Friday, June 7, 2013

Solar panel trade war

Well, it happened.  The EU slapped some tariffs on Chinese PV cells.  The reason is obvious—the Chinese ARE dumping.

As someone who believes in managed trade, I think this decision is probably a good thing.  First of all, why the hell are the Chinese manufacturing solar cells for Europe when there are so MANY needs for them in China? (this is so obviously an economic distortion of neoliberalism!)  And right behind is the question—what is accomplished in terms of carbon reduction when you ship panels all over?  Finally, it is probably a good thing when panels are built for local conditions.

Since PV cells were invented, the goal has been to increase the rate of conversion from sunlight to electricity.  But as these things mature we will see PV panels optimized for other things such as ease of maintenance, enhanced durability, and targeted operating temperature (my brother is discovering that his panels work much better in April than July because of lower ambient temperatures in April.)  Because PV panels represents a dispersed energy system, their market will more imitate the markets for construction materials.  (As someone who had been watching this phenomenon over most of a lifetime, I have noticed that building methods don't travel all that well.  Different building methods—different building supplies.)

EU slaps tariffs on ‘dumped’ Chinese solar panels

The European Union has imposed immediate levies of around 12% on solar panels coming from China in a bid to protect its own manufacturers, saying it hopes to reach a deal with the Asian giant before stiffer tariffs go into effect this summer.

By FRANCE 24 (text)  04/06/2013

The European Commission adopted levies on Chinese-manufactured solar panels on Tuesday, despite opposition by German Chancellor Angela Merkel and forceful warnings that the move could spark a trade war between the 27-member EU block and Asia’s manufacturing colossus.

“Today, the European Commission has decided unanimously to impose tariffs” on Chinese panels, EU Trade Commissioner Karel De Gucht told reporters in Brussels, adding that cheap imports were harming Europe’s clean energy industry and threatening up to 25,000 jobs.

The EU will impose a tariff of 11.8% from June 6 on cells and wafers, but could raise it to around 47% starting in August unless a settlement is reached.

European builders have accused China of unlawfully dumping solar panels on their turf, selling solar panels at up to 88% below their fair price to elbow their European rivals out of the market.

They say that in the space of a few years Chinese competitors have conquered more than 80% of the European market, a feat that would be impossible if Beijing was not unlawfully subsidising its own manufacturers.

Observers said the Commission’s decision came after careful and painstaking consideration, since the new tariffs will likely trigger punitive measures from China that could also do harm to Europe’s already beleaguered economy.

Shen Danyang, a spokesman for the Chinese Ministry of Commerce, warned on May 15 that “reckless and arbitrary” EU levies would “seriously damage” bilateral trade relations that are worth more than 500 billion euros annually.

“China... does not want to go into a trade war with the European Union,” Shen said, hinting his country was ready to drag the EU before the World Trade Organisation (WTO).

‘War’ abroad and at home

Europe’s position was further complicated by Germany’s Merkel, who held a joint press conference with Chinese Premier Li Keqiang in Berlin last month, telling reporters her country would do “what it can so that there are no permanent import duties” and quickly quell the heated dispute.

But other European politicians were adamant about the need to punish Beijing. “China has become the 28th member state of the EU,” carped Daniel Cohn-Bendit, co-leader of the Greens in the European Parliament, who in the past has blasted China on its human rights record.

EU Trade Commissioner De Gucht said he was aware of the pressure exerted by China on EU member states and was more than ready to resist it.

“It is the role of the European Commission to remain independent, to resist any external pressure and to see the 'big picture' for the benefit of Europe, its companies and workers based upon the evidence alone,” he said on Monday.

Familiar battle lines

On Tuesday, announcing the Commission’s approval of levies on solar panels, De Gucht said he hoped the decision would lead to talks with Beijing that would avoid the additional tax rise in August. “I want a fair solution with China," he said.

De Gucht said the measure was not a case of protectionism, but a way to even the playing field and foster real competition. “The ball is now in China's court,” he added.

The game is not unfamiliar to China. Last December, US lawmakers pressed by American solar panel manufacturers slapped tariffs of up to 250% on Chinese products.

The Coalition for American Solar Manufacturing (CASM) said in January of this year that imports of crystalline silicon solar cells and panels from China had since fallen to their lowest levels in two years, even amid a peak in sales of the products. more
As you can see here, the Germans are true believers when it comes to the teachings of "free" trade.  And since they have large trade positions with China, they have a lot to lose.  But as cheap Chinese panels destroy the carefully constructed German solar industry, there are small cracks in the "Free Trade" consensus.

Solar Strife: EU Fires First Shot in Trade War with China

By Christoph Pauly and Melanie Amann REUTERS

The European Commission on Tuesday announced it was imposing tariffs on Chinese solar panels in response to "price dumping." China has previously warned it would retaliate. The escalating trade war can only have one loser: Germany.

In Chinese industry, the officials of the European Commission have a reputation similar to that enjoyed by tax investigators among affluent tax evaders. They are hated, but at the same time they are received with the greatest of civility.

