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Proposal to Extend Anti-dumping Duties on Chinese Solar Panels Opposed by Some Member States

On 26 January 2017, during a meeting of trade officials from the EU Member States, a majority voted against the European Commission’s proposal to extend the anti-dumping duties on Chinese solar panels for an additional period of two years.

Due to the opposition by 18 out of 28 national governments, the Commission’s proposal to extend the anti-dumping measures will – for the first time since a change to the EU’s procedural rules in 2014 – be subject to an appeal from the EU Member States.

It should be noted that, while opposing the extension of the anti-dumping duties, the EU governments supported a two-year extension of the anti-subsidy duties on solar panels originating in mainland China. This decision was easier to make, as the anti-subsidy duties are capped at 11.5%. In contrast, the anti-dumping duties range up to as high as 64.9%.

Hong Kong traders should be aware that the anti-dumping duties in question will not necessarily end because of the opposition from the 18 Member States (including Hungary, Bulgaria and the Czech Republic). The Commission’s failure to obtain sufficient support for the extension of the duties does, however, automatically trigger an appeal before an “appeals committee”, made up of EU ambassadors of the 28 Member States or officials of a similar ranking.

While the same government positions of the initial committee of experts are represented in the appeals committee, the voting standards of the procedures differ substantially. Indeed, during the first vote among Member State officials which already took place, a “simple” majority opposing the measures sufficed to prevent the imposition of the duties and to send the proposal to the appeals committee. In contrast, within the appeals committee, a “qualified majority” vote opposing the Commission’s proposal is needed to block the adoption of the measures.

A “qualified majority” implies that votes are weighted by the size of the population of each country. On appeal, the opposing countries must thus represent at least 55% of the Member States (i.e. 15 Members or more) and 65% of the total EU population. If such an opposing qualified majority is not reached, the Commission will adopt the trade defence measures.

As a result of this higher voting threshold, the initial objection from 18 Member States’ national EU trade officials might not be enough to prevent the Commission’s proposal from going through.

The European Commission is now consulting with EU governments on how to proceed. Fourteen days at the earliest and one month at the latest after the meeting among trade officials, the Commission must inform the Member States of the results of those consultations and submit a draft implementing act to the appeals committee. After such draft implementing act is submitted, the vote within the appeals committee must be taken in between two weeks and one month’s time.

While not required to do so, the appeals process could encourage the Commission to present an amended proposal to the committee, diluting the EU’s solar panels tariff extension plans. Indeed, the Commission is currently facing a lot of pressure from lobby groups such as SolarPower Europe to soften its proposal, by extending the duties by just a year, for example, and inserting a clause ruling out future extensions of the measures.

The EU has been imposing anti-dumping duties on solar cells and solar panels originating in mainland China from 6 December 2013 onwards. The trade measures were initially imposed for a period of two years. While the initial trade measures were thus set to expire on 7 December 2015, an expiry and partial interim review were initiated on 5 December 2015. These investigations are still ongoing.

On 21 December 2016, the European Commission concluded that the results of the expiry and partial interim review – which will officially end no later than 5 March 2017 – should lead to the extension of the anti-dumping duties for an additional period of two years. According to the Commission, Chinese producers are likely to keep on dumping solar modules and panels on the European market. The Commission argues that the removal of the measures on cells might likely lead to a collapse of the EU’s cells manufacturing industry, the loss of highly skilled jobs and related R&D activity.

This solar panel case – the biggest anti-dumping matter that the EU has ever faced – is of a very political nature, attracting viewpoints from many different interest groups. European solar panel producers, in favor of tougher measures against mainland China, have welcomed the Commission’s findings, stating that they are convinced that an extension of anti-dumping measures would be settled within weeks.

On the other hand, SolarPower Europe stated that it was pleased with the majority view and that it hoped the Commission would substantially review its proposal. In addition, environmental activists have complained that the EU is contradicting its own climate goals to boost renewable energy generation by imposing the punitive measures.

Content provided by Picture: HKTDC Research
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