In a move that might see an increase in the cost of solar panels, Europe’s second highest court on February 28, 2017 backed the European Union’s move of levying substantial anti-dumping duties on Chinese solar panel imports. This move by the EU almost started a trade war with China four years ago.
The decision of the European Council to impose anti-subsidy and anti-dumping duties with an average of 47.7% in late 2013 came following a two-year investigation that saw the European Commission found out that Chinese solar panels were being sold below market prices.
Also, the commission stated that said Chinese solar panel exporters were benefiting from illegal subsidies. Said exporters, a group of 26 companies, then challenged the decision of the General Court based at Luxembourg. The judges rejected the appeals.
In a statement, the Luxembourg-based court stated that it confirms the validity of the anti-dumping and anti-subsidy measures for Chinese solar panels. However, since the 2013 decision, the European Commission has moderated its stance on said issue. In February 2017, it proposed to extend import duties on the solar panels shorter by the initially proposed 18 months before eventually phasing them out.
Experts see this move as a prop to EU solar panel manufacturers and those who benefit from cheaper imports and also as a sign to China that it is needed as an ally against protectionism and climate change.
Naturally, the Chinese Commerce Ministry decried this move as increasing protectionism of the European Union. It has called on the EU to treat Chinese companies “fairly and impartially,” while at the same time indicating to its EU counterparts that it is ready to strengthen correspondence to discuss issues in the industry.
Anti-dumping and anti-subsidy
Dumping, according to the European Commission (EC), is the practice of exporting a product to the EU at prices lower than the market value of the product. Export companies which are accused of this practice are investigated by the EC. The investigation is usually opened after a complaint is received by the EC or it can also start on its own initiative.
During the investigation, the EC must prove the ff.:
1. Dumping occurs in the country/countries concerned
2. The Community industry suffered material injury
3. There is a causal link between the material injury and the dumping
4. The measures that will be imposed will not be against the Community interest
Once the investigation is finished and the conditions have been met, anti-dumping measures can then be imposed on the importers of the product under scrutiny. Said measures usually take the form of ad valorem duty. The duties are then paid by the importer in the EU and collected by the customs authorities of the countries involved.
On the other hand, according to EU anti-subsidy rules, subsidy is a “financial contribution made by (or on behalf of) a government of public body which confers a benefit to the recipient.” Once an EU industry points out that a product from a non-EU country is subsidized, it can lodge a complaint with the EC.
Definitive measures will be taken once the investigation shows the ff. Conditions:
1. The imports benefit from a countervailable subsidy
2. An EU industry suffers an injury
3. There is a causal link between the subsidized imports and the injury befalling the EU industry
4. The Community won’t suffer losses if measures are implemented
If the investigation determines that measures are indeed warranted, they must be imposed by the EC within 13 months. Definitive measures are usually applicable for five years.