EUROPEAN FOREIGN POLICY SCORECARD 2014

Trade liberalisation and overall relationship

4 - EU-China solar panel case

Grade: B-
Unity 0/5
Resources 5/5
Outcome 6/10
Total 11/20

Europeans were deeply divided by the solar panel case, the biggest trade dispute of the year. But, despite disunity, the settlement was a positive outcome for Europe.   

In September 2012, the European Commission launched an anti-dumping investigation against Chinese photovoltaic manufacturers after a case was brought by a German manufacturer. In the first half of 2013, it became the major issue in EU–China relations as it concerned about €21 billion of Chinese solar panels sold in the EU. Trade Commissioner Karel De Gucht explained that the EU objective was “to remove the injury to European industry caused by illegal dumping, and at the same time ensure that European users and customers benefit from cheap supply of solar panels”.

While France, Italy, and Spain strongly backed De Gucht, at least 15 other member states voiced their opposition to punitive tariffs on Chinese solar panels. Perhaps most significant was Germany, which Li Keqiang visited at a crucial stage in the dispute on his first trip to Europe as prime minister. After he met Chancellor Angela Merkel, she officially criticised the Commission’s plan to impose tariffs on Chinese solar panels. De Gucht came under pressure not only from China and some member states, but also from the Alliance for Affordable Solar Energy, a lobby group of Chinese and European companies, which also opposed the planned tariffs.

In June, the Commission finally decided to impose provisional tariffs of 11.8 percent on Chinese solar panels but gave China two months to settle the dispute before a higher level of duties was implemented. Beijing responded by announcing an investigation into European wine and polysilicon exports (the powder substance for solar panels) into the country, which put additional pressure on the EU and some member states to find a quick and acceptable solution and avoid a trade war. In late July, after intense discussions, China and the European Commission agreed to set a minimal price on solar panels. The European Commission was weakened by the failure of member states collectively to back it. Nevertheless, despite the disunity, the settlement was a positive outcome for Europe.