It's been coming for months but it has finally happened. The EU, in the guise of European Trade Commissioner Karel De Gucht, have decided to put pressure on the Chinese by applying an 11.8% tariff to imported Chinese solar panels. This is despite opposition from 18 of the EU's 27 members including Britain and Germany.
The news gets worse for the solar installation industry and the European economy in general. If agreement is not reached with the Chinese by August 6th then the EU plan to increase the tariff from 11.8% to a massive 47% on average. This could destroy the Chinese solar pv panel manufacturers, who have 80% share of the European solar panel market, as well as seriously damage the solar installation industry across Europe.
The tariff's have been imposed as the EU feel they have evidence of Chinese firms are selling their goods below cost - a practice known as dumping. However the response from China, who exported 21 billion euros worth of panels to the EU in 2011, could escalate this dispute into a full scale trade war which will severely damage the EU's already fragile economies. It will just depend on how the Chinese respond to this gun to the head from the EU.
The EU Commission seem happy to shoot Europe in the foot, ignoring the protests of most of the individual EU governments. Whilst accusing the Chinese of dumping, the EU Commission was previously happy to have state aid provided to European Manufacturers operating in the same area. An example from a 2008 press release from the EU: "The European Commission has authorised, under EC Treaty state aid rules, €47 million of aid, which the German authorities intend to grant to Wacker Schott for the production of solar wafers in Thüringen, Germany. The project involves investments of €322 million and is expected to significantly increase direct and indirect employment." (see full release here)
This dispute will run and run. In the meantime there is likely to be uncertainty in the solar industry and European manufacturers may well seize the opportunity to raise prices.
