EC mulls punitive import duties on Chinese solar panels

The European Union's trade regulator is expected to recommend punitive duties on imports of solar panels worth billions of euros in a bid to protect European manufactures - a measure that would upset both Beijing and thousands of local manufacturers of solar photovoltaic systems.

The punitive duties intended to protect European manufactures like Germany's SolarWorld against cheap imports from China, the EU's second largest trading partner, is also needed to help lift the bloc out of recession.

The European Commission's move is being seen as a protectionist measure that would risk upsetting Beijing even as the European solar industry is split over proposals that Brussels impose penal tariffs on imported solar panels from China.

Over a 1,000 companies from across the industry have written to the European Commission warning that import duties could have a negative impact on European solar industry by pushing up costs.

Trade commissioner Karel De Gucht is widely expected to urge fellow commissioners of EU member countries to push for punitive tariffs against imports from China where production and sale of solar panels have quadrupled between 2009 and 2011, exceeding the entire global demand.

Solar panel manufacturers in the EU say that the Chinese have captured over 80 per cent of the European market, forcing many of them out of business.

China, which had barely any solar production capacity a decade ago, exported panels worth over €21 billion to the EU in 2011.

According to research firm IHS, Europe accounted for around half of the global solar market last year, which was worth $77 billion.

The EC is now in a dilemma as it wants to both protect its manufacturers like Germany's SolarWorld against cheap imports and also needs continued trade with China to emerge from recession.

The EC is expected to slap a 30-per cent import duty on Chinese solar panels so as to make them less attractive in European countries.

The case, the biggest the EC has launched, is a delicate one for Brussels.

The levy if accepted at Wednesday's meeting in Brussels, would come into force by 6 June.

However, there are still chances that Beijing may agree to a negotiated settlement with the EC as the stakes are too high for a trade war with Europe at a time when domestic economic growth is flagging.

The US too imposed duties solar energy products from China last year, citing massive oversupply.
 
Germany, the US and China have emerged the world's biggest solar markets as they seek to limit pollution and global warming.