The European Commission (EC) last week imposed a provisional antidumping duty of 11.8% on imports of solar cells, wafers, and panels from China. Manufacturers have welcomed the controversial move, but installers and developers have decried it, saying it escalates a trade war that could drive up the cost of many solar technologies and undermine investment in the sector.

The EC’s decision followed a "thorough and serious" investigation, it said as it announced the duty. Though it noted that it was important for the duty not to disrupt the "very large" market for imports of solar panels, it set a phased approach, starting with duties on imports at 11.8% until Aug. 6. From that date onwards, the duty will be set at 47.6%, which the EC said was the "level required to remove the harm caused by the dumping to the European industry."

The EC called on Chinese exporters to negotiate a solution in line with the 27-country bloc’s antidumping regulations so that provisional duties could be suspended. Last week, China responded by announcing the launch of its own antidumping and anti-subsidy probe into European wine.

Several EU leaders swiftly protested the duty, including UK climate change Minister Greg Barker and Anna-Karin Hatt, Swedish minister for information technology and energy. German Chancellor Angela Merkel said Germany would do what it could to avert permanent import duties, telling reporters "we don’t believe that this will help us." French President Francois Hollande last week also called for an expedited resolution, saying, "It is up to us to be more competitive and to convince the Chinese that there can be reciprocity.”

Industry association EU ProSun last year alleged that solar panels and key components including solar cells and solar wafers imported from China enter the European market at prices below market values. On Sept. 6, the EC launched an antidumping investigation, reasoning that in terms of import value affected, "this is the most significant anti-dumping complaint" that the executive body of the EU has received.

The nine-month investigation was completed earlier this month. In a 43-page document, the EC concludes that the fair value of a Chinese solar panel sold to Europe should be 88% higher than the price at 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," it says.

But the commission imposed duties below 50% because the EU applies a so-called “lesser duty rule,” imposing only enough duty needed to restore a level playing field. "Such a low duty means that China gets off lightly, but crucially it is enough to allow the European solar industry back into the game, and this time the game has to be fair," said Milan Nitzschke, president of EU ProSun. The industry group that claims it represents a "majority" of European PV manufacturers—but declines to name them, citing possible "serious retaliation"—says three years of "Chinese dumping" caused thousands of Europeans to lose their jobs and 60 European factory closures, of which 30 were in Germany alone.

Nitzschke refuted claims that the duties would dampen European solar market growth. Duties imposed by the U.S. last year on China for similar antidumping reasons had not led to a decline in the market; rather, it had led to a market expansion, he said.

The U.S. solar industry group the Solar Energy Industries Association (SEIA) has repeatedly called trade disputes concerning solar exports "costly and disruptive." This May, SEIA concluded a joint policy position with its Asian counterpart, the Asia PV Industry Association, that strongly encourages the U.S., China, the EU, and other nations to engage in multilateral trade negotiations. The so-called "Shanghai Solar Declaration" highlights evidence that disputes within one segment of the industry affects the entire solar supply chain. It also encourages governments to create a "pro-competitive, collaborative framework for preventing future trade conflicts and ensuring the adoption of balanced and equitable agreements in the future."

Meanwhile, the EC last week warned that Europe would see some short-term job losses as a result of the preliminary solar duty, though it said those jobs could be re-created "as the situation of EU producers improves and imports from other countries increase."

The EC is expected to continue its investigation and plans to apply definitive antidumping duties on China for five years if a settlement cannot be reached. At the same time, the EC is conducting a parallel anti-subsidy investigation on the same solar products. Provisional anti-subsidy measures, if any, could be imposed by Aug. 7.

China’s exporters hold more than 80% of the EU solar market. In 2012, China’s excess capacity was almost double total EU demand, the EC says. According to EU ProSun, Europe accounted for 21.9 GW of crystalline PV solar installations, which constituted 75% of global new installations in 2011. About 75% of the total global installed PV capacity is located in Europe.

Sources: POWERnews, European Commission, EU ProSun, SEIA

Sonal Patel, Senior Writer (@POWERmagazine, @sonalcpatel)

NOTE: This story was originally published on June 12