP), welcomed the Commission announcement, saying Brussels had stretched out its hand to China by announcing lower tariffs in order to avoid an all-out trade war.
“This is a fair offer made in a spirit of partnership," said Caspary, EPP spokesperson for the Parliament’s international trade committee. "Now it is up to the Chinese government to demonstrate its will to deepen the economic partnership with the EU, and take the necessary measures to prevent local producers from using dumping products to break into the European market".
"China has to show it is willing to stick to the rules of a globalised economy," he said.
"These duties are going to damage businesses that install solar panels, and force up prices for consumers,” said British MEP Robert Sturdy (European Conservatives and Reformists) the vice-president of the Parliament’s international trade committee.
"We are sending out very bad signals about our environmental commitment and our trading relationship with Asia. If the EU is to grow its economy then we need to put the wider picture ahead of parochial interests and make trade defence decisions based on the wider ramifications that they could have."
Businesses underlined that the EU’s decision had yet to be fully implemented and left room for negotiation.
“It is important to remember that a final decision regarding this anti-dumping investigation will only be made by December this year, and that definitive duties, if any, will be decided by the Council representing the 27 European Member States,” said a statement from the European Photovoltaic Industry Association (EPIA).
EPIA had maintained a neutral position in this case, adding: “The fast price decrease observed over the last two years has resulted in negative margins over almost the entire value chain of the solar PV industry and put many of its players in severe financial difficulties.”
By contrast, EU ProSun, a coalition of European solar manufacturers, welcomed the Commission’s move.
“We are relieved that the European Commission finally introduced concrete measures today against Chinese dumping, which has already cost thousands of jobs and over 60 factory closures in the European solar industry,” ProSun said in a statement.
“Dumping is fraud and harms the future of solar energy and must be relegated to the past. Therefore, we also welcome negotiations with China, because now it is China´s turn to act. To date, China financed its dumping and has burned an enormous sum of money. Now the Chinese government must put forward proposals that result in dumping being stopped permanently.”
The European Commission announced in May that it would impose punitive import duties on solar panels from China in a move to guard against what it sees as dumping of cheap goods in Europe
Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand.
EU producers say Chinese companies have captured more than 80% of the European market from almost zero a few years ago, exporting €21 billion to the European Union in 2011.
As a result, Chinese-made panels are as much as 45% cheaper than those made in Europe, industry executives say.
But while some European and US manufacturers would welcome EU action, installers and prospective purchasers of solar technology are concerned that such a move will drive up the cost of solar panels, leading to a slowdown in the deployment of the technology and job losses across the industry.
- Until 6 Aug.: 11.8% duty rate applies to imports of Chinese solar panels to Europe.
- After 6 Aug.: If no settlement is reached, the average rate will then rise to 47.6%.
- December: 47.6% rate could be put in force for five years.
- Press release: EU imposes provisional anti-dumping tariffs on Chinese solar panels (4 June 2013)
- Memo: EU imposes provisional anti-dumping duties on Chinese solar panels (4 June 2013)
- Speech by Karel De Gucht on the decision to impose provisional anti-dumping measures on imports of solar panels from China (4 June 2013)
- Frequently asked questions: On the European Commission’s decision to impose provisional duties on imports of solar panels from China (Case AD 590) (4 June 2013)
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