EU Solar Manufacturers Outraged at China Trade Deal

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Tuesday, July 30th, 2013
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Karel De Gucht
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A long-standing dispute between the EU and China over alleged price dumping in the solar panel market by the latter has come to an end with the two parties reaching a compromise which has left European manufacturers outraged.

In a statement issued on Saturday, EU Trade Commissioner Karel de Gucht said that after “weeks of intensive talks” a deal had been reached which would serve as an “amicable solution in the EU-China solar panels case.”

“We are confident that this price undertaking will stabilize the European solar panel market and will remove the injury that the dumping practices have caused to the European industry,” de Gucht said.

European solar manufacturers do not share De Gucht’s confidence in the price deal, however, with many enraged at what they perceive as a feeble compromise following a year of dispute, and some even vowing to sue the European Commission for its negligence.

Chinese producers are only required to refrain from the export of solar panels at prices of under 74 cents a watt, which is nonetheless still 25 per cent lower than price levels at the start of the case.

Industry experts say China’s share of the European solar panel market is likely to fall from 80 per cent during the past several years to between 60 to 70 per cent under the new pricing regime.

Washington is also believed to be dissatisfied with the outcome, as the deal has undermined the US’ attempts to assume a tough stance against China on the issue of solar panel trade.

A public statement issued by the Obama administration was implicitly critical of the deal.

“We believe there needs to be a global solution, consistent with our trade laws, that creates stability and certainty in the various components of the solar sector,” said US trade representative Michael Froman.

According to insiders in China’s solar industry, however, the deal has surprised the Chinese government. Ocean Yuan, the founder and chief executive of Grape Solar, told the Boston Globe that Beijing had anticipated a tougher bargain from Brussels, and that the minimum price per watt was lower than their expectations.

The European Commission had previously accused China of dumping photovoltaic panels on the European market at prices below cost following a quadrupling of the country’s production capacity between 2009 and 2011 to levels in excess of global demand. The European market alone was worth US$27 billion to Chinese solar manufacturers in 2012.

The investigation, launched by the European Commission into imports of solar panels from China last September, was the biggest anti-dumping case in history at the time.

In June, the EU placed a punitive tariff on imported Chinese solar products of 11.8 per cent, which was originally scheduled to rise to 47 per cent in August prior to the deal concluded over the weekend

This decision put the two economic regions on the brink of a major trade stoush, with China responding in kind with the announcement of an anti-dumping tariff on imports of the chemical toluidine – a key ingredient in the manufacture of products including medicines, pesticides and dyes.

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