Sunday, April 2, 2017

Top court in Europe rejects Chinese solar industry’s appeal

Top court in Europe rejects Chinese solar industry’s appeal


Trade friction likely to increase amid sluggish global economy

A worker assembles photovoltaic panels at a plant in Lianyungang, East China's Jiangsu Province on August 18, 2016. Photo: CFP

A top EU court's rejection of an appeal by 26 Chinese solar panel companies to void anti-dumping and countervailing measures in the EU is groundless and reflects the bloc's rising trade protectionism, experts said on Wednesday.

The Luxembourg-based General Court, the second-highest court in Europe, "rejects all the applications and confirms all the definitive duties set by the council," The Wall Street Journal reported on Tuesday, citing a statement issued by the court.

In 2013, the European Council member states imposed anti-dumping and countervailing duties averaging 47.7 percent on imports of solar panels from China.

The states claimed that after a two-year investigation, they found that Chinese solar panel prices were below-market and had received illegal subsidies, which was harmful to the interests of EU solar panel makers, according to industry website

The decision affected 26 domestic solar panel manufacturers in China, including JA Solar Holding Co, who subsequently appealed the case to the General Court in 2014, urging it to "withdraw those measures," reported. The court dismissed the appeal.

Meanwhile, Chinese solar panel manufacturers can still appeal the decision to EU's highest court, the Court of Justice, The Wall Street Journal said.

The failure of the appeal may lie in the EU's own dumping standards and discriminatory treatment of Chinese companies, said Chen Weidong, an international law professor at the Beijing-based University of International Business and Economics.

As the EU has its own dumping standards, the administrative departments may easily decide that Chinese companies are dumping products if they can't provide solid proof to the contrary, he explained.

Besides, the EU's attitude is still unclear as to the substitute country method, which should have ended in December 2016. Hence, it still adopts price and cost data from an alternative country when investigating China for potential dumping and thus imposes high penalties, according to Chen.

"Chinese government has reduced subsidies to the photovoltaic industry in recent years, so the European Council's claim that the sector is receiving illegal subsidies is not reasonable," Cui Hongjian, director of the China Institute of International Studies' Department of European Studies, told the Global Times on Wednesday.

Cui said that it is normal for the government to provide incentives to stimulate high-tech industries' growth.

Given that free land, low interest rate loans and equity investments may easily be considered subsidies, local governments should adjust the way they provide support for domestic companies, Chen noted.

Small and medium-sized Chinese solar panel manufacturers also adopt the strategy of "slim profits, quick turnover," and that's the reason why such products are sold cheaper in Europe, Cui said.

In February, the European Commission softened its position on Chinese imports, proposing an extension of import duties on solar panels from China by 18 months with a gradual phase-out.

The rapid change in the EU's attitude also highlighted the uncertainties caused by the EU's rising trade protectionism amid sluggish economic growth, experts said.

The bloc's recovery from economic crisis has been slow, Cui pointed out. "So its member states are protecting their industry at the expense of sabotaging their Chinese counterparts."

Such trade friction is likely to increase not only in the photovoltaic industry, but also in other energy and steel sectors, experts warned.

Cui suggested that Chinese enterprises should focus on research and development into critical technologies to improve the competitiveness of products. "Take solar panels as an example. Despite favorable government policies, Chinese companies are still locked in an embarrassing position … they import materials from Europe, do some basic processing, and re-export the products to Europe," Cui said.

This is where the "root problem" lies, Cui stressed. He also urged China to further open up its energy market to private players. "Currently, the market is still dominated by State-owned enterprises like the big three oil companies, and as a result, high-tech private-sector companies have to expand abroad to look for opportunities."

If the domestic market climate improved, these private players would focus on Chinese consumers and wouldn't need to expose themselves to potential foreign trade volatility, experts said.