The European Union Trade Commissioner Karel De Gucht announced earlier this month that the EU willimpose a tariff of about 11.8 percent on imports of Chinese solar panels, cells and wafers from early June,which will increase to 47.6 percent in August unless a settlement is reached with China in the next 60 days.The trade row is the world's biggest anti-dumping case by sales volume, according to EU officials.
Leaving aside whether the investigation process has been fair or transparent enough, it iswithout doubt that no side will be the winner should the EU slap punitive measures on solarpanels, cells and wafers made in China.
The decision, another blow to China's efforts to promote one of its important export industries,will cost China over 20 billion euros ($26.55 billion) a year and 400,000 jobs.
But as the market shares of the United States, Japan and China in the solar panel sectorcontinue to expand, the impact of the provisional tariff will be limited, and China will furtherboost its domestic market for solar energy and introduce supporting policies.
The EU, however, stands to lose more from its decision to impose duties, which was madedespite protests from hundreds of European solar companies, 15 European photovoltaicassociations and various trade groups, which warned that the tarrifs will harm not only theEuropean solar industry, but also the European economy as a whole.
A great number of European importers and installers of solar panels have expressed their"deep concerns" about a volatile market as a result of higher cost solar products, which willseverely hinder the competitiveness of European businesses in the solar industry. Europeanconsumers of solar energy, especially in countries such as Italy, Germany, Portugal and Spain,where affordable solar energy has been integrated into the national power grids, may have topay more for electricity. What's more, at a time of a second economic recession in the EU andrecord unemployment, up to 240,000 European jobs in downstream businesses could be at riskaccording to the findings of Prognos, a Germany-based economic research organization.
The Alliance for Affordable Solar Energy, a coalition of over 350 companies, is opposed to theintroduction of import tariffs, and it has orchestrated a letter signed by 1,024 companies toKarel De Gucht. It argues the problems faced by European solar manufacturers are more theresult of over-capacity in the global solar market caused by the economic slowdown thancompetition from China.
Several EU nations, including Germany, have spoken out against imposing special duties andurged the commission to reach a settlement with China. "The German government explicitlyrejects the preliminary anti-dumping measures planned by the European Commission," GermanEconomy Minister Philipp Rosler repeated on Tuesday. "We believe this step would be aserious mistake."
Altogether 18 EU member states voted against the provisional tariff just one week before thecommission's decision, fearing that higher cost of solar panels will lead to a slowdown in thedeployment of the technology and job losses across the industry.
All these seem to be not enough to stop the commission from introducing the duties. China'sefforts and its long-standing contribution to help the European economy recover from the direeffects of the crisis have also been overlooked. At the end of May, China sent a delegation toEU for consultations. This goodwill was not reciprocated. The day before the commission'sdecision, Chinese Premier Li Keqiang spoke to European Commission President Jose ManuelBarroso by telephone, expressing China's willingness to communicate with the EU on relevantissues under the existing bilateral trade mechanism to find a solution acceptable to both sides,so as to jointly promote the continuous development of the China-EU comprehensive strategicpartnership.
On June 5, China decided to begin an anti-dumping and anti-subsidy investigation into winesimported from the European Union. Now many fear that more is yet to come.
An all-out trade war might be a worst-case scenario. But is the ball now in China's court? As theChinese commerce ministry spokesperson said, the Chinese side has already fully expressedits views, made the ultimate efforts it can and displayed sincerity. Will there be a deal to avoidan escalation of trade friction? It's entirely up to the EU.
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