German blow to EU action against China

German Chancellor Angela Merkel meets Chinese Prime Minister Li Keqiang  during his first official visit to Germany.

Story highlights

  • Germany and other EU members are opposing punitive duties on imported Chinese solar panels
  • The move undermines EU Trade Commissioner's push to stop allegedly unfair competition
  • Karel De Gucht has accused Chinese solar producers of selling goods below cost
  • The Commissioner recommended provisional punitive tariffs averaging 47 per cent

Germany led a majority of EU members on Monday to oppose punitive duties on imported Chinese solar panels, undermining an aggressive attempt by the bloc's trade commissioner to combat allegedly unfair competition from China.

Karel De Gucht is confronting Beijing in the EU's biggest ever trade investigation. But Philipp Rösler, Germany's economy minister, made clear his government's opposition to duties at an official lunch in Berlin for Li Keqiang, the visiting Chinese premier.

Mr De Gucht, who is from Belgium, has recommended that provisional punitive tariffs averaging 47 per cent be imposed on imports from Chinese solar producers, whom he accuses of selling goods below cost.

The anti-dumping case has emerged as a test of whether the EU can maintain a unified trade policy orchestrated by Brussels, or whether national governments would ultimately fracture under intense commercial lobbying by Beijing.

Under EU rules, the commission has the authority to determine whether those provisional duties are enacted. But opposition from member states would weaken Mr De Gucht's hand as the investigation moves toward a conclusion in December, when they can ultimately can block his proposal.

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Mr De Gucht met on Monday with Zhong Shan, a deputy Chinese commerce minister, to discuss the issue. An EU trade spokesman said that "Commissioner De Gucht ... made it very clear to the Vice-Minister that he was aware of the pressure being exerted by China on a number of EU member states which explains why they are positioning themselves as they are in their advisory positions towards the European Commission".

Member states were supposed to respond to the commissioner's proposal by a Friday deadline. According to diplomats, trade officials and other people involved in the case, at least 14 of the EU's 27 governments have rejected duties, with some putting the number as high as 17.

Berlin's opposition is particularly significant since it is the bloc's largest economy and its biggest trading partner with China. A German photovoltaics manufacturer, Bonn-based SolarWorld, has spearheaded the commission's investigation.

The EU trade spokesman added that Mr De Gucht would "take note of the advisory positions of the member states" but noted duties may be necessary given the "life-threatening position" of the EU solar industry. "Currently, 25,000 jobs are at risk in that sector within the EU," he said. "The commission is obliged to see the big picture and take decisions based solely on the evidence."

In what may reflect a softening of Brussels' stance, the spokesman also indicated that the commission was open to a settlement: "Commissioner De Gucht also expressed ... his intention to examine the possibility of a negotiated settlement in partnership with the United States should this become necessary."

Mr De Gucht has also been sparring with Beijing over a separate anti-dumping and anti-subsidy investigation he has threatened to launch against two Chinese telecommunications network equipment suppliers, Huawei Technologies and ZTE Corp.

The trade commissioner has won backing from Brussels to open the probe, although he said he would hold off to make a last attempt at negotiating a settlement.

Last year Angela Merkel, the German chancellor, irritated EU trade officials when she publicly suggested during a Beijing visit that Mr De Gucht should not impose duties and instead negotiate a solution -- a move that many in Brussels interpreted as undercutting the commissioner. After a long period of quiet, the German government has restated that position in recent days.

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