EU Investigation Finds China Solar Manufacturers Got Aid, Tensions Increase

Chinese solar-panel makers received subsidies, a European Union investigation showed, increasing the likelihood of EU tariffs on imports of the renewable-energy technology from China to counter trade-distorting state aid.

The European Commission has concluded in the probe opened last November that Chinese manufacturers of crystalline silicon photovoltaic modules or panels, and cells and wafers used in them, benefited from preferential lending, tax programs and other aid, an EU official said today in Brussels. The inquiry is one of two that the commission is conducting into alleged unfair Chinese trade in solar goods.

The commission, the 28-nation EU’s regulatory arm, on Aug. 2 approved an agreement with China to curb Chinese shipments of solar panels as part of a parallel probe into below-cost sales, a practice known as dumping. The accord, which took effect on Aug. 6, sets a minimum price and a volume limit on EU imports of Chinese solar panels until the end of 2015.

The findings in the anti-subsidy case do not undermine the Aug. 2 agreement, said the official, who asked not to be identified, citing policy. Chinese manufacturers that take part in the pact are being spared provisional EU anti-dumping duties as high as 67.9 percent.

The commission is engaged in a political balancing act as it seeks to limit Chinese competition against European manufacturers such as Solarworld AG. The dumping and subsidy cases cover EU imports valued at 21 billion euros ($28 billion) in 2011. EU governments, acting on proposals from the commission, must decide by early December on any “definitive” measures against China.

Import Prices

With Chinese companies such as Yingli Energy (China) Co. and Wuxi Suntech Power Co. controlling 80 percent of the EU solar-panel market and China’s government opposed to any trade protection in Europe, some European governments including those in Berlin and London have expressed opposition to anti-dumping duties to boost import prices. That led in June to commission negotiations with China on a settlement of the dumping case.

On Aug. 7, the commission decided against imposing preliminary anti-subsidy tariffs on Chinese solar panels. It said the accord reached with China in the dumping case removed the injury suffered by EUsolar-panel producers while pledging to “continue working actively” on the subsidy case.

The EU normally doesn’t double count when calculating the level of trade protection planned in dumping and subsidy inquiries. The bloc also generally fixes the level below the dumping and subsidization margin when the lower level is sufficient to remove the injury to EU manufacturers. As a result, any EU decision to impose definitive anti-subsidy duties on Chinese solar panels may lead to a corresponding reduction in the level of anti-dumping duties.

Copyright 2013 Bloomberg

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