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Special> Chinese Solar Panels Face Forward> In-Depth
UPDATED: August 5, 2013 NO. 32 AUGUST 8, 2013
Tensions Eased
A China-EU settlement ensures Chinese solar panel makers won't be shut out of a massive market
By Deng Yaqing

LIFT AND CARRY: Two workers hold a solar panel in a Tianjin plant of Yingli Group on June 5 (YUE YUEWEI)

As the saying goes, every cloud has a silver lining. Just as it was widely believed that Chinese photovoltaic exports to the European Union (EU) would continue to be slapped with unreasonable duties, a turnaround came.

On July 27, five solar panel groups, including the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), announced that an agreement had been reached to allow Chinese solar panel imports access to a majority of the EU market at a minimum set price.

The deal, reached between the CCCME and the European Commission, came after weeks of intensive talks following a decision by the commission to impose provisional anti-dumping duties on Chinese for two months beginning in early June.

The agreement pegged the floor price for Chinese solar imports at 0.56 euro ($0.74) per watt and imposed an export quota of 7 gigawatts (gw) on Chinese manufacturers. The compromise came just in time. If the two parties failed to reach a consensus on a price undertaking before August 6, all Chinese solar panel exports to the EU would be levied with an anti-dumping duty as high as 47.6 percent.

"To comply with the new agreement, Chinese manufacturers have to raise prices by 10 percent. Compared with the 47.6-percent punitive duty, the price increase seems less desperate," said Zhao Yuwen, Director of the Photovoltaic Committee of the China Renewable Energy Society.

"Under the terms of the deal, about 60 percent of the market share in the EU could be guaranteed for Chinese solar panel exporters," said Chen Huiqing, Deputy Director of the Legal Department of the CCCME.

The price settlement was welcomed by the Ministry of Commerce (MOFCOM), which said the decision would help ease China-EU bilateral trade frictions. Shen Danyang, MOFCOM spokesman, believed that settling trade disputes through negotiations would contribute to an open, cooperative, stable and sustainable relationship between two of the world's largest economies.

REACHING A COMPROMISE: Karel De Gucht at a press briefing on the China-EU solar trade row in Brussels on July 29 (GONG BING)

On the other side, Karel De Gucht, the EU Trade Commissioner, also expressed satisfaction with the price settlement, saying the deal would lead to a new market balance at sustainable prices.

Avoiding a lose-lose result

China is the EU's second largest trading partner after the United States. In 2012, China exported goods worth 290 billion euros ($385 billion) to the EU, while goods totaling 144 billion euros ($191 billion) flowed from the EU to China.

When a ballot was held in May to allow EU members to vote on whether to tax Chinese solar panel products, the Alliance for Affordable Solar Energy (AFASE), which represents more than 1,000 European photovoltaic manufacturers, protested.

According to the European Photovoltaic Industry Association, around 70 percent of the photovoltaic supply chain's value in the EU market is created in Europe. It's worth 40 billion euros ($53 billion) and provides 265,000 jobs for EU countries. "In contrast, the enterprises in favor of a heavy anti-dumping tariff against China only create no more than 8,000 jobs," said in an open letter sent to the European Commission by the AFASE.

A study by Prognos, a German research consultancy, shows, 115,600 jobs could be lost in the EU as a result of anti-dumping duties, with upward of 4.7 billion euros ($6.24 billion) in total lost revenue. In addition, a great many Chinese solar panel producers, or even the entire photovoltaic industry, would be pushed to the brink of bankruptcy if the tariffs were imposed.

Taking advantage of a growing market for renewable energy, Chinese solar panel production quadrupled between 2009 and 2011—more than the world's entire demand.

In 2011, Chinese photovoltaic exports to the EU totaled $20.4 billion. With the panic triggered by the EU anti-dumping investigation sweeping across the industry, the figure fell to $11.19 billion in 2012, down 45.1 percent.

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