Yet Another Trade Dispute… and a Solution on the Horizon?

Yet Another Trade Dispute… and a Solution on the Horizon?

By Taylor Sholler, SEMI Americas 

Last month, the European Commission opened a new probe into the manipulation of the global PV Panelsolar industry by Chinese competitors.   This investigation kicks off a new wave of conflict in the long and costly solar trade war that has afflicted the overall trading relationship between the two economies.

For the past few years, discord had been tamped down as a minimum price for solar panel imports from China was reached in July 2013.   This brought a cessation to the constant sparring that was born out of the European Commission’s decision to impose punitive import duties on solar panels from China in order to counter what was characterized as the dumping of cheap goods in Europe.

This new investigation focuses on transshipment. Of particular concern, the Commission notes that “a significant change in the pattern of trade involving exports from the People’s Republic of China, Malaysia and Taiwan to the union has taken place following the imposition of the measures, without sufficient due cause or economic justification for such a change other than the imposition of the duty.” 

EU ProSun, a joint initiative of EU solar businesses led by German panel-maker Solarworld AG, requested the probe, alleging Chinese exporters shipped solar panels to Taiwan and Malaysia and then passed them off as locally made to avoid EU levies.  The investigation could take up to nine months and the Commission has threatened to extend tariffs on solar panels from China to Taiwan and Malaysia in the interim to counter the problem.

As this plays out, the minimum price regime that has dictated market flows is also set to expire at the end of the year.  It is clear that a grand bargain must be reached if the global market is ever expected to systematize and improve.  In mid-June, negotiators from 14 economies including the U.S., EU, and China met in Geneva to begin discussions on what could prospectively be such a bargain.

Environmental Goods Agreement (EGA) negotiations recently kicked off what will be a painstaking process to determine which items will make the cut for duty elimination as a primary benefit of being defined by the global trading community as serving an environmental purpose or need.  Solar cells and modules are currently among the list of products on the table for consideration.

Stakeholders in the solar space have long sought a high-reaching accord to tackle the solar trade issue and have examined various avenues for amelioration from WTO influence to a World Semiconductor council model for solar/PV.   Never before has a process offered the comprehensive resolution this agreement stands to provide.  This most recent negotiating round is just the first of many to determine the universe of the pact.  SEMI’s trade policy team has engaged EGA negotiators since the inception, in order to advocate for solar’s inclusion in the final accord.

As we begin another battle over the rules of solar trade ─ tensions remain high.  Yet for the first time, a comprehensive solution appears on the horizon.  As we continue to work through this process we hope to alleviate the damage that has been so counter-productive to growth and bring much-needed stability to a vital industry.  The EGA negotiating round to relating to the solar space will take place in the coming months and SEMI will remain intimately involved in the process to ensure that these vital products are freely traded in the future.

The Grid
June 24, 2015