PV firms face risks despite EU deal

SHIJIAZHUANG -- The amicable solution to a dispute between China and the European Union (EU) over solar panels has brought benefits to China's photovoltaic (PV) industry but also poses potential risks to the Chinese companies.

According to a statement issued on Saturday by the European Commission, the EU has endorsed the price undertaking submitted by a bloc of Chinese solar panel exporters. The agreement takes effect on Tuesday and will expire in 2015.

The deal, reached after weeks of intensive talks following the EU's proposed decision in June to impose hefty provisional anti-dumping tariffs on solar panel imports from China, has also set a minimum price for imports from China.

EU Trade Commissioner Karel De Gucht said Chinese PV firms that signed the deal will take about 70 percent of the EU market while other Chinese PV companies will have to shoulder the anti-dumping tariff of 47.6 percent.

The EU also set a quota for annual imports from Chinese PV companies. Any imports above that limit would incur the anti-dumping tariff of 47.6 percent.

Though exports to the EU have been restricted, the compromise between China and Europe has prevented a trade war between the two major trade partners, said Tong Xingxue, president and CEO of LDK Solar Co Ltd, a leading Chinese producer of solar equipment.

"Coming up with a price undertaking deal rather than imposing a high anti-dumping tariff is a positive move," said Qu Xiaohua, chairman of Jiangsu-based Canadian Solar Inc.

As the minimum price was set, leading PV enterprises which have their own brands, research and development strength and sales channels are expected to gain significant competitive advantages in the EU market, compared to smaller companies, according to Qu.

However, industry insiders have pointed out Chinese PV firms still face some potential risks.

Liang Tian, director of public relations at Yingli Green Energy Holdings Co, said China will have difficulty selling its PV products on the EU market if rivals from other Asian countries such as India, Malaysia and the Republic of Korea, joined the competition without being subject to the terms of the new deal.