Europe to Investigate Chinese Exports of Solar Panels

Defying Chinese threats of retaliation against European wines and industrial materials, the European Union is preparing to begin on Thursday morning a broad investigation into whether Chinese companies have been exporting solar panels for less than it costs to make them.The case would be one of the largest trade actions in European history and could lead to steep tariffs on much of China's $20 billion in annual exports of solar products to Europe, four people familiar with the dispute said Wednesday.The anti-dumping case, which follows a series of bankruptcies and factory closings by European and U.S. solar panel manufacturers, would broaden what has already become one of the biggest sticking points in trade relations between China and the United States. The U.S. Commerce Department imposed preliminary anti-dumping tariffs in May of at least 31 percent on Chinese solar panels, in addition to preliminary anti-subsidy tariffs of 2.9 percent to 4.73 percent that were imposed in March.
The Chinese government has responded by accusing American producers of polysilicon, the main material used in solar panels, of engaging in unfair trade practices and has threatened steep tariffs on the producers.Chinese polysilicon producers have asked the country's Commerce Ministry to investigate whether their European rivals have sold subsidized material below cost in China. The official newspaper China Daily on Wednesday quoted an unidentified person at the Commerce Ministry as saying that if the European Union opened the solar panel trade case, the Chinese government might retaliate with trade restrictions aimed at European wines and polysilicon.
Chinese government officials declined to comment Wednesday evening, saying that they wanted to see first what the European Union would do.The E.U. trade case differs from the American action in that the European case will most likely be limited to an anti-dumping complaint, without including an anti-subsidy charge, the people familiar with the dispute said. They insisted on anonymity, citing the diplomatic sensitivity of the issue.The Union also takes longer than the United States to investigate such cases. Preliminary tariffs could be imposed in Europe next May, and final tariffs would not be set until December of next year. E.U. officials declined to comment on the solar panel issue. Regarding the possibility of Chinese retaliation, they repeated the Union's standard position that foreign countries should impose trade restrictions only if they follow procedures that comply with the World Trade Organization's rules.