EU trade chief vows no U-turn in solar panel row with China

Karel de Gucht.jpg

EU Trade Commissioner Karel De Gucht bluntly told China and leading European states that they were wasting their time trying to put pressure on him to drop plans to impose punitive import duties on Chinese solar panels.

The European Commission accuses China of flooding Europe with cheap solar panels sold at below the cost of production, and intends to impose duties.

That has prompted energetic lobbying from Beijing against the move and divisions have emerged among EU countries on the issue, foreshadowing a bruising internal battle over how to respond to China's trade practices.

A majority of European countries, led by Germany and Britain, oppose Gucht's plans to levy tariffs of 47% on solar panel imports from China next month, according to a survey by Reuters.

De Gucht, who met Chinese Vice-Minister of Commerce Zhong Shan in Brussels on Monday , confirmed there was widespread resistance among member states, but said governments were clearly being lent on by Beijing.

The Chinese "are not going to impress me by putting pressure on member states," De Gucht told the European Parliament's influential trade committee on Tuesday (28 May).

"I couldn't care less whether that happens with … the biggest and most populous state in the world. For me it is the same. So they can try to put pressure on member states, but they will waste their time trying to do so with me," De Gucht said.

Largest trade challenge

The solar case is the largest the Commission has undertaken, with about €21 billion of Chinese-made solar panels sold in the EUThe split between the commission and EU member countries, as well as division among the bloc's 27 governments, sets the European Union up for a potentially debilitating dispute over how to deal with China, its second largest trade partner.

France and Italy support De Gucht and say China's rapid rise in solar panel production – to more than total global demand – could not have happened without illegal state support. They blame Chinese overproduction for the loss of thousands of EU jobs in the sector.

But countries such as Germany, Britain, Sweden and the Netherlands do not want duties on Chinese solar panels because they are worried about retaliation from China and being shut out of its lucrative markets.

Chinese diplomats in Brussels said in a statement late on Monday that if the European Commission were to impose sanctions "the Chinese government would not sit on the sidelines, but would take necessary steps to defend its national interest".

The case also has implications for how Europe handles another complex dispute, over Chinese telecoms equipment makers.

The Commission accuses Huawei and ZTE of dumping in Europe and gaining almost a quarter of the EU market by unfair means, a sensitive security issue as more and more European firms rely on cheaper Chinese equipment to run their mobile networks.

European manufacturers Ericsson, Alcatel-Lucent SA and Nokia Siemens Networks also fear retaliation if the Commission acts against Huawei and ZTE.

Division over Europe's strategy on China is even more difficult to resolve because in the solar panels case the Commission has set in motion a process within EU law that cannot be stopped easily.

A group of European firms led by Germany's Solar World complained of Chinese dumping last year and the Commission launched an investigation in September.

The Commission is now legally obliged to act, because it has found clear evidence of dumping by Chinese producers, according to a copy of its solar investigation obtained by Reuters.

Background

The European Commission intends to open negotiations with China to reach an investment agreement that could lead to a broader trade deal if the two partners can overcome anti-dumping disputes, said the EU executive on 23 May.

The announcement came as Brussels and Beijing are at odds after the European Commission agreed 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.

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