EU protectionism report steers clear of indicting Chinese manufacturers

With the EU anti-subsidy investigation into Chinese solar products ongoing, a report by the European Commission’s directorate-general for trade into restrictive trade measures worldwide fails to make any explicit mention of allegations the Chinese government is unfairly subsidizing its solar manufacturers.

The EU’s tenth report on potentially restrictive trade measures was prepared in advance of the G20 summit of world leaders in St Petersburg, Russia, which has been taking place yesterday and today.

Although the crisis in Syria has dominated the summit, G20 finance ministers will have considered the EU report which, in part, aims to monitor the G20 anti-protectionism commitment agreed at the onset of the financial crisis and which was extended until the end of next year at last year’s G20 summit in Los Cabos, Mexico.

The 190-page EU report discusses a number of potentially restrictive measures including ‘behind-the-border’ restrictions such as measures "to stimulate domestic industry or exports at the expense of competing foreign economic players."

Stimulus measures criticized include subsidized interest rates on export credits in India, US$1.5bn of state grants by the G20’s Russian host for luxury goods exporters, preferential government loans and insurance for South Korean exporters and a JPY200bn (US$2bn) Japanese subsidy to cover up to half the costs of exporting companies. China, however, is conspicuous by its absence in the rundown of highlighted stimulus measures applied in the year to May 31.

The People’s Republic is mentioned in a list of potentially protectionist stimulus measures applied since the onset of the financial crisis five years ago, however.

The stimulation of domestic consumption of ICT products in China through credit facilities for SMEs is criticized along with plans announced on May 18, 2009 to offer ‘credit lines to industrial companies with a good track record but short of liquidity’; competitive loans for shipbuilders to the end of 2012; and the award in 2008 of CNY15bn (US$150m) to the state’s top three airlines and a further CNY1.5bn for China Southern Airlines.

The nearest the EU report gets to mentioning the allegations by European solar manufacturers of subsidized loans from Chinese-state-owned banks is in a mention of China’s 12th five-year plan – to govern industrial policy from 2011 to 2015 – which announced an intent to foster seven strategic industries including ‘new energy.’