This article is part of our special report Sunlight at the end of the tunnel?.
EU trade defence measures on solar imports from China are, in effect, a European Commission-backed cartel, which benefits only German and Chinese panel producers and makes the fight against climate change more expensive, MEP Christofer Fjellner has said.
Christofer Fjellner is a vice-coordinator of the European Parliament’s Trade Committee and a substitute member of the Environment Committee. The Sweden Moderaterna lawmaker (EPP), spoke to euractiv.com News Editor James Crisp.
What is the feeling in the European Parliament when it comes to free trade?
I would say that there is clearly a wave of protectionism that is sweeping all over the world and that’s clearly present in the European Parliament. You can see by looking at the WTO that there has been a sharp increase in trade defence instruments all over the world and the European Parliament is no exception. The first thing that almost always comes is new calls for anti-dumping duties and use of trade defence measures.
But I have actually never met a protectionist or no one who calls themselves that! I’ve met a lot of people that claim the need for protection for X,Y or Z but they don’t call themselves protectionists.
What’s driving this desire to shut up shop?
When you are in dire economic times, that is when free trade is most needed. Normally, the way to get the economy moving in such situations is to use taxpayer’s money and call it investment. But we have kind of run out of taxpayer’s money! When growth is low, people tend to protect what they have instead of opening up the economy to competition to improve growth. It’s an illogical logic but it has been around forever.
You’ve said the Greens are guilty of this…
Nobody admits to being a protectionist but we have a hell of a lot of them and most of them come from those people who think you can foster economic growth by telling other people what to do rather than opening up the economy. That again is a conflict in politics and ideas that’s been around for hundreds of years.
Today, a lot of those who want to tell people what to do come from the Greens. The most provoking examples of that are in the application of trade defence instruments. The very ones hailed by Greens have, with the precision of a surgeon, been targeted towards renewable energy. We now have antidumping on all forms of renewables – biodiesel, ethanol, even the plastic that covers our windmills.
Some even claim the tariffs are too low. One example of this provoking protectionism is the Green Goods Agreement. It would remove tariffs on green goods and the Greens are the most vocal opponents to it.
We have no tariffs on oil, coal or any of the fossil stuff. They even oppose the removal of tariffs on bikes. It’s unbelievable .
But aren’t these measures needed to protect European jobs?
Anyone who thinks you can protect jobs by protectionism will preserve what is uncompetitive and old, and make us the losers of globalisation.
Soon Portugal will be exporting T-shirts to China when China will be exporting airplanes to Portugal. If the EU doesn‘t adapt to globalisation, we will be run over.
Is the problem that people are scared of China’s economic and manufacturing muscle?
Sure, and a lot of people are upset with how the Chinese run their economy, with the subsidies and lack of a transparent marketplace. Saying that, I have spent most of my political life being criticised for not subsidising solar panels. When it comes to dumping solar panels on the EU market, the people who should really be upset are the Chinese taxpayers!
Imagine if Russia through Gazprom had subsidised the gas they sell to the EU. Or Saudi Arabia said we will give you oil for free. Do you think the reaction would have been “No, we are upset with this and we will hit you with tariffs”? And it is not as if OPEC is run on a regulated market basis.
Do the fears over Chinese dumping of steel and its effect on the European steel industry play into this?
We have plenty of anti-dumping duties on steel. We have over 27 measures on steel. Probably one of the sectors, along with chemicals, where we have the most trade defence instruments in place. One could argue that we need to drive up the price of steel in Europe but we should also ask ourselves how many less Mercedes cars we will be able to sell to China as a result.
Is there a risk of Chinese retaliation? A trade war?
We will probably have retaliation on top of the decreasing competitiveness of European industry. But steel is less of an influence that the general mood towards trade defences and protectionism.
The European Commission wants to show it is tough on China but if we want to be WTO compatible, we have to be less discriminatory towards China.
The expiry review was extraordinarily stupid because it was declared in Paris during the UN Climate Change Conference, while negotiations were ongoing.
Can the EU hit its climate and energy targets with the duties on Chinese solar products in place?
Solar is, of course, important. How important is down to other policy choices. We can probably hit the targets but this is an important tool and it will be expensive if we don’t use it. The tariffs create costs and makes our fight against climate change a lot more expensive and it is not as if we have too much money to fight climate change!
One thing about the tariffs; their construction through the minimum import price removes competition in the solar sectors. The level of the minimum import price was supposedly agreed by Germany and China, the two largest producers. As has been said in the past, when two producers meet together, they conspire against the consumer.
You’re saying it is a cartel?
They have managed to get a European Commission sanctioned, controlled, and enforced cartel. The reason I don’t get Chinese producers complaining – as I did before the measures were imposed – is that we have a lot of Chinese producers making damn good money.
Should the EU grant China market economy status?
The person who called it market economy status is either an idiot or very good at public relations. This has nothing to do with whether China is a market economy. I think the EU should live up to its WTO obligations and respect the treaty it signed up to in 2001. The treaty says there would be a transitional period of 15 years when non-standards of calculating anti-dumping could be used but that period is nearly over. All the lawyers say that we have to change our relation with China when it comes to trade defence instruments.
But I think we will miss the 11 December deadline in the treaty, we will have retaliation and we will be sued by China. Our own lawyers say we will enter an illegal situation on 11 December and the Commission has not presented any proposal to change that.
But the Commission must respect the legal framework of fair competition.
After 11 December, we will be the ones breaking the law, not China. Before then, the EU can use the current evaluation method, which makes it possible to find dumping wherever you want.
Maybe the law itself is flawed but in the case of solar panels I would question if the Commission has followed the legislation which asks for an ‘interests of the Union’ test.
This is a test to see if it is in the wider interests of the EU not to continue with trade defence measures. Do the measures on Chinese solar products fail that test?
27% of EU solar producers filed a complaint with the Commission saying they were hurt by Chinese dumping but there is another side to that coin. What about the climate targets? What about the downstream users? 80% of the value of solar panels is created downstream – this really sits badly.
In this case, it is hard to see how it could possibly be in the Union interest to strike down on renewables and make them more expensive.
The European Commission decided in 2013 to 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.
Marking an escalation of the dispute, China hit back a few months later by launching a probe into the EU wine sector.
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.
Germany's then-Federal Minister of Economics and Technology, Philipp Rösler, said the European Commission made a "grave mistake" by agreeing to duties on solar panels from China and urged the Commission to work to prevent the eruption of a trade conflict.
Brussels and Beijing finally reached an "amicable solution" in July 2013, agreeing to a minimum price for solar panel imports.
Some angry European solar panel makers blasted the deal as "unacceptable and completely against European interests,” vowing to take their case to the European Court of Justice.