On May 20, Washington and Brussels decided to negotiate settlements with China involving China’s $30 billion solar panel shipments to Europe and the US. Both blocs are expected to raise the price of solar panels from China, the world’s dominant producer. They would require Chinese companies to charge more for their panels and further limit the total number of panels exported to the West.
China will be hit with tough tariffs. The United States has already started collecting tariffs of up to 30% of the price while the European Union may impose similar tariffs ranging from 37% to 68% on June 5.
The goal of these tariffs, and quantity regulations are to protect both American and European manufacturers from what they have called “unfair competition.” According to manufactures in both blocs, Chinese solar panels are heavily subsidized and then dumped in their countries at prices below the cost of production. As reported by the manufacturer’s, two dozen American and European solar panel firms have already cut back production or gone bankrupt in the last three years. According to these same sources, Chinese shipments to the West have driven solar panel prices down by three-quarters in the last four years. In total, China’s solar industry exported €21 billion of goods to Europe in 2011.
In response to this issue, German Economy Minister Phillipp Roesler stated that the EU made a “grave mistake” by agreeing to impose tariffs on solar panels from China. He stated that China has already warned that the tariffs on solar panels would harm bilateral trade. Germany is one of the world’s leading export nations and Roesler beliefs that a trade conflict with China could hurt Germany’s trade relations with China, one of the countries greatest trading partners, in the long run.
Environmentalists in both the US and Europe are against the decision to levy tariffs on Chinese solar panel imports as it will make the price of renewable energy even more expensive. At the moment, renewable energy is still much more expensive compared to energy produced from fossil fuels.
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