Merkel, Li want to end solar trade row

Merkel and Li China premier 3.JPG

German Chancellor Angela Merkel and Chinese Premier Li Keqiang on Sunday  (26 May) called for an end to a trade row between Europe and China over solar panels and wireless equipment, telling a joint news conference they were both for free trade.

The European Union accuses China of pricing its solar panels and mobile telecom devices too cheaply and "dumping" them in Europe to corner the market. It plans to impose duties on Chinese panel makers.

China denies the allegations.

Merkel said Germany would do everything it could to prevent the trade dispute from escalating to the point where the European Commission imposed import duties on Chinese panel makers.

"Germany will do what it can so that there are no permanent import duties and we'll try to clear things up as quickly as possible," Merkel told reporters after a meeting with Li in Berlin. "We don't believe that this will help us so we want to use the next six months intensively."

The call comes after German Economy Minister Philipp Rösler said last week that the European Commission made a "grave mistake" by agreeing to impose punitive import duties on solar panels from China and urged the Commission to work to prevent the eruption of a trade conflict.

The European Union is considering whether to impose punitive import duties on solar panels from China after the United States levied its own duties last year – a move opposed by Beijing.

China has threatened to retaliate if the EU pushes ahead with the investigation.

Not only Germany is against imposing the duties. Reportedly as many as 15 of the 27 EU member states have voiced their opposition.

Li, standing next to Merkel at the briefing that followed the signing of a range of business agreements, said a trade dispute between the EU and China would harm both sides and benefit neither.

He said China was interested in both a two-way dialogue and consultation on how to resolve the issue.

"We don't agree with this decision and emphatically reject it," Li said, adding the step was "especially dubious" because the global economic recovery was still in fragile shape.

"It not only endangers jobs in Germany. It will also endanger the development of the sector in Europe. That will harm the interests of the European consumers and Europe's industry."

European Trade Commissioner Karel De Gucht said earlier this month that the Commission agreed in principle to open an anti-dumping and anti-subsidy case against China, but would first seek to negotiate a solution with Chinese authorities.

Merkel told the news conference that it was a "somewhat complicated situation" because the Commission has the authority to launch a procedure on its own. She said she believed a trade dispute could still be prevented with dialogue.

"Germany will do all it can so that this won't lead to import tariffs," she said. "That's not something we believe in."

The EU is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports to the EU totaled €290 billion last year, with €144 billion going the other way.

China also announced on Sunday it would hold informal talks with the European Commission today to try to defuse the row over solar panels and mobile devices.

Trade disputes between China and Europe have multiplied as commercial ties have deepened. Eighteen of 31 trade investigations conducted by the European Union involve China.

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.

Timeline

  • 6 June 2013: The Commission to decide whether to impose duties averaging 47% on imported solar panels from China.

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