March 13, 2015 / 2:50 PM / in 3 years

EU proposes ending duty-free access for three China solar firms

BRUSSELS, March 13 (Reuters) - The European Commission has proposed denying three Chinese solar panel producers duty-free access to European markets because of alleged violations of its conditions, according to two sources familiar with the proposal.

The three, Chinese-Canadian Canadian Solar, ReneSola and ET Solar, have until March 20 to make written submissions to the Commission, with hearings then possible. The Commission is expected to take a final decision in late April or early May.

Canadian Solar and ReneSola said earlier this week that the Commission had raised issues related to their compliance with the duty-free access “undertaking”, both adding they had fully complied with the agreement. No one was immediately available to respond at ET.

The European Union concluded an investigation in 2013 into alleged dumping and illegal subsidies for Chinese solar panel producers by allowing a limited amount of panels at a minimum price and key components such as cells free of import duties.

For Chinese manufacturers not covered by the undertaking, punitive duties amount to an average of 47.7 percent.

Based on monitoring of a sample of the 121 companies covered by the undertaking, the Commission said its findings justified withdrawing three companies. One source said eight companies had been sampled.

The Commission, the EU’s executive arm, said the three companies variously failed to report sales as required, offered benefits that effectively undercut the minimum price or sold excessive amounts of other products to customers.

The Commission has also questioned the use of original equipment manufacturers (OEMs) that assemble modules outside China using cells from a third country, making monitoring was impracticable.

The European Commission’s inquiry into Chinese solar import panels in 2012-2013 was its biggest to date in terms of value. Imports of Chinese solar panels and related components into the European Union were some 21 billion euros ($22 billion) in 2011.

The case stemmed from a complaint lodged by a group of European companies led by Germany’s SolarWorld, which said Chinese competitors were dumping product on EU markets, propped up by hefty illegal subsidies.

Responding to the EU’s initial move to impose tariffs, China hit European wine producers with retaliatory duties and the trade dispute threatened to widen into other sectors, including steel.

China and the European Union eventually resolved the dispute in July 2013, with a deal allowing China to meet about half of Europe’s solar panel demand. ($1 = 0.9514 euros) (Reporting by Philip Blenkinsop; Editing by Ruth Pitchford)

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