Economists urge negotiation in PV trade

Economists attending the ongoing 2013 Fortune Global Forum have called for negotiation in solving photovoltaic (PV) trade frictions between the EU and China.

US economist Stephen Roach said it has been discouraging to see the hard stance taken by the EU and the consequent developments between the two sides.

China and the EU are important trade partners for each other, Roach said, adding that he hopes the trade frictions will not hinder overall clean energy cooperation between the two sides in the future.

The EU announced earlier this week that it will impose an interim anti-dumping duty of 11.8 percent on imports of all Chinese solar panel products, including panels, cells and wafers, starting from Thursday. The duty will be raised to an average of 47.6 percent two months later if both sides fail to come to an agreement.

China has opposed the duties and called for solving the problem through dialogue and consultation. It has also decided to open an anti-dumping and anti-subsidy investigation into wine imported from the EU.

Experts at the forum said frictions in the PV sector will set a bad example, lead to trade remedy measures in other fields and hinder global economic recovery.

U.S. Chamber of Commerce President and CEO Thomas Donohue said that in the wake of economic difficulties, relevant economies tend to take protectionist measures. He said negotiation should be stressed to prevent a single case from hurting overall trade.

Former U.S. Treasury Secretary Henry Paulson said the appropriate handling of disagreements is an important part of relations between major powers.

"All countries have their differences," Paulson said. "But today's major powers must not let differences preclude cooperation in the areas where we agree."He said smart leadership is needed for countries to advance shared interests.

The cost of solar power generation has become cheaper in some parts of Europe and become more competitive with conventional electricity production thanks to local solar power systems built with low-cost Chinese-made PV products.

But if the cost of Chinese products rises, the cost of solar power will increase and demand from consumers will weaken, hurting the whole sector.

Duties of 20 percent would cost the European economy up to 175,500 jobs and 18.4 billion euros in added value over the next three years, according to independent economic research institute Prognos.

Chinese manufacturers will lose their price advantage to their counterparts in Taiwan and the Republic of Korea because of the anti-dumping duties, said Wang Shijiang, secretary-general of the China PV industry Alliance, adding that many companies will be driven out of the market.

The EU opened the investigation after some European companies complained that a Chinese monopoly could be created in the EU market, causing prices to increase and quality to decrease.

But opposition to the duties was also presented by 18 EU member states, hundreds of European solar companies and 15 European photovoltaic associations.

European industry insiders say a price alliance among Chinese companies is not likely to form in the future, as it has never happened in the Chinese domestic PV market, which is even fiercer than the EU market.

Chinese PV makers are now trying to tap into other markets or relocate capacity overseas to avoid the EU duties.

Cai Hongbin, dean of the Guanghua School of Management at Peking University, said the punitive duties have also sounded an alarm in other sectors in China that rely heavily on overseas markets.