The EU and China reached a deal this summer on their high-tension row over solar panel trade, with Beijing agreeing to a “price undertaking” arrangement that will effectively exempt participating companies from anti-dumping duties. However, a separate investigation by the European Commission into allegedly unfair Chinese solar subsidies is still ongoing, with definitive results due by year’s end.
The deal announced in late July came after months of burgeoning tension between the EU and its second-largest trading partner, due to the Commission’s announcement in June that it had found evidence of Chinese solar panels and their components being “dumped” on the EU market - in other words, being sold at lower prices abroad than their normal value.
Brussels had subsequently imposed provisional duties of 11.8 percent on these imports, with the warning that these would increase to an average of 47.6 percent should EU and Chinese officials not reach a negotiated solution by early August.
The Commission’s investigation had begun a year ago, following a complaint filed by EU ProSun - a coalition of EU solar panel makers led by the German-based SolarWorld.
The EU currently imports €21 billion in solar panels and their component wafers and cells from China each year. The Commission had argued that the anti-dumping duties were necessary to protect the 25,000 jobs in the EU solar sector, with the industry taking a hard hit in recent years as it struggled to keep up with lower-priced imports from abroad.
Price undertaking agreement: terms
Under the terms of the agreement, participating Chinese exporters have committed to respecting minimum import prices. According to the Financial Times, Chinese companies will be able to export up to 7 gigawatts per year of solar products without having to pay the anti-dumping duties, as long as the price does not fall below 56 cents per watt.
Non-participating Chinese companies will, however, be subject to the 47.6 percent average anti-dumping duty.
The deal reportedly received nearly unanimous support by EU member states, which had been divided over the earlier duties. None voted against it, according to Reuters.
“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,” EU Trade Commissioner Karel De Gucht said in announcing the agreement. “We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level.”
Deal receives mixed response from EU industry
The industry group that had lodged the original complaint with the Commission, EU ProSun, has already announced that it will be filing a case before the EU General Court against the agreement, claiming that it contravenes EU law by not sufficiently removing the “injurious” effect of dumping.
“The agreement endangers the very existence of the European solar industry, which has already lost 15,000 jobs due to Chinese dumping and illegal state subsidies, and now is at risk of losing remaining producers in Europe,” EU ProSun President Milan Nitzschke said.
Many European solar manufacturers had wanted at least 80 cents or more per watt out of the price undertaking agreement, arguing that anything less would not sufficiently level the playing field for EU producers.
Meanwhile, the Alliance for Affordable Solar Energy (AFASE) - a separate coalition of downstream solar producers that has been critical of the ProSun case - gave a lukewarm welcome of the price undertaking deal, while warning that it could create problems for some renewable energy projects in the 28-member EU bloc.
“The current price undertakings are not perfect but provide some of the much needed certainty in the market,” the group said in a statement. “They will nevertheless jeopardise commercial rooftop installations in some member state markets and prevent large ground-mounted installations in many markets.”
AFASE had argued that imposing duties on Chinese imports would only hurt EU producers that require these panels for renewable energy projects.
What the EU-China deal could mean for Beijing’s discussions with Washington on solar trade remain to be seen, given that imports of Chinese solar cells to the US are also being subjected to anti-dumping and anti-subsidy duties. While the EU, US, and China had reportedly discussed reaching a final agreement jointly on the subject, no such Washington-Beijing deal has been announced.
EU solar subsidy probe continues; no duties imposed
Just weeks after the price undertaking agreement was announced, the European Commission confirmed that it would be continuing a separate probe into whether Chinese solar panel producers had been provided with unfair subsidies. Brussels will not be imposing any provisional duties for the time being, officials said in August.
However, the Commission noted that not imposing provisional duties now does “not, in any event, prejudice any subsequent decision which may be taken at the definitive stage of this proceeding,” leaving the door open for future duties once the investigation concludes.
The Commission has also flagged the possibility of including the anti-subsidy investigation into the price undertaking deal, “should such action be warranted.”
The anti-subsidy investigation had kicked off last November, shortly after the anti-dumping probe began. The subsidies case was also launched as the result of a complaint by EU ProSun; definitive findings in both cases are due by 5 December.
While the EU has not formally said whether the provisional investigation results have shown evidence of unfair subsidies, unnamed officials familiar with the probe told Reuters last week that such proof was indeed found. Beijing has already been informed of the provisional outcome.
ICTSD reporting; “EU says China guilty of giving illegal aid to solar industry,” REUTERS, 27 August 2013; “EU signs off on China solar deal, no state votes against,” REUTERS, 2 August 2013; “EU and China settle trade fight over solar panels,” FINANCIAL TIMES, 27 July 2013.