Pressure Mounts for EU-China Solar Solution

13 June 2013

With the clock ticking for the EU and China to come to an amicable solution on their trade row regarding solar panels, EU member states and policy analysts alike have increased their calls for the two sides to act quickly to address their differences. US officials, meanwhile, have recently confirmed that a possible joint deal between Washington, Brussels, and Beijing is one of the options being discussed.

The row has become increasingly heated since the European Commission's confirmation last week that it would be imposing provisional duties on imports of solar panels and their component wafers and cells from China, in a decision that has been lambasted by Beijing. (See Bridges Weekly, 6 June 2013)

However, rather than immediately implementing the planned 47.6 percent average duty, the Commission decided that it would be imposing it in two phases - starting with a lower 11.8 percent duty until 6 August, and then reverting to the higher number should the two sides fail to reach a negotiated solution.

The Commission will then either revise, maintain, or revoke the duties upon formally concluding its anti-dumping investigation in December.

The US, meanwhile, has imposed both anti-dumping and countervailing duties on imports of Chinese-made solar cells since late last year. (See Bridges Weekly, 10 October 2012)

China: wine investigation "not retaliation"

The announcement last week that China's Ministry of Commerce was launching its own trade defence investigation into imports of European wine prompted many in the international trade community to speculate whether this was a tit-for-tat move on Beijing's part in response to the European Commission duties.

Since then, Chinese officials have stressed that the move is not, in fact, retaliation. "China has long been exercising restraint in adopting trade remedy measures despite clear evidence of the EU dumping and subsidising certain exports to China," a spokesperson for the Chinese mission to the EU said in a statement last week.

An editorial in the state-run Chinese newspaper People's Daily, however, warned last week that while Beijing has "set the table" for discussions, there are still "plenty of cards we can play." The article was published under the pen name "Zhong Sheng," which means "Voice of China" and is considered a representation of official views.

Reports have also surfaced in the past week that Beijing may be considering launching a separate investigation into luxury cars from Europe, in response to an industry complaint. However, the Chinese government has not confirmed whether such a probe is indeed under discussion.

USTR-nominee Froman: joint deal possible

Speculation has been rife over the past month over what form an amicable solution - if reached - might take, with rumours swirling over whether the US and EU might join forces in negotiating with China. While reports of such joint discussions were initially denied by both Washington and Brussels, Mike Froman - who is the current nominee for the position of US Trade Representative (USTR) - has since confirmed that the US is now talking to both trading partners about a possible global settlement.

"There have been some initial discussions with both the European market and China about how to deal with this on a global basis," Froman told a Senate panel on Thursday, in response to questions from Senator Ron Wyden, a Democrat from the US state of Oregon.

"It is a critically important issue because it brings together both the importance of enforcing our trade laws effectively, the importance of seeing the further development of clean energy, and the importance of levelling the playing field so that our producers of clean energy products can participate in that growing market," the USTR nominee continued.

Wyden, in response, urged Froman to "own those negotiations" if he is confirmed as the US' next trade chief, given the magnitude of the issue.

EU member states call for solution

The solar row has also created a rift between EU member states on the subject, with 18 of the 27 reportedly opposing the duties. French President François Hollande publicly called last week for a prompt solution to the disagreement, asking that the Commission hold a special meeting with EU member states to establish a common position on the matter.

"We need to resolve our trade problems with China through discussion, without advantages being given to one country over another," Hollande said on Saturday, in comments reported by Reuters.

While European Commission President José Manuel Barroso has said that there is no reason for heads of state and government not to address the issue again, he told the Wall Street Journal that calling a special summit on the subject would not be "appropriate."

France is one of Europe's main wine producers, together with Italy and Spain, and could potentially be affected by the new wine investigation opened by Beijing.

Germany has similarly been urging the EU and China to come together on an amicable solution, with an economy ministry spokesman on Monday reiterating previous entreaties for such a result to be achieved "quickly."

ICTSD reporting; "Europe Reacts With Alarm to China Threat to Wine Exports," WALL STREET JOURNAL, 5 June 2013; "China's investigation of European wine not retaliation: spokesperson," XINHUA, 7 June 2013; "France's Hollande says EU, China must resolve trade disputes," REUTERS, 8 June 2013; "China eyes EU luxury cars as trade dispute rages," REUTERS, 7 June 2013; "China has more cards to play in EU trade dispute: People's Daily," REUTERS, 5 June 2013.  

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