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The European Commission (EC) has decided to impose provisional anti-dumping duties on solar panels and key components, including cells and wafers, from China. The decision follows an investigation by the European Union which found that Chinese solar panels are being dumped in Europe. A product is dumped if it is exported to another country at prices lower than its normal value in its own domestic market.
Effective from June 6, the duties will be imposed to check the harm caused to the European industry by this unfair trade practice, reads a press statement by EC on June 4.
The duties imposed are, however, lower than what was expected because of mounting pressure from Chinese lobby and some European leaders. Karel De Gucht, EU trade commissioner, has been quoted in New York Times saying that there has been mounting pressure on him to back off. China is a strong trade partner of the EU, and Chinese officials, on many occasions have warned their EU counterparts that an anti-dumping investigation could invite swift retaliation.
In 2012 the EU imported goods from China worth $378.8 billion, while EU exports to China amounted to just $188 billion. Bilateral trade in goods between the EU and China already well exceeds 1.3 billion per day. In 2012, the EU imported solar panels from China worth about $15.0 billion.
As against the dumping rate of 88 per cent on an average, reduced duty level of 11.8 per cent will be introduced for two months. After that, duties ranging from 37.2 per cent to 67.9 per cent (averaging 47.6 per cent) will be levied on solar panels from China. As per the statement by EC, those Chinese companies which will co-operate in the investigation will face lower tariffs, whereas those which do not will face higher tariffs. The duty will have to be paid as an “ad valorem” duty; in other words, as a percentage of the import value. It is provisional and imposed in total for a period of maximum six months.
The investigation, however, will continue. Definitive measures, if any, would have to be imposed by December 5, 2013. The definitive measures will be imposed for a period of up to five years.
The investigation was initiated on September 6, last year, following a complaint lodged by EU ProSun, an industry association, which claims solar panels from China are being dumped in the EU.
The probe established that there is dumping by the exporting producers in China. Chinese solar panels are sold in the European market far below their normal market value, resulting, on average, in dumping margins of 88 per cent, which means that the fair value of a Chinese solar panel sold to Europe should actually be 88 per cent higher than the price at which it is sold. In some cases, dumping margins were as high as 112.6 per cent, according to the Commission’s press statement.
Europe is the top market for solar products, accounting for 74 per cent of global installations in 2011, according to European Photovoltaic Industry Association.
However, it is not the first time Chinese trade practices are being questioned in the renewable energy sector. Last year, the United States levied duties ranging from 24 per cent to 255 per cent on import of Chinese crystalline silicon cells and panels.
India also launched an anti-dumping probe against Chinese panels in November last year. “All the details have been sought from the stakeholders. The Ministry of Commerce is investigating. We are waiting for results,” said S Venkatramani, general secretary, Indian Solar Manufacturers Association. If proven, India may also levy import duties on Chinese solar panels.
According to experts, overcapacity in China is one of the reasons behind their dumping of solar products in other countries. In 2012, Chinese production capacity was over 55 gigawatt (GW), representing around 150 per cent of global consumption. In other words, China can today produce one and half times the amount of solar panels the world is demanding. Excess Chinese production capacity was around 27 GW or some 90 per cent of global demand in 2012.