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UPDATE: EU-China Solar Trade War Entering Endgame?

The European Commission has decided to recommend duties on Chinese solar panels up to 67.9 percent, according to reports from multiple sources.

Wall Street Journal reports that the tariffs will affect more than 100 companies, and be implemented at a range from 37.3 to 67.9 percent at an average of 47.6 percent, close to projections earlier this week. Companies will face tariffs as follows:

  • Suntech and its subsidiaries: 48.6 percent
  • LDK Solar: 55.9 percent
  • Trina Solar.: 51.5 percent
  • JA Solar: 58.7 percent

Other companies that cooperated with the investigation will likely be hit with a 47.6 percent tariff, while those that did not cooperate will face a 67.9 percent tariff.

China strongly opposes the tariffs and is calling for extended dialogue to resolve the situation, according to Bloomberg. The Alliance for Affordable Solar Energy (AFASE) also expressed its concern in a statement, claiming that punititve tariffs at any level will cause "irreversible damage to the entire European Photovoltaic value chain."

Last November the U.S. handed down antidumping and countervailing duties. Europe already was eyeing actions against China's solar manufacturers in motion for more than a year, before the U.S.' own trade case was finalized, though presumably the U.S.' decision provided momentum.

The EC's preliminary decision on antidumping was scheduled for early June, followed by a preliminary ruling on antisubsidies in August. Both are expected to be finalized in December.

In recent weeks the EC has further tightened the screws on Chinese solar imports, first requiring registration of panels, and more recently initiating antisubsidy and antidumping investigations into solar glass from China. The latter, spawned by a complaint by EU ProSun Glass, is a distinct investigation from the Chinese solar panel investigation, and is said to be not formally affiliated with the SolarWorld-led "EU ProSun" coalition which launched the broader solar complaint a year ago.

Not all of Europe is united in this solar dispute. The Solar Trade Association (STA), a collection of EU national industry associations — UK, Italy, Romania, Poland, Hungary, Sweden, and Slovakia — has expressed "deep concerns" and "overwhelming opposition" in an open letter to European Trade Commissioner Karel De Gucht, arguing that the EC's investigation into Chinese solar manufacturers already has been damaging. "The impact on employment and EU value added will far outstrip any impact that the duties may have on EU photovoltaic producers, particularly because these producers are struggling with structural issues that cannot be efficiently addressed through the imposition of duties," they say. "Duties at any level are already having a significant impact, dwarfing any possible benefit for European solar producers and setting back the objective for grid parity for years." Meanwhile, China and France have been formally discussing broader "economic relations and the cooperation of common interest," including having the French urge the EU "to cautiously utilize trade remedy measures" regarding the PV investigations.

And China has repeatedly suggested it might retaliate with its own probe into US and European polysilicon suppliers. "I continue to not understand the logic" of a retaliatory Chinese penalty on silicon imports, said Thomas Gutierrez, president and CEO of GT Advanced Technologies, which makes equipment for producing the silicon starting material for solar cells and modules, days ago during the company's quarterly results conference call. "China can't support itself in high-quality production of polysilicon. And if they put tariffs on polysilicon, they're going to increase the cost of their already profitless wafer and cell manufacturing industry."

Among the arguments lobbed in the EU/China trade dispute is the issue of jobs at risk, as it was in the U.S./China dispute. A report earlier this year suggested nearly a quarter of a million jobs might be at stake across several European countries, potentially wiping out €18.4-€27.2 billion of market activity. Chong Quan, deputy international trade representative with China's Ministry of Commerce, has suggested 400,000 Chinese workers could be affected by Europe's solar trade decision. The STA acknowledges the European Photovoltaic Industry Association's calculation of a €39.4 billion value in the PV value chain and "no less than 265,000 jobs — but that the companies behind Europe's antidumping investigations "represent no more than a maximum of 8,700 jobs," or at most 3 percent of all jobs in the PV value chain, according to the STA.

Both types of trade disputes have dangerous consequences on the overall global market. "If domestic requirements are forced to be abandoned and incentive policies changed radically, that would change demand in specific countries," explained Michael Barker, senior analyst at Solarbuzz. The upstream trade disputes, meanwhile, could change supply arrangements across key regions; placing duties on products "could change investments going forward and short-term supply."

"Trade issues are big — but PV demand is driven more by local policy and regulatory movements than by cost," Barker said. As costs come down, so do incentive policies — even down to the city level. "While the cost portion is certainly very important, it's also what countries are doing at the local level to make it easier, or harder, for PV to be competitive or get ample returns," Barker said. "Local regulations and policies will be the ones enabling end-market demand, or hindering it."

Lead image: Fingers pointing to each other via Shutterstock

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