Why there will be no simple wins in the solar panel trade wars

  • The long year dispute between the EU, the US and China over solar panel exports escalated again this week with a Chinese WTO challenge to the EU’s energy subsidy regime, and the launch of an EU investigation into Chinese state subsidies for solar panel manufacturers. This followed EU’s own investigation into price distortions in the manufacture and export to Europe of Chinese solar panel modules and their components and a retaliatory Chinese anti-dumping case on polysilicons.  
  • Like most anti-dumping disputes, the case pits not just the US and the EU against China, but also EU domestic constituencies against each other. It also sets politically sensitive domestic policy outcomes in the EU and the US in conflict. These go to the heart of what the EU believes it stands to gain from a global shift to low carbon energy generation.
  • The EU cannot raise duties on imported solar modules and cells without impacting on the rollout of solar generation in Europe, at least to some degree. But it cannot ignore subsidised Chinese imports without implicitly conceding that Europe will capture the emissions cuts and energy security gains, but not the new manufacturing.
  • As in the US, the solar panel dispute raises not just the usual sensitivities about China, but a big question about the extent to which EU trade policy is also energy policy, and the extent to which both are industrial policy. Beijing probably calculates rightly that its strongest suit is the fact that the EU has no single answer to these questions.

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