Contrary to the belief a complaint would be submitted during this years Intersolar Europe in June, it has been reported by various media sources and industry analysts that a SolarWorld-led coalition has officially filed its protest with the EU, claiming unfair trade practices from Chinese competitors, today.
Now, the EU Commission has 45 days to determine if there is sufficient evidence to move forward. It must also confirm that the required industry backing has been obtained. As EU trade law expert, Jennifer Paterson, who works for Herbert Smith LLC, explained during a conference call held by Jefferies on June 28, in order for a complaint to move forward in the EU, it must have backing from manufacturers that represent at least 25 percent of production of the goods involved in the dispute.
pv magazine contacted SolarWorlds representatives in Brussels for comment, however they were not willing to provide further details at this stage. The spokesperson would only confirm that a coalition of companies is working on a submission, but would not reveal which, and also how many, manufacturers are involved. The complainants are expected to release a statement about the European Commission complaint in Brussels by Thursday or Friday of this week.
Overall, the complaint could take over 15 months to be resolved. If the EU Commission decides to move the case forward, there will then be a period of nine months in which it has to deliver its preliminary finding. It may then take another six months to bring down its final determination.
A spokesperson for the European Commission told pv magazine that they could neither confirm nor deny whether a complaint had been lodged and that notice would be given within the 45 day period in which the case is initially accessed.
Serious implications
According to Jefferies, which issued an industry note this morning, July 25, in addition to being "negative" for Chinese photovoltaic manufacturers, it believes the case will move forward. It adds that the implications are "much more serious than the US case because of substantially higher volumes in Europe".
Despite this, it is believed that the case will be harder to win than in the U.S., due to both the EU rules and WTO laws. Furthermore, if any duties are enforced, they are likely to be lower than those imposed in the U.S. "since the EU system does not always require the imposition of duties where injurious dumping is found". However, in light of the size of the European photovoltaic market, Jefferies says it would be hard for Chinese companies to evade duties using solar cells manufactured outside of China, due to the Taiwanese capacity constraints.
The analysts add, "The issue of community interest will likely prove the key point. We believe the final implementation of a duty is likely higher than Street expectations however, the size is likely to be much smaller than in the US; so the issue maybe not if, but how much."
In October 2011, SolarWorld, along with several other U.S. manufacturers filed a similar complaint in the U.S. To date, preliminary AD and CVD duties have been imposed. A spokesperson for the U.S. Department of Commerce recently told pv magazine, "We will be announcing our final determinations in both cases on October 10. The ITC has 45 days from the date of Commerces final dumping and subsidy decisions to issue its final injury determination."
EU-US trade case differences
According to Jefferies, there are a number of key differences between complaints filed in the EU and the U.S. They are:
- Injury margin In addition to looking at the dumping margin, the EU calculates an injury margin. The analysts write, "The US used a supply chain build up to determine the cost of a cell in Thailand which in the EU they look at pricing of competing products outside of China. In the EU, non-market economy prices are generally based on a constructed price in a third country. Of note First Solar may not be part of the discussion if the scope is defined only to cells."
- Community interest In addition to considering the injury to an industry, the EU looks at whether duties would be in the in the interest of the community as a whole. "This allows upstream/downstream companies and consumers to have greater influence in EU than in the US."
- Market economy treatment – While the US sees China as a non-market economy, the EU allows Chinese companies to request market economy treatment (MET) based on certain criteria.
- Single authority In comparison to the U.S., which has a bifurcated system with both Department of Commerce (DoC) and International Trade Commission (ITC) in charge, the EU has only one investigating authority, the EU Commission.
- Transparency – Unlike the US, lawyers for participants do not have access to the non-confidential data of the industry and other respondents.
Industry response
Responding to the complaint, the Coalition for Affordable Solar Energy (CASE) stated, "The entire global solar industry manufacturers, suppliers, installers and consumers has benefited from the sharp decline in the price of solar cells, and our industrys future success is predicated on our ability to continually improve the economics of solar electricity generation. SolarWorld desperately needs that trend to halt to remain competitive. Like a crazed agent provocateur, SolarWorld is fueling global solar industry infighting for its own selfish interest. On behalf of tens of thousands of US solar workers, we are very disheartened by SolarWorlds unnecessary and destructive actions and urge the EU to reject their petition."
Jerry Stokes, president of Suntech Europe added, "Suntech rejects SolarWorld´s allegations that it has received illegal subsidies and is dumping solar products in Europe and will cooperate fully with any investigation Protectionist measures would increase the cost of solar energy in Europe and delay the transition from fossil fuels to renewable energy. Tariffs would also destroy thousands of jobs in the European solar industry. The EU solar industry provides employment for around 300,000 people, and more than 80 percent are employed in upstream and downstream industries such as raw material suppliers, equipment manufacturing, system design, installation and project financing, and not in cell production."
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