This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2012/09/07/business/global/eu-investigates-chinese-solar-panels.html

The article has changed 4 times. There is an RSS feed of changes available.

Version 1 Version 2
E.U. Investigates Chinese Solar Panels E.U. Investigates Chinese Solar Panels
(about 7 hours later)
CHENGDU, CHINA — The European Union began on Thursday morning the world’s biggest anti-dumping investigation in terms of value, a broad inquiry into whether Chinese companies have been exporting solar power products for less than it costs to make them. BRUSSELS — The European Union began a broad investigation Thursday into whether Chinese companies have exported solar power equipment for less than the cost of making it, in what amounts to history’s biggest anti-dumping investigation by value.
The case covers imports from China worth $26.5 billion last year, a hefty 6.5 percent of all European imports of Chinese goods. The case covers imports from China worth €21 billion, or $26.5 billion, last year, a hefty 6.5 percent of all E.U. imports of Chinese goods. The European case is four or five times larger by value than a similar investigation under way in the United States, because the Union is the biggest export market for Chinese solar panels.
After exerting heavy diplomatic pressure for the European Union not to start the case, and after veiled threats to retaliate, the initial Chinese response on Thursday was restrained. The European Commission, which is leading the investigation announced Thursday, said the Union accounted for 80 percent of Chinese solar equipment sales worldwide.
Shen Danyang, the Commerce Ministry spokesman, said in a statement that China expressed “deep regret,” adding that the trade action would hurt not only industries in China and the European Union but also the global development of clean energy. After exerting heavy diplomatic pressure for the Union not to start the case, and after veiled threats to retaliate, the initial Chinese response Thursday was comparatively restrained.
The scope of the European investigation is unusually broad, applying not only to fully assembled solar panels but also imports of key components like solar cells and solar wafers. If tariffs are applied, the breadth of the case would make it extremely difficult for Chinese companies from shipping the components to Europe and then assembling them into finished panels there. Shen Danyang, the Commerce Ministry spokesman, said in a statement that China expressed “deep regret,” adding that the trade action would hurt not only Chinese and European industry but also the global development of clean energy.
The anti-dumping case, which follows bankruptcies and factory closings by European and U.S. solar panel manufacturers, considerably expands a trade battle that 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. European leaders including Chancellor Angela Merkel of Germany, wary of retaliation by China, had urged the commission to seek a negotiated solution. China could, in response, impose duties on products it imports from Europe, including polysilicon, one of the main components of solar panels.
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. Opponents of the trade action warned that it could also undermine European efforts to expand sources of clean, renewable energy to meet its ambitious goals for reducing greenhouse gas emissions. The growth of the Chinese solar equipment industry is due in large part to the billions of euros in government subsidies the Union and national governments have put in place to promote installation of solar panels for homes and businesses.
Alan Wolff, a trade official in the Johnson, Nixon, Ford and Carter administrations and one of the world’s most prominent trade lawyers ever since, said that the European Union’s anti-dumping case against solar panels from China was the world’s largest anti-dumping case ever, even adjusting for inflation. “Free trade was one of the factors that enabled the European solar industry to become a fast-growing sector,” said Thorsten Preugschas, chief executive of Soventix, a company headquartered in Duisburg, Germany, that builds and operates solar plants worldwide. “We call on the European Commission to bear in mind the severe damage punitive tariffs would bring to the whole European photovoltaic sector.”
Two other trade cases that were not anti-dumping cases might have been larger, depending on how the affected trade is measured and what inflation adjustment is used. Those are a long-running World Trade Organization case involving Airbus and Boeing jets, and a so-called “safeguards” case in the United States in 1980 against cars from Japan. The scope of the European investigation is unusually broad, applying not only to fully assembled solar panels but also to imports of key components like solar cells and solar wafers. If the commission were to apply punitive tariffs on such a broad range of imports, Chinese companies could not avoid them by shipping components to Europe and assembling them into finished panels there.
But when it comes to anti-dumping cases, in which foreign producers are accused of shipping goods at unfairly low prices, nothing matches the case that the European Union just filed against China over solar panels, said Mr. Wolff, who is now a senior lawyer in the Washington office of McKenna, Long and Aldridge. The commission could impose within nine months so-called provisional duties usually lasting up to six months. Within 15 months, the commission must determine whether to impose so-called definitive measures, or duties lasting up to five years.
The E.U. trade case against Chinese solar panels differs from the American solar panel case in several ways. The European case is limited to anti-dumping, without including an anti-subsidy charge. By including solar wafers in addition to cells and fully assembled solar panels, the European case is also broader than the American action, which covers solar panels for which either the cell was made in China or cells were assembled into the finished panel in China. The next steps for the European investigators involve sending lengthy questionnaires to producers in Europe and China, and visiting their factories, to gather evidence firsthand.
Making a solar panel, also known as a solar module, requires four main steps. The first is to use molten polysilicon to grow crystals or cast blocks of polycrystalline silicon. The second step is cutting and polishing the material into thin, smooth wafers. The case could grow more complicated if, as expected, a coalition of companies assembled by SolarWorld of Germany, which brought the initial complaint to the commission, files a second complaint claiming that the Chinese government illegally subsidizes its solar industry.
The next step involves chemically treating the wafer and adding electrical contacts to turn it into a solar cell. The last step involves connecting 60 or 72 solar cells together, covering them with glass, enclosing them in an aluminum frame and adding an electrical junction box. On Thursday, that coalition, called EU ProSun, said China had been dumping solar panels on the European market for two years, contributing to the bankruptcy of 20 European manufacturers this year alone.
Milan Nitzschke, the president of EU ProSun and a vice president of SolarWorld, said that prices of Chinese solar equipment sold in Europe would have been 60 percent to 90 percent higher last year had the products not been dumped on the market.
Workers were being laid off “day by day, week by week,” said Paolo Gianese, the secretary general of the Industrie Fotovoltaiche Italiane, an Italian industry group. “We are still in time to save our industry. But you have to act quickly.”
Another German company, Q-Cells, once the biggest maker of solar power cells, became the most prominent European victim of an increasingly competitive market when it filed for insolvency in April.
The E.U. trade case against Chinese solar panels differs from the American case in several ways. The European case is, at least for now, limited to allegations of dumping, not improper government subsidies. But the European case is broader than the U.S. action, which covers solar panels for which either the cell was made in China or cells were assembled into the finished panel in China.
The U.S. Commerce Department in May imposed preliminary anti-dumping tariffs 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 companies.
But Mr. Nitzschke, of EU ProSun, said China would be reluctant to impose steep tariffs on imports of polysilicon from the United States and Europe, which are among the world’s largest producers. Ultimately, the brunt of those tariffs would be paid by the Chinese manufacturers that import polysilicon and are already struggling, he said.
Alan Wolff, a trade official in the administrations of three former U.S. presidents and now a prominent trade lawyer, said the Union’s anti-dumping case was the world’s largest ever, even adjusting for inflation.
Two other trade cases that are not anti-dumping cases may have been larger, depending on how the affected trade is measured and what inflation adjustment is used. Those are a long-running World Trade Organization case involving Airbus and Boeing aircraft, and a so-called “safeguards” case in the United States in 1980 against cars from Japan.
But when it comes to anti-dumping cases, nothing matches the case that the Union just filed against Chinese solar companies, said Mr. Wolff, now a senior lawyer in the Washington office of McKenna, Long and Aldridge.
Keith Bradsher reported from Chengdu, China.