EU Imposes Tariffs on Chinese Solar Panels

The EU has finally decided to give in to the lobbying of an industry group that wants to get government protection against the alleged 'dumping' of goods by solar panel manufacturers in China.

Apparently no-one in Brussels deigned to ask consumers, i.e., the buyers of solar panels, if they agreed with the idea (we know what their answer would be though). Solar energy has for a long time been a money loser with a net negative energy equation that could only hope to survive by means of government subsidies. Now that prices are finally declining to a level that may make solar energy worth considering,  the cries of 'dumping' go up. What the term indicates is that the bureaucracy has decided that domestic producers must be protected against allegedly 'unfair competition' from foreigners who produce and sell the same goods more cheaply. In this way, a tiny group of manufacturers is assured of higher profits on the back of the great mass of consumers. Obviously this is a self-defeating strategy. It means that society at large will be worse off. But lets move on with it anyway, and damn the torpedoes.

Reuters reports:

 

“The European Commission agreed to impose punitive import duties on solar panels from China in a move to guard against what it sees as dumping of cheap goods in Europe, prompting a cautious response from Beijing which called for further dialogue.

EU commissioners backed EU Trade Chief Karel De Gucht's proposal to levy the provisional duties by June 6 and make Chinese solar exports less attractive, two officials said.

Shares in German manufacturers SolarWorld, Phoenix Solar and Centrotherm rose sharply, while China's Suntech fell heavily. The investigation into accusations of dumping is the biggest the commission has launched, but Brussels is trying to tread a careful path, knowing it needs China, the EU's second largest trading partner, to help the bloc pull out from recession.

China's ambassador to the World Trade Organisation, Yi Xiaozhun, called the decision a mistake although he declined to comment on any possible retaliation. "It will send the wrong message to the world that protectionism is coming," Yi told Reuters in Geneva on Wednesday.

China's Commerce Ministry on Thursday called for dialogue. "We don't want to see a trade war between the two sides and we hope the EU can cautiously make the ruling decision on China's solar panel products," spokesman Yao Jian told reporters.

Given that Germany and France are seeking to increase exports to China, De Gucht will try for a negotiated solution with new Chinese Commerce Minister Gao Hucheng before an EU deadline in December to cement the levies for up to five years. That could mean agreeing a minimum price at which all solar panels makers selling in Europe adhere to, diplomats said. The EU duties, which will come into effect once the commission publishes the decision in its Official Journal, will be set at an average of 47 percent, officials said.

Trade specialists from all 27 EU countries will be consulted on May 15 at a meeting in Brussels and are expected to back the decision, although their position is non-binding. The European Commission declined to comment.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago, exporting 21 billion euros ($27 billion) to the European Union in 2011. As a result, Chinese-made panels are as much as 45 percent cheaper than those made in Europe, industry executives say.”

 

(emphasis added)

In other words, China's production has increased so much, that both its economies of scale and the supply of solar panels have vastly increased. Hence prices have declined. This is how it should be, but evidently it is not allowed to happen. Consumers must either pay 47% (!) more, or brace themselves for having to put up with some arbitrary 'minimum price', i.e., the full cartelization of the solar industry. Free trade by the way does not require 'trade experts'. It works best when no trade experts are anywhere near.

Why are European solar manufacturers in trouble? It turns out that the reason is that they are no longer as heavily subsidized by tax payer funds as they used to be!

 

“Solar covers about 3 percent of Europe's electricity demands but government support for developing the green energy source varies widely across Europe with the euro zone debt crisis dampening government support in Spain and Greece.

Europe's stance on solar energy is complicated by the fact that some in the EU solar sector, notably importers and installers, support cheap panel imports from China. They say EU tariffs would be damaging for efforts to develop clean energy. Some fear retaliation by Beijing. "Protective duties are poisonous for the solar industry," said Udo Mohrstedt, chief executive of Germany's IBC Solar. "These guarding measures will endanger more than 70,000 jobs in medium-sized companies in Germany alone."

 

(emphasis added)

So now that they can no longer dip their greedy paws into the pockets of tax payers, solar manufacturers simply want the State to force consumers to pay more instead. That is what this amounts to in the final analysis. And the tariffs will be endangering 70,000 jobs in Germany alone? Brilliant!

 

Philipp Rösler Not Happy

Germany's economy minister Philipp Rösler rightly denounces this bizarre maneuver by the EU commission. He realizes that it can only be counterproductive, because now there is a grave danger of Chinese retaliation.  Who wants to start a trade war over solar panels?

 

“German Economy Minister Philipp Roesler said the European Commission made a "grave mistake" by agreeing to impose punitive import duties on solar panels from China and urged the Commission to work to prevent the eruption of a trade conflict.

"It's a grave mistake," Roesler told Welt am Sonntag newspaper on Sunday. He said China already warned the duties on solar panels would harm bilateral trade. "That shows: punitive import duties are the wrong instrument."

Roesler told the Sunday newspaper that the German government has repeatedly warned of the consequences of punitive import duties against China's solar industry. Germany is one of the world's leading export nations.

"German industry is very concerned and quite rightly," Roesler said. "I expect the Commission to do everything to prevent a trade conflict. The Commission has to seek a resolution with negotiations and dialogue instead of threats."

Germany's BDI industry association warned at the weekend about negative consequences for Germany's export-oriented industry of the Commission's move to impose average import duties of 47 percent on solar panels from China.”

 

(emphasis added)

It seems everybody but the faceless bureaucrats in Brussels and the lobbyists who influenced their decision is against this nonsense. However, it will probably be very similar to the ban on light bulbs: once the bureaucracy has set something into motion, there is little that can stop it. It is absolutely stunning that the only 'crime' China's solar manufacturers are apparently accused of is that they are producing such a large supply that prices have come down.

Conclusion:

The EU was originally founded to enable free trade between its members. Now this idea has apparently been perverted into a mission of preventing trade with those outside of the EU that are better able to serve its consumers than domestic producers. Not to put too fine a point on it: the Brussels trade bureaucrats are mercantilistic morons. It is no wonder that the population is increasingly disenchanted with the EU.

 


 

 

 

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