EU – China: Solar Panel Case
It has been few weeks since the European Union led an investigation on alleged Chinese dumping on solar panels. This case was brought to Brussels’ attention by E.U ProSun, a European organization created by some industry professionals. Few years ago, the solar panel industry in Europe was mainly dominated by German companies such as SolarWorld, one of the leaders on the solar panel market. However, SolarWorld encountered financial issues when Chinese government started to carry out their five year plan to boost their solar panel industry. Today, China is the main manufacturer of solar panels in the world as the country owns about 65% of the market share.
E.U ProSun asked the European Union Commission to investigate on Chinese’s solar panel price as they suspected a dumping from Chinese companies. Helped with subsidies from the Chinese government and highly in debt to state-owned banks, Chinese solar panel producers are allegedly selling their products at a price below the cost of production. Behind that, European leaders want to avoid a Chinese monopoly on solar panel market in E.U. Today, Beijing exports about 90% of its solar panels oversea and 80% of them are sent to Europe. Moreover, 80% of the European solar panel industry is dominating by Chinese companies whereas in 2009, they represented 63% of the European market. Since then, a great number of European competitors closed down.
During the first act of this solar panel dispute, some tensions were palpable between E.U members. Some countries, among them Germany, were firmly against the establishment of custom duty on Chinese solar panels. Those countries were accused to only think about their interest in China by the countries in favor of the tax.
On June 4th, Karel de Gucht, the European Union trade commissioner, announced that EU would apply custom duty on Chinese solar panels of 11.8% and raise it to 47% by August. Right after this decision has been reported, Chinese government informed EU that they will investigate on European wines alleged dumping and warned EU authorities that custom duty might be apply on their wines in China.
Last week, in Beijing, Chinese and European leaders met to discuss the issue. Wanting to avoid a war trade, they started discussion with willingness to reach an acceptable agreement every actor. During this time, European Union stated they will freeze taxes on Chinese solar panel at 11.8% and will not increase it to 47% in August as announced 3 weeks ago. One of the issues to this trade dispute would be to settle a minimum retail price on Chinese solar panel. Both parties said they are open to dialogue and willing to find a compromise.
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