European Commission announces deal with China in dumping investigation
The European Commission and China have come to an agreement to settle the solar dumping dispute that was threatening to develop into a full-blown trade war that could have involved a number of industries. The deal was announced by Commissioner Karel De Gucht and was not universally praised with many believing that after such a protracted process the result is relatively weak. The result will remove uncertainty in the solar industry and will be welcomed by many European Union countries that had actively campaigned against the process.
The deal that has been announced is a price undertaking that means that Chinese solar modules and products will not be exported for less than about 60 euro cents a watt. This figure will be confirmed after the EU has voted on the proposal and will contain sliding scales dependant on industry prices. This undertaking comes with the commission's promise to not impose punitive tariffs on Chinese solar product has had been threatened. The agreed price is about 25 percent lower than when the case began and certainly not as much as the instigators of the case were hoping for.
It is good news for Chinese manufacturers and some commentators are suggesting it could actually help consolidate the Chinese industry. Only a couple of weeks ago industry insiders from China revealed to me that the country would not budge below 55 Euro cents in the negotiations revealing just what a good deal they have managed to obtain.
Price undertakings are a form of an amicable solution in trade defence proceedings permitted by the WTO and EU laws. It is an alternative form of a measure where a duty is replaced by a price undertaking based on a minimum import price. Those exporting Chinese companies participating in the price-undertaking will be subject to its terms. Hence, their exports will be exempted from the anti-dumping duties.
"We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices." said Commissioner De Gucht. "After weeks of intensive talks, I can announce today that I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters, as foreseen by the EU's trade defence legislation. This is the amicable solution that both the EU and China were looking for."
Commentators in the USA have not been so positive with the news suggesting the outcome is a weak dilution of the original commission investigation and claim that the decision could lead to increased output of cheap Chinese imports into the States. None of these assertions are backed up with rationale and appear to be baseless at this time.
Considering the pressure place on the EC from the European Union countries the decision is the best of a difficult scenario that De Gucht found himself in. A number of countries actively called for the investigation to be cancelled with high level delegations going to and from Belgium to ensure a deal that did not threaten the larger trade conditions between the two major trading blocs.
"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," De Gucht continued. "We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level."
The presentation of the offer by the Chinese exporters results from weeks of intensive talks following the imposition of provisional anti-dumping duties on EU imports of solar panels from China on 6 June.
Not everyone in Europe is happy with the decision with trade body EU ProSun led by German manufacturer SolarWorld, who instigated the trade investigation, threatening to sue the EC a day before the announcement was detailed.
Milan Nitzschke, President of EU ProSun stated "The agreement between the European Commission and China is contrary in every respect to European law. The agreement endangers the very existence of the European solar industry, which has already lost 15,000 jobs due to Chinese dumping and illegal Chinese state subsidies, and now is at risk of losing remaining producers in Europe."
The European counterpart AFASE were happy to wait for details of the announcement and cautioned against any decision that would precipitate a price rise. With module prices continuing to fall over the course of the investigation it will not be long before module prices will be in line with the Chinese deal. With no punitive tariffs there should be little impact on the industry overall.
With EU ProSun continuing to battle in the European Courts the process is still not complete but is does appear the decision that has been reached appears little more than a chest beating exercise with little impact to the overall industry. There are still other cases to be heard in China, Europe and other areas around the world but this decision was always considered the major one and should add direction to other events around the globe.