EU-China Solar Panel Pact Sealed

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Import tariffs on Chinese solar panels will be removed in three days as the European Commission approved European Trade Commissioner Karel De Guct’s plan for curbs on solar panels. The European Commission, EU’s executive arm, endorsed a negotiated settlement with China that sets a minimum price and a volume limit on EU imports of Chinese panels until the end of 2015, Chinese manufacturers will be spared of EU duties levied to counter below-cost sales, more popularly known as dumping. Dumping is a king of predatory pricing, it happens when manufacturers export a product to another country at a price below the price charged in its home market or below its cost of production. The World Trade Organisation condemns dumping if it causes material injury to a domestic industry in the importing country.

Quoting media persons in Brussels, European Trade Chief De Guccht said “We allow a certain intervention in the market hoping we are trustful and this will lead to a stabilization of the market. If the European solar industry wants to continue selling solar panels, they will have to be competitive with the rest of the world “.

The goal is to limit Chinese competition against European manufacturers such as Solarworld AG, without resorting to anti-dumping duties opposed by U.K. and Germany. The renewable energy case covers EU imports of crystalline silicon photovoltaic modules or panels, cells and wafers used in between them, shipments which were valued at £ 21 billion Euros ($ 28 billion) in 2011.  Earlier in June, the commission introduced provisional anti dumping duties as high as 67.9 percent on Chinese solar panels as part of a probe which began in September, the commission decided to relax the anti dumping duty to 11.8 percent for two months to encourage Beijing for a compatible solution between both the parties.

As on August, without the accord, the provisional levies applied would have ranged from 37.3 percent to 67.9 percent, depending on the company. The import taxes target more than 100 Chinese companies including Yingli Energy Co, Wuxi Suntech Power Co and Changzhou Trina Solar Energy Company. The agreement fixes a minimum price of 56 euro cents a watt for annual imports from China of as much as 7 gig watts, a trade official in Europe said. The pact would cover around 90 Chinese exporters who dominate the solar panel market, De Gucht said the agreement covers Chinese exporters that account for 70 percent of EU imports of solar panels.

Observations by EnergyTrend a research subsidiary of global research company TrendForce noted the new agreement’s minimum retail price for modules will probably fall between € 0.54 per watt to € 0.57 per watt, which is about a 10 percent increase compared to previous market range of € 0.50 per watt to € 0.55 per watt. The cell and wafer products produced by Chinese manufacturers will have a minimum cost of $ 0.54 per watt.

Opposition to the Deal

EU ProSun, which represents around 40 European solar panel producers including Solarworld of Germany has called the accord unacceptable and vowed to file a lawsuit. “Seventy percent of the EU market will be given over to China’s planned economy delivering products at dumped prices, European Industry expects further bankruptcies and job losses as a result of this agreement”, Milan Nitzschke, President of EU ProSun said in an e-mailed statement. 

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