HONG KONG — China’s victory over the weekend in its solar panel dispute with the European Commission has exposed glaring gaps in European unity on trade issues. And it casts a harsh light on the prospects for the United States and Europe to cooperate on trade policy.
On Saturday trade officials for Europe said they had reached a settlement over exports of low-cost solar panels that set a minimum price for sales of Chinese panels in the European Union. The agreement staved off punishingly high tariffs that the European trade commissioner, Karel De Gucht, had threatened to impose, beginning early next month.
But though Mr. De Gucht described it on Saturday as “an amicable solution,” very few others seem happy about the outcome.
The case underscores the difficulties of hammering out trade accords in an increasingly global marketplace, when even the parties on the same side of the bargaining table may have conflicting goals and agendas.
European makers of solar panels were furious at what they considered a capitulation to China and vowed to sue the European Commission to void the deal. The agreement sets a minimum price for Chinese panels of €0.56, or $0.74, per watt. That is actually 25 percent lower than what the products were selling for last year when the industry complained to the commission that the Chinese makers, heavily subsidized by state-owned banks, were dumping them on the market at prices below their actual cost.
The European settlement also undermined Obama administration officials, who have taken a tough stance toward China on solar trade and have been trying for several months to persuade European leaders to side with them. Nearly a dozen U.S. makers of solar panels have gone bankrupt or closed factories, unable to compete with low-cost Chinese imports.
The Obama administration issued a thinly veiled criticism late Saturday afternoon of Europe’s decision to cut its own deal. “We believe there needs to be a global solution, consistent with our trade laws, that creates stability and certainty in the various components of the solar sector,” Michael Froman, the U.S. trade representative, said in a statement.
The European Union’s retreat on solar panel trade with China could make it much harder for the United States to negotiate a trans-Atlantic trade agreement with Europe, for which talks began this month. The European Commission is supposed to negotiate on behalf of all member countries. But in the solar case, it was pressure from Germany that derailed Mr. De Gucht’s tariff plans. That suggests that individual countries in Europe may also have the power to undo any concessions that Brussels might make in the complex bargaining needed for a broad U.S.-Europe trade agreement.
Even among the dozens of companies in China that make solar panels, the deal will be divisive. It is likely to benefit only the few big players, like Trina, that can compete globally on the quality of their products and the warranties they can afford to offer, while making things even more difficult for the many more smaller, struggling companies with little to distinguish themselves other than low prices they will no longer be able to legally offer to European customers.
China has captured close to 80 percent of the European market for solar panels over the past several years, with exports reaching $27 billion in 2011, before the trade battle began. Industry executives expect China’s market share to fall to between 60 and 70 percent as a result of the deal struck Saturday.
The politics of the solar trade case within Europe had been highly unusual from the start. In most European trade cases against an imported product, the main country in Europe that makes the same product will push for protection from subsidized imports. Other European countries, meanwhile, tend to like the low-cost imports and are less enthusiastic about imposing tariffs.
For solar panels, many of the main European manufacturers are German. As China expanded its solar panel industry from almost nothing in 2007 to more than two-thirds of world production by last year, financed by big low-interest loans from state-owned banks and other incentives from government agencies, Germany’s solar industry crumbled.
Article source: http://www.nytimes.com/2013/07/29/business/global/grumbling-all-around-after-solar-panel-deal.html?partner=rss&emc=rss