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News Analysis: Grumbling All Around After Solar Panel Deal

July 28, 2013 by

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

Filed Under: Global Business Tagged With: , ,

House G.O.P. Looks to a Round 2 Obama Hopes to Avoid

January 2, 2013 by Leave a Comment

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” the president said, pausing to repeat himself. “We can’t not pay bills that we’ve already incurred.”

But it is not clear exactly how Mr. Obama can avoid engaging in just such a tug of war.

In the wake of the president’s victory on taxes over the New Year’s holiday, Republicans in Congress are betting that by refusing to unconditionally raise the $16.4 trillion debt ceiling, they can force Mr. Obama to the bargaining table on spending cuts and issues like reform of Medicare and Social Security.

That would inevitably reprise the bitter clash over the debt ceiling in the summer of 2011, when the government came close to shutting down before lawmakers and the president agreed to a $1.2 trillion package of spending cuts in exchange for Republican agreement to raise the debt ceiling by about the same amount.

And that is exactly what Republicans want.

The party’s caucus in the House will discuss its debt ceiling strategy at its retreat in Williamsburg, Va., in a couple of weeks, according to a top Republican aide, who said it was determined to insist again on spending cuts that equal the increase in the amount the country can borrow.

“The speaker told the president to his face that everything you want in life comes with a price. That doesn’t change here,” the Republican aide said. “I don’t think he has any choice.”

That strategy could risk a new round of criticism aimed at Republicans from a public weary of brinkmanship. The 2011 fight ended with a last-minute deal but led to a downgrade in the rating of the nation’s debt and a slump in the economic recovery.

But Brendan Buck, a spokesman for Speaker John A. Boehner, said Republicans had made it clear what they wanted in exchange for a willingness to allow borrowing to increase.

“If they want to get the debt limit raised, they are going to have to engage and accept that reality,” Mr. Buck said. “The president knows that.”

In fact, the White House has been on notice for months that Republicans view the debt ceiling as leverage in the next budget fight. Now, the question is what Mr. Obama and his advisers can do to sidestep that fight.

One possibility is to turn to business executives for support. Many top chief executives view the possibility of a debt ceiling crisis as a significant impediment to the nation’s economy just as it is beginning to grow again. Those executives might try to pressure Republican lawmakers not to use the country’s credit as a negotiating tool.

Mr. Obama might also take to the road again, using the power of his office to try to convince the public that another fight over the debt ceiling risks another economic crisis. Public polls after the last debt ceiling fight suggested that more people blamed Republicans for the threat of a default.

The president and his aides have signaled that they will try to educate the public by explaining that the increase in the borrowing limit is necessary to cover debts that the government has already incurred. In his statement on Tuesday night, Mr. Obama warned about what would happen if the country did not meet its obligations.

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff,” Mr. Obama said.

In the coming days and weeks, Mr. Obama is likely to try to focus negotiations on the other looming issue: how to avoid deep across-the-board cuts to the nation’s military and domestic programs. The deal passed on Tuesday postpones those cuts for two months, but Mr. Obama and lawmakers in both parties are eager to avoid them.

Instead, the president wants a debate over spending cuts and tax changes that would remove loopholes and deductions for wealthy Americans.

That fight is coming. The question is whether the president can avoid conducting it in the middle of a nasty, drawn-out debate over the debt limit.

Article source: http://www.nytimes.com/2013/01/03/us/politics/for-obama-no-clear-path-to-avoid-a-debt-ceiling-fight.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Cuomo Secures Big Givebacks in Union Deal

June 23, 2011 by Leave a Comment

The five-year agreement between Gov. Andrew M. Cuomo, a Democrat, and the Civil Service Employees Association, includes a three-year wage freeze, the first furloughs ever for state workers and an increase in the amount employees must pay toward their health insurance.

Savings would amount to $73 million this year, and as much as $1.6 billion over five years, if other labor unions representing public workers agreed to similar concessions. Absent those agreements, there could still be layoffs of some public workers, the Cuomo administration said.

The agreement was announced as the governor and lawmakers negotiated over a number of issues in the waning hours of the legislative session. Senate Republicans had not decided on Wednesday night whether to allow a vote on the most contentious issue, the proposed legalization of same-sex marriage.

