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27th May 2022

EU imposes controversial levy on Chinese solar panels

  • 'EU policies should be inspired by law, not by fear [of China],' says Brussels (Photo: Brookhaven National Laboratory)

The European Commission on Tuesday (4 June) decided to impose anti-dumping tariffs on Chinese solar panels - the largest case to date involving over €20bn worth of imports - despite German-led opposition from member states.

"Today the Commission has unanimously decided to impose tariffs on China to counter the dumping of solar panels on the European market," EU trade commissioner Karel De Gucht said during a press conference in Brussels.

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The decision will enter into force on 6 June at an average tariff of 11.8 percent - some Chinese exporters face more depending on the "level of cooperation" with Brussels. The tariffs will be in place for two months and will then increase to 47 percent if the Chinese manufacturers do not raise their prices and decrease the quantities of solar panels exported to the EU.

"This is a very clear incentive to negotiate - we are offering a window of opportunity here, but the ball is in China's court," De Gucht said.

EU leaders, notably Germany's Angela Merkel - whose country is the biggest European producer of solar panels - have openly spoken against tariffs, for fear this could escalate into a trade war at a time when the eurozone economy is seeking good trade relations with the Asian giant.

But De Gucht responded on Tuesday by saying "European policies should be inspired by law, not fear."

He explained that the commission was asked to investigate whether China is dumping cheap solar panels on the EU market and whether this endangers the local industry.

"The answer was clearly yes," he said.

China currently produces 1.5 times more than the global demand for solar panels. Its companies are heavily subsidised.

The EU commission has also opened a parallel anti-subsidy case which is expected to be finalised in August, by which the time the higher tariffs are set to kick in if the Chinese do not agree to a compromise.

According to the commission's findings, the price should be 88 percent higher than what Chinese solar panels currently cost on the EU market. "This is clearly harming the European solar panel industry, jeopardising at least 25,000 jobs and damaging current and future investment, especially in research and development," De Gucht said.

EU ProSun, an umbrella organisation for European solar panel makers, welcomed the move.

“We are relieved that the European Commission finally introduced concrete measures today against Chinese dumping, which has already cost thousands of jobs and over 60 factory closures in the European solar industry," EU ProSun said in a press statement.

Even if the EU commission has the power to impose these tariffs now, member states can repel the decision if more than half of them agree to do so in the council of ministers. It would be a first, as no tariff decision has ever been rejected by the council.

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