European Commission decides on tariffs on China dumping case
The European Commission has decided to impose provisional anti-dumping duties on imports of solar panels, cells and wafers from China.
This decision follows the investigation initiated by German based Solarworld. As the market for and imports of solar panels in the EU is very large, it is important for this duty not to disrupt it. Therefore, a phased approach will be followed with the duty set at 11.8% until 6 August 2013. From August on the duty will be set at the level of 47.6% which is the level required to remove the harm caused by the dumping to the European industry.
The European Commission reiterates its readiness to pursue discussions with Chinese exporters and with the Chinese Chamber of Commerce in order to find a solution in line with Article 8 of the Basic Anti-Dumping Regulation so that provisional duties can be suspended and a negotiated solution achieved.
The European Commission reaffirms its readiness to have the EU-China Joint Committee in the next weeks at a mutually agreeable date to discuss in a constructive manner all topics of our trade relations in line with our common WTO commitments and in the spirit of our strategic partnership."
The decision came after a nine month investigation, launched in September 2012 (MEMO/12/647), during which the Commission found that Chinese companies are selling solar panels to Europe at far below their normal market value, which causes significant harm to EU solar panel producers. The fair value of a Chinese solar panel sold to Europe should be 88% higher than the price to which it is actually sold. The dumped Chinese exports exerted undue price pressure on the EU market, which had a significant negative effect on the financial and operational performance of European producers.
EU Trade Commissioner Karel De Gucht had this to say in delivering the decision, "Let me be very clear: I want an amicable solution with our Chinese partners; that is also what Europe wants.
He continued, "I would just like to address a number of criticisms. In the run-up to today's decision certain parties suggested that today' trade defence measures equal 'protectionism'. That is simply wrong and misleading.
The truth is that our action is about ensuring fair competition and the respect of international trade rules to which both Europe and China have signed up to in the WTO.
At first glance, cheap and plentiful seems great "“ but ultimately this will lead to a 'race to the bottom' and everyone loses across the solar panel industry and its related services.
Even those arguing that cheap solar panels are good for sustainable energy and the environment must realize that you need to keep the solar panel industry 'sustainable' in the first place if you are going to see any benefits over time."
The duties will be imposed in two stages, starting with 11.8% for the first two months and followed by 47.6% for another four months to alleviate the harm that is caused to the European industry by this unfair trade practice, dumping. In total, this provisional duty will be in place for a maximum of 6 months. The provisional duties are far lower than the 88% rate at which the panels are being dumped because the EU applies the so-called 'lesser duty rule', imposing only enough duty needed to restore a level playing field. The provisional duty, in addition to restoring fair competition, will ensure the continued development of an innovative green energy sector in the EU.
The Commission will now continue its investigation and hear the views of all interested parties. It remains ready to intensify talks with China to find alternative satisfactory solutions through a negotiation. On 5 December at the latest, the EU will have to decide if definitive anti-dumping duties will be imposed for a duration of five years.
According to the commission EU companies are currently being exposed to immediate threats of bankruptcy because of unfair competition from Chinese exporters, who have taken over more than 80% of the EU market and whose production capacity currently amounts to 150% of global consumption. In 2012, China's excess capacity was almost double total EU demand. The Commission's assessment indicates that imposing provisional measures will not only secure the existing 25,000 jobs in EU solar production, but also create new jobs in the sector.
The decision should also contribute to creating a level playing field for Europe's renewable energy industry, which is essential to the EU's renewable energy targets. Unfair trade in solar panels does not help the environment and is not compatible with a healthy global solar industry. The Commission believes that a market that faces dumped imports will drive local producers out of business and discourages EU producers from developing cutting-edge technologies in the renewable energy sector.
"The decision of the Commission gives the EU and China only a short time span to find a negotiation solution. We call on both parties to come to an agreement within the next two months that avoids price increases, taking into account the interests of the EU upstream and downstream solar industry," says Thorsten Preugschas, CEO of German Soventix GmbH and Chairman of AFASE e.V. "We need to be clear about one thing: The current market development leaves no room for price increases. Therefore already duties as low as 11.8 percent will put a halt to most of the PV projects in the EU and cause severe damage to the European solar value chain."
During the investigation, the Commission assessed the level of duty needed to counteract the injurious effects of dumping. This means the level of the duty is never punitive in nature: it was fixed at the strict minimum necessary to restore a level playing field for the EU industry concerned. By systematically applying the 'lesser duty rule', the EU goes beyond its WTO obligations. This is in contrast to other WTO members like China and the US which always apply the full dumping found.
The interest of all parties concerned was thoroughly evaluated in the investigation. The Commission sent out questionnaires to various interested parties, such as exporting producers, Union producers, importers, upstream and downstream operators and their representative associations.
The investigation will continue and definitive measures, if any, would have to be imposed within 15 months of initiation, i.e. 5 December 2013. In parallel, the Commission is open to discuss alternative forms of measures which would be equivalent to the 47% duty. Both WTO and EU law offer this possibility in the form of a price undertaking "“ a commitment not to sell below an agreed price.
