The EU Trade Commissioner Karel De Gucht will recommend placing punitive import duties on billions of euros of solar panels from China in a protectionist move that risks upsetting Beijing, people close to the matter say.
The case, the biggest the commission has launched, is a delicate one for Brussels. Europe wants to protect its manufacturers such as Germany’s SolarWorld against cheap imports, but also needs China, the EU’s second-largest trading partner, to help the bloc emerge from recession.
De Gucht is expected to tell his fellow EU commissioners on Wednesday that Brussels should levy the tariffs to guard against Chinese production that quadrupled between 2009 and 2011 to more than the entire global demand.
EU producers say Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago, prompting the European Commission to act against what it terms dumping.
Europe accounted for about half of the global solar market last year, which was worth US$77 billion, according to research firm IHS.
“De Gucht is ready to go ahead,” one person close to the decision-making said. “The commission has a very solid case.”
The commission started an investigation in September last year when it judged there were grounds to take up a complaint by a group of mainly German and Italian companies. They accuse China of subsidizing its producers with easy credit to push output to more than 20 times the level of Chinese consumption.
De Gucht now believes there is clear evidence of dumping on the EU market, and following Wednesday’s meeting in Brussels, will propose the measures at a gathering of trade specialists from all EU countries.
They are expected to back them, diplomats say, allowing the provisional levies to come into force by June 6, the deadline for a decision under EU rules.
However, the move to levy duties would still leave the door open for a negotiated solution with Beijing before December and avoid levies that could be imposed for up to five years.
The US levied its own duties on Chinese solar energy products last year, arguing that China’s rapid expansion into the industry has created a massive oversupply.
The initial EU duties on Chinese solar panels are likely to be set at 30 percent and above, which would make Chinese exports far less attractive in Europe, one person involved said.
China, which had barely any solar production capacity a decade ago, exported more than 21 billion euros in panels to the EU in 2011.
SolarWorld, once Germany’s biggest solar group, partly blames Chinese overcapacity for its problems, including 900 million euros (US$1.2 billion) in liabilities, while its smaller rival Q-Cells filed for insolvency last year.