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Europe and China Agree to Settle Solar Panel Fight
(about 2 hours later)
BRUSSELS — The European Union’s trade chief said on Saturday that a deal had been reached with China to settle a dispute over exports of low-cost solar panels that had threatened to ignite a wider trade war between two of the world’s largest economies.
BRUSSELS — The European Union’s trade chief said on Saturday that a deal had been reached with China to settle a dispute over exports of low-cost solar panels that had threatened to set off a wider trade war between two of the world’s largest economies.
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 enormous loans from state-owned banks and other government assistance so as to charge prices that would otherwise by uneconomical.
The settlement essentially involves setting a fairly high minimum price for sales of Chinese-made solar panels in the European Union to try to prevent them from undercutting European producers. Those producers accused Chinese manufacturers of benefiting from enormous loans from state-owned banks and other government assistance that enabled them to charge prices that would otherwise be 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.
“We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” Karel De Gucht, the European trade commissioner, said in a statement.
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.
The deal immediately met with ferocious criticism from the European manufacturers that had filed the complaint, and it complicates a similar dispute between the United States and China.
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.
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 called for further negotiations to avoid harm to German exporters. European importers of solar products from China also opposed the tariffs.
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.
At the time, Mr. De Gucht said he had been left with no choice but 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.
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.
On Saturday, officials at the European Commission 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 a European Union official, who spoke on condition of anonymity because the deal had not yet been formally approved, said the two sides had agreed to a minimum price of 0.56 euros per watt (74 cents), which would base any potential surcharge on the amount of electricity generated by each imported panel.
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 European solar manufacturers who lobbied for tougher action against the Chinese exporters on Saturday promised to sue over the settlement.
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.
The agreement “is contrary in every respect to European law,” said Milan Nitzschke, the president of EU ProSun, an industry group. A minimum price of 0.55 to 0.57 euros was at the level of “the current dumping price for Chinese modules,” the group said in a statement.
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 arrangement would cover exports from 90 of about 140 Chinese exporters that were examined during the investigation, and that represent 60 percent of the panels sold in Europe, the government official said. Those 90 companies would no longer face tariffs that were put in place in June. Chinese exporters that did not agree to the terms will 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.
The Chinese government hoped from the start of the trade case with the European Union for a negotiated settlement instead of a legal battle. This 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 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 responded on July 18 that it was preparing to impose tariffs of more than 50 percent on polysilicon, the main material for solar panels, on imports from the United States and South Korea.
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.
The United States began trying in early summer to arrange a comprehensive deal among Beijing, Brussels and Washington that would set new global trade arrangements for solar panels in exchange for the removal of the American tariffs and the preliminary European tariffs. But faced with a complex process in the United States for removing tariffs once the Commerce Department has made them final, the European Union pushed ahead with its own negotiations with China, a Senate aide with detailed knowledge of the issue said on Friday.
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.
“The administration has been doing the right thing on this, pushing for talks and trying to get a joint settlement with Europe, but the Europeans have not had the same attitude and instead are pursuing talks with China independently of the U.S., which has stalled progress on U.S.-China talks,” said the aide, who spoke anonymously because of the diplomatic sensitivity of the issue.
The United States began trying in early summer to arrange a comprehensive deal among Beijing, Brussels and Washington that would set new global trade arrangements for solar panels in exchange for the removal of the American tariffs and the preliminary European tariffs. But faced with a complex process in the United States for removing tariffs once the Commerce Department has made them final, the European Union pushed ahead with its own negotiations with China, a Senate aide with a detailed knowledge of the issue said on Friday.
“The administration has been doing the right thing on this, pushing for talks and trying to get a joint settlement with Europe, but the Europeans have not had the same attitude, and instead are pursuing talks with China independently of the U.S., which has stalled progress on U.S.-China talks,” said the aide, who insisted on anonymity because of the diplomatic sensitivity of the issue.
The Office of the United States Trade Representative, which is part of the White House, had no immediate response to the European deal, which was announced shortly before dawn in Washington.
The Office of the United States Trade Representative, which is part of the White House, had no immediate response to the European deal, which was announced shortly before dawn in Washington.
Solar panels represent more than 6 percent of China’s exports to the Continent, making them one of the largest Chinese exports to the European Union. In 2011, Chinese exports of panels and their main components to the European Union were worth about 21 billion euros ($27.4 billion).
Solar panels represent more than 6 percent of China’s exports to the Continent, making them one of the largest Chinese exports to the European Union. In 2011, Chinese exports of panels and their main components to the European Union were worth about 21 billion euros or $27.4 billion.
Individual Western companies, in the solar industry and other sectors, have been wary of taking any public stand against China, which has become the world’s largest market in industries as diverse as steel, cellphones and automobiles. Chinese officials have considerable discretion in issuing factory permits, export licenses and even visas for visiting executives, making most companies leery of publicly voicing criticism of China or being seen as supporting trade actions against it.
China grew from a tiny player in the global solar panel market five years ago to the world’s dominant producer now through a program of enormous lending by state-owned banks and a wide variety of manufacturing incentives by local and provincial governments. That has allowed Chinese producers to drive down the price of panels by three-quarters over the same period.
China has grown from a tiny player in the global solar panel market five years ago to the world’s dominant producer now through a program of massive lending by state-owned banks and a wide variety of manufacturing incentives by local and provincial governments. That has allowed Chinese producers to drive down the price of panels by three-quarters over the same period.
But Chinese manufacturers have expanded faster than the market, and the largest of them now face severe financial difficulties.
But Chinese manufacturers have expanded faster than the market, with the result that the largest Chinese producer in 2011, Suntech, put its main operating unit into bankruptcy early this year and other Chinese producers face severe financial difficulties. The Chinese government assistance to manufacturers has also drawn international criticism because Western governments have mostly subsidized buyers of solar panels, only to see these consumer subsidies end up going heavily to buyers of imported Chinese equipment.
James
Kanter reported from Brussels and Keith Bradsher from Hong Kong.
As in the European Union, trade law in the United States allows duties to be suspended in anti-dumping and anti-subsidy cases if they are replaced by an undertaking by the exporting country to set a minimum price for its goods. Exporting countries sometimes like such arrangements, because it allows them to keep the proceeds from a higher price, instead of the difference between the world price and the higher price being collected as tariffs.
The difficulty in negotiating a deal lies in how high the minimum price is set. Exporting companies do not want the price set so high that they lose most of their market share to rivals in the importing country.
James Kanter reported from Brussels and Keith Bradsher reported from Hong Kong.
