The EU duties on solar panels from China are probably the worst trade measures ever introduced in Europe. They serve to protect less that 20 percent of the jobs in the European solar sector, while hurting growth and job creation in the downstream sector where 80 percent of the value in the European solar sector is created. Still, the Commission proposed to re-introduce the duties for another two years. But today, 18 member states in the committee for trade defence voted against an extension of the duties. The battle is not yet over as the issue will now be discussed in an appellate committee. But the Commission should not take that step. Instead they should listen to the member states and withdraw the proposal right now.
I have written about the duties on solar panels before, as recently as just before the vote. The solar panel duties are the biggest protectionist measure in the EU as we speak. Over half of the EU imports that are affected by trade defence instruments are solar panels and solar cells. Furthermore, the measures take the form of an undertaking which means that Chinese producers will not have to pay the duties if they set the price above a minimum price. In other words, the Commission has created a state-backed cartel, shifting profits to Chinese companies to the detriment of European consumers and downstream companies.
The vote today is a historic one. For the first time, an appellate committee will review the Commission proposal before it is finally adopted and a qualified majority of the EU member states must vote against to block the measure. Still, the signal should be crystal clear: a majority of member states want to get rid of the measures. Probably, they understand that in times when US president Donald Trump is calling for a “big border tax” and even threatens to leave the WTO, it is not the right time to be a protectionist. It will hurt in the end.
Commissioner Cecilia Malmström now has a choice. Either, she pushes on with the duties against a majority of member states with the slimmest margin possible; or she reconsiders the proposal and takes the entire EU interest into account as required by our laws and scraps the duties. Doing the latter would mean actually following what the Commission says it is pursuing by an open trade agenda. I expect her to do just that.