Encouraged by German Chancellor Angela Merkel, it looks like the European Union (EU) is holding a dialogue aimed at resolving its solar trade dispute with China.
The EU is threatening to impose tariffs on Chinese panel imports, echoing action taken by the US earlier this year. It moved to launch a formal investigation in early September, after considering a petition from local European solar manufacturer ProSun Group. China has threatened retaliatory action against imports of European goods such as French wine, pushing for talks to settle the matter.
A Chinese ministry of commerce delegation met with the EC this week to ease the tension but little progress was made, reports The New York Times. More talks are apparently scheduled in coming days. China believes the EU’s investigation is motivated by trade protectionism, so it has been pushing for a dialogue.
“Anti-dumping duties on Chinese products run against the consensus reached on the G20 summit this year, in which each country had promised no trade protectionist measures before 2014.” Chong Quan, deputy trade rep. of Chinese Ministry of Commerce, told the NYT.
There is plenty at stake for China, since close to 70% of the country’s solar products are sold into the 27 countries that make up the EU.
In the past few weeks, a number of Chinese solar makers have announced reduced expectations, pointing to the uncertainty being caused by the EU situation.
For example, Suntech Power Holdings Co. week said it would idle up to one-quarter of its solar production capacity because of the worldwide panel supply, antidumping tariffs in the US, and the probe in the EU.
ProSun’s trade complaint suggests that Chinese solar manufacturers have dumped their products at prices below market rates in Europe, putting some local companies out of business.
A similar petition in the US resulted in the Department of Commerce imposing duties ranging from 31% to 250% on imports of Chinese-made solar panels into the US, and China is seeking to avoid the same onerous duties in Europe.
The Chinese government is retaliating against the US decision with its own investigation into whether American makers of polysilicon (a key component in solar panels) are engaging in unfair trade practices. It has also challenged state subsidies and programs that it says are unfair to Chinese companies.
If talks break down in the EU situation, preliminary tariffs could be imposed by next May, but final tariffs probably wouldn’t be set until December 2013, according to the reports.
For the NYT article about the EU-China solar situation: