No solar panel war, but China wins anyway

Major Chinese manufacturers have accepted a price undertaking

There will be next to no anti-dumping tax on Chinese panels

The barely-lit fuse can now be extinguished, as the biggest potential trade dispute between the European Union and China came to an end before it had even properly begun. There will be no solar panel war after all. The “amicable agreement” first announced on Saturday, as described in a statement by Karel De Gucht, European trade commissioner, brought an end to the conflict over China’s dumping practices in the European solar panel market that had soured relations between the two commercial powers.

Following a proposal by the Belgian politician, the European Commission had initially decided to apply an anti-dumping tax of 11.8 % on Chinese solar panel imports from 6 June onward. If an accord had not been found, the duties would have increased to 47.6 % on 6 August. This is the level that the trade commissioner judged necessary to negate the damage to local solar panel manufacturers. They had been brought to their knees by Chinese competitors that had expanded from 0 to 80 % of the European market since 2007.

The exact details of the agreement remain somewhat vague, as they are still to be approved by the entire European Commission. It plans on a minimum price undertaking to which a group of large Chinese companies had agreed to adhere when selling their panels in Europe. Beyond a certain market share threshold, the anti-dumping tax of 47.6 % will still apply, as it will to Chinese firms which have not signed up to the agreement.

According to this weekend’s diplomatic indiscretions made public by the European organization EU Pro Sun, the original source of the anti-China complaints, the minimum price stipulated in the agreement is 56 cents per watt. The market share figure meanwhile is said to be seven gigawatts (the 2013 market is valued at 10-12 gigawatts). It was likely this difference that De Gucht was referring to when he mentioned “breathing space” for European manufacturers which would currently struggle to achieve a market share of three gigawatts.

A satisfactory settlement if De Gucht is to be believed? The EU Pro Sun lobby does not appear to share this optimism, stating that the 56-cent tariff simply matches the one at which Chinese exporters are already selling panels and that 80 cents would have been a fairer level.

The European commissioner had placed Chinese dumping at 88 % in May. The facts of the matter are straightforward. The agreement, if the conditions are confirmed, does indeed leave around 70 % of the European market share to Chinese companies –  free of customs tariffs.

Germany satisfied

While it is difficult to understand what the European Union will gain from this “amicable agreement”, the Chinese could barely conceal their delight. Proof of this was provided by Beijing’s decision to step back from the retaliatory measures it had introduced against the EU, such as launching inquiries into the European imports of wine and polysilicon, a component of solar panels.

De Gucht claims to have been driven by two concerns. The first is to not allow Chinese imports to destroy the European solar panel industry while avoiding a supply crisis in a European marketwhich has grown dependent on Chinese manufacturers and their rock-bottom prices.

Aside from these considerations there was another threat with which to contend. Germany had stated its formal opposition to imposing levies on China and embarking on a trade war that Angela Merkel regarded as dangerous to the health of German and European industry. Indeed, the Chinese prime minister had paid a personal visit to Berlin in May in order to convince the chancellor to go down a different road.

The European Commission and Karel De Gucht were therefore faced with the significant risk that a possible anti-dumping tax proposal would be rejected by the European Council at the end of the year. The prospect of a complete collapse doubtless gave this retreat the more acceptable appearance of a minor victory.

JUREK KUCZKIEWICZ

 

This entry was posted in Non classé. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>