EU Warned Over Punitive Duties On Chinese Solar Imports

While the European Trade Commissioner Karel De Gucht is readying substantial anti-dumping duties (ADs) and, subsequently, countervailing duties (CVDs) against Chinese exporters of solar panels and solar cells into the European Union (EU), warnings of the consequences of such actions have been received both from the European solar energy industry and the China's Ministry of Commerce (MOC).

The EU launched its AD investigation in September 2012 into imports from China of solar panels and their key components, including solar cells, and then followed it up, in November last year with the beginning of a CVD investigation when EU ProSun, the European solar manufacturers association, claimed that those products imported from China also benefit from unfair government subsidies.

China is the world's largest producer of solar panels, with around 65 percent of the market. The EU is China's main export market, accounting for around 80 percent of all Chinese export sales. In 2011, China exported solar panels and their key components worth around EUR21bn (USD27.4bn) to the EU.

According to EU ProSun, Chinese imports have already cost thousands of jobs in Europe. Only in the production of solar modules, it is said that some 15,000 jobs have been lost since 2011.

It is reported that De Gucht has received approval from the European Commission to introduce provisional ADs against Chinese solar imports from June 6. The ADs are expected to reach an average level of 47 percent, but duties could be as high as 67.9 percent for individual exporters.

Milan Nitzschke, President of EU ProSun said: "The announcement of ADs comes for many at the last moment, but still in time. Europe remains the global leader in solar technology. Everything that is currently used in the solar industry in China has been previously developed and applied in Europe. Compared to China, we are still about a year ahead."

"If the EU takes action against dumping, the strategically significant photovoltaic industry can be maintained and further expanded in Europe," he added. "Furthermore, a Chinese monopoly with all the ensuing negative consequences for customers, installers and suppliers will be prevented."

However, the retail and installation side of the industry were not so supportive of ADs on Chinese importers. The Alliance for Affordable Solar Energy (AFASE) has recently written to De Gucht expressing its strong concerns.

AFASE believes that "open and free markets are key drivers for a healthy solar industry. The European photovoltaic (PV) industry is in a state of consolidation with different players striving to obtain maximum cost savings and economies of scale. This is essential to fulfil the ambitious EU-wide renewable energy targets for 2020."

Their letter highlights the negative effects of possible duties on the growth of solar energy in the EU, as well as on job creation in Europe. "There would be no winners, only losers at the detriment of the entire EU solar industry," said Wouter Vermeersch CEO of the Belgian company, Cleantec Trade. "The harm to the upstream and downstream suppliers (which account for 70 percent of the PV supply chain’s value in the EU) would outweigh benefits to EU PV producers. Tariffs on solar products and their components are bad for the entire European solar industry since they would lead to price increases and significantly dampen demand."

There would, of course, be a period available for negotiation with China before the provisional EU ADs become final, for a five year period, in December this year. The MOC is adamant that advantage should be taken of that period and, on May 9, at a special foreign trade press conference, MOC spokesman Yao Jian repeated its belief that trade disputes should always be settled through dialogue and consultation, and that countries should exercise caution and restraint before using trade remedy measures.

The MOC has said that it sees itself as fighting a tendency, led by the US, and now the EU, towards global trade protectionism following the financial and economic crisis, where countries that are abusing the use of trade remedy tariffs.

At the press conference, Yao pointed out that China and the EU are important economic and trade partners. The EU is China's largest source of imports and the proper handling of the PV dispute would be significant for the maintenance of their future trading relationship.

He also insisted that, while the MOC "do not want to see a trade war," China would "earnestly safeguard the interests of Chinese enterprises and hopes that the EU will adopt prudent measures." He did not specify what action China would take in the event of the level of PV ADs being confirmed, but it has already (in November last year) begun its own AD and CVD investigation into imports of solar-grade polysilicon from the EU.

May 10, 2013

Source: Tax News