EU Commission Extends China Solar Duties to Taiwan, Malaysia

18 February 2016

The European Commission confirmed this week that it would be attempting to tackle “circumvention” by some Chinese solar producers of existing anti-dumping and countervailing duties, specifically by imposing duties on solar modules and cells being imported into the 28-nation bloc from Taiwan and Malaysia.

According to the EU executive, the measures were necessary to address so-called transhipment of Chinese-made solar modules and cells via Taiwan and Malaysia, which Brussels claims was an attempt to evade anti-dumping and countervailing duties. Those Taiwanese and Malaysian companies that are indeed “genuine” producers will not, however, face these fees.

Anti-dumping duties aim to tackle instances where products are sold abroad at prices below their normal value – a practice known in trade jargon as “dumping.” Countervailing duties serve a different purpose, namely to address instances where an exporting producer is receiving unfair state aid.

Reviewing 2013 deal

The duties at issue were imposed in 2013, following a heated row between Brussels and Beijing on solar energy trade that escalated sharply upon the news that the Commission had found evidence of Chinese solar panels and their components being “dumped” on the European market. (See Bridges Weekly, 6 June 2013)

At the time, the EU was importing €21 billion annually in these products from China, while facing significant difficulties in protecting its domestic solar industry and the 25,000 jobs it claimed were being affected by lower-priced imports.

The two sides ultimately reached a “price undertaking” agreement that same year with various Chinese exporters of solar cells and panels, exempting participating companies from otherwise paying hefty anti-dumping and countervailing duties. In turn, those companies agreed to sell these products abroad at prices above a set threshold. (See Bridges Weekly, 5 September 2013)

While the price undertaking deal was hailed at the time for improving relations between two major trading partners, particularly at a time when both were trying to build their respective renewable energy industries, the years since have seen a renewal of tensions as questions emerged over whether the deal was being respected.

Along with the circumvention allegations, other problems have also emerged. For instance, various Chinese exporting producers have been removed from the price undertaking over the past several months, including most recently Trina Solar in late January, which the latter voluntarily requested.

While companies have the option of ending their involvement in the price undertaking, some other producers have been removed directly by the European Commission on the grounds that they were allegedly not complying with the undertaking’s terms.

Year ahead

The coming year could see a series of developments with the potential to affect solar energy trade – and broader economic relations – between the two sides.

For example, the European Commission is in the midst of conducting a series of “reviews” on different China-related solar issues, including an investigation of whether to revise the “minimum import price” used in the price undertaking deal, as well as an expiry review on whether the 2013 anti-dumping and countervailing duties should be extended or removed.

The results of the expiry reviews – which began in December 2015 for both anti-dumping and countervailing duties – are expected later this year. In the meantime, the price undertaking deal will remain in place for cooperating producers.

ICTSD reporting.

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