Mixed reactions from the industry on anti-dumping duties [updated]

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The provisional tariffs that will come into effect between June 6 and Aug. 6 will affect Chinese-made solar wafers, cells and modules and after Aug. 6 the duty will increase to 47.6%. This was made even clearer with details in the official legislation document that was released. The European Commission has justified this action as "the level required to remove the harm caused by the dumping to the European industry." The 11.8% for the first two months is lesser than feared, but there remains much to to be ironed out before the looming 47.6% goes into effect.

The Chinese react

The reactions in Beijing were not positive. The Chinese Ministry of Economics stated that it hopes negotiations begin as soon as possible. An amicable solution is expected by the Ministry. Nevertheless the first chain reaction can already be seen in the wine sector with China launching and anti-dumping and anti-subsidy probe into European wine sales in the country. The French government has reacted, in what is turning out to be a cross-industry trade war, by saying that the Chinese rebuttle with wine is "inappropriate and reprehensible" as Reuters reported.

Chinese manufacturer China Sunergy (CSUN) Europe’s Marketing Director Andrea Bodenhagen told pv magazine that the duties were already expected and thankfully they are not as high as expected for a start. Still, Bodenhagen added, duties are not the right instrument to increase the competitiveness of companies in Europe.

Bodenhagen stated that the remaining European manufacturers need to do their own homework and customize their own cost structures instead of "being helped." The duties themselves do not necessarily affect the company since it produces in Turkey as well. At higher duties the fear is that project developers and installers in Germany and Europe would be endangered.

Chinese module maker Trina Solar also reacted to the news with disappointment, disagreeing completely with the accusation that Chinese photovoltaic manufacturers have "dumped into the European market". After August 6, increased provisional anti-dumping duty rates of 37% to 67% are to be applied to these imports, and as Trina Solar added, this includes a rate of 51.5% on PV products from the company. Unless the EU and China reach an agreement on an alternative resolution to the matter, this could have a detrimental effect. "We will continue to cooperate with the European Commission’s investigation, and use evidence to defend our position that these duties are unwarranted and serve as an impediment to the broader adoption of solar energy as a sustainable energy source," stated Chairman and CEO of the company Jifan Gao.

Yingli Green Energy Holding also took the news rather bitterly. The company’s duty will be set at the level of 37.3% after August 6 until the ruling in December. The company’s duty level is the lowest rate amongst Chinese manufacturers. "Punitive tariffs – no matter at what level – will inevitably lead to higher prices for solar products causing at least the stagnation of the solar industry in Europe," stated Liansheng Miao, Chairman and CEO of Yingli.

Head of Strategic Planning and Business Development at JA Solar Christoph Flink’s first reaction was that the duties should not pressure the market all that much and in end effect will not be more expensive than outsourcing. "Still, the insecurity remains and affects the market further," he added. What comes after the first two months, however, should be observed with more caution.

Protectionism, or not?

The Alliance for Affordable Solar Energy (AFASE) expressed utter disappointment with the decision, saying the duties will "severely hurt the EU industry." AFASE stuck to its stand that any level of tariffs is harmful even though the preliminary duties are lower than expected for the first two months. Thorsten Preugschas, CEO of German Soventix GmbH and chairman of AFASE e.V., stated, "We need to be clear about one thing: The current market development leaves no room for price increases. Therefore already duties as low as 11.8% will put a halt to most of the PV projects in the EU and cause severe damage to the European solar value chain."

Despite European trade commissioner Karel de Gucht insisting that "this is not protectionism," many industry insiders have voiced otherwise. Ralf Lüdemann, CTO of German-based equipment manufacturer Schmid, told pv magazine that protectionism is fundamentally negative for business and does not help the remaining European PV industry.

IHS analyst Henning Wicht also expressed concern, saying that the duties do not "provide the necessary stability for the industry and does not help the market." Analsyts at IHS have also illustrated that duties of 45% could reduce the German market alone by almost 2 GW. This is more than 25% of the capacity installed in Germany last year.

Wicht added that he sees an imbalance between the Chinese and European market and financing conditions, but adds that he does not see duties as a smart way to solve the problem because they result in counter measures. He also sees negotiations as necessary for Europe and China to find long-lasting solutions and to even out the playing field.

Independent economic research institute Prognos concluded that duties of 20% would cost the European economy up to 175,500 jobs and €18.4 billion of value added over the next three years.

Relief for those for the duties

As a counter to the Prognos conclusion, analysts at PricewaterhouseCoopers released a report stating that such tariffs would not compromise the European economy, but instead help secure 25,000 solar jobs EU-wide and create new opportunities. Major flaws in methodology were highlighted by the London-based PricewaterhouseCoopers.

EU ProSun, which has been working intensely on "recreating a level playing field with China" for European manufacturers, welcomed de Gucht’s decision with relief. "We are relieved that the European Commission finally introduced concrete measures," stated the group, which is led by SolarWorld AG. EU ProSun added that "dumping is fraud and damages the solar sector" and that it welcomed negotiations with China on how the government plans to stop such dumping.

On the fence

The European Photovoltaic Industry Association (EPIA), however, said it is important to remember that the final decision will only be made in December this year and that definitive duties, if any, will be decided by the Council representing the 27 European member states. EPIA has chosen to remain neutral, saying that it encourages "all governmental and industry players to ensure fair competition respecting WTO rules and to engage at an early stage in discussions so as to avoid trade conflicts in the future and collaborate on a global scale."

EPIA President Winfried Hoffmann told pv magazine that he hopes for both sides to find a possible compromise before December in order to end the uncertainty in the industry. He added that a solution should be found before the final decision is announced by the EU member states.

The association chooses to remain positive in this situation saying that no matter what the final outcome is, the the mid- to long-term prospects for solar PV in Europe and around the world remain solid and will play a key role in the needed economic recovery.