EU to impose tariffs on Chinese solar panels

De Gucht says tariffs will rise to more than 47% after two months.

Karel De Gucht, the European commissioner for trade, announced this afternoon that punitive tariffs would be imposed on imports of solar panels from China, with effect from 6 June.

For the first two months, however, the punitive tariffs will be imposed at a uniform rate of only 11.8%. The tariffs will then quadruple to an average of 47.6% from 6 August, with a lower rate of 37.2% for companies that co-operated with the Commission during its investigation.

The aim of the staggered approach is to encourage Chinese exporters and the Chinese Chamber of Commerce to make ‘price undertakings‘, which would involve them agreeing to a minimum sales price in Europe.

De Gucht described his decision as “moderate and resolute” and said its aim was “a negotiated solution”.

The case is the biggest anti-dumping case ever handled by the Commission. Chinese producers exported €21 billion worth of solar panels to the EU in 2011.

The trade commissioner said the decision had the unanimous backing of the college of European commissioners.

It followed a finding by the Commission that Chinese exporters were dumping solar panels on the European market 88% below what it described as a “fair sale price”. This had, it said, enabled China to grab 80% of the European market and was putting 25,000 European jobs at risk.

Karel De Gucht, the European trade commissioner, described the decision as “an emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly from this dumping”. But he denied that the measure was protectionist.

“I am doing my job,” he said, saying that his job was to enforce European legislation. He also pointed out that the United States currently applies duties to Chinese exports.

The Commission has the power to impose tariffs temporarily, for six months, without the backing of the member states. But prolongation would require support from the member states, which have been divided over whether to take action against China.

The many European businesses that oppose the tariffs argue that the side-effects of punitive tariffs could be far greater than the benefits. They believe they will shrink the market substantially, causing job losses across an industry that includes many thousands of installation companies and other service providers. This could also, they contend, retard the development of the industry at a point when European producers are nearly capable of surviving without subsidies.

Their arguments won over many of the EU’s member states. Eighteen advised the Commission not to proceed with tariffs when the Commission’s plan was presented to the member states‘ expert group on dumping issues in late May.

However, De Gucht today argued that the issue was the sustainability of the solar industry. “The dumping threatens the sector’s very survival by damaging current and future investment,” he said. “We are looking the bigger, longer-term interests of the industry.”

Chinese delegations have visited Brussels twice in the past fortnight in a bid to forestall tariffs, and on both occasions the meetings proved test and unproductive, observers say.

A decision had to be taken by 6 June, six months after the formal investigation was launched.

Even at 47%, the tariffs would be substantially less than the 88% discount to the production price at which the Commission says solar panels have been sold.

“Most countries would impose 88% duties,” a Commission official said. “The US would; China would.”

However, EU does not only consider the dumping price; it assesses the actual damage suffered by the European industry. Whichever of the two figures is lower – in this case, the ‘injury margin‘ – becomes the tariff.

The Commission is also trying to determine whether the subsidies that the Chinese government is providing the Chinese solar industry are unfair. It began that investigation in November, two months after the launch of anti-dumping investigation. The Commission is due to decide on 6 August whether to take temporary measures.

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