EU leaves Taiwan loophole open

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A solar industry source has told pv magazine that the EU’s decision to exempt Chinese solar modules made with Taiwanese cells from last year’s trade agreement effectively renders the import cap limitless.

In the summer, EU trade commissioner Karel de Gucht negotiated a minimum module price for Chinese-made modules as well as an annual cap on the amount of such panels which could be exported to Europe, a figure reported to be 7 GW of the estimated 10 GW China-EU trade by German company SolarWorld, which has been a vocal critic of the deal.

A figure within the China-EU solar trade says the decision by the EU to clarify, on December 17, that panels assembled in China with Taiwanese cells would be exempt from the agreement, made it highly unlikely the amount of panels manufactured with Chinese cells would approach the 7 GW figure.

The EU confirmed, in legislation which came into effect on Christmas Day, the origin of modules is determined by the origin of cells they are assembled from, opening the floodgates for the numerous Chinese manufacturers who have switched their cell manufacturing operations across the Taiwan Strait.

That loophole is expected to be closed by the U.S. Department of Commerce this year – after pressure from SolarWorld‘s U.S. subsidiary – which is expected to introduce a more comprehensive definition to its own anti dumping and countervailing duty regime that also includes Taiwan.

EU loophole damages de Gucht credibility

The EU could be set for a similar showdown with European manufacturers, no doubt led by the vocal SolarWorld, in the immediate future even as de Gucht lauded Friday’s pledge by the EU and 12 other countries to strive to remove tariffs from a list of ‘green goods’ as a prelude to removing all trade barriers on such goods in future.

The goods in question – identified by the heads of state of the Asia Pacific Economic Co-operation (APEC) and including solar cells, panels and inverters – were the subject of a pledge to remove trade barriers led by the U.S. with China also a signatory to the deal at last week’s World Econmic Forum in Davos, Switzerland.

"This outcome is a great success for the green economy, climate change and trade. Whether it will solve the disputes of the past remains to be seen," Joachim Monkelbaan, senior program officer for the International Center for Trade and Sustainable Development (ICTSD) told pv magazine. "The long-term aim should be to remove all trade barriers for sustainable goods, not just to remove tariffs.

"Sometimes it can be healthy to have dispute settlements in the WTO (World Trade Organization), to clarify the rules in specific cases but you can’t leave the whole policy making to the dispute settlement process there."

Monkelbaan said tariffs would be addressed first under the Davos pledge, and it is hoped the signatories will turn their gaze on other trade barriers, such as domestic content requirements, state subsidies and government procurement, once there is a deal on tariffs.