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.

 


 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Is the Canary in the Gold Mine Coming to Life Again?
      A Chirp from the Deep Level Mines Back in late 2015 and early 2016, we wrote about a leading indicator for gold stocks, namely the sub-sector of marginal - and hence highly leveraged to the gold price - South African gold stocks. Our example du jour at the time was Harmony Gold (HMY) (see “Marginal Producer Takes Off” and “The Canary in the Gold Mine” for the details).   Mining engineer equipped with bio-sensor Photo credit: Hulton Archive   As we write these...
  • Fed Credit and the US Money Supply – The Liquidity Drain Accelerates
      Federal Reserve Credit Contracts Further We last wrote in July about the beginning contraction in outstanding Fed credit, repatriation inflows, reverse repos, and commercial and industrial lending growth, and how the interplay between these drivers has affected the growth rate of the true broad US money supply TMS-2 (the details can be seen here: “The Liquidity Drain Becomes Serious” and “A Scramble for Capital”).   The Fed has clearly changed course under Jerome Powell...
  • Are Credit Spreads Still a Leading Indicator for the Stock Market?
      A Well-Established Tradition Seemingly out of the blue, equities suffered a few bad hair days recently. As regular readers know, we have long argued that one should expect corrections in the form of mini-crashes to strike with very little advance warning, due to issues related to market structure and the unique post “QE” environment. Credit spreads are traditionally a fairly reliable early warning indicator for stocks and the economy (and incidentally for gold as well). Here is a...
  • The Gold Standard: Protector of Individual Liberty and Economic Prosperity
      A Piece of Paper Alone Cannot Secure Liberty The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.   Sound money vs. a piece of paper – which is the better guarantor of liberty?...
  • Fed President Kashkari Hears Voices – Are They Lying?
      Orchestrated Larceny The government continues its approach towards full meltdown. The stock market does too. But when it comes down to it, these are mere distractions from the bigger breakdown that is bearing down upon us.   Prosperity imbalance illustrated. The hoi-polloi may be getting restless. [PT]   Average working stiffs have little time or inclination to contemplate gibberish from the Fed. They are too worn out from running in place all day to make much...
  • US Stocks and Bonds Get Clocked in Tandem
      A Surprise Rout in the Bond Market At the time of writing, the stock market is recovering from a fairly steep (by recent standards) intraday sell-off. We have no idea where it will close, but we would argue that even a recovery into the close won't alter the status of today's action – it is a typical warning shot. Here is what makes the sell-off unique:   30 year bond and 10-year note yields have broken out from a lengthy consolidation pattern. This has actually surprised us, as...
  • Switzerland, Model of Freedom & Wealth Moving East – Interviews with Claudio Grass
      Sarah Westall Interviews Claudio Grass Last month our friend Claudio Grass, roving Mises Institute Ambassador and a Switzerland-based investment advisor specializing in precious metals, was interviewed by Sarah Westall for her Business Game Changers channel.   Sarah Westall and Claudio Grass   There are two interviews, both of which are probably of interest to our readers. The first one focuses on Switzerland with its unique, well-developed system of  direct...
  • Exaggerated Economic Growth of the Third World
      Exciting Visions of a Bright Future Fund Managers, economists and politicians agree on the exciting future they see in the Third World. According to them, the engine of the world’s economic growth has moved from the West to what were once the poverty-stricken societies of the Third World. They feel mushy about the rapid increase in the size of the Middle Class in the Third World, and how poverty is becoming history.   GDP of India vs. UK in 2016 – crossing...
  • Choking On the Salt of Debt
      Life After ZIRP Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.   Our boy ZIRP has passed away. Mr. 2.2% effective has taken his place in the meantime. [PT]   We found the absurdity of zero bound interest rates to have parallels to the absurdity of hundreds upon hundreds of miles of...
  • Why You Should Expect the Unexpected
      End of the Road The confluence of factors that influence market prices are vast and variable.  One moment patterns and relationships are so pronounced you can set a cornerstone by them.  The next moment they vanish like smoke in the wind. One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight.  When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.   The...
  • How Dangerous is the Month of October?
      A Month with a Bad Reputation A certain degree of nervousness tends to suffuse global financial markets when the month of October approaches. The memories of sharp slumps that happened in this month in the past – often wiping out the profits of an entire year in a single day – are apt to induce fear. However, if one disregards outliers such as 1987 or 2008, October generally delivers an acceptable performance.   The road to October... not much happens at first - until it...
  • Yield Curve Compression - Precious Metals Supply and Demand
      Hammering the Spread The price of gold fell nine bucks last week. However, the price of silver shot up 33 cents. Our central planners of credit (i.e., the Fed) raised short-term interest rates, and threatened to do it again in December. Meanwhile, the stock market continues to act as if investors do not understand the concepts of marginal debtor, zombie corporation, and net present value.   The Federal Reserve – carefully inching forward to Bustville   People...

Support Acting Man

Item Guides

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com