EU move on China solar panels seen as damaging to EU-China trade

The EU imposed an 'emergency' tariff on import of all solar panels from China last week, prompting concern among solar firms.

EU trade commissioner, Karel de Gucht introduced the 11 per cent tariff, in the face of majority voting against such a move in the EC recently. There are reports the tariff would be hiked to 47 per cent later this year in August.

The so-called anti-dumping tariff is aimed at Chinese firms undercutting EU manufacturers with below cost sales of solar products.

But the tariff was greeted by an outcry from solar installers and trade groups across Europe at the time it was mooted earlier this year.

According to Jonathan Selwyn, managing director of UK solar firm Lark Energy, the ''desperate'' hope was that a compromise could be reached before the higher tariff kicked in over the summer.

He added, most of the European solar industry was dependent on the low prices that Chinese panels provided. He added, the consequences of there not being a deal were dire - far from saving the European solar industry, it would stop it dead, threatening tens of thousands of jobs.

Acording to a report in The Telegraph , Beijing's instant and ultra-assertive response to a solar panel spat was a sign that the west could hardly afford to ignore.

From almost zero, solar generation had surged to 2.5 Gw over the last three years and together  with wind-power, which produced 5.5 Gw, it accounted for the bulk of the UK's renewable energy sector, which was up a fifth in 2012 and now accounted for 11.3 per cent of all UK electricity output, with solar transforming itself from a marginal cottage industry into a fully-fledged business sector.

Though China is being accused of ''dumping'' solar on European markets, selling their goods below cost, yet 18 EU member states had opposed De Gucht's move – including not only the UK but also Germany, home to Europe's largest solar panel manufacturers, he points out.

With China accounting for around 40 per cent of global solar panel production and with four-fifths of panels made in China being sold in the EU, the commission's move clearly had implications for solar-fitting companies across Europe, including the UK, as the panels they installed were by far their biggest cost, according to Halligan.

Meanwhile, China in a response to De Gucht's move has immediately launched an anti-dumping and anti-subsidy probe into EU wine exports. According to Halligan though Beijing insisted this was a ''routine fair trade investigation'', it was clear, a bout of extremely damaging tit-for-tat exchanges could follow ending in an all-out trade war.