A lesson in opacity

23. August 2013 By:  Hans-Christoph Neidlein

The manner in which the EU and China negotiated the compromise in the trade dispute and the way it continues to be communicated is a lesson in opacity. The companies and the public have been left in the dark about crucial details of the agreement and its implementation.

Hans-Christoph Neidlein, editor in chief

After weeks of tug of war, EU Trade Commissioner Karel De Gucht and China's Minister of Commerce, Gao Hucheng, agreed in early August to a preliminary settlement in the anti-dumping case over the import of crystalline wafers, cells and ingots.

Until the end of 2015 about 70% of Chinese exporting producers will be affected by minimum EU import prices on modules, cells and wafers that have been based on the upper level of the till now average wholesale prices for imports as well as by import caps that are nearly at the same level as existing imports.

The approximately 30% of companies that, according to Brussels, did not consent to the voluntary price agreement, have to pay average import duties of 47.6%. This would go some way towards redressing the harm inflicted on the European solar industry by the "dumping practices" of Chinese manufacturers, says De Gucht.

On the one hand it is good that a negotiated solution has been found, that things are a little clearer and that both the industry and political leaders can now turn their minds to more promising matters. On the other hand, it is difficult to see what will come of it and, above all, why the whole procedure was, and is, so lacking in transparency.

There is virtually no advantage for the European industry, which is required to do its own homework in any case. The ruling will most likely benefit those major Chinese manufacturers that signed up to the voluntary agreement and can now export products to Europe in a temporary price cartel with good margins, albeit under growing competition from Asian, Indian and other non-European manufacturers that are now expected to supply more modules under the agreed net import price of €0.56 per watt for Chinese imports to Europe.

In the short term there will certainly be a gap in the low-price European module sector where several commercial rooftop and open land projects have already stalled. IHS expects that the effects of the trade dispute compromise will lead to a 1.5 GW reduction in installations in Europe this year, which will, in turn, intensify the downwards trend of the European market. It is a development over which nobody in the industry can be happy!

The biggest losers are democracy and the credibility of the political system. The manner in which things were allowed to proceed and how few details emerged is a lesson in opacity. The two sides haggled behind closed doors for months on end while the PV industry served as a pawn for other commercial interests.

Moreover, there was a power struggle between the European Commission and the governments of the member states over bypassing their parliaments. The case is now evidently being used by the Chinese to further accelerate industry consolidation, also with a lot of wheeling and dealing behind closed doors.

It is to be hoped that Europe will, in the future, provide a better example! In the short term, Brussels and Beijing are now under an obligation to clarify previously obscure points on the implementation of the scheme and to communicate important details so that the companies concerned are, at the very least, not left even more in the lurch!

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