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Stop EU punitive tariffs on Chinese solar panels

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Stop EU punitive tariffs on Chinese solar panels
  
  

 


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Read below what Carl B Hamilton writes in Dagens Nyheter.

"Stop EU punitive tariffs on Chinese solar panels"

Inexpensive emission-free energy. On June 5, the EU is expected to decide on a 40 percent penalty tariff on solar panels from China to protect the domestic industry. But for every job saved by producers risk four jobs will be lost at installers and service, writes economics professor and parliamentarian Carl B Hamilton (FP).

All that is both for better climate and increased free trade - particularly more exports from poor countries - have reason to be deeply concerned about an imminent EU decision on 5 June. This applies to EU measures against Chinese imports of solar panels and their components. It may sound like a trivial matter but is the opposite: the availability of cheap emission solar power in Europe and worldwide, as well as major commercial values ​​to consumers who purchase these products.

The background is that the price of solar panels fell a full 75 to 80 percent in just three years between 2008 and 2011. The price is expected to fall another few percent. The price drop is of course fantastic from a climate perspective: When the cost of solar energy decreases, more of the world's households and businesses can afford to use this emission-free energy source. Solar energy can outrank some fossil-based energy and in countries with very light over the years also become cheaper than nuclear power.

Today, state support for solar energy in many countries. The supports are particularly high in Germany but would be superfluous when solar power will be significantly cheaper. For Sweden, it would basically mean 210 million kronor in the abolition of state aid years 2013-16.

The price drop has several reasons but mainly due to a rapid increase in production of solar panels in Chinese companies. China increased its share of world production from 1 percent in 2001 to about 50 percent in 2010. With a cost advantage of 20-30 per cent were sent a portion of the production exported to the United States, and pitched out many US-based competitors. They threatened U.S. companies mobilized protectionist regulations and politicians in Congress. This led in 2012 to the "punitive tariffs" with an average of about 30 percent on Chinese exports of solar panels to the United States.

Unsurprisingly then ruled the Chinese producers of exports to Europe, which today is the world's largest market for these products. Today, the Chinese producers for 80 percent of sales of all solar panels in Europe. The European producers did, however, like their colleagues in the U.S. and are now demanding that the European Commission should put punitive tariffs on Chinese imports. A preliminary decision on the 40 per cent duty has unfortunately recently taken, and 5 June, the idea is that the decision will be confirmed at a meeting in Brussels.

One would think that punitive tariffs protect jobs and profits in the U.S. and the EU, but it is actually quite the opposite, and it applies even if China were to refrain from retaliation. Import barriers protects certainly job with producers of solar panels in the rich countries. But each in-country jobs in production of solar panels, it is about four in-country job of installers, distributors and service companies.

Tariffs leads to reduced overall demand for solar panels, and means that many more jobs will be lost in the next stage (artisans, service personnel and others) than be saved by producers. If the EU on June 5 would adopt trade barriers corresponding to a tariff of 40 percent is a very conservative estimate (a halving of the numbers in a German study) that the number of job losses in the EU-27 after three years could be at least 100,000 to 120,000 jobs .

Nor is there any particular industrial or energy for political reasons today to support solar manufacturing in the EU. This is a standard product without significant spillover effects on other sectors.

Producers' arguments for their claim of import barriers is that they "need" (as the protection of their profits) to offset Chinese subsidies to its solar industry. However, it is unlikely that the Chinese government subsidizes by more than 5 percent of the production cost, although the extent is difficult to determine precisely.

Additionally, similar charges against China in terms of subsidies is also likely directed towards the EU. If the EU imposes punitive tariffs, this will certainly lead to Chinese retaliation, industry or other industries. China, for example, are likely to respond to surveys of EU subsidies of companies engaged in the technology for "green electricity" and notify them support - such as "certified systems" - to the WTO, and impose barriers to imports of components for wind turbines and more. This spiral of trade barriers will ultimately hurt all participants, and some more than others.

Most serious of EU punitive tariffs is climate effects of consumers will buy fewer solar panels when the price goes up. EU trade policy decisions are contrary fundamentally against EU climate policy objectives.

Sweden has the EU gone against the proposals on these trade barriers against China but so far lost. The Swedish arguments have been technical and legal, but Sweden has also referred to the environmental and climatic aspects. The latter is in my opinion the important and crucial. In this issue is the credibility of the EU's climate policy at stake, as well as the attitude towards free trade and the general EU's relationship with China.

The EU is about to decide on 5 June, measures that deprive poor Chinese jobs, which reduces the (net) number of jobs in the EU, to the detriment of the climate and all violations of EU climate policy, and that is likely to trigger a vicious spiral of protectionism.

The issue of solar equipment from China should be lifted to a higher political level, the EU Heads of State and Government Summit in June. These are much larger and wider interests of Sweden and the EU than a limited number of European PV producers' interests.

Carl B. Hamilton, Professor of International Economics, Member of Parliament (Liberal)

Posted May 22, 2013
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