But the case ended with a whimper on Saturday and illuminated the deep divisions within Europe — and how good the Chinese are at exploiting those differences. The European Commission announced Saturday that it had settled the case in exchange for a pledge from China not to export solar panels for less than 0.56 euros (74 cents) a watt, a price about 25 percent lower even than when the case began. The commission also decided to forgo imposing the steep tariffs on Chinese solar panels it had originally threatened.
The deal could end up strengthening the fractured Chinese solar panel industry and sending a wave of cheaper Chinese solar panels to the United States.
Trade experts said over the weekend that the European Commission’s meager outcome, in a case covering 6 percent of China’s exports to Europe, showed that while Brussels might have had a very strong case in terms of the law or economics, it was fatally weak from the beginning at the political level. Those political weaknesses increased as China’s leaders traveled repeatedly to European capitals and lobbied aggressively and successfully to divide Europe on the issue.
European makers of solar panels were furious over the weekend at receiving so little after a year of litigation, and vowed to sue. The European settlement also undermined Obama administration officials, who had taken a tough stance toward China on solar panel trade and had tried for several months to persuade the European leaders to side with them.
After nearly a full day of silence from Washington, the 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,” said Michael Froman, the United States trade representative.
Li Junfeng, a senior Chinese government energy policy maker, said that the trade deal was good for both China and the European Union. China has captured close to 80 percent of the European market for solar panels over the last several years, with exports that reached $27 billion in 2011, before the trade battle began. China has expanded its industry using huge loans from state-owned banks as well as cheap land and other incentives from government agencies. Industry executives say they expect China’s market share to fall to between 60 and 70 percent with the minimum price agreed on Saturday.
The politics of the solar trade case within Europe were highly unusual from the start. In most European trade cases regarding an imported product, the main country in Europe making the same product energetically favors protection from subsidized imports. Other European countries tend to like low-cost imports and be less enthusiastic about imposing tariffs.
The European solar panel industry is concentrated in Germany, and has felt the brunt of the impact of lower prices, yet the German government emerged as the biggest critic of confronting China on solar panel exports. Chancellor Angela Merkel of Germany opposed the trade case from the very beginning, saying that it would be preferable to continue talking with Chinese officials about the issue. Solar panel manufacturers in Germany tend to be independent companies that are not part of the country’s big industrial powerhouses like Volkswagen or BASF.
Germany has had far more success in exporting to China than any other European country, particularly in shipments of factory equipment, and Ms. Merkel has sought to cultivate a special relationship with Beijing. Most big German companies were unenthusiastic about the trade case, fearing that it could lead to a broader trade war that might hurt German exports.
“A tit-for-tat policy will more destabilize than help us,” Martin Brudermüller, the vice chairman of the German chemicals giant BASF, said at a news conference in Hong Kong last month.
Article source: http://www.nytimes.com/2013/07/29/business/global/weak-finish-from-europe-on-chinese-solar-panels.html?partner=rss&emc=rss