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Putting solar power in the shade: European Commission proposes severe ‘anti-dumping’ duties on Chinese solar panel manufacturers

  • United Kingdom
  • Competition, EU and Trade - Competition e-briefings

16-05-2013

The European Commission is proposing to impose anti-dumping duties averaging around 47% on Chinese importers of photovoltaic panels.  The duties are expected to take effect when the Commission publishes its provisional decision in early June[1].  Whilst the duties will aid European manufacturers of solar panels, as they are designed to level the playing field with their Chinese competitors, they could have a negative impact on the solar industry as a whole, hugely increasing the cost of installing solar panels.

Separately, on 6 November 2012, the Commission initiated an anti-subsidy investigation, looking at whether the Chinese government is granting subsidies to solar panel producers which are causing injury to the EU industry.  A provisional decision is expected by 5 August 2013, and the Commission must complete its investigation by 5 December.  This investigation could also result in duties being imposed on solar panels imported into the EU, though should not result in ‘double jeopardy’, since a product cannot be subject to both anti-dumping duties and anti-subsidy duties aimed at dealing with one and the same issue.

Comment

There has been much controversy concerning the Commission’s solar panel investigations, with opponents arguing it amounts to protectionism likely to endanger the green energy agenda by increasing the cost of panels and saying that any Chinese trade retaliation could harm the industry which the duties are designed to assist.  The complainant and the Commission have staunchly resisted such suggestions.

According to some media sources, several Chinese solar companies have already received direct support from local governments but the future of the industry remains uncertain.  The Chinese government is trying to rescue the solar industry by increasing domestic demand for solar panels as well as introducing supportive policies to help domestic manufacturers avoid bankruptcy.  This would imply that the EU solar panel industry could lose out. 

If EU Member States feel the Commission is going too far, they can intervene[2].  With industry interests as divided as they are, and the consequences of getting it wrong potentially irreversible, Member States may well wish to scrutinise the Commission’s decision making whilst they have the chance. It already looks from press reports that Germany may be moving from being supportive of the complaint to seeking an EU  solution. 

 

More details on the Solar panel investigation

On 6 September 2012, the European Commission commenced an investigation into suspected dumping of Chinese solar panels and components, on the back of a complaint by the EU Pro Sun industry association which represents over 25% of European solar panel producers.

‘Dumping’ occurs where a company exports a product at a lower price than the normal value of the product on its domestic market.  It is prohibited under international rules agreed by members of the World Trade Organisation, on which the EU anti-dumping regime is based.

The Commission is due to publish a provisional decision by 5 June, and must complete its investigation by 5 December 2013.

The Commission can impose anti-dumping duties where it finds that:

  • dumping is occurring,
  • material injury has been suffered by the EU industry as a result of the dumping, and
  • the imposition of duties is not against the EU interest. 

Duties are set at the level required to remove the effect of dumping (or, if lower, the level required to remove the injury to the EU industry).

Anti-dumping duties normally apply for a period of 5 years.[3]

The Commission can also impose provisional duties while its investigation is ongoing, usually for a period of 6 months. 

Anti-dumping duties are not always the outcome of an investigation.  Exporters can offer undertakings, for example to sell at a minimum price, although the Commission does not have to accept these.

If you have any queries, please contact James Robinson, Aysha Fernandes or your usual contact.


[1] Provisional measures must take effect by 6 June – 9 months after initiation of the investigation.
[2] The European Council, acting by a qualified majority, may change the Commission’s provisional measures.
[3] This can be extended upon ‘expiry review’ by the Commission if there remains a concern that the dumping and injury caused by it will continue or recur.  Additionally, an interim review may be carried out (including at the request of a Chinese importer, after the measures have been in place for at least a year) if there is evidence the measures are insufficient/ineffective or no longer necessary.