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EU Extends Anti-dumping and Anti-subsidy Duties on Chinese Solar Cells and Solar Panels

On 17 February 2017, EU Member State delegates voted on the highly controversial European Commission proposal to counter unfair pricing methods and state aid linked to solar cells and solar panels originating in mainland China. The Commission’s revised proposal was backed by a sufficient number of Member States, causing the anti-dumping and anti-subsidy measures to be extended for another 18 months, rather than the two years the Commission had originally proposed. The vote, which took place in the Appeals Committee on 17 February 2017, was the first of its kind.

Practically speaking, EU importers of solar cells and solar panels from mainland China will continue to pay duties of up to 64.9% for an additional 18 months, unless the Chinese producers have signed up to a minimum import price deal. With regard to the so-called minimum import price (MIP), the European Commission accepted an undertaking, whereby producers from mainland China selling their solar cells and solar panels to the EU at a price at or above the MIP are not subject to the anti-dumping and anti-subsidy duties. The MIP is currently set at 0.56 EUR per watt.

Industry groups representing various interests welcomed the European Commission’s proposal, albeit for different reasons. On the one hand, the president of EU ProSun – a group representing European solar cell and panel producers – said the decision was good news for solar manufacturing in Europe, but regretted “that the Commission reduced the measures from 24 to 18 months, ahead of a summit with China.” On the other hand, the CEO of Solar Power Europe – a group of companies opposed to the measures – called the decision “a small victory” and said he hoped the minimum price would be reduced quickly.

During previous weeks, controversy emerged when it was leaked that the Commission’s proposal would include a clause making it impossible for EU producers to request future expiry reviews, thereby ensuring that the duties would be extended for the very last time. Industry groups such as EU ProSun and SolarWorld immediately disputed the legality of a clause limiting a company’s right to apply for further extensions of anti-dumping duties. They stated that if the Commission were to opt for such a clause, they would challenge the measure before the European courts. It appears, however, that the clause was deleted from the final version of the Commission’s proposal.

Nevertheless, uncertainty remains with regard to the European Commission’s declared intention of “phasing out” the anti-dumping measures. The Commission is most likely to initiate a new interim review, aimed at changing the way the MIP is calculated and eventually reducing the MIP on imports of solar cells and solar panels originating in mainland China.

The MIP is currently calculated on the basis of the Bloomberg index of solar panel prices, and can be adjusted quarterly in order to stay in line with the global average. However, investigators claim that the index does not reflect a decline in the EU industry’s production costs. Due to technological advances, costs are now more than 20% lower than they were when the EU imposed the measures in 2013. The European Commission stated that it plans to take such cost declines into consideration when setting the new MIP. For the time being, however, it remains unclear how this will be done.

The duties on solar cells and solar panels from mainland China were originally imposed by the European Commission on 6 December 2013 for a period of two years, as a combination of anti-dumping and anti-subsidy duties and an MIP. While the initial trade measures were set to expire on 7 December 2015, expiry and partial interim reviews were initiated on 5 December 2015.

On 20 December 2016 – in response to the initiated expiry review and the partial interim review of the measures – the European Commission concluded that Chinese producers were likely to keep dumping solar cells and solar panels on the EU market. While stating that the measures should be maintained, the Commission proposed, exceptionally, to prolong the measures only for a period of two years.

On 26 January 2017, however, the EU Member States rejected the Commission’s proposal to extend the duties on Chinese solar cells and solar panels for another two years. While countries with solar cell producers, notably France and Germany, supported the extension of duties, 18 other Member States voted against the Commission’s proposal. As a result, the Commission’s proposal became subject to an appeal by the EU Member States.

While the European Commission was not obliged to do so, it reconsidered its proposal, following political pressure from mainland China, European solar panel users and environmental groups. Between the two votes, the Commission’s original proposal to extend the duties on Chinese solar cells and solar panels for two years was reduced to 18 months. Such a rapprochement with mainland China was seen as a way to counter some of the more alarming protectionism which is occurring in the United States of America.

The European Commission proposed its softer approach vis-à-vis Chinese exporters at the meeting of the College of Commissioners on 8 February 2017. As the College agreed with the extension of the anti-dumping and anti-subsidy duties for another 18 months, the revised proposal was presented to the Appeals Committee on 17 February 2017. In the absence of a qualified majority against the proposal in the Appeals Committee, the Commission may now adopt its revised regulation. As a result, the anti-dumping and anti-subsidy duties on solar cells and solar panels from mainland China will be extended for another 18 months.

Content provided by Picture: HKTDC Research
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