The negotiations between Mr. Cuomo and the union, which represents about a third of the 186,000 state workers, were largely free of the public rancor that accompanied efforts to reduce spending on labor in New Jersey and Wisconsin.

“I want to applaud C.S.E.A. for understanding, truly, the situation that the state is in,” the governor told reporters on Wednesday night. “The union really stepped up and helped the state out at a very precarious time, from a financial point of view.”

In a statement, Danny Donohue, the president of the union, said, “These are not ordinary times, and C.S.E.A. and the Cuomo administration have worked very hard at the bargaining table to produce an agreement that balances shared sacrifice with fairness and respect.”

The deal is subject to ratification by union members, who will vote by mail over the next several weeks. It would provide pay raises of 2 percent in the fourth and fifth years of the contract.

Mr. Cuomo, facing shrinking resources because of the recession, had earlier in the legislative session won approval of a state budget that depended on a $450 million cut in labor costs, either from layoffs or union concessions.

He had also proposed reducing pension benefits for new government workers; that proposal is unlikely to be approved in this session, but will be a potential flash point going forward.

Edmund J. McMahon, director of the Empire Center for New York State Policy, a research group that favors reduced government spending, called the deal a mixed bag.

On one hand, Mr. McMahon said, the agreement was not an effort at significant transformation, like that tried by Gov. Scott Walker of Wisconsin, who sought to end collective bargaining for many public-employee unions. On the other hand, he said, the New York deal marked a sharp departure from the state’s previous four-year labor contract, which put in place base wage increases of 3 percent a year for the first three years and 4 percent in the fourth year.

“In Wisconsin, they tried to change the rules,” Mr. McMahon said, adding, “If you’re negotiating within the rules of the game, this is probably the best deal you can get.”

Under the terms of the deal announced on Wednesday, lower-paid employees — those whose salaries start at about $33,000 or less — will have their share of health care premiums rise to 12 percent, from 10 percent, for individuals. More highly paid employees will have their share rise to 16 percent. The cost of family health coverage will also increase; for more highly paid employees, for example, the share will rise to 31 percent, from 25 percent. State officials expect that, as in the past, the health care changes will also apply to retirees, a potentially critical part of the overall savings.

In addition to taking a five-day furlough in the current fiscal year, employees must take a four-day leave in the year after, though the second-year furlough will be repaid at the end of the contract term.

Employees who remain through 2013 will earn one-time bonus payments of $775 in 2013 and $225 in 2014 — such one-time payments do not compound over time like salary increases, which increase long-term cash costs for the state and the burden on the pension system.

In addition to the wage and benefits concessions, the union also agreed to an overhaul of the disciplinary procedures for state employees accused of abuse or neglect of the developmentally disabled. The state and the union will develop a series of punishments for employees who commit disciplinary offenses in an effort to end the seemingly random punishments handed out by arbitrators to employees in the past. And there will also be an overhaul of the current arbitration panel and higher pay in an effort to recruit better arbitrators.

The Cuomo administration had pressed for the changes after a series of articles in The New York Times examining the treatment of the disabled in group homes and state-run institutions. Among the newspaper’s findings: The state has retained workers who committed physical or sexual abuse, rehired many workers it had fired, shunned whistle-blowers and rarely reported allegations of abuse to law enforcement officials.

While employees represented by the Civil Service Employees Association averted layoffs, the Cuomo administration is still negotiating with a number of other unions, including the Public Employees Federation, which represents 56,000 employees and is the second-largest union of state employees. The state has put forward a July 15 deadline for layoffs in other unions if an agreement is not reached to reduce their wages and benefits.

The Public Employees Federation has had more contentious talks thus far with the Cuomo administration, going so far as to post the administration’s negotiating position on the Internet, but its position was weakened by the agreement announced on Wednesday.

Ken Brynien, president of the Public Employees Federation, issued only a brief statement, saying his union “stands ready to meet with the state’s negotiators to reach an agreement.”

Article source: http://feeds.nytimes.com/click.phdo?i=303e5dfa35e832979db5ab091babdfd6

Filed Under: Economy News Tagged With: , ,