Tuesday, May 28, 2013

Solar dumping update

The Chinese are about to discover what the Japanese automakers learned before them—Europe is not the USA when it comes to giving up industrial turf.  It actually looks like EU Trade Commissioner Karel de Gucht is willing to trigger a trade war over solar panels.  You can hardly blame him.  After all, the Europeans have put a lot of public money into the development of their Green industry—why should they give that up for a cheap trade-war trick like dumping?

I find this dispute fascinating and have covered it in the past.  See also:

EU trade chief unfazed by China muscle-flexing in solar row

uhe/slk (Reuters, AFP) 28.05.2013

The EU Trade Commissioner Karel de Gucht has vowed not to drop plans for higher duties on solar panels from China. He has called Beijing's efforts to pressure the European Commission a waste of time.

In the solar panel trade dispute between the European Union and China, EU Trade Commissioner Karel de Gucht turned up the heat, saying he was not impressed by a Chinese attempt to put pressure on EU member states.

"I couldn't care less whether that happens with the biggest and most populous state in the world," he told a meeting of the European Parliament's Trade Committee on Tuesday.

Gucht also said he was aware of the external pressure China had been exerting recently, but added that Beijing was wasting its time trying to do so with him.

The EU trade chief is a strong advocate of punitive tariffs on Chinese solar panel exports to the EU. The European Commission, the bloc's main executive body, is planning to slap duties of up to 47 percent on China-made solar equipment. The commission accuses Beijing of undercutting market prices with state subsidies.

But a majority of EU governments have opposed the plan, apparently out of fear that their booming business ties with the Asian economic powerhouse will be hurt. In the past two weeks, China already imposed higher duties on imports of unwelded pipes, as well as announced anti-dumping measures against European chemicals makers.

The EU commission will decide on June 5 whether or not to impose the punitive tariffs on Chinese solar exports. However, EU member states have the power to overrule the decision. more
The Chinese really do not believe the EU will press ahead with their punitive tariffs.  So they have embarked on a "charm" offensive while throwing around words like "protectionism."  If they lose, the tariffs on Chinese solar panels go to 47% (Mitt Romney would so love that figure.)

Friend, not Foe: ‘Dumping’ China urges EU to drop punitive import tariff

May 27, 2013

China is trying to stave off a trade war with the EU that could cost both sides billions, as premier Li Keqiang dashes between European capitals persuading leaders not to vote for a punitive tariff on Chinese imports.

On June 5, European Union member states will cast ballots on whether to impose a massive 47 percent tariff on solar panels on its second-largest trading partner, in what appears to be an undecided vote.

As he made his first foreign trip since being appointed in March, Li Keqiang dismissed the proposed sanctions as “protectionism” and warned the EU that they “will hurt Chinese industries, business and jobs and also damage the vital interests of European users and consumers.”

Less than ten years ago China controlled about 10 percent of the world solar panel market, now it has more than 50 percent, with most of its exports going to the EU, which has some of the world’s greenest policies. Supplies to the EU brought Chinese companies more than €21 billion last year.

But a wide-ranging fifteen-month EU investigation, which is due to present its final results at the end of this year, has already concluded that Chinese authorities are subsidizing their companies so they can undercut European competitors and eventually force them out, by 'dumping' cheaper panels onto the European market.

EU Trade Commissioner Karel De Gucht has said that the Chinese government provides these subsidies through cheap land and energy, and huge loans given to industrial leaders at below-market rates, creating “a distorted playing field”.

"At this stage, any potential temporary measures are an emergency response to rebalance the market place for European companies facing life-threatening dumping and unfair competition from China's solar panel industry," said de Gucht.

The vote next Wednesday would only put the tariffs in place until December, but if China does not comply with EU demands, it could then be made permanent for up to five years.

But despite censure from official Brussels, Li has managed to get the backing of a powerful supporter – Angela Merkel.

“Germany will get involved and engage in negotiations to ensure that we don’t come to a point where there are permanent levies,” promised the German Chancellor.

"There is no need for more sanction measures," said an even more emphatic Economy Minister Philipp Roesler, once talks with Li had concluded.

While Germany initially supported the tariffs, and appeared to be isolated when it made a volte face, by Monday evening news agency Reuters said that 15 of the 27 EU member states would vote against the tariffs. Only six countries are definitely in favor, though the situation appears fluid.

A Chinese delegation held “informal” talks with EU officials in Brussels on Monday evening to try to take advantage of the changing tide.

Italy and France are leading the faction of those remain firmly against letting China off, as solar panel makers around the world continue to go bankrupt, engulfed by the torrent of Asian supplies.

"We want to see a balanced relationship between China and the European Union. Countries that use protectionism, and China is one of them, should accept reciprocal rules," said French Industry Minister Arnaud Montebourg.

"The Commission was presented with prima facie evidence that dumping occurred. They can't just ignore that," Stuart Newman, a legal advisor to the Foreign Trade Association, told Reuters.

But China is unlikely to watch impassively.

While it can appeal to the WTO over the tariffs, instead it has already unleashed a series of what can be seen as tit-for-tat anti-dumping investigations. Beijing has announced that it is investigating European chemicals companies for the practice, a fortnight after it said that makers of unwelded pipes from the region were also selling their goods below price.

On the other hand, the EU says that Chinese telecommunications makers – whose share has also risen rapidly - could be the next to be investigated for dumping.

The escalation of the conflict over what is a relatively paltry if growing industry could be disastrous for both regions. Last year total trade between the EU and China amounted to €434 billion.  more

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