European Union and China Settle Solar Panel Fight

The settlement essentially involves setting a fairly high minimum price for sales of Chinese-made solar panels in the European Union, so as to prevent them from undercutting European producers. Those producers had accused Chinese manufacturers of benefiting from massive loans from state-owned banks and other government assistance so as to charge prices that would otherwise by uneconomical.

The accord “will remove the injury that the dumping practices have caused to the European industry,” Karel De Gucht, the European Union’s trade commissioner, said in a statement. “We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” he said.

Mr. De Gucht’s decision in June to carry out his threat to impose tariffs on solar panels from China generated significant fears within the Union about retribution from China. Chancellor Angela Merkel of Germany had called for further negotiations to avoid harm to German exporters, and European importers of solar products from China also expressed fury over the tariffs.

At the time, Mr. De Gucht said he had been left with no choice to impose the tariffs since his investigators found a systematic effort by Chinese companies to sell solar panels in Europe below the cost of making them, a practice known as dumping.

On Saturday, officials at the European Commission, the European Union’s executive agency, said they could not give details of the deal, including the price that Chinese exporters would pay to sell their panels in Europe, until the arrangement had been formally approved by the commission. But an official from the bloc, who spoke on condition of anonymity because the deal had not yet been formally approved, said the two sides had agreed a minimum price of 0.56 euros per watt ($.74), which would base any potential surcharge on the amount of electricity generated by each imported panel.

The deal immediately met with ferocious criticism, including a promise to sue, from the European solar manufacturers who have strongly lobbied in favor of tough action against the Chinese exporters.

The agreement “is contrary in every respect to European law,” Milan Nitzschke, a vice president of SolarWorld, a German manufacturer, and the president of EU ProSun, an industry group. A minimum price of between 0.55 euros and 0.57 euros was at the level of “the current dumping price for Chinese modules,” EU ProSun said in a statement.

The arrangement would cover exports from about 90 of approximately 140 Chinese exporters that were examined during the bloc’s investigation, and that represent about 60 percent of the panels sold in the Union, the bloc official said. Those 90 companies would no longer face tariffs that were put in place in June.

Chinese exporters that do not agreed to the terms of the deal still face tariffs that are set to rise to 47.6 percent on Aug. 6 from the current level of 11.8 percent, the official said.

The Chinese government had been hoping from the start of the trade case with the European Union for a negotiated settlement instead of a legal battle, so Saturday’s deal comes as a relief, said He Weiwen, the co-director of the China-United States-European Union Study Center at the China Association of International Trade in Beijing.

“This is what China expected because at the very beginning, we said we would proceed in two ways, one is with the legal dispute and one is with bargaining,” Mr. He said. “China and the European Union have had the desire to settle this case through negotiation rather than a trade war.”

The European settlement with Beijing in some ways complicates a current similar dispute between the United States and China. The United States Commerce Department imposed final anti-dumping and anti-subsidy tariffs last spring on imports of solar panels from China.

China retaliated on July 18 by announcing that it was preparing to impose tariffs exceeding 50 percent on polysilicon, the main material for solar panels, on imports from the United States and South Korea.

James Kanter reported from Brussels and Keith Bradsher reported from Hong Kong.

Article source: http://www.nytimes.com/2013/07/28/business/global/european-union-and-china-settle-solar-panel-fight.html?partner=rss&emc=rss