EU members losing faith in solar duty plan

Chinese solar companies will have to prepare for heavy duties imposed by the European Commission, although the plan has lost the support of an overwhelming majority of EU members, industry insiders said.

A total of 18 EU members, including Belgium, Germany and the United Kingdom, opposed to the commission's plan to impose hefty tariffs on solar products imported from China, in a vote conducted last Friday.

France, Italy, Portugal and Lithuania backed the decision, and another five countries abstained, China's 21st Century Business Herald reported on Friday.

The Ministry of Commerce was unable to confirm the report on Friday, saying that the commission has no obligation to report the result of the vote to the Chinese government at this stage.

Shawn Qu, CEO of Canadian Solar, a Nasdaq-listed solar company in Jiangsu province, said that the result was "definitely positive and increases the momentum of our campaign against trade protectionism".

"But it is hard to say if it will affect the preliminary decision of the EU trade commissioner on June 6. However, it will add pressure on the commissioner to negotiate with China, and therefore affect the final ruling in December," he added.

Li Lei, a counsel at Sidley Austin LLP's Beijing office, said the imposition of anti-dumping or anti-subsidy duties would be more difficult without the majority support of EU members.

The commission, the EU's executive body, claims that Chinese companies have sold solar panels at below cost in Europe, and plans to impose duties, averaging at 47 percent, on them. They will come into force from June 6 for a trial period, but could be withdrawn if both sides reach a negotiated settlement.

Foreign media reported on Tuesday that EU trade chief Karel De Gucht accused China of forcing EU member states to oppose duties against Chinese solar manufacturers, and said he would not drop the plan to introduce punitive duties.

Zhang Hanbing, director of global marketing at Canadian Solar, said: "It seems the European Commission is unlikely to drop the plan, judging from De Gucht's tone. But the result of the vote could be read as a signal that the European Commission should listen to."

Zhang said that although the vote may not affect the preliminary ruling, it may influence the decision "in another way".

"It is still not clear on which products they are going to impose the duties. It could be panels, or modules, or silicon materials, or any solar products from China. How they define 'dumping' and decide the range for imposing duties matters a lot to us," she said.

On the other hand, Chinese companies have been preparing to deal with the possible duties that will last for at least six months.

Zhang said Canadian Solar's shipments to Europe declined to 24.7 percent of its total in the first quarter, from 50.7 percent in the 2012 fiscal year.

"We are going to send products from our manufacturing base in Canada to Europe if the provisionary duties are imposed, to avoid losses as much as possible," she said.

Data from the Solar Industry Association in Zhejiang province said average capacity utilization of local solar companies has increased from 30 percent to 50 percent from January to April.

Orders from Japan, the US, India, Southeast Asia, Africa and the Middle East are increasing steadily, and are becoming important target markets besides Europe for the company, said Qiu Zhanwei, CEO of Astronergy, based in Zhejiang province.

Paul Barwell, CEO of the UK-based Solar Trade Association, said: "The results of this vote send a strong signal to the European Commission that these duties would do much more damage than good to the European solar industry.

"If duties are imposed, panel prices will rise across the board, and consumers and installers alike will lose out. It makes no sense to safeguard 8,000 manufacturing jobs by sacrificing up to 200,000 jobs in the wider industry."