Globalisation is in a process of transition.
Five years after the global financial crisis erupted, some areas of ‘globalisation
management’ – notably the financial sector – have been closely scrutinised, resulting
in new regulation. Institutions like the World Trade Organization (WTO), and
the global trading system more broadly, have received praise for helping to
avoid the same degree of protectionism that undermined global efforts to
recover from the great depression of the 1930s.
However, some regimes are still following pre-crisis-era agendas. The recent decision of the European Commission (EC) to apply temporary anti-dumping duties on imported solar panels produced in China is a case in point – and one that has adversely affected EU producers and consumers. Covering EU imports of crystalline silicon photovoltaic modules or panels, and the cells and wafers used inside them (shipments valued at EUR21 billion – $27.4 bn – in 2011), it weakens efforts to mitigate climate change in Europe through the use of the best available (and lowest cost) technology to produce solar energy. And it furthers sours trading relations with a major world trader at a time when multilateralism remains within crisis.
So why would the EC do this?
China is the world's largest producer of solar panels, and the recent case against these products is the biggest ever undertaken by the EC – although the first complaint was raised by a German company, Solarworld. The measures fall under the category of ‘anti-dumping duties’ – trade defence measures, which are allowed by the EU, so long as sufficient evidence of the following elements have been proven:
(i) product dumping (i.e. the selling of imported stock at a lower price
than it could be sold for in the exporting country – or at below cost price);
(ii) a material prejudice against the importing country's industry in that product;
(iii) a causal link between the dumped imports and the harm caused to the industry; and
(iv) anti-dumping measures must not be against the European Community interest.
As a result of its
investigations into the pricing of Chinese exports, the EC subjected imports of Chinese solar products to a punitive
duty of 11.8% until 6 August 2013. After that, the duty would have been raised
to 47.6%, if a provisional agreement had not been reached through negotiations.
The EC investigation found ‘material injury’ as a result of dumped
imports from China; namely, it estimated that up to 25,000 jobs in EU solar production were
likely to be lost without the extra duties. The European Trade Commissioner, Karel De Gucht, has stated that the
measures will give ‘life-saving
oxygen to a business sector in Europe that is suffering badly from this dumping’.
Is this job-loss scare valid?
A number of European photovoltaic companies are concerned that the
anti-dumping decision made by the EC was reached on a
sample of only seven companies. Those concerned responded in Brussels at
organised by the Alliance for Affordable Solar Energy (AFASE), which represents over 740 companies in Europe. The resultant job
losses estimated by the AFASE from the imposition
of the measure could be as high as 65,000 – considerably more than the number
assumed to be protected by the EC as a result of its intervention. Other
independent studies have estimated numbers to be much higher: up
to 240,000 jobs should the higher duty have been approved by the European Council.
In addition, China could retaliate with its own duties; if retaliation had gone ahead in this instance, more European jobs would have been lost.
Or is the motivation to put pressure on China?
The majority of firms operating within the solar panel
sector – and the majority of EU member states, including Germany – opposed or
questioned the anti-dumping measures, calling into debate how far they are
actually in the ‘European Community interest’, as required in the rulebook. But
what rules specifically? Commissioner De Gucht stated quite clearly
that the AD actions are not about protection, but rather ‘about
ensuring international trade rules also apply to