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European Commission Proposes Two-year Trade Measures Extension Against Solar Cells and Panels Originating in Mainland China

Despite the ongoing controversy surrounding trade defence measures against solar cells and panels originating in mainland China, the European Commission is reported to have planned for an extension of the measures in late December 2016.

It will be recalled that, from 6 December 2013 onwards, the EU has been imposing anti-dumping and anti-subsidy duties on solar cells and solar panels originating in mainland China. More precisely, the initial duties were imposed on “crystalline silicon photovoltaic modules or panels and cells of the type used in crystalline silicon photovoltaic modules or panels (the cells have a thickness not exceeding 400 micrometres)”.

The trade measures on solar cells and solar panels were initially imposed for a period of two years, as a combination of tariffs and a so-called minimum import price (MIP). With regard to the latter, the European Commission accepted an undertaking, whereby the producers from mainland China agreed to sell solar cells and solar panels to the EU at a price at or above an MIP. In return for doing so, the anti-dumping and anti-subsidy duties are not being levied. The MIP is currently set at 0.56 EUR per watt.

On 29 March 2015, an anti-circumvention investigation was initiated in order to determine whether the imports of solar cells and solar panels into the EU consigned from Malaysia and Taiwan – whether declared as originating in Malaysia and Taiwan or not – were circumventing the trade measures against imports of such products from mainland China.

While the initial trade measures were set to expire on 7 December 2015, a request for an extension of the anti-dumping and anti-subsidy duties was lodged on 4 September 2015 by EU ProSun, on behalf of EU producers said to be representing more than 25% of the total EU production. In consequence, expiry reviews were initiated on 5 December 2015 and are still ongoing.

On 12 February 2016, the European Commission completed the anti-circumvention investigation, deciding to extend the existing anti-dumping and anti-subsidy measures on imports of solar cells and solar panels from mainland China to Taiwan and Malaysia. The decision followed an investigation which concluded that the circumvention of the EU trade defence measures was taking place by means of transhipment via these countries.

In parallel, on 5 December 2015, the European Commission decided – on its own initiative – to initiate a partial interim review, examining whether it is in the EU’s interest to maintain the anti-dumping duties on cells of the type used in crystalline silicon photovoltaic modules or panels. This review is still ongoing.

Hong Kong traders should be aware of the fact that, as long as the expiry reviews and the partial interim review are ongoing, the current trade measures (the anti-dumping duties, the anti-subsidy duties, the undertaking and the MIP) remain in force.

On 15 December 2016, 22 Members of the European Parliament called on the European Commission to end the trade measures on solar cells and solar panels from mainland China. In their joint letter, they urged the Commission to act in the interests of the EU and remove the measures for the benefit of the European solar industry and European consumers, and to achieve alignment with the ambition of the EU's climate change objectives.

Despite such efforts, the European Commission on 21 December 2016 concluded that the result of the expiry reviews and the partial interim review – which will officially end no later than March 2017 – should be the extension of the duties and the MIP for an additional period of two years. In addition, it is claimed that the MIP will be revised downwards in early 2017.

The proposed extension of the trade measures on solar cells and solar panels from mainland China has led to divergent reactions and lobbying initiatives from different interest groups.

On the one hand, EU importers of solar cells and solar panels strongly oppose the European Commission’s proposal, arguing that such an extension would represent a severe blow to the solar industry. The association SolarPower Europe already reported that it will turn to EU Member States to redress some of the reported inaccuracies apparently being presented by proponents of the measures. In the same vein, manufacturers in mainland China assert that an extension of the measures would harm customers and lead to uncompetitive prices.

On the other hand, EU manufacturers applaud the European Commission’s proposal to extend the measures imposed against solar cells and solar panels from mainland China, arguing that this is an important step to ensure the recovery of the EU solar industry. They refer to, according to them, the state-financed overcapacities of mainland China, which they claim could easily be re-diverted to the EU.

In fact, the EU solar lobby ProSun is of the opinion that the trade measures should be extended for a period of five years, in order to “reduce bureaucratic burdens, and at the same time increase predictability and certainty for the EU solar industry, which in turn would foster greater investments and quicker innovations”. The European Commission will, however, most likely opt for an extension of two years, at the end of which another review would take place.

The European Commission’s plans are still in draft form. The Commission’s formal proposal is expected in March, after which it will need to be approved by the EU Council of Member State Ministers.

Content provided by Picture: HKTDC Research
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