Solar panels tariffs cannot save European producers

BEIJING - The European Commission agreed on Wednesday to slap a hefty 47-percent punitive tariff on solar panels imported from China in an effort to save Europe's struggling photovoltaic industry, but the protective approach would only lead to an unintended disaster.

For years, the EU countries have spearheaded global efforts to develop clean energy and outshined other countries as they put up more solar panels on the roofs of homes and businesses.

Their clean energy initiative, a laudable contribution to the worldwide campaign against global warming, may suffer as consumers cancel their orders when they can no longer buy Chinese panels about 40 percent cheaper than European goods.

"The solar business is very price-sensitive ... If prices are artificially increased by punitive tariffs, the European solar market would simply come to a standstill," Wouter Vermeersch, head of the Belgian company Cleantec Trade, said in a statement Wednesday.

Economy wise, the steep tariffs could seriously divide and debilitate Europe's solar businesses. Companies that build and install solar panels share a large part of the EU's value-added chain. Their steep revenue losses and forced job cuts will undermine the vitality of the whole solar sector, adding to Europe's thorny economic problems.

On the surface, the European Commission is accusing China of allegedly exporting solar panels at below-cost prices and using illegal subsidies to crowd out European competitors to corner the market.

But even European companies have admitted that China's price advantage is largely a result of economies of scale, fueled in part by the exponential increase in the global demand for solar energy in recent years.

Blaming the lack of competitiveness of European products on China is misguided. Instead of trying to win more breathing room through unfair protectionist measures, European solar panel makers need to find ways on their own to revive their businesses and compete with their rivals in the global market.

In an interconnected world economy, trade protectionism can lead to a no-win situation. A malicious beggar-thy-neighbor approach can lead to a trade war that neither side can afford, and strain the valuable trade ties that have benefited billions of people from both sides.

The protective measure involves about 21 billion euros ($27.6 billion) of Chinese solar panels, the EU's largest anti-dumping case to date. The European Union has every reason to handle the case carefully and work out solutions through dialogue and consultation with its Chinese partners.

China deeply cherishes its ties with the European Union, its largest trading partner. As the EU's No 2 trading partner, China is also rapidly expanding its consumer market, which can be a boost for Europe's economy still recovering from years of financial crisis.

A cooperative, not an aggressive, strategy in managing ties between China and the European Union, two giant economies in the world, will reap economic rewards for both sides and build up global efforts at developing clean energy.