Talks Break Down, Or Maybe Not
A brief update on the EU's bizarre mercantilistic plan to increase tarrifs on solar panels from China. As previously noted, it is not only shooting itself in the foot in order to protect a tiny minority of producers to the detriment of the far larger contingent of consumers, but is risking a trade war with China to boot.
China's trade association has let it be known that the talks with the EU's 'trade experts' have broken down, something the EU denies:
“The European Commission rejected Chinese trade association statements that talks to resolve a dispute over allegations of dumping of solar panels had broken down, while Chinese comments highlighted risks the dispute could escalate.
EU regulators agreed to impose solar panel duties earlier this month following a investigation launched by a complaint from German manufacturer SolarWorld.
The dispute has the potential to impact 21 billion euros ($27.1 billion) worth of imported Chinese solar panels, cells and wafers from manufacturers such as Trina Solar, Yingli Green Energy and Suntech Power Holdings.
A Chinese industry association authorized to represent Chinese solar companies told reporters in Beijing on Wednesday that it had made an offer during a visit to Brussels but was rebuffed by the European Commission.
"These claims are simply wrong and misleading for one simple reason – no formal negotiations are yet ongoing between the EU and China in the solar panel anti-dumping case," EU trade spokesman John Clancy said in a statement on Thursday.
It is especially absurd that a German manufacturer's complaints have led to this spat, as far more jobs in Germany depend on being able to source cheap panels from China than on the German manufacturer's ability to keep its prices high.
However, the still greater danger is that tit-for-tat retaliation will be the result of the dispute. 'China is angry' as the Reuters article points out:
“CCCME made an offer for producers to voluntarily raise their prices to avoid duties during informal talks last week, a Chinese source familiar with the negotiations said. "They have shown no flexibility, so it makes China very angry. It is quite rare for the export chamber to hold this type of press conference."
He said that EU regulators had insisted that they would accept only a price level consistent with the amount regulators say Chinese firms undercut European producers, which would amount to a markup of 47 percent.
"If they have carried out their tariff and they still insist on the high level of the price offer, then there is no need for us to negotiate, and China will have to respond in another way," the source said.
Beijing says the duties would seriously harm trade ties and that it is expected to decide in June whether to levy its own duties on imported European solar-grade polysilicon, a raw material used in solar panel production.
The source said it was also possible that China could open an anti-dumping investigation into EU wine, but pressure on the Chinese government by the Chinese solar industry and domestic media could lead to a larger response.
"If the EU side really cares about the 47 percent tariff in June, then that kind of response is not enough," he said. "They will want to really hurt the EU."
Please not how completely and utterly absurd the EU's demands are: they are asking suppliers to increase their prices if they want to continue to sell their wares in the EU. They want to risk a trade war for that?
No-one in the marketplace would ever get such a plainly nonsensical idea. In the daily wheeling and dealing in the market, buyers are eager to get their suppliers to lower their prices, not increase them.
We'll say it again: the EU's external trade department is evidently run by economically illiterate mercantilistic morons.
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