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U.S., EU Said to Be in Talks With China to End Solar Spat

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U.S. Said to Be in Talks With China, EU on Solar-Energy Spat
Solar panels near the Sino-Singapore Eco-city near Tianjin in China. Photographer: Ed Jones/AFP via Getty Images

May 21 (Bloomberg) -- The Obama administration is engaged in preliminary talks with the European Union and China to settle a dispute over trade in solar-energy equipment and avoid a conflict among the world’s largest economies, according to people familiar with the discussions.

The effort is focused on setting a quota on Chinese exports and a minimum price for solar-energy equipment, in exchange for suspending U.S. duties on the goods, according to two people familiar with the U.S. position who asked not to be identified to discuss private deliberations.

“After expressing our intentions to the White House, we are very encouraged that these long-needed negotiations appear ready to proceed,” said John Smirnow, vice president of trade and competitiveness for the Solar Energy Industries Association. “It’s time for everyone to work together toward a fair resolution of these cases.”

Representatives from the Washington-based solar group and the Singapore-based Asia Photovoltaic Industry Association met last week in China to discuss the trade disputes, Smirnow said. A policy resolution by the groups urged the U.S., China, EU and other nations to enter multilateral talks to quell rifts over solar-energy goods, he said yesterday in a statement.

Tensions over China’s policies flared in recent months and each of the partners has either imposed or is considering duties to limit imports of solar-energy goods. Government support for renewable-energy products including solar panels has led to disputes as the price of polysilicon, the main ingredient in solar cells, has dropped 64 percent since December 2010.

Froman Briefing

Michael Froman, a White House adviser and President Barack Obama’s nominee to head the U.S. trade office, informed senators in recent weeks that the U.S. is exploring talks with China and the 27-nation EU, according to a Senate aide, who asked not to be identified in describing the matter.

The New York Times reported yesterday that the trading partners are weighing settlements to end the solar-energy cases.

“Our goal is to support a healthy global solar industry in conditions that foster the adoption of renewable energy and continued innovation and a level playing field for all,” Carol Guthrie, a spokeswoman for the U.S. trade representative, said in an e-mail. “We will continue to work with industry and our trading partners to explore ways to resolve concerns. Active negotiations have not yet begun.”

Chinese Embassy

John Clancy, a spokesman for EU Trade Commissioner Karel De Gucht, declined to comment. Calls to the Chinese embassy in Washington weren’t answered. The press office of the Chinese consulate in New York requested submission of questions by e-mail and hadn’t responded.

The U.S. wants to coordinate with the EU, which is a larger market and hasn’t yet imposed final duties to block Chinese goods from being sold in the EU below cost, according to an industry official. The U.S. wants to avoid giving Chinese producers a way to bypass a deal with the EU by sending partially finished equipment to the U.S. for final assembly and export -- duty free -- to Europe, the person said.

The manufacture of photovoltaic modules in China grew sixfold from 2009 to 2011, making China the world’s dominant producer and leading to a worldwide oversupply and prices below marginal costs for producing most modules, according to an annual factbook by Bloomberg New Energy Finance. While that has pushed down U.S. production, “oversupply on the manufacturing side has been a boon for developers, as it has contributed to lower equipment costs,” according to the analysts.

Chinese Production

China, the world’s largest maker of solar panel, has determined the U.S. and the EU are subsidizing polysilicon and is preparing to set anti-dumping duties on imports of the material used in solar panels, according to two people with direct knowledge of the matter cited by Bloomberg News May 16.

The EU also may set levies of as much as 67.9 percent on imports of Chinese solar panels to prevent dumping, according to an EU official who spoke on condition of anonymity May 8.

The U.S. Commerce Department in October set anti-dumping duties ranging from 18.32 percent to 249.96 percent on solar-energy cells from China, reducing preliminary penalties imposed on Trina Solar Ltd. and increasing them on Suntech Power Holdings Co. The duties followed a complaint by the American unit of Bonn-based SolarWorld AG.

To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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