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Solar Cells and Panels from Mainland China: Controversy Dogs Choice for Determining New EU MIP

It has come to light that a Taiwanese investigation on the accuracy of market research company PVInsights’ price data has added yet another complication to the EU’s much disputed trade defence proceedings against solar panels and solar cells from mainland China. The European Commission should refrain, according to critics, from recommending that PVInsights’ data be used for determining the new EU minimum import price (MIP), as the data may not be as reliable as first thought.

The Taiwan Photovoltaic Industry Association (TPVIA) had filed a complaint against the Taiwanese market research company for the solar market, PVinsights, on behalf of Taiwanese cell manufacturers at the Taiwanese Fair Trade Commission (FTC). TPVIA claims that the prices set by PVinsights are too low, as they do not correspond to actual sale prices and are below actual production costs. This has been reported by several sources.

As previously reported, definitive EU trade defence measures have been imposed on solar cells and solar panels from mainland China from 6 December 2013 onwards. The measures were imposed as a combination of tariffs on the one hand (anti-dumping duties ranging from 27.3% to 64.9% and countervailing duties ranging from 0% to 11.5%), and an MIP on the other hand.

With regard to the MIP, the European Commission accepted a price undertaking, whereby certain exporting producers from mainland China agreed to sell their solar cells and solar panels to EU customers at a price at or above an MIP. In return for doing so, the anti-dumping and countervailing duties are not being levied on their imports into the EU.

While the trade defence measures on solar cells and solar panels were initially imposed for a period of two years, the EU extended the duties and MIP for a period of 18 months in March 2017. As a result, the trade defence measures are now set to expire in September 2018.

Pursuant to the partial interim review that the European Commission is currently conducting, which is explicitly limited to the form of the trade defence measures, the Commission is expected to reduce its MIP as of September 2017. According to the Commission’s draft plans, the MIP for solar panels will drop over 20% within a year, while the MIP for solar cells will drop over 10%.

Importantly, in order to determine its new MIP, the European Commission is set to replace the currently used Bloomberg index with the price index linked to PVInsights. The Commission is of the view that PVInsights’ index is the most reliable and most widely used index by the solar industry.

However, by casting doubts on PVInsights’ price index and its ability to reflect actual costs, Taiwan’s investigation could, potentially, prevent the European Commission’s plan of basing itself on PVInsights’ price index.

TPVIA argues that the weekly publication of PVInsights on the price developments of crystalline solar cells and solar models shows prices below the level of actual production costs for many Taiwanese producers. PVInsights appears to not include Taiwanese prices in its figures, which would apparently distort the outcome of its research. This, in turn, would have a direct negative impact on solar cell manufacturers in Taiwan and their opportunities for fair trade.

Nevertheless, the chances that the Taiwanese investigation will effectively lead to a change of plans for EU investigators appear to be slim.

On the one hand, it could be argued that the mere fact that an investigation has been initiated does not mean that the Taiwanese allegations are accurate. On the other hand, the European Commission hopes to have approval of its new MIP from EU governments before the end of September 2017, while the Taiwanese FTC only opened an investigation procedure in June 2017. As any outcome from the FTC probe is not expected before the Commission sets its new MIP, EU investigators will probably start using the data of PVInsights anyway.

It thus appears that only pressure from EU governments could persuade the European Commission to change its plans, and not resort to the price data provided by PVInsights. In order for this to happen, the EU Member States – which have to approve the new MIP before it can enter into force – would, in light of the Taiwanese investigation, have to raise concerns about using the price data of PVInsights.

Content provided by Picture: HKTDC Research
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