European Union Reaches Agreement With China — Solar Panel Trade Dispute Resolved

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The European Union and China have come to terms with regard to their recent trade dispute over solar panels — Chinese solar panel imports to the EU will now be subject to a minimum price limit somewhere around spot market prices. The deal should put to rest any potential worries about a larger trade war erupting between the two economic superpowers within the near future.

The trade dispute was primarily the result of a number of European solar panel manufacturers questioning Chinese solar panel subsidies — huge state subsidies which allowed Chinese solar panel manufacturers “to dump about 21 billion euros ($28 billion) worth of below-cost solar panels in Europe last year, putting European firms out of business,” as Reuters put it.

In response to the situation, European officials had been planning to place hefty tariffs on solar panel imports from China — a number of European governments were opposed to this action, though, preferring to reach some sort of an agreement with China and avoid potentially losing solar installation business as a result of heavy tariffs.

Image Credit: Solar Panels via Flickr CC

“We found an amicable solution,” stated EU Trade Commissioner Karel De Gucht. “I am satisfied with the offer of a price undertaking submitted by China’s solar panel exporters.”

Chinese Commerce Ministry Spokesman Shen Danyang agreed, referring to the deal as a “positive and highly constructive outcome.”

As per Reuters: “An EU diplomatic source said that in the solar agreement, the agreed price was 0.56 euro cents per watt, near the spot price for Chinese solar panels in July in Europe, according to solar exchange pvXchange. Under the terms of the deal, China will also be allowed to meet about half Europe’s solar panel demand, if taken at last year’s levels. EU consumption was about 15 gigawatts in 2012, and China will be able to provide 7 gigawatts without being subject to tariffs under the deal.”

Not really the best-sounding deal, though — so it’s unsurprising that some EU solar manufacturers have already raised objections, arguing that the agreed-upon minimum import price was still low enough to constitute dumping. Some have even gone as far as accusing the European Commission of ignoring EU law “by failing to protect European industry.” Some manufacturers have stated that they will be bringing their complaints to the European Court of Justice in Luxembourg.

The counter argument is of course that China has sold solar panels for far less than the agreed-upon 0.56 euro cents per watt — sometimes for as little as 0.38 cents a watt — so it is an improvement….

Reuters provides more background:

“Chinese solar panel production quadrupled between 2009 and 2011 to more than the world’s entire demand as it took advantage of a growing market for renewable energy in the face of concerns about climate change.

“But the global financial crisis and ensuing euro zone crisis have forced European governments to withdraw generous subsidies for solar energy. That, along with Chinese imports pushing down prices, have sent many European solar companies into bankruptcy.

“Still, those concerns have become secondary to the much larger EU-China trade relationship at stake over the panels dispute. Europe is China’s most important trading partner, while for the EU, China is second only to the United States. Chinese exports of goods to the bloc totaled 290 billion euros last year, with 144 billion going the other way.”

In response to the earlier threat of tariffs by the EU, China itself launched an “anti-dumping inquiry” into European wine sales — in effect, potentially retaliatory duties. That “inquiry” is now expected to be dropped as a “goodwill gesture” between the two trading partners, according to those close to the negotiations.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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