EU readies heavy tariff on China solar panels

The European Commission proposed Wednesday what an EU source said was an urgently needed anti-dumping levy on imports of Chinese solar panels, allegedly unfairly subsidised by a government that has retaliated in kind to similar moves. The Commission, the EU's executive arm, is now canvassing member states to see if they agree with a provisional heavy tariff of 47 percent, the source said. "The consultation process has been launched," the source said, adding that the Commission wanted to announce a decision on June 5 to help struggling European manufacturers. "The proposal is an urgent reaction to an urgent situation," the source added. European solar panel makers complain that they are being undercut by cheap Chinese imports, jeopardising their future as Beijing seeks to corner the market in a key green technology. The EU ProSun industry association says China now holds about 80 percent of the EU market as European companies fall by the wayside in the face of its subsidised imports. "If the situation continues and the European producers are not allowed to compete with the Chinese producers at fair prices, the whole industry might cease to exist," it claims on its website. In a series of tit-for-tat trade disputes with China, the Commission launched an anti-dumping probe into imports of Chinese solar panels in September. It then opened an anti-subsidy probe in November as China in turn decided to launch a similar investigation into European exports of polysilicon, a key component for solar panel makers. Brussels upped the ante in February with an anti-dumping probe into imports of solar glass made in China and in March said it would begin recording all imports of Chinese solar panels and components as part of its investigations. The conclusion of these probes is not due until next year but the EU source said the situation was becoming so serious that the Commission believed it had to take action sooner. "There is a real risk that some European companies could disappear before the (final) decision is taken and it is for that reason that the Commission proposed a provisional tariff," the source said. The Commission declined to give any details about the provisional tariff when asked but did say that it could be decided on June 5. While some of the EU's 27 member states are critical of Beijing's trade policy, others are reluctant to get involved in another spat with China."It is difficult to negotiate with the Chinese," said one EU official who asked not to be named. "They find it difficult to respect the laws of their partners and with them, everything becomes a political issue." As China has shown several times, it is ready to play hardball when it feels its interests are being disregarded. In response to EU plans to impose a carbon emissions levy on all airlines flying into the bloc, China threatened to cut its massive orders for Airbus aircraft, pressing France and Germany in particular to get it changed. For the moment, the EU has suspended the plan for a year. The EU source said that while such pressure made it more difficult, the Commission expected to get approval for the provisional tariff because it was "based on the facts ... it has a legal basis and is not political." At the same time, China too might have an interest in this instance in not reacting too strongly, the EU source said, noting that the tariff is so far provisional only and not fixed. Brussels says ties with China are among the most important but because it does not view the communist country as a fully-fledged open market, it remains cautious about the government's role in the economy.