Encouraged by German Chancellor Angela Merkel, the European Union (EU) is in a dialogue with China to resolve the solar trade complaint.
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 a petition was filed, led again by SolarWorld, this time as part of the EU ProSun Group.
The issue is even more serious in Europe than it is in the US, because close to 70% of Chinese solar manufacturers’ revenue is generated there.
In the past few weeks, a number of Chinese solar makers have announced much lower revenue expectations, pointing to the uncertainty being caused by the EU situation.
Suntech, for example, says it will idle up to 25% of its production capacity because of the worldwide panel supply glut, antidumping tariffs in the US, and the probe in the EU.
China has threatened retaliatory action against many imports from Europe, such as French wine and industrial products, pushing for talks to settle the matter.
"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 representative of the Chinese Ministry of Commerce, told the NY Times.
A Chinese ministry of commerce delegation met with the European Commission this week to ease the tension but little progress was made, reports The New York Times. More talks are apparently scheduled in coming days.
If talks break down, the EU could impose preliminary tariffs by next May, with final tariffs set by the end of 2013.
EU ProSun’s trade complaint says that Chinese solar manufacturers have dumped their products at prices below market rates in Europe, putting some of Europe’s most important solar companies out of business.
The US Situation
The original petition, filed in the US, resulted in the Department of Commerce imposing duties this year that range from 31% to 250% on imports of Chinese-made solar panels
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.
The Coalition for American Solar Manufacturing (CASM), which filed the complaint, says although volumes from China are still high, the tariffs have been successful in slowing the flow of solar products from China into the U.S.
But imports from Taiwan and the Philippines have risen significantly, a sign that Chinese manufacturers are routing their products through other countries to avoid tariffs.
Here’s the NY Times article about the EU-China solar situation: