EU Strikes Deal with China in Solar Spat as China Imposes Solar Duties on U.S., S. Korea

The European Union (EU) Trade Commission reached a "targeted and innovative" settlement in its high-profile solar spat with Beijing, just as China imposed lofty duties on U.S. and South Korean manufacturers of solar-grade polysilicon.

Over the weekend, EU Trade Commissioner Karel De Gucht announced an "amicable solution" had been reached with his Chinese counterpart Minister Gao Hucheng following "signed commitments from a large number of Chinese solar panel exporters." The settlement, which still requires approval by the European Commission (EC), likely by Aug. 2, was reached days before higher EU provisional antidumping duties on Chinese solar panels of 47.6% are set to take effect on Aug. 6.

The EU this June imposed provisional duties of 11.8% on imports of solar cells, wafers, and panels from China after an investigation concluded 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, the EC said. In June, the EC set the phased tariff approach so as not to disrupt the "very large" market for imports of solar panels to the carbon-conscious 27-country bloc.

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 said. In 2011, Europe accounted for 21.9 GW of crystalline PV solar installations, which constituted 75% of global new installations.

"On the one hand, we could not accept a situation where Chinese dumping would destroy the European solar panel industry. On the other hand, we were not interested in a solution leading to a shortage of supply in Europe and to overly negative effects on downstream industry—and on consumers," said De Gucht in a July 27 memo. "In short: Europe will continue to rely on solar panel imports to an important extent also in the future, even when the injurious effects of the dumping will be eliminated and the EU industry will have fully recovered."

Under the settlement, 70% of Chinese suppliers who agree to a "voluntary price undertaking," where they commit to stop dumping and keep prices above a certain floor, will be exempt from antidumping duties. The undertaking will apply to an annual volume that covers part of the overall European market. Chinese exports exceeding this annual volume will be required to pay antidumping duties of 47.6% starting on Aug. 6.

Industry Group Disputes Legality of Settlement, Threatens Suit

The spat began last year when industry association EU ProSun 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.

EU ProSun on July 27 said it would take legal action before the EU General Court in Luxembourg against the settlement in the international trade dispute. "The agreement between the European Commission and China is contrary in every respect to European law," said EU ProSun President Milan Nitzschke, who also claimed that throughout the negotiations, China appears to have "blackmailed and mocked" the EU. "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," he said.

Nitzschke also argued that the EC’s claim that the agreement with China on minimum prices and import volumes is a success for European industry as claimed by the trade commissioner, saying: "The EU Commission argues with false data. Following this weekend’s agreement, the European solar market will be split. The EU solar market for 2013 is expected to be 10 GW. The European Commission awarded 7 GW of this total as duty-free imports to government-subsidized Chinese solar producers.

“In other words 70% of the EU market will be given over to China’s planned economy delivering products at dumped prices, and the remaining 30% will be shared between Europeans, Koreans, Japanese and other manufacturers from the rest of the world in free competition."

Reuters , meanwhile, on July 30 reported that the EU is investigating Bonn-based consultancy firm Europressedienst, which provided data used in EU solar panel analyses. The data, used earlier by European solar panel makers to make their antidumping case, is disputed by EU firms that install solar power systems.

China Imposes Antidumping Duties on the U.S., South Korea

Meanwhile, after a year-long investigation, the Chinese Ministry of Commerce (MOFCOM) last week imposed provisional anti-dumping duties on imports of U.S. and South Korean polysilicon.

“MOFCOM [has] made the preliminary ruling that during the investigation period of this case, there was dumping of the products under investigation and China’s domestic industry was substantially damaged, and there was causal relationship between the dumping and substantive damages,” the ministry said.

From July 24, 2013, onwards U.S. producers of solar-grade polysilicon will face duties of between 53.3% and 57%, while South Korean producers will see duties of between 2.4% and 48.7%.

The U.S. International Trade Commission (ITC) last November unanimously determined that imports of crystalline silicon photovoltaic cells and modules from China materially injured the U.S. industry, clearing the way for the Commerce Department to issue antidumping and countervailing duties of between 31% and 250% on Chinese producers.

The Commerce Department’s announced tariffs has sparked strong disagreement among U.S. solar manufacturers. The seven-company Coalition for American Solar Manufacturing (CASM) lauded the ITC’s November 2012 final determination, which finalizes the dumping case filed in October 2011 by Oregon-based SolarWorld Industries America (an entity of Solarworld AG, Germany’s largest solar-panel maker, which is also a member of EU ProSun). The Coalition for Affordable Solar Energy (CASE)—a group of about 70 solar companies claiming to represent 98% of U.S. solar sector jobs was set up in 2011 to counter CASM.

According to the ITC, the U.S. has 14 crystalline silicon photovoltaic module makers, with about 1,900 employees in states across the nation. In 2011, U.S.-produced shipments of crystalline silicon photovoltaic modules were valued at about $790.5 million, while the nation consumed $3.01 billion worth of modules. About 57.4% of all consumed modules were imported from China, goods worth about $1.9 billion.

Sources: POWERnews, EU Trade Commission, MOFCOM, EU ProSun

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

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