Which is why more than 100 Chinese exporters of solar panels in recent months have dutifully filled out pages of forms from the European Commission, which accuses them of trying to drive the competition into bankruptcy by undercutting their prices. When the European inspectors arrived, Chinese companies even gave them access to their confidential price calculations for the domestic and international market.

The Chinese are being so accommodating because they have plenty of experience with such procedures. The European Commission has thus far imposed punitive tariffs against the country for so-called dumping offenses in 48 different sectors. Chinese companies know that the size of the tariffs depends in part on the extent to which they cooperate in the investigations.

European Trade Commissioner Karel De Gucht is convinced that China systematically manipulates its prices to drive European manufacturers of solar cells and panels out of business. Those Chinese companies that have proven to be cooperative are expected to pay a 37 percent punitive tariff, while others will pay tariffs of up to 69 percent if they wish to continue selling their products in Europe, their primary market.

Ever since Flemish politician De Gucht announced that he would soon be issuing his decision, China has been openly threatening a trade war with Europe. On Tuesday, earlier than planned, De Gucht announced that he was imposing preliminary tariffs at a low level for two months to pressure the Chinese to negotiate.

China has said that it would consider retaliatory measures, including the imposition of a high tariff on seamless steel pipes from Europe. This would be a sharp blow to Germany's crisis-ridden steelmakers. The auto industry would also be an easy target for retaliatory action.

'Explicitly Rejects'

The German government is alarmed at such prospects. Germany could only lose in a trade war with the major Asian power. Chinese is by far the largest market for German exports in Asia and it was primarily Chinese consumers who, with their fondness for German products, helped the German economy recover from the dire effects of the financial crisis.

"The German government explicitly rejects the preliminary anti-dumping measures planned by the European Commission," German Economy Minister Philipp Rösler repeated on Tuesday. "We believe this step would be a serious mistake."

Berlin has been doing everything it can to stop the punitive tariffs. Last Monday, Berlin informed the European Commission that it opposes the tariffs, and 16 other EU member-states have also reportedly voiced their concerns. But De Gucht has the support of the remaining commissioners and is determined to proceed. The European Commission has the power to approve temporary sanctions for a period of six months.

Stopping the move would take a qualified majority of all countries voting against the measure in the European Council. But because France and a few smaller countries support the Commission, Germany is unable to assemble enough votes. Opponents could only prevail in six months when permanent sanctions are under consideration. Then, only a simple majority will be sufficient to block the measure.

Germany has taken its time to voice its objections. German negotiators in the European Commission's anti-dumping committee kept a low profile for months. The Economy Ministry officials had been instructed to take a neutral stance in the negotiations. "If the German government had taken a position earlier," says a representative of the anti-tariff lobby, "it would have been possible to influence the various countries."

Dangerous Trade War

Instead, the officials behaved as if the dispute were none of their business -- until Trade Commissioner De Gucht submitted his recommendation for a decision on punitive tariffs and, almost at the same time, Chinese Premier Li Keqiang arrived in Berlin for a visit at the end of May. Suddenly Chancellor Angela Merkel was interested in the solar issue, and it dawned on the officials that they were heading for a dangerous trade war.

It certainly wouldn't be the first dispute over tariffs between Brussels and China. But this time the problem doesn't revolve around a small sector like the bicycle industry, where Chinese manufacturers have had to pay punitive tariffs for years. In 2011, Chinese solar panel manufacturers raked in €21 billion ($27.5 billion) in revenues in Europe.

According to sources at the Economy Ministry, the German government's failure to voice its opposition earlier also had to do with the fact that the solar industry is deeply divided over the issue. On the one side is the dwindling number of manufacturers of solar systems that are being brought to their knees under pricing pressure from the Chinese competition. On the other side are those players in the solar sector who are profiting from their dealings with the Chinese.

"The German economy also makes money with every Chinese module," says Stephan Kohler, head of the German Energy Agency (DENA). "Sixty percent of added value in this area is created in Germany. That's why punitive tariffs are also hard on many German companies," such as chemical firms, which supply the Chinese with the silicon for their solar cells, and machine builders, which ship production facilities for the modules to the Far East. Tariffs would also adversely affect companies that import, process or install Chinese solar cells. All of these businesses are members of the same associations: the Federal Solar Energy Association, the Federal Association of Renewable Energy and the European Photovoltaic Industry Association (EPIA). Until now, they have jointly fought to ensure that, for example, the government didn't significantly reduce solar electricity fees. But the industry is deeply divided when it comes to tariffs.

This has led to two new proxy groups waging the fight for and against tariffs: the solar system producers, represented by the EU ProSun group, and the opponents of tariffs and their organization, the Alliance for Affordable Solar Energy (AFASE).

[snip]

This experience has made De Gucht bridle over the criticism from Berlin. He wants the European capitals to stay out of the process. "The best protection for the member states is to say that this is the competence of the European Commission." more

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