Secrecy and silence intensify EU-China solar trade shambles

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After a week of rumour, speculation, leaked documents and hastily written rebuttals, followed by a fresh round of rumour, the need for transparency in EU-China price undertaking could never be more apparent.

A document from the EU Trade Commission was passed to PV Tech on Monday 9 March. It clearly stated that three companies – ET Solar, Canadian Solar and ReneSola – had been informed that they were to be removed from the price undertaking pending a right of reply.

PV Tech contacted all three and the Trade Commission to confirm the document before publishing.

The commission attempted to inform us that we couldn’t write about the document because it wasn’t in the public domain. With the PDF open on my colleague Ben Willis’ computer, he was told the commission would not confirm its existence, not even to dispel the uncertainty it created. “We don’t comment on leaks.”

The solar rumour mill wheeled on with the commission seemingly happy to supply the grist.

On Tuesday morning, the three companies, for whom uncertainty is even less attractive, began to respond.

ET Solar was first, sending a response to PV Tech that confirmed the legitimacy of the document we had seen. The others followed shortly after with official releases passed through their investor relations teams. ReneSola said it would withdraw from the undertaking entirely.

On Wednesday, earlier stories emanating from the Netherlands about impounded panels appeared to hold water with as many as 22 companies dragged into the mire. PV Tech has heard several independent, but unconfirmed, reports that one of these pulled out of the European market entirely on Wednesday morning with staff laid off. This had been preceded by computer equipment being seized from homes and offices.

Despite the fact that multiple sources have relayed the same rumours, the speculation remains just that. The industry is in the dark. Just as it has remained in the dark throughout the operation of the 2013 price undertaking and its minimum import price (MIP).

The MIP is set quarterly on the 15th of the month. In the build up to this there is no guidance as to what is about to happen.

It is supposed to reflect the Bloomberg price index but this does not make the changes any more predictable.

In the summer we asked the European Commission to open the books on the agreement and its workings, with commercially sensitive data redacted to prevent commercially sensitive data being revealed. The industry didn’t seem to be entirely sure how it worked. The commission had to put a circular round explaining what currency the MIP would use (Bloomberg uses dollars, the continent of Europe does not).

The Trade Commission rejected the request for access to information, a decision we appealed.

The response from Catherine Day, secretary-general of the European Commission cited impacts on “international relations”, an absence of any “public interest” argument for disclosure (it was the largest trade dispute ever between China and the EU) and also said we were a “third party” and “interested parties” had partial access to the undertaking’s documents that we were denied.

Directors of European firms have contacted us ahead of potential MIP changes to see if we know what is going to happen. The C-level executives of Chinese firms tell us they only know when the price on their import paperwork changes. These would seem to be interested parties, to quote the commission, yet seem to be far from fully informed. Others in Europe have told us they depend on the Chinese firms subject to the MIP to share the latest figures. To their credit they have been doing so.

As for ongoing compliance, the EU and the national customs bodies to which it defers enforcement, are unlikely to comment about ongoing investigations for obvious reasons. The industry has been left to spread warnings about the implications of breaking the (poorly advertised) rules. The result is the tangled knot of speculation that hangs over the industry and does nobody any favours.

MIP unravelling

Then of course there’s the question of the MIP itself. If the undertaking was ever functioning properly to begin with, the past week’s revelations have revealed it is rapidly falling into deeper chaos. The next scheduled review of the MIP is expected to see it increase as a result of the exchange rate from dollar to euro. As industry costs continue to fall, the MIP will artificially drive costs up.

Chinese firms continue to expand their manufacturing bases outside of mainland China to bypass the MIP and the associated quota system, as well as tariffs in North America. Depending on how you interpret the commission’s view of ReneSola’s OEM arrangements, this practice could no longer be sufficient and they too will face punitive duties. The only way it seems this loophole could be used is if a cast-iron guarantee can be offered (and tested) that proves no Chinese components have been used. That sounds impracticable.

EU ProSun will be cheered to see the EU adding some teeth to the undertaking and it may feel now more than ever that pursuing its renewal is worthwhile. PV Tech understands that if EU ProSun so much as requests a review of the anti-dumping proceedings, an 18-month extension from the time of that request will added.

With the current system pushing prices up, reducing competition and creating additional uncertainty in the market, major changes to the agreement are needed or the commission’s stated goals of creating “open” and “fair” trade will be missed.

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