Bridges

An informal meeting between the EU's and China's top trade officials last Friday has yielded early advances toward a possible solution to their solar panel row, after weeks of heightened tensions between the two sides. However, both officials warned, an actual settlement is still some way off.

The two sides have spent the past couple of months at loggerheads, after reports emerged that the European Commission was planning to impose a 47.6 percent average duty on imports of Chinese-made solar panels and their component wafers and cells. The duties would be aimed at addressing alleged dumping by Chinese producers, a practice through which goods are sold at prices below their normal value overseas.

Brussels ultimately decided to stagger the duties, imposing an 11.8 percent duty earlier this month. (See Bridges Weekly, 6 June 2013) However, these will rise to the originally-planned 47.6 percent if the two parties cannot negotiate a solution by August.

In what some observers perceived as a tit-for-tat response, Beijing subsequently opened an investigation on imports of European wine.

Price undertaking?

Since the duties were first announced, there has been much speculation over what format an "amicable solution" could take. Brussels and Beijing are now said to be looking at the possibility of "price-undertaking" - in other words, a deal that would require Chinese producers not to sell these products below an established minimum price.

"We have more or less agreed on the structure," EU Trade Commissioner Karel De Gucht told reporters on Friday. Chinese Commerce Minister Gao Hucheng agreed, noting that the Friday talks with his European counterpart had been "positive."

Technical level talks are already well underway in Brussels, with the involvement of Chinese experts. (See Bridges Weekly, 20 June 2013)

Whether or not Washington will be involved in this process is still unclear, given that the US has already imposed its own anti-dumping and countervailing duties on Chinese solar cell imports. (See Bridges Weekly, 10 October 2012) While recently-confirmed US Trade Representative Mike Froman has already indicated that the US has been present during some of the preliminary discussions, further details have not been made available.

De Gucht: No "overnight" solution

EU Trade Commissioner Karel De Gucht stressed on Friday that Brussels' "one wish" is on reaching an amicable solution. However, he warned, such a result will not be achieved overnight.

"Everyone should be very careful not to jump to any conclusions - one way or the other - simply because there is no hard news on this issue today," he said.

Both sides have come under pressure to remedy the row before it escalates further, including from some of the EU's own member states - particularly Germany. China is the EU's second-largest trading partner, while the 27-country bloc is China's largest.

A separate Commission investigation into allegedly unfair solar subsidies is also underway, with Brussels expected to announce provisional findings in August. Some analysts warn that the results of this investigation may change the direction of the currently "amicable" negotiations and further complicate the prospect of reaching a solution.

ICTSD reporting; "EU, China Talk Toward Ending Rift on Solar Panels," ASSOCIATED PRESS, 21 June 2013; "End in Sight to EU-China solar spat," THE FINANCIAL TIMES, 22 June 2013.