EU/China Solar Settlement Becomes Effective

A settlement between the European Union (EU) and the Chinese government on the import of photovoltaic solar cells to the EU became effective on August 6, 2013. The settlement resolves a US $27 billion dumping and subsidy investigation1 of the price of EU imports of photovoltaic modules manufactured with Chinese cells. Under the terms of the pact, up to 7 GW of such modules may be sold in the European Union by participating Chinese companies, with a price floor of .56 Euro cents (US $.75) per watt, which might be subject to modification over time. Imports above the 7 GW volume will be subject to duties of 47.6 percent.2

The Sino-European agreement is the latest turn in a flap over the export of silicon photovoltaic modules from China. Western module manufacturers have alleged that their Chinese competitors sell product in outside markets below the cost of production to gain market share. This allegation formed the basis for unfair trade claims filed before the U.S. Department of Commerce and International Trade Commission in October of 2011 and before the European Commission in Brussels in July 2012.

The U.S. disputes were resolved favorably to the claimants in November 2012, resulting in tariffs of between 23.75 percent and 254.66 percent on U.S. imports of photovoltaic modules that incorporate Chinese silicon cells. In response to the U.S. tariffs, China launched a trade sanctions investigation against imports of polysilicon from the United States which remains pending. 

The instant agreement will make few stakeholders happy. In the short term little should change.  Current spot-market prices for Chinese imports in Europe are at or near the agreed .56 Euro cent floor, and the 7 GW quota represents approximately 60 percent of the European market. Furthermore, manufacturers in other jurisdictions, like Taiwan, are likely to continue the race to the bottom in solar pricing, since they remain unaffected by the deal. Consequently:

  • The claimants, who were seeking a price floor of around .80 euro cents (US $1.03) per watt believe the floor is too low (and have vowed to take legal action to block it).
  • Low cost solar advocates are unhappy with the imposition of artificial trade restrictions that may bolster price.
  • Chinese manufacturers’ market position in Europe is susceptible to being undercut by low-price manufacturers in other developing nations.

Perhaps the only satisfied European or Chinese parties are European polysilicon and wine exporters, who will likely be relieved from pending Chinese trade investigations

1 The EU is expected to announce the results of the subsidy case in early August, but, as of this publication, has not done so.  The settlement described in this post is expected to resolve both the dumping and subsidy cases, according to statements by EU officials.

2 Companies that do not participate in the agreement will pay the additional 47.6 percent duty as well.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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