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Abstract This week, the China-EU photovoltaic trade conflict reached a critical turning point. On the 5th, China is expected to release its preliminary anti-dumping decision on EU polysilicon, marking a pivotal moment in the ongoing trade dispute. Industry analysts warn that if the European Commission proceeds with temporary tariffs on Chinese PV products, it could spark a full-blown trade war.
The tension between China and the EU in the solar sector has escalated into a high-stakes game of tit-for-tat measures. While the anti-dumping ruling is imminent, behind the scenes, the European Commission has already completed its countervailing investigation into Chinese PV imports. The report is set to be submitted to member states next month, followed by a vote. What stands out is the Commission’s strategic use of the “low-tax rule†to avoid double relief—essentially circumventing WTO rules that prohibit applying both anti-dumping and countervailing duties simultaneously. This move appears to be part of a broader effort to target what the EU calls “Chinese subsidies.â€
On November 5, the European Commission will announce its preliminary findings on anti-dumping measures against Chinese PV. According to insiders, three scenarios are possible: first, the imposition of temporary tariffs, which would trigger a trade war; second, a delay due to pressure from member states; or third, a decision to impose tariffs without immediate enforcement. However, many believe the first outcome is most likely, as EU Trade Commissioner De Gucht seeks to leave a lasting political legacy.
Meanwhile, the countervailing investigation has also been finalized, with the results expected in early August. The EU is preparing for a complex voting process, and negotiations between China and Europe in the coming weeks will play a crucial role in shaping the final outcome. A senior insider in Brussels noted that this round of voting will be more challenging than the last, with China’s diplomatic efforts likely to have a significant impact.
The use of the “low-tax rule†has raised concerns among industry experts. In the past, the EU applied this method in cases like the coated paper dispute, where the tax was based on the difference between the export price and the EU market price rather than just dumping or subsidy margins. This approach allows the EU to avoid double taxation while still imposing penalties. For example, in the coated paper case, the damage level was used instead of combining the dumping margin and subsidy rate, resulting in a lower overall tax.
Experts argue that the EU’s strategy is not just about imposing tariffs but also about creating a legal framework to challenge China’s competitive advantage at the institutional level. By targeting both companies and the government, the EU aims to frame Chinese solar products as unfairly subsidized, which carries significant political weight.
Looking ahead, the EU’s long-term plan seems clear: to shift from relying solely on anti-dumping measures to using countervailing duties as a more sustainable tool. With China expected to gain market economy status in 2016, the EU wants to secure its legal leverage now. This case marks a continuation of previous actions, such as the 2010 coated paper investigation, but with greater scale and impact.
In summary, the China-EU PV dispute is not just about tariffs—it’s a strategic battle over trade policy, legal frameworks, and economic influence. As the situation unfolds, the global solar industry will be closely watching how both sides navigate this complex and high-stakes conflict.