BRUSSELS (Reuters) - The European Union’s trade chief bluntly told China on Tuesday it was wasting its time trying to put pressure on him to drop plans to impose punitive import duties on Chinese solar panels.
The European Commission, the EU’s executive, accuses China of flooding Europe with cheap solar panels sold at below the cost of production, and intends to impose duties.
That has prompted energetic lobbying from Beijing against the move and divisions have emerged in Europe on the issue, foreshadowing a bruising internal battle over how to respond to China’s trade practices.
A majority of European countries, led by Germany and Britain, oppose EU Trade Commissioner Karel De Gucht’s plans to levy tariffs of 47 percent on solar panel imports from China next month, according to a survey by Reuters.
De Gucht, who met Chinese Vice-Minister of Commerce Zhong Shan in Brussels on Monday, confirmed there was widespread resistance among member states, but said governments were clearly being lent on by Beijing.
“They (the Chinese) are not going to impress me by putting pressure on member states,” De Gucht, a Belgian lawyer, told the European Parliament’s influential trade committee.
“I couldn’t care less whether that happens with ... the biggest and most populous state in the world. For me it is the same. So they can try to put pressure on member states, but they will waste their time trying to do so with me,” De Gucht said.
The solar case is the largest the Commission has undertaken, with about 21 billion euros ($27 billion) of Chinese-made solar panels sold in the European Union.
The split between the Commission and EU member countries, as well as division among the bloc’s 27 governments, sets the European Union up for a potentially debilitating dispute over how to deal with China, its second largest trade partner.
France and Italy support De Gucht and say China’s rapid rise in solar panel production - to more than total global demand - could not have happened without illegal state support. They blame Chinese overproduction for the loss of thousands of EU jobs in the sector.
But countries such as Germany, Britain, Sweden and the Netherlands do not want duties on Chinese solar panels because they are worried about retaliation from China and being shut out of its lucrative markets.
Chinese diplomats in Brussels said in a statement late on Monday that if the European Commission were to impose sanctions “the Chinese government would not sit on the sidelines, but would take necessary steps to defend its national interest”.
The case also has implications for how Europe handles another complex dispute, over Chinese telecoms equipment makers.
The Commission accuses Huawei HWT.UL and ZTE (000063.SZ) of dumping in Europe and gaining almost a quarter of the EU market by unfair means, a sensitive security issue as more and more European firms rely on cheaper Chinese equipment to run their mobile networks.
European manufacturers Ericsson (ERICb.ST), Alcatel-Lucent SA ALUA.PA and Nokia Siemens Networks NOKI.UL also fear retaliation if the Commission acts against Huawei and ZTE.
Division over Europe’s strategy on China is even more difficult to resolve because in the solar panels case the Commission has set in motion a process within European Union law that cannot be stopped easily.
A group of European firms led by Germany’s Solar World SWVG.DE complained of Chinese dumping last year and the Commission launched an investigation in September.
The Commission is now legally obliged to act, because it has found clear evidence of dumping by Chinese producers, according to a copy of its solar investigation obtained by Reuters.
De Gucht has also calculated that imposing duties for a trial period from June is the best way to force China’s new president, Xi Jinping, to engage in finding a solution.
“It is about giving us leverage with China,” said one EU official, speaking on condition of anonymity.
“If we blink now, in once fell swoop, the Chinese will have broken our trade defence system,” the official said. ($1 = 0.7729 euros)
Additional reporting by Philip Blenkinsop and Charlie Dunmore; Editing by Giles Elgood