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EU Decides to Reject Calls Made by EU Solar Panel Manufacturers for Extension of Trade Defence Measures

Hong Kong businesses involved with the export of solar panels from mainland China to the EU will have been holding their breath over whether the European Commission would give in to the EU industry’s demands for an expiry review. The industry has been mounting a last-ditch effort to keep the EU tariffs on imports in place, even though this would likely trigger trade tensions with Beijing.

For the measures to remain in place for the foreseeable future, the Commission would have to initiate an expiry review: this would automatically keep the measures in place until conclusion of the review, thus, for up to 15 more months. This would be the case even if the Commission were to eventually conclude – at the end of the review – that the measures should be terminated.

The European Commission had already intimated that it planned to reject the requests for review, according to a document that was sent last month to interested parties. The document reportedly stated that “the Commission intends to reject the expiry review request,” but applicants were granted the possibility to submit comments.

The Commission then organised a meeting with Member States’ national trade representatives on 21 August 2018 to evaluate the industry demand. It proposed dismissing the request for an expiry review, and is said to have received backing from a majority of the EU’s 28 Member States.

The EU had first imposed anti-dumping and anti-subsidy measures on Chinese-origin solar panels, wafers and cells in 2013, and extended them in March 2017 for a further 18 months. The trade defence proceedings are among the EU's most politically sensitive trade disputes, involving alleged subsidies granted by the Chinese government to Chinese solar panel exporters, who in turn have allegedly carried out dumped sales to EU based customers.

In 2013, when the EU introduced the anti-dumping and anti-subsidy duties against mainland China in order to slow down competition for producers in Europe, the case was also the EU’s biggest commercial dispute of its kind. It covered European imports valued at €21 billion in 2011, and brought about high-level discussions between EU governments and mainland China. As a result of this, the EU imposed the definitive duties in December 2013, but for two years rather than the usual five-year period. Thereafter, the same measures were prolonged in March 2017 for 18 months, with an understanding among the parties that they would definitively lapse on the scheduled date of 3 September 2018.

As part of their call to extend the measures, EU solar panel makers have contended that, notwithstanding the measures, global circumstances have altered to such a degree that another expiry review is warranted. It is reported that the companies point to a reduction in the domestic Chinese market for the installation of solar modules, as well as US levies on imports from mainland China and import barriers from India. These “developments will inevitably draw all excess Chinese production to the European market,” remarked a paper from the EU industry dated 30 July, responding to the Commission's stated plan to allow the measures to expire in early September.

The president of EU ProSun (a body which has repeatedly called for measures to remain in place) is quoted as stating that “only the EU is at the same time irresponsibly dropping all measures and inviting Chinese producers to eliminate European and third-country competition in the EU market”. It is thought that some companies may be considering a legal challenge at the EU’s highest-level court, the Court of Justice.

The anti-dumping and anti-subsidy measures were linked to an EU-mainland China agreement in late 2013 to limit European imports of solar panels from mainland China. The agreement set a minimum price and a volume limit on imports into the EU. Chinese manufacturers that decided to take part in the pact – which numbered over a hundred at the beginning — did not have to suffer the actual EU-imposed duties, which, depending on the exporter, were as high as 64.9 percent. Thereafter, in September 2017, the Commission altered the system for Chinese companies that were still part of the accord: Chinese manufacturers have been allowed to sell solar products in Europe free of duties if they do so at or above a minimum price that has progressively declined. If sold for less than that price, they are subject to the actual duties of up to 64.9 percent. All this is set to end as of 3 September 2018.

Content provided by Picture: HKTDC Research
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