Thursday, September 13, 2012

Chinese solar panels - EU takes on China

News of the EU planning to initiate antidumping investigation against Chinese solar manufacturers is doing the rounds here, here and here. Considering the sensitivity of the issue, reports of a Chinese delegation rushing for negotiations is reported here.Renewable energy and subsidies provided to it has been a contentious area in international trade relations.

Brussels Blog of the FT reported on the impending trade war here. The EU is essentially contending that Chinese made solar panels are being "dumped" in the EU at a price much lower than what it is in China  causing harm to EU solar panel manufacturers.

Some thoughts on stakeholders, interests and realities of subsidies in the renewable sector:

1. The price of Chinese solar panels being less, benefits the EU consumer. It also enhances adoption of renewable energy technology and assists in climate mitigation efforts.

2. The antidumping investigation essentially seeks to protect the local EU industry.

3. Subsidies in the renewable energy sector are a common phenomenon across geographies. While the Chinese State might be supporting its manufacturers, EU and its member states too provide subsidies in various forms to its manufacturers. While the fact that this is a reality may not be relevant in an antidumping investigation, it surely useful in countering a high moral position taken by country that challenge subsidies.The recent investigation by China against state level subsidies in the U.S. is a trend in this direction.

4. Climate change activists claim that the proliferation of cheap, affordable technology has benefitted the adoption of clean energy technologies. Thus, the goals of an environmentally sustainable world and trade rules that frown upon subsidization of renewable energy seem to be incompatible. Of course, this discussion does not take place in an antidumping investigation.

The EU investigation and subsequent Chinese response at the WTO would have a bearing on how countries react to subsidies in the renewable energy sector. Till now no case in the dispute settlement mechanism deals with this issue. The Ontario Feed-in Tariff case is the first. Would a Chinese challenge to an EU finding of dumping be the next big renewable energy case at the WTO?

1 comment:

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