China Divides Europe in Fight Against Tariffs
Adroitly alternating the threat of a trade war with the lure of its huge import market, China appears to have driven a deep wedge between Germany and the rest of the European Union. And it may even have caused a rift within the German business world.
As Chinese and European trade officials stare each other down over next week’s scheduled imposition of big tariffs on the $27 billion worth of solar panels China sells to Europe each year, Germany has come down on China’s side.
Notably, Berlin is backing Beijing, even though Europe’s biggest producer of solar equipment, SolarWorld, is a German company that desperately wants the European Union to impose tariffs on the Chinese equipment. Unless the bloc backs off under German pressure, tariffs averaging nearly 50 percent would go into effect June 6, to punish China for the ostensible “dumping” of solar panels at below cost in Europe.
“Europe cannot succumb to blackmail — dumping is illegal, and the E.U. is obliged to defend itself by applying the international trade law,” said Milan Nitzschke, a spokesman for SolarWorld and the president of ProSun, a lobbying group for the European solar energy industry.
But many other German companies, which rely more heavily than other European manufacturers on China as a significant market for their exports — whether Volkswagen cars or Siemens factory equipment or various other goods — fear that the dispute over solar panels could lead to an all-out trade war with China, which would be disastrous for their businesses. So far, the German government appears to agree.
And little wonder. Germany is China’s most important trading partner in Europe and China is Germany’s leading partner in Asia. The Federation of German Industry estimates that one million German jobs are dependent on exports to China. Of those, the German solar industry has about 99,000.
For half a century, Germany has been one of the most loyal and enthusiastic supporters of European unity. And since the advent of the European Union two decades ago, Berlin has advocated giving Brussels greater scope in the range of issues it handles. But the solar tariff showdown illustrates the way domestic priorities can sometimes trump pan-European loyalties.
Chancellor Angela Merkel of Germany played host last weekend to Prime Minister Li Keqiang of China. More than a dozen trade agreements were signed, including between VW, Siemens, BASF and their Chinese partners, all supporting further expansion for German industry in the Chinese market and further investment by the Chinese in Germany. Special privileges that China offered German companies in its agricultural and recycling industries were clearly aimed at trying to win Berlin’s support.
After her meeting with Mr. Li, Ms. Merkel told reporters on Sunday that her government would lobby against the solar tariffs, saying the situation was “rather complicated.”
“Germany will do everything possible to resolve the conflicts that we have in trade,” Ms. Merkel said, “through as many discussions as possible to prevent it from falling into a sort of conflict that ends in the raising of tariffs from both sides.”
Germany’s economics minister, Philipp Rösler, said Monday that Germany had told the European Commission in Brussels that it was voting against the imposition of preliminary tariffs on Chinese solar panels. While the commission routinely consults member countries on preliminary tariffs, in the past that has tended to be more of a formality, and opposition has been infrequent.
But on Tuesday, a trade official in Europe with direct knowledge of the matter said it appeared that a majority of the governments were officially opposed to preliminary tariffs on Chinese solar imports. And yet, the European commissioner for trade, Karel De Gucht, could still go ahead on June 5 and impose the preliminary duties the next day without any further approvals. That deadline was established at the opening of the commission’s investigation in September.
Whether Mr. De Gucht proceeds with the preliminary duties remains to be seen. But he “will not be intimidated in any way” and “will not bend to external pressure,” Mr. De Gucht’s spokesman, John Clancy, said at the commission’s daily news conference Tuesday.
Preliminary tariffs, which would last six months, in the past have tended to be imposed as a negotiating ploy before the European Commission decides whether to impose so-called final tariffs that last for five years. A voting majority of member nations could overturn the preliminary tariffs, although such a move would be unprecedented.
Formal settlement talks with the Chinese could begin later in the year, even if Mr. De Gucht did impose the preliminary duties. “His door has been open for approximately one year in terms of trying to find an amicable solution to the solar panels case,” Mr. Clancy said, referring to the informal discussions Mr. De Gucht has held with the Chinese. “The door is still open.”
The Chinese premier, Mr. Li, is clearly aware of Germany’s power within the European economic bloc. Germany was the only member country he visited during his first trip to Europe since taking office in March, spending three days in Berlin before heading to Brussels for what proved to be blustery trade talks.
During his Berlin visit, Mr. Li said China was willing to offer preferential treatment to German investors in its fast-growing logistics, education and health care sectors.
“China and Germany have a shared position of opposition to trade protectionism, and we have expectations that Germany will play an active role and promote a resolution of the frictions through dialogue and consultation between the European Union and China,” Mr. Li said.
Zhong Shan, China’s vice minister of commerce and chief international trade representative, issued a strong warning to Brussels late Monday after his latest trade talks there failed to produce a compromise on solar panels.
If the bloc proceeded with antidumping duties on solar panels, “the Chinese government would not sit on the sideline, but would rather take necessary steps to defend its national interest,” Mr. Zhong said in a statement.
The trade office in Brussels complained publicly in a statement late Monday about China’s pressure on member governments.
“It is the role of the European Commission to remain independent, to resist any external pressure and to see the ‘big picture’ for the benefit of Europe, its companies and workers based upon the evidence alone,” said Mr. Clancy, the spokesman.
The United States, which has similar concerns, has already imposed tariffs totaling about 30 percent on Chinese solar panels. But the Obama administration recently decided to seek its own negotiated settlement with China to replace the tariffs. Such a settlement could take the form of setting high minimum prices for Chinese exports to the United States, a ceiling on the volume of exports, or both.
A negotiated settlement with either the United States or Europe would force the Chinese solar industry to address production overcapacity, and the industry has not figured out how to do that, executives and officials in China said.
Many Chinese solar companies are already struggling. Suntech Power Holdings, based in Wuxi, was once the world’s biggest solar panel producer but recently was forced to put its main operating subsidiary into bankruptcy. Other solar panel companies are trying to avoid similar fates. In Suntech’s case, the bankrupt operating unit has been turned over to a local government to manage while in receivership, and that government has been trying to protect jobs.
But the European solar panel industry has its own struggles, and is not willing to let their Chinese rivals solve their problems by unloading their inventory too cheaply on the Continent. That is why European executives are pressing for the preliminary tariffs — to force China to the bargaining table.
Fonte: nytimes.com
