EU Launches WTO Investigation into Chinese Silicon PV Dumping Allegations

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The European Commission (EC) has decided there’s sufficient evidence to support investigating claims that Chinese silicon photovoltaic (PV) wafer, cell, and panel manufacturers are dumping product in the European Union (EU). The investigation is to cover exports of crystalline silicon PV modules, as well as cells and wafers, and is to be concluded within nine months, provided there is sufficient “prima facie evidence of dumping,” according to an EU press release.

The World Trade Organization (WTO) anti-dumping petition was filed July 25 by EU Prosun, a group of European solar PV manufacturers led by SolarWorld AG, whose US subsidiary — SolarWorld Industries America — has led what’s thus far been successful WTO legal actions against imports of silicon PV products.

EU markets were the destination for 60% of Chinese silicon PV manufacturers’ exports, worth some $26.6 billion, in 2011. This being the case, the EC finding in support of EU Prosun’s dumping allegations would be a much thornier problem for China’s silicon PV manufacturers than the import duties now being levied in the US.
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China PV Manufacturers Rise at the Expense of EU, US Competitors

Acting per the WTO process, US international trade authorities have issued preliminary countervailing duties and anti-dumping duties on Chinese silicon PV imports. Chinese manufacturers have captured some 80% of the US market for silicon PV cells and panels, while US manufacturers have been pushed to, or beyond, the brink of solvency. The Dept. of Commerce is expected to issue a final determination in mid-October.

The same thing is happening in the EU, where once fast-growing silicon PV manufacturing pioneers, such as Q-Cells, have filed for insolvency or are now on the verge of failing. Yet, the EU’s been the largest buyer of Chinese silicon PV exports by far, as Chinese manufacturers have been able to capitalize on the enactment of solar PV feed-in tariffs (FiTs) that have made EU nations — such as Germany, Italy and Spain — world leaders in terms of installed solar power capacity.

Supported by the central government’s strategic economic development plans and financial support from government and banks, Chinese silicon PV manufacturers over the past 5+ years have undertaken huge expansion programs that have flooded the global market with silicon PV panels. China’s surging silicon PV exports have led to precipitous declines in solar panel and installed solar energy costs, as well as WTO legal actions on the part of manufacturers in other WTO member countries.

Riding the wave of growing solar energy demand, Chinese silicon PV manufacturers such as Suntech, LDK, and JA Solar, have rapidly risen to dominate the global market for silicon PV cells and panels. They’ve taken on a huge amount of debt along the way, however.

Changing Fortunes in Silicon PV

Carrying large amounts of debt, and faced with the sharp drop in silicon PV prices, the ongoing EU debt crisis, and slowing economic growth, JA Solar and LDK are reportedly on the ropes in terms of financial solvency and could not survive without government-directed financial support from Chinese banks. Suntech also reported a large loss this quarter, and is facing a growing list of legal actions spun out of an alleged offshore financial fraud and scandal at GSF, a Luxembourg–based solar project development fund Suntech controls.

Besides putting additional financial pressure on Chinese silicon PV manufacturers, the added threat of anti-dumping duties imposed by the EC is raising the domestic and international political and economic stakes surrounding the issue. In the EU and US, the dispute with trade and policy for silicon PV products is spilling over and adding to a growing list of legal disputes regarding a broad range of internationally traded products.

For its part, EU Prosun issued a press release applauding the EC’s decision. Stated Milan Nitzschke, President of EU ProSun, the Sustainable Solar Energy Initiative for Europe, “The European Commission took a big step today to save Europe’s green tech sector and broader manufacturing base.

“Chinese companies are selling solar products in Europe far below their cost of production, with a dumping margin of 60% to 80%. This means that Chinese solar companies are making enormous losses, but are not bankrupt because they are bankrolled by the state. Such practices have led to over 20 major European solar manufacturers going out of business already in 2012 alone. If China destroys the EU solar industry where labour accounts for less than 10% of production costs, then virtually all European manufacturing sectors and jobs are under threat.”

EU Prosun’s US counterpart, the Coalition for American Solar Manufacturing (CASM), has also come out publicly in support of the EC’s decision. “The more than 220 member companies of CASM today applaud the decision of the European Union’s Directorate General for Trade to initiate the anti-dumping investigation requested by EU ProSun against Chinese solar manufacturers,” Gordon Brinser, president of Oregon–based SolarWorld Industries America Inc., which has been leading CASM’s effort, stated.

“We believe that, similar to the United States, the European Union will come to the conclusion that the Chinese are violating EU and international trade law and we look forward to the results of the investigation next fall.

“We understand the scope that the European Union is considering for this trade case will be a comprehensive one. If the Chinese are found to have violated EU and international law, as we expect they will, the broader scope of the case will help prevent the Chinese from avoiding duties by shipping cells through Taiwan or another third country.

“CASM again calls for the U.S. Commerce Department to revise the scope of the American case in its final determination in order to stop the Chinese from causing continued injury by circumventing any final determinations from Commerce in October and the International Trade Commission in November and to provide effective relief for American industry.

Opposing Chinese Silicon PV Import Duties

Chinese solar PV companies joined in calling for the EC to halt a rising tide of protectionism. Ministry of Commerce spokesman Shen Danyang on Thursday said that the Chinese government “‘deeply regrets’ the European Commission’s decision,” according to a China Daily report.

“Restricting China’s solar panel products will not only hurt the interests of both the Chinese and European solar industries, it will also undermine the healthy development of the global solar and clean energy sector,” Shen was quoted as saying.

While continuing its opposition to the imposition of import duties on imports of silicon PV cells and panels in the US, Coalition for Affordable Solar Energy (CASE) President Jigar Shah also came out publicly in opposition to the EC’s decision.

“Today’s European Union announcement initiating a trade investigation into Chinese solar exports to Europe represents the continuation of SolarWorld’s efforts to utilize legal maneuvers to support their business objectives. As in the US solar trade case, SolarWorld is seeking to institute trade barriers and tariffs to support its business at the expense of the majority of the solar market. As in the US solar trade case, we note that many European solar companies oppose SolarWorld’s self-serving maneuvers. We also note that many European political leaders are rejecting protectionism and are advocating constructive negotiations for resolving the current solar trade dispute.

“Clearly, all global solar industry leaders, including major PV US and EU–based trade associations like SEIA, EPIA, and SEMI, want to see a constructive resolution to global solar trade issues. Just as in the US trade case, when the US solar industry rallied in opposition to SolarWorld’s actions, the majority of EU–based solar companies oppose the imposition of harmful taxes on the global solar industry.

“The solar industry’s growth, which results in adding jobs and infrastructure investment, is correlated to the reduction in solar system costs, and this cost reduction goal is undermined by SolarWorld’s legal initiatives.”

Photo Credit: Suntech

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