Solar-Panel Dispute Burns Hole in EU Strategy

At The Wall Street Journal, Matthew Dalton reports that the EU’s watering-down of plans for steep tariffs on Chinese solar-panels, which it claims are dumped in European markets due to illegal government subsidies, shows weaknesses in its strategy towards China.

The fundamental problem facing the commission and Mr. De Gucht is that many of the bloc’s member states don’t appear to have the stomach for a fight with China. Germany, the EU’s largest economy, has enjoyed the fruits of an increasingly tight relationship with Beijing over the past five years. Unwilling to jeopardize that relationship for the sake of a few solar-panel producers, Berlin opposed the commission’s tariff plan—even though many of those producers were German.

“The commission fought an uphill battle over the last two months,” said François Godement, an Asia expert at the European Council on Foreign Relations.

[…] The solar-panel episode highlights what has become an uneasy three-way relationship between Brussels, Berlin and Beijing. The EU treaty gives the commission the power to investigate trade complaints, impose and negotiate trade agreements. But many of these decisions must be approved by member states, giving China an opening to negotiate with—and some say—squeeze national governments. [Source]

The Economist cautions that the truce may not hold:

Even so, it may be premature to celebrate. EU ProSun, an industry lobby, is planning to appeal against the decision. “This agreement is not a solution but a capitulation,” it thundered. And indeed it is, in a way. China forced Mr De Gucht to cave in by pressing several European countries, notably Germany, into speaking out against his investigations.

Telecoms is the other worry. Mr De Gucht has been rattling his sabre about a possible investigation into subsidies granted to Huawei and ZTE, two Chinese telecoms giants. He went out of his way to say that “mobile networks were not even mentioned” in the recent solar talks. [Source]