EU, China settle row over solar panel dumping

In a strategic turn of events, the European Union (EU) and China have settled the row over dumping of Chinese solar panels in the EU. They have agreed on a floor price for imported Chinese solar panels. The move has upset the European solar panel manufacturing industry. While the floor price has not been disclosed, media reports suggest that it is €0.56 a watt.

In June, EU had imposed provisional anti-dumping duties on Chinese solar panels in two phases, starting with 11.8 per cent on June 6 and 47.6 per cent on an average from August 6. This was the result of an investigation started by the EU on September 6, last year, following a complaint lodged by EU ProSun, an industry association, which saidthat China was dumping solar panels in the European maket.   A product is dumped if it is exported to another country at prices lower than its normal value in its own domestic market.

In a statement released on July 29,  EU trade commissioner Karel De Gucht said, “After weeks of intensive talks, I am satisfied with the offer of a price undertaking submitted by China’s solar panel exporters, as foreseen by the EU’s trade defence legislation. This is the amicable solution that both the EU and China were looking for.”

“We are confident that this price undertaking will stabilise the European solar panel market and will remove the injury that the dumping practices have caused to the European industry,” he added. Gucht tabled the draft decision to the commission on July 29. “I hope the European Commission will adopt my proposal on 2 August,” he said. Gucht believes that this constructive approach will set the tone for discussions.

China reciprocates

Reacting to the development, China New Energy Chamber of Commerce has stated on its website that the pledged price will allow Chinese companies to continue exports to the EU and keep reasonable market share. The pact covers around 90 Chinese exporters. If recent media reports are to be believed, China, in response to the deal, has also dropped the domestic trade investigations on polysilicon (a solar PV base material imported from the EU to China) and on French wine as result of this deal.

According to the deal, the companies which have submitted the undertaking to keep the prices above the set floor price will not have to pay anti-dumping duties. However, the companies that are not participating in the undertaking will have to pay the duties. These exporters contribute up to 30  per cent of the current Chinese exports.

In 2011, China exported solar panels and their key components worth around €21 billion to the EU. Europe is the top market for solar products, accounting for 74 per cent of global installations in 2011, according to the European Photovoltaic Industry Association.

European solar industry cries foul

However, EU ProSun, which represents around 40 European solar-panel producers, including Solarworld of Germany, says that the deal is unacceptable and is taking a legal action. Milan Nitzschke, president of EU ProSun , in a statement, said: "The agreement between the European Commission and China is contrary in every respect to European law. The agreement endangers the very existence of the European solar industry, which has already lost 15,000 jobs due to Chinese dumping and illegal Chinese state subsidies, and now is at risk of losing remaining producers in Europe."

As per the statement, the Basic Anti-dumping Regulation, Regulation 1225/2009, explicitly provides that a suspension of anti-dumping duties through a price undertaking is permitted only if the minimum price is adequate to remove the injury caused by the dumping to the European industry. A minimum price of between 55 and 57 Euro cents, apparently the price level in the agreement, would lie exactly at the level of the current dumping price for Chinese modules.

Experts say that the strategic deal has been reached because EU does not want to spoil its trade relations with China which is the largest importer of EU products.