EU Hits China With Solar-Panel Duties in Dumping Dispute

Photographer: Qilai Shen/Bloomberg

An employee assembles photovoltaic panels at a factory in Wuxi, China. Close

An employee assembles photovoltaic panels at a factory in Wuxi, China.

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Photographer: Qilai Shen/Bloomberg

An employee assembles photovoltaic panels at a factory in Wuxi, China.

The European Union imposed tariffs as high as 67.9 percent on solar panels from China in the largest EU commercial dispute of its kind, seeking to help revive a withering industry in Europe.

The duties punish Chinese manufacturers of solar panels for allegedly selling them in the 27-nation EU below cost, a practice known as dumping. Yingli Green Energy Holding Co., Wuxi Suntech Power Co. and Changzhou Trina Solar Energy Co. are among the more than 100 companies targeted.

EU producers such as Solarworld AG (SWV), Germany’s No. 1 maker of the renewable-energy technology, have suffered “material injury” as a result of dumped imports from China, the European Commission, the bloc’s trade authority in Brussels, said today in the Official Journal. The commission said 25,000 jobs in EU solar production would likely be lost without the import taxes.

The EU’s action “is an emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly from this dumping,” European Trade Commissioner Karel De Gucht told reporters. The levies, due to take effect tomorrow at an initial lower rate of 11.8 percent, will be for six months and may be prolonged for five years.

The trade protection covers EU imports of crystalline silicon photovoltaic modules or panels, and cells and wafers used in them -- shipments valued at 21 billion euros ($27.4 billion) in 2011. European companies including Solarworld have demanded punitive levies to counter growing competition from China following similar U.S. trade protection.

Broader Crackdown

The case highlights EU concerns about the expansion of Chinese solar companies, which have grabbed market share from European rivals that were once dominant, and underpins a broader crackdown by Europe on perceived unfair low pricing by China’s exporters. The dispute also spotlights tensions within Europe between high-tech manufacturers and consumers and between policies to bolster production and to spur clean-energy use.

In Europe, which accounts for about three-quarters of the global photovoltaic market, more than two dozen manufacturers have sought protection from creditors since 2010 and many have shifted production to lower-cost factories in Asia. Germany’s Q-Cells SE, which was acquired last year by South Korea’s Hanwha Group, has its largest factory in Malaysia.

Solarworld rose 11 percent in Frankfurt yesterday, when the commission announced the planned anti-dumping duties before the publication of them. That was the steepest gain since May 9.

‘Concrete Measures’

“We are relieved that the European Commission finally introduced concrete measures,” EU ProSun, a group that represents European producers including Solarworld, said in a statement. “Dumping is fraud and harms the future of solar energy.”

Chinese exporters increased their combined share of the EU modules market to 80 percent in the 12 months through June 2012 from 63 percent in 2009, said the commission. The Chinese industry expanded its share of the bloc’s cells market to 25 percent from 8 percent and of Europe’s wafers market to 33 percent from 6 percent over the period, according to the commission.

The duties are the preliminary outcome of a dumping inquiry that the commission opened in September and that German Chancellor Angela Merkel said last month shouldn’t lead to permanent levies against China. EU governments, acting on a commission proposal, have until Dec. 6 to decide whether to turn the provisional duties into “definitive” five-year measures.

Provisional Levies

De Gucht held out the possibility of negotiating a settlement with China in which Chinese exporters would boost prices in return for an eventual end to the levies. He said the initial lower duty rate of 11.8 percent, which will last for two months, is an incentive for the government in Beijing to sit down for talks.

As of Aug. 6, unless an accord is reached, the provisional levies will range from 37.3 percent to 67.9 percent, depending on the Chinese company. A 47.6 percent rate will apply to about 130 Chinese producers that cooperated in the investigation without being sampled by the commission.

“This staggered approach allows a smooth transition for our markets to adapt and it is a one-time offer to the Chinese side, providing a very clear incentive to negotiate,” De Gucht said. “It provides a clear window of opportunity for negotiations, but the ball is now in China’s court.”

Photovoltaic Systems

In a statement today highlighting the risk of tit-for-tat retaliation, the Chinese Ministry of Commerce said it “firmly” opposes the EU anti-dumping duties and would probe whether European wine sold in China was being subsidized and dumped. The ministry also said it didn’t want the solar-panel case to affect the broader EU-China relationship.

Along with the Chinese government, a group of EU nations including the U.K. and solar-project developers and installers have fought to prevent anti-dumping protection. Opponents warn about higher prices, depressed demand and more lost jobs in Europe than would be gained in the European solar-panel manufacturing industry.

“We call on both parties to come to an agreement within the next two months that avoids price increases,” the Alliance for Affordable Solar Energy, a group opposed to EU anti-dumping duties, said in a statement. “The current market development leaves no room for price increases.”

European Demand

The initial lower provisional duty is likely to “be positive” for European demand for Chinese solar panels over the next two months, Jenny Chase, Zurich-based chief solar analyst for Bloomberg New Energy Finance, said by e-mail. Any negotiated accord is likely to be complicated by the “sheer number of players,” she said.

Overall, the provisional anti-dumping duties are likely to increase capital expenditure for ground-mounted photovoltaic systems in Europe by about 5 percent, Chase said.

The EU is also threatening to impose a separate set of duties on Chinese solar panels to counter alleged subsidies. That’s the focus of a second investigation in which the deadline for introducing any provisional anti-subsidy duties is Aug. 8 and for imposing any definitive anti-subsidy measures is early December.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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