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SolarWorld Circulates Petition for European Trade Complaint

SolarWorld AG is busy trying to get signatures from companies that make up at least 50 percent of manufacturing capacity in the European solar industry before bringing a formal complaint against Chinese producers to the European Union Commission, company spokesman Milan Nitzschke said Wednesday.

The company’s U.S. subsidiary, together with six other unnamed firms, already filed a similar complaint in the United States that the U.S. government has agreed to pursue. A first ruling could come as early as Dec. 2.

European laws only require companies representing 25 percent of production to sign a petition, but SolarWorld wants to exceed that threshold and is shooting to get 50 percent of production onboard, Nitzschke said in a telephone interview while traveling on business. He said he didn’t have SolarWorld AG’s production figures at hand, but said the company produces less than 20 percent of total European capacity and that the market is more fragmented in the EU than it is elsewhere.

He would not elaborate on who had signed on so far and who had refused, but he noted that as it happened in the United States, he expected some companies to join the complaint at the last minute. Others, like companies with operations in China, will refuse to join, he said, because they are worried about retaliation against their Chinese operations from the Chinese government.

Asked why SolarWorld chose to be the only company named in the U.S. complaint, Nitzschke said, “Someone has to do it.” He said SolarWorld is the biggest producer in the U.S. by far, so it was natural for the company to take the lead.

The company’s size, however, has created some pressure.

“The expectations are very high for us to do something similar in Europe,” he said.

Despite a lot of publicity about how cheap labor is in China, Nitzschke said the problem is not the low labor costs, which account for less than 10 percent of total manufacturing costs.

The Chinese can’t compete without subsidies because they don’t produce efficiently, he said. They have too many workers per machine, too many problems with quality management and their transportation costs are higher.

“Without subsidies they would have a zero chance of being competitive,” he said.

Filing in the U.S. first was a bit easier because the company has such a strong market position there and also because “there is a stronger sensitivity for this topic in the United States,” he said.

A possible complicating factor in Europe is the economic situation. EU leaders have been looking to the Chinese to bail them out of the current economic woes. It is unclear what effect this will have on the EU’s willingness to pursue an eventual complaint.

As for the U.S. complaint, many in the German solar industry are carefully watching its progress, but there has been little official comment on whether the suit is good for the industry or not.

Adam Krop, vice president for equity research at Ardour Capital Investments, said complaints like the one Solarworld filed in the States and is planning to file in Europe are not a good idea because they would make solar energy more expensive relative to the alternatives.

“A likely result would be a significant reduction in global solar volume growth as lower FIT structures are met with higher project costs,” he said. 

Should the complaints be approved, Chinese manufacturers would likely focus on their domestic market as well as India, Australia, the Middle East and South Africa, Krop said. “With or without the trade dispute we believe the Chinese market will be stronger than expected in the coming years as the government looks to build out solar infrastructure on the back of a recently introduced FIT program.”

But Krop warns that the EU and U.S. markets make up 80 percent of total solar industry volume this year, so limited access to those markets for the Chinese “would be devastating to manufacturers.”

The Federal Association of German Industries said its policy is not to comment on individual trade complaints – and besides it has a lot of competing demands under its roof so it’s hard to back one petition over the other. The Federal Environment Ministry was also mum.

The German Solar Industry Association issued a general statement against unfair competition, but didn’t name the SolarWorld complaint and refused to call for any actions that would exclude any market participants. It did cite a Roland Berger study conducted between April 2010 and March 2011, showing that the Chinese government made some $30 billion euros in low-interest credit available to seven large Chinese PV manufacturers.

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