EU should resolve China solar dispute, states say

LUXEMBOURG Fri Jun 14, 2013 4:47pm EDT

An employee works on a production line of solar panel at a factory of a photovoltaic company in Jiaxing, Zhejiang province June 5, 2013. REUTERS/William Hong

An employee works on a production line of solar panel at a factory of a photovoltaic company in Jiaxing, Zhejiang province June 5, 2013.

Credit: Reuters/William Hong

LUXEMBOURG (Reuters) - A group of free-trade-oriented northern European nations urged the EU's trade chief on Friday to defuse a growing dispute with China or risk a negative spiral that could choke exports.

Sweden, Denmark and the Netherlands said EU Trade Commissioner Karel De Gucht should find a diplomatic solution with Beijing to avoid a tit-for-tat trade war, after Brussels imposed tariffs on Chinese solar panels and Beijing retaliated with an investigation into European wine.

"It is not the right way to go. When the one side begins to close up, the other continues. And then we have a negative spiral that doesn't stimulate trade," Swedish Trade Minister Ewa Bjorling told reporters at a meeting in Luxembourg.

De Gucht, who handles trade issues for the European Union's 27 countries, went ahead with sanctions against Chinese solar panels on June 6, despite opposition from 18 of the bloc's governments, who fear retaliation from Beijing.

The European Commission, the EU executive, accuses Beijing of dumping billions of euros' worth of solar panels below cost of production, unfairly winning 80 percent of the EU market.

However, De Gucht softened his earlier plan to levy punitive tariffs averaging 47 percent immediately, and went ahead with tariffs at 11.8 percent for two months, leaving a window for Brussels and Beijing to reach a negotiated solution.

De Gucht is expected to travel to Beijing on Thursday to participate in talks with the Chinese, diplomats said, to try to agree a solution by setting a minimum price at which Chinese companies can sell solar panels in Europe, as well quotas on the number of solar panels that could be sold.

"Naturally we want a solution as quickly as possible," Bjorling said. "One where we don't lose trade with China, and same time makes sure there are reasonable prices on solar panels so that we can reach our climate goal."

RETALIATION

China responded to the EU's solar case with a decision to investigate accusations of dumping of EU wine, an apparent attempt to target France and Italy, the two countries most in favor of European tariffs on Chinese solar panels.

Danish Trade Minister Pia Olsen Dyhr said that trade cases could not be looked at in isolation.

"I think it's important to have the general relationship between China and Europe in mind when you have these discussions," she told Reuters, explaining that legally, trade cases must serve the interest of the entire European Union.

De Gucht has said that China subsidizes "nearly everything" and wants to force Beijing to respect rules set by the World Trade Organization in Geneva.

China has threatened it could retaliate with further cases against the EU if no negotiated solution is found.

In the latest trade response by the EU, on Thursday it launched a World Trade Organization complaint against China's imposition of anti-dumping duties on imports of stainless steel tubes, six months after Japan filed a similar case.

The move confirmed a plan first reported by Reuters on Tuesday.

(Additional reporting by Robin Emmott in Luxembourg and Ben Blanchard in Beijing; Editing by Michael Roddy)