On June 4, the European Union decided to impose provisional anti-dumping tariffs of nearly 50 percent of Chinese photovoltaic (PV) solar modules. But there’s a silver lining for Chinese PV manufacturers: they have until August to curb their anti-competitive practices, before the full impact of the tariffs take effect. In response, China is now investigating imposing sanctions, as well—on European wine.
After receiving complaints from solar manufacturers led by SolarWorld and EU ProSun, advocacy organization SolarWorld helped found, the European Commission undertook a nine-month study and determined that Chinese PV companies are selling to European countries at levels below their market value. “The fair value of a Chinese solar panel sold to Europe should be 88 percent higher than the price to which it is actually sold. The dumped Chinese exports exerted undue price pressure on the EU market, which had a significant negative effect on the financial and operational performance of European producers,” the commission said.
These practices have led to Chinese PV overtaking more than 80 percent of the European market, according to the commission. The European Commission also found that Chinese PV production is producing 150 percent of global consumption, with China’s excess capacity nearly double the total EU demand last year.
As such, the commission is imposing sanctions against the imports from China, but instead of imposing the full effect of the tariffs upon making the decision, the EU is taking a phased approach so it doesn’t disrupt the solar industry too much in Europe. “A phased approach will be followed with the duty set at 11.8 percent until Aug. 6, 2013. From August on, the duty will be set at the level of 47.6 percent which is the level required to remove the harm caused by the dumping to the European industry,” according to the commission. Ultimately the anti-dumping duties could range from 37 percent to 68 percent by company.
“This is not protectionism,”cautions EU Trade Commissioner Karel De Gucht. “Rather it is about ensuring that international trade rules also apply to Chinese companies.” He adds, “Our action today is an emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly from this dumping. Our response is balanced, legal and justified within international trade rules and designed to prevent the situation from turning fatal.”
The provisional decision also comes with an opportunity for Chinese PV exporters to remedy the situation and suspend the anti-dumping provisions. “The European Commission reaffirms its readiness to have the EU-China Joint Committee in the next weeks at a mutually agreeable date to discuss in a constructive manner all topics of our trade relations in line with our common WTO commitments and in the spirit of our strategic partnership,” the commission says.
The duties follow similar actions in the U.S., but they could have a much greater impact on Chinese PV manufacturers, since they export much more PV to European countries including Germany, than they do to America. In addition, the tariffs will be harder for the PV manufacturers to get around in Europe than in the U.S.
EU ProSun praised the commission’s actions. “Today is the first high point after three years of Chinese dumping which caused thousands of Europeans to lose their jobs, and 60 European factory closures of which 30 were in Germany alone,” says EU ProSun President Milan Nitzschke. “The final outcome of the investigation will be either effective tariff measures or a negotiated settlement with China. It is crucial that China stops dumping.” Ending the dumping, he says will allow European PV manufacturers to compete again.
However, the imposition of tariffs is controversial and has faced plenty of opposition. Last month the Solar Trade Association, a United Kingdom solar advocacy organization, observed that “18 member states have voted against provisional duties on Chinese solar panels, with four in favor and five abstaining.” Countries that have opposed the provisions include Germany and France as well as the United Kingdom.
China was also in opposition to the imposition of tariffs on its country’s goods. In response to the commission’s actions, Shen Danyang, a spokesperson for China’s Ministry of Commerce issued a statement expressing China’s resolute opposition to the sanctions. Danyang concluded the statement with,“The Chinese government has started anti-dumping and countervailing duty investigations into the EU’s wine program,” according to a Google translation of the statement.