European Commission Imposes Duties on Chinese Solar Panels

6 June 2013

The European Commission confirmed on Tuesday that it would be imposing anti-dumping duties on imports of Chinese-made solar panels, as well as their component wafers and cells. The provisional duties, however, have been temporarily scaled-back in order to allow some time for the two sides to seek an amicable solution.

The duties, which entered into force yesterday, will amount to 11.8 percent for the first two months. Following that period, the average duty will increase to 47.6 percent, with a range of 37.2 to 67.9 percent depending on the specific producer involved. These fees, the Commission says, are aimed at "levelling the playing field" in response to alleged dumping by Chinese producers - defined as selling products abroad at prices below their normal value.

The investigation is still ongoing, however, with final results required by 5 December. At that stage, the Commission may decide either to maintain, revise, or revoke the duties.

The news comes following weeks of rising tension between the EU and China, the bloc's second-largest trading partner, after reports emerged that the Commission was planning to impose 47.6 percent average duties. Beijing officials had warned that the original duties, if imposed, could incur a response from China, without specifying details.

The row had ultimately prompted a split among EU member states, with reportedly 18 of the 27 - particularly Germany - telling Brussels that they were against the move. While the European Commission can impose provisional duties without the approval of member states, the final duties - if imposed - will require their sign-off. (See Bridges Weekly, 8 May 2013 and 30 May 2013)

Brussels' investigation began in September 2012, after a coalition of European solar panel manufacturers, led by the German-based SolarWorld, filed a formal request with the European Commission. (See Bridges Weekly, 3 October 2012)

A separate case regarding alleged unfair subsidies is still ongoing; Brussels has said that it will announce the provisional results of the latter probe in early August.

De Gucht: Phased-in duties a "one-time offer"

Commission officials said on Tuesday that the decision to stagger the duties is important from a negotiating perspective and in order to give European industry a chance to gradually increase its supply of solar panels to meet demand.

"This staggered response allows a smooth transition for our markets to adapt - and it is a one-time offer to the Chinese side, providing a very clear incentive to negotiate," EU Trade Commissioner Karel De Gucht said in announcing the duties. "The ball is now in China's court," he continued, stressing that - should a negotiated solution not be reached by 6 August - the originally-planned 47.6 percent average duty would apply.

"Let me be very clear: my sincere aim since the outset has been an amicable solution," the EU trade chief stressed. Earlier informal talks with Chinese officials, such as the ones held last week, were unable to lead to a negotiated solution because EU law requires formal negotiations to begin only after duties are legally confirmed.

De Gucht has said that an amicable solution between the two sides should take the form of "price-undertaking" - in other words, a deal that would require Chinese producers not to sell these products below an established minimum price.

China: Open to negotiation, "resolute opposition" to duties

In a statement released by China's Ministry of Commerce yesterday, Beijing officials were quick to outline their "resolute opposition" to the European Commission's decision.

"Ministry of Commerce spokesman Shen Danyang has issued a statement today noting that the Chinese government and industry made great efforts to solve problems through dialogue and consultations, showing great sincerity," the statement said, adding that the proposed duties are "unfair."

Referring to the staggered imposition of the duties, the ministry said that it hopes "the EU will further show their sincerity, their flexibility, through consultations to find mutually acceptable solutions."

In the same announcement, the ministry also noted that Beijing is launching its own anti-dumping investigation into imports of wine from the EU, which some observers have suggested could be a tit-for-tat response to the duties.

25,000 jobs at stake, Commission says

The Commission has said that the duties are necessary to secure the current 25,000 jobs in EU solar production. According to their investigation, China is producing 150 percent of total world consumption in solar panels and in 2011/2012 had 80 percent of EU market share. EU industry, in comparison, held a 13 percent share during the same period.

"[Chinese producers] are simply producing too much," De Gucht said, noting that the US also imposes its own anti-dumping and anti-subsidy duties on Chinese-made solar products. (See Bridges Weekly, 10 October 2012)

The row has spilled over into the EU solar industry itself. Several producers of solar panels, such as the EU ProSun coalition, have insisted that duties are necessary for levelling the playing field and ensuring the survival of the EU's solar industry. However, the Alliance for Solar Energy - a separate group said to represent 450 European companies, including raw materials suppliers, installers, and project developers - warned on Tuesday that "any level of tariffs will seriously damage the European solar industry."

ICTSD reporting.

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