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EU Imposes Duties on Chinese Solar Panels, But Keeps Door Ajar for Talks

The European Commission has formally ruled to impose antidumping duties on Chinese solar panels, cells, and wafers, but is offering a short grace period of lower duties in the hopes of finding a resolution in broader trade relations.

A month ago, after a nine-month investigation, the EC concluded that Chinese solar panels sold in Europe should have fair value 88 percent higher than for what they are actually being sold. Their recommendation: provisional antidumping duties averaging 47.6 percent, and ranging from 37.3 to 67.9 percent, on more than 100 companies. That lower amount is attributed to a "lesser duty rule" which only aims to "restore a level playing field," the EC says.

Now the EC is formally imposing a two-month duty of 11.8 percent until August 6, at which point the aforementioned average would kick in. By no later than December 5, the EU says it will decide whether to impose final anti-dumping duties for a five-year period. The EC also is looking at potential anti-subsidy penalties on Chinese solar products; provisional duties (if any) are expected to be imposed by August 7 and final measured determined sometime in December.

Why the grace period? Simply put, Europe wants to prevent this dispute from erupting into an all-out trade war with one of its biggest partners, and might be willing to put aside these solar duties for the greater good. (Some media reports indicated China was already willing to talk but had been rebuffed; European officials denied that, saying no official negotiations were possible since no official determination had been issued.) "The EU has no interest in starting a trade war," according to an EC statement. Europe imported €11.5 billion worth of Chinese-imported solar products in 2012, but overall Chinese imports were €289.7 billion, roughly twice the value of products flowing back the other way, and the two nations' bilateral trade exceeds €1 billion per day. "The European Commission reaffirms its readiness to have the EU-China Joint Committee in the next weeks at a mutually agreeable date to discuss in a constructive manner all topics of our trade relations in line with our common WTO commitments and in the spirit of our strategic partnership," the EC said.

EU Trade Commissioner Karel De Gucht confirmed Europe's willingness to negotiate, but hardened the language describing the two-month level of lower duties as "a one-time offer to the Chinese side" to come to the table. "The ball is now in China's court," he stated. After meetings over the past year by himself and his staff with Chinese partners, "I hope today's decision will now provide the space for such discussions to move forward in a formal manner."

The EU is proposing that such negotiations would revolve around a "voluntary price undertaking," basically a promise by China not to sell below an agreed-upon minimum price (but one that will be monitored). "In essence, the system is made stable again if Chinese companies were to agree to re-establish fair pricing which reflects the true market value of these solar panels," De Gucht stated. "Let me be very clear: I want an amicable solution with our Chinese partners; that is also what Europe wants [...] there is no reason for this to last months if there is a sincere desire by our Chinese partners to seek a solution" through price-undertaking, he said. "But it is the role of Chinese exporters and the Chinese Chamber of Commerce to now step forward with a solution that removes the injury to the European solar panel industry."

Of course not everyone thinks the EU duties against Chinese solar components will be helpful. Two-thirds of European Union member states (18 out of 27) vote against duties, alongside warnings from hundreds of European solar companies, 15 regional solar PV associations, and various trade groups, points out the Alliance for Affordable Solar Energy (AFASE). "We need to be clear about one thing: The current market development leaves no room for price increases," and even these lower temporary duties "will put a halt to most of the PV projects in the EU and cause severe damage to the European solar value chain," stated Thorsten Preugschas, chairman of AFASE and CEO of German Soventix GmbH. Others argue that it's too little or too late to have a positive impact on Europe's manufacturing sector; AFASE points out that Europe' solar manufacturers are hampered by factors independent of recent Chinese competition, such as smaller production capabilities and "unfavorable polysilicon supply contracts that drive up costs."

Lead image: Cartoon sun playing tennis via Shutterstock

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