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Solar-tariff showdown averted in Europe

But EU-China dispute still far from resolved

The European Union’s trade chief says that massive overproduction in China of solar panels has led the country to engage in the dumping of products in the European market. Above, a worker cleaned solar panels at a plant in China.

Reuters/File 2012

The European Union’s trade chief says that massive overproduction in China of solar panels has led the country to engage in the dumping of products in the European market. Above, a worker cleaned solar panels at a plant in China.

BRUSSELS — The European Union’s trade chief on Tuesday carried out his threat to impose tariffs on solar panels from China. But in a concession to Chinese lobbying and after opposition from some European leaders and industry executives, he significantly watered down the penalties.

Karel De Gucht, the trade commissioner, said the tariffs will be 11.8 percent initially — about a quarter of the amount he had been threatening to levy. But the tariffs will rise to 47.6 percent in August if Beijing does not remedy what he says is a systematic effort by Chinese companies to sell solar panels in Europe below the cost of making them, a practice known as dumping.

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“The ball is in China’s court,” De Gucht said, referring to negotiations expected over the next two months. The period of the lower tariff “is a window of opportunity,” he said, adding that windows “can also shut.”

He had warned he could impose much higher duties to defend the credibility of EU trade rules, but pressure had been mounting on him to back off.

Premier Li Keqiang of China bypassed De Gucht during a visit to Germany last week and persuaded Chancellor Angela Merkel to call for further negotiations. China is a big export market for German products, and Merkel is not eager to see a trade war.

On Monday, Li went over De Gucht’s head with a phone conversation with the European Commission president, José Manuel Barroso. Li told Barroso China was ready to retaliate if the EU took action. The official Chinese news agency, said Li told Barroso “there would be no winners in a trade war.”

Solar panels represent more than 6 percent of China’s exports to the Continent. In 2011, Chinese exports of panels and components to the EU were worth $27.4 billion.

De Gucht suggested “massive overcapacity” in China led the Chinese to flood the European market. China is “producing today one and a half times the amount of solar panels the world needs,” he said.

Most EU governments opposed the preliminary tariffs. Under the rules, however, they faced significant obstacles to stopping De Gucht, who had backing of the European Commission, the executive branch.

Western governments contend Beijing has helped Chinese industries take over global markets with huge loans, government research programs, protection of the domestic Chinese market from imports, and industrial espionage. China went from a bit player in solar panels as recently as 2006 to the dominant world producer.

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