News Column

China, European Union Settle Solar Dispute

July 27, 2013

China and the European Union have settled their trade dispute over Chinese solar imports, the EU trade commissioner said Saturday.

The two sides agreed to minimum prices and import quotas for Chinese solar products after a six-week tug of war, Karel De Gucht said in a statement.

De Gucht said an "amicable solution" had been reached.

The Chinese government also welcomed the deal, the official Xinhua news agency said.

The compromise "showcased pragmatic and flexible attitudes from both sides," Ministry of Commerce spokesman Shen Dayang was quoted as saying.

The EU accused Chinese solar manufacturers of dumping solar products on the European market. Government subsidies in China allowed them to sell their products below production cost in the EU, it alleged.

Diplomatic sources said the agreement called for a minimum price of 56 cents per watt of output. A cap was to also be placed on the total output of Chinese imports of solar panels to the EU of 7 gigawatts per year.

The deal would cover exports from about 90 Chinese exporters, representing 60 per cent of panels sold in the EU, the European Commission said. The companies that comply with these conditions would not be subject to punitive tariffs.

For other companies, the punitive tariffs ranging from 37.2 to 67.9 per cent that De Gucht had announced in June would take effect August 6.

The European Commission justified the tariffs because it said 25,000 jobs in the ailing European solar industry were in grave danger because of unfair cheap competition from China.

World Trade Organization anti-dumping rules allow countries to protect their domestic industry from unfair competition, but when the EU imposed provisional tariffs of 11.8 per cent in early June, it raised fears of retaliation from Beijing.

"We are confident that this price undertaking will stabilize the European solar panel market and will remove the injury that the dumping practices have caused to the European industry," De Gucht said.

The compromise would "result in a new equilibrium on the European solar panel market at a sustainable price level," he said.

Shen said in Beijing that the agreement would promote an open, cooperative, stable and sustainable economic and trade relationship between China and the EU.

Authorities in Brussels want member states to give official approval to the agreement in the next 10 days, the European Commission said.

The agreement prevented a further escalation of the trade dispute, which was unprecedented given the high market value of the solar imports, estimated at 28 billion dollars per year.

The preliminary duties were controversial among EU member states. The commission imposed the duties despite opposition from Germany and 17 other countries, who warned of a trade war.

German Economy Minister Philip Roesler welcomed the agreement, saying, "We have always suggested that a negotiated solution is better than a conflict that would damage our economic relations."

The solar agreement now raises hopes that Beijing would be willing to settle disputes with the EU in other areas.

For example, China initiated anti-dumping proceedings against European wine, seen as a retaliatory action to increase pressure on the solar negotiations. China pointed to European subsidies for grape growers, saying they allowed European wine to be sold under its production price in China.

China also started investigations into imports of steel alloy pipes and specialty chemical products from the EU.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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