-- EU delays the full weight of import tariffs on Chinese solar
panels for two months
-- The delay allows time for a possible negotiated settlement of
the trade dispute
-- Chinese officials said to have lobbied heavily against the
sanctions
BRUSSELS-The European Union will delay for two months the full
impact of import tariffs it planned to put on Chinese solar panel
equipment, allowing Chinese manufacturers to negotiate a settlement
with European authorities that could defuse one of the biggest
disputes over unfair trade in recent decades, EU officials said
Tuesday.
The decision comes after a campaign of intense lobbying by the
Chinese government that appeared to help swing the tide of opinion
among the 27 EU national governments against the tariffs.
EU trade chief Karel De Gucht doesn't need to secure national
approval right now for the tariffs, which are supposed to last for
six months. But in December, he will need their backing to extend
the duties to last five years, raising the threat that Mr. De
Gucht's tariff plan would face an embarrassing rejection by member
states.
"Decisions do not fall from heaven," Mr. De Gucht said at a
press conference on Tuesday. "They are made in a political
environment."
The tariffs will come into force Thursday at 11.8%, a quarter of
the average level seen in a European Commission plan circulated
last month that called for duties of between 37.3% and 67.9%,
depending on the company. The tariffs--which will cover solar
panels and their main components, solar cells and silicon
wafers--were supposed to average around 47%. All manufacturers will
face the same 11.8% tariff for the two-month period.
Mr. De Gucht is giving Chinese solar panel manufacturers until
Aug. 6 to propose an acceptable alternative to the tariff plan. In
trade disputes this is usually a commitment to sell solar panels in
the EU above a minimum price and limit the quantity of panels they
sell in Europe. If an agreement isn't reached, the tariffs will
come into force at the originally planned level.
Officials at the European Commission, the EU's executive arm,
have in recent years grown increasingly worried about arm-twisting
and threats of retaliation that China allegedly has used to
discourage national governments from supporting tariffs and
European companies from bringing trade complaints to the
commission.
Mr. De Gucht has said that he will use the commission's powers
to open its own trade investigations, without first receiving a
complaint from a European company, to counter pressure placed by
foreign governments on multinational corporations. Last week, he
vowed that the Chinese "are not going to impress me by putting
pressure on member states."
After Mr. De Gucht's original tariff proposal emerged in May,
Shen Danyang, a spokesman for China's Ministry of Commerce, said
the EU's "handling of the situation is in serious violation of
multilateral consensus." He called the original solar proposal:
"picking up a stone to drop on one's foot."
The tariff plan hit at a politically sensitive industry that had
grown to become one of China's biggest exporters, accounting at its
peak in 2011 for 7% of all Chinese exports to the EU. Moreover,
Chinese authorities have given extensive support to Chinese panel
manufacturers as part of the government's strategy of becoming a
global force in the production of renewable-energy products.
Chinese officials met with government officials in European
national capitals to lobby against the tariffs. Li Keqiang, the new
Chinese premier, urged German Chancellor Angela Merkel during a
meeting last month to oppose the duties. Ms. Merkel then urged the
commission to negotiate instead of imposing the duties.
Thursday's announcement of the tariffs will kick off a flurry of
negotiations as the EU clock ticks. Despite the olive branch handed
to Chinese manufacturers, Mr. De Gucht said the evidence is strong
that the industry is "dumping" its products at unfair prices on the
European market, causing profound damage to European
manufacturers.
"The dumping of these Chinese solar panels is clearly harming
the European solar panel industry," Mr. De Gucht said. "This
jeopardizes at least 25,000 current jobs."
Chinese manufacturers, he said, must come up with a proposal
that eliminates the harm done to European producers by dumped
Chinese products.
European solar panel manufacturers, led by the German firm
SolarWorld AG (SWV.XE), sought the tariffs in a complaint filed
with the commission last year. Chinese-made panels now account for
roughly 80% of the European market.
Prices have plunged in recent years, causing dozens of European
panel-makers to shut production and at least one major bankruptcy
in China, of Suntech Power Holdings Co.(K3ND.SG), once the world's
largest manufacturer of solar panels. Suntech will face duties of
48.6% if the negotiations fail, according to a copy of the
commission's original tariff proposal seen by The Wall Street
Journal.
If the tariffs go into effect as the commission originally
proposed, they would be 55.9% on LDK Solar Ltd (LDK) and 51.5% on
Trina Solar Ltd. (K3ND.SG). JingAo Solar Co. will face tariffs of
58.7%, the document says. Yingli Green Energy Holdings Co. Ltd
(YGE) would face the lowest tariffs of any Chinese panel
manufacturer, just 37.3%.
Write to Matthew Dalton at matthew.dalton@dowjones.com
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