EU Solar Panel Ruling Sparks Fears of Trade War with China
June 06,2013

There are fears of a potentially costly trade war between Europe and China - after the European Commission introduced sharply higher tariffs on Chinese-made solar panels. European manufacturers claim Chinese solar panel makers are selling their products below cost. But some EU countries fear retaliation from China.

New estimates show Chinese-made solar panels account for about 80 percent of the world’s market share. But European manufacturers say that’s because Chinese manufacturers are not playing fair - selling their products far below cost - and driving the competition out of business.

Laurent Quittre, head of the Belgian solar panel company ISSOL, said the unfair trade practices are to blame for massive job losses at his company.

“We are today 55 people but, if we come back to fair rules, I think we can increase again to 200 people. Clearly, there is a need of better rules so that everybody, China and Europe, can make fair business,” Quittre stated.

On Wednesday, the European Union said it is moving forward with plans to impose sharply higher duties on Chinese solar panels. But facing resistance from some European member states, EU trade commissioner Karel de Gucht offered to phase in the highter tariffs.

“As of the 6th of June, a tariff of 11.8 percent will be imposed on all Chinese solar panel imports. Two months later, as of the 6th of August, the average tariff will be 47.6 percent. Overall, the duties will range from 37.2 percent to 67.9 percent at that stage,” said de Gucht.

It didn’t take long for a response from Beijing - which said it is investigating EU subsidies for European wines.

The EU is one of China’s largest trading partners. Chinese Foreign Ministry spokesman Hong Lei said he hopes the Europeans will reconsider.

“We hope the European Union will meet China at some common ground and will not take any measures towards protectionism," he noted. "Otherwise, the EU will only harm others and gain no benefits.”

China imported more than 400 million liters of wine last year - more than two thirds of it from Europe, according to customs data.

Some European countries fear higher Chinese tariffs on European wines could affect other industries -- at a time when Europe desperately needs growth.