Germany pushes to settle EU-China solar trade row
As China asserts itself as a global leader in photovoltaic manufacturing, the European Union and United States have grappled with how to respond. German Chancellor Angela Merkel is leading a cohort of EU member states hoping to negotiate a settlement to a long-simmering trade row over cheap Chinese solar panels.
A German national flag flies in front of solar panels in Bad Hersfeld, Germany. German Chancellor Angela Merkel is opposing an EU plan to impose tariffs averaging 47 percent on Chinese solar panels.
Lisi Niesner/Reuters/File
The German and Chinese heads of state called for a truce Sunday on a festering trade row over solar panels.
China is accused of flooding Europe with underpriced photovoltaics that undermine its domestic manufacturers 鈥� a problem German聽Chancellor Angela Merkel says can be resolved with a negotiated settlement instead of punitive tariffs.
The dynamic is playing out elsewhere in the world as China asserts itself as a global leader in photovoltaic manufacturing. The United States, the European Union, and other nations have grappled with how to capitalize on the benefits of cheap Chinese solar panels while still protecting the interests of domestic manufacturers. 聽
Companies in mainland聽China and Taiwan made up 61 percent of global solar photovoltaics production in 2011, up from 50 percent in 2010, according to , a Paris-based renewable energy policy firm.聽Europe鈥檚聽share of the market dropped to 14 percent in 2011 while the US made up only 4 percent.
The boom in China's solar production has led to a dramatic drop in the price of photovoltaics 鈥� helping to boost growth in solar installation in many parts of the world. The US saw solar installations grow by 76 percent in 2012, according to the Solar Energy Industries Association, a Washington-based trade association.
Not everybody is happy with the price drop. In 2011, several major US solar manufacturers filed a trade complaint, accusing the Chinese government of subsidizing Chinese manufacturers to "dump" cheap solar panels into the US market. A year later the US imposed tariffs聽of some 24 to 36 percent on most Chinese solar panels.聽
Facing similar trade pressure, the European Union's executive body has proposed tariffs averaging 47 percent on Chinese solar panels. But on Sunday,聽German Chancellor Angela Merkel came out against that plan.聽
鈥淕ermany will use its influence to ensure that very intensive talks are held, that it doesn鈥檛 come to permanent import tariffs,鈥� Ms. Merkel said during a news conference with Chinese Premier Li Keqiang聽in Berlin, as reported by . 鈥淚 will get involved to make sure that soon there are intensive negotiations with the Chinese side about all upcoming questions.鈥�
Merkel is not the only one hoping for a settlement with China.聽Germany, Britain, and the Netherlands are among at least 14 EU member states opposing the tariffs, diplomats told . The fear is that China would respond with tariffs of its own, putting a crimp on European exports.
An international group of solar industry trade associations has also called for a settlement. The Solar Energy Industries Association,聽the Asia PV Industry Association, and other groups signed an agreement in Shanghai last week encouraging the US, China, the EU and other nations to engage in multilateral trade negotiations.
鈥淭here is clear evidence that disputes within one segment of the industry affect the entire solar supply chain,"聽John Smirnow, vice president of trade and competitiveness for SEIA, said in a statement.聽"What鈥檚 more, they cause a ripple effect throughout the economies of the United States, Asia and Europe. In addition to resolving current disagreements, we hope this process will also lead to the creation of a pro-competitive, collaborative framework for preventing future trade conflicts and ensuring the adoption of balanced and equitable agreements in the future."
In March, China's photovoltaic industry showed signs of stress when China-based聽Suntech聽Power Holdings, one of the world's largest solar-panel manufacturers, filed for bankruptcy after defaulting on聽$541 million in bonds. The collapse was part of a larger consolidation of the oversupplied global photovoltaic market, but US tariffs likely played a role.
The European Commission has until June 6 to decide whether to go forward with temporary tariffs, which it can do without the support of member states. Permanent tariffs require the approval of a majority of EU member states. The聽EU's trade chief Karel De Gucht of Brussels has led the push for tariffs, with support from France, Italy, and other nations.聽