The EU and China have been working for some months on a co-operative solution to the current trade row which started when European solar manufacturers accused Chinese exporters of selling solar panels in the EU market at below cost in an attempt to gain market share. It is the EU’s biggest ever anti-dumping case, and is about the €20 billion in Chinese-made solar products – crystalline modules, cells and wafers – shipped to the bloc in 2011.
But on 26 July negotiations between the European Commission and the Chinese Ministry of Commerce apparently came to a halt. According to a report in specialist journal pv magazine this was because the talks had failed to reach agreement on a minimum trade price level that the EC wants to set for PV imports.
Until 26 July the possibility of a compromise was a real one. The Commission had updated member states on the talks, outlining its proposition to implement a maximum import ceiling of 7 GW on Chinese modules, and a minimum module import price of €0.57/W.
Beijing had reportedly reached an agreement over the import ceiling for modules with the EU, but the import price became a sensitive topic, leading negotiations to stall. The Chinese delegation declined to accept a figure of €0.57/W. It is believed that the €0.57 figure is unacceptable because Asian and European manufacturers that buy cells from Asia already offer lower prices. Therefore Beijing is holding out for €0.55/W. But the EU is unwilling to compromise on a lower price, and the stand-off has led to the Chinese delegation’s halting negotiations for now. Most likely the import ceiling compromise of 7 GW is also off the table. The Chinese delegation were due to discuss their strategy on Sunday 29 July.
The talks have been in danger of stalling at least once already. In May the EU Trade Commissioner, Karel De Gucht, announced plans provisionally to impose an import tariff of 47 % on solar panels coming from China. However, 18 EU member states – including Germany and the UK – voted against this, arguing that it would do more harm than good to the European solar industry and result in prices rising across the board. But the Trade Commissioner is not bound by this vote and will provisionally impose the new import tariff, up from its previous level of 11%, if an agreement is not reached by August 6th.
Many believe there is no longer enough time to reach a conclusion. Other elements of the price undertaking yetto be agreed include volume and duration. It looks as if the Chinese would have access to up to 60 % of the EU market at the minimum price, but above that Chinese products would face steep duties. As for duration, the Chinese initially demanded that the price floor expire after six months, while the Commission wants at least two years.
There are also political issues. Beijing would like the Commission to shut down a related anti-subsidy investigation into the solar industry, focusing on suspicions that the Chinese government is subsidising the below-cost import price, because the results of that investigation could prove damaging and might sway the opinion of some EU governments on the merits of the solar case. Any subsidies uncovered could also supply evidence useful to other European makers – and politicians.
Meanwhile, the EC wants to ensure that as part of a solar deal China would also drop similar investigations it has recently started into European wine and polysilicon exports, investigations it apparently launched in retaliation. It is not clear yet if these are serious matters or have been set up only to use as bargaining counters.