This section will first give an overview of key developments and actors in the EU–China solar case, followed by the arguments that have been used, often involving a mix of factors, and a discussion of MNE response strategies to LOF and particularly to LOR.
Key Developments and Actors in the Case
The solar panel anti-dumping case unfolded against a background of very rapid increases in Chinese production capacity and an exponential growth of solar panel exports from China, which went from practically nothing in 2003 to over 40 % of the world export market in 2009. By 2010, three of the top five global PV companies were Chinese (Algieri et al.
2011). This growth, based on a combination of low costs and vertical integration, also contributed to a 50 % fall in prices between 2010 and 2011. These developments inevitably put pressure on market actors and on both sides of the Atlantic (Dunford et al.
2013), but the EU was the key global market for solar panels, with 75 % of the total installed capacity in 2011 (EPIA
2012). In this context of rapid growth in market share, falling prices and home-government support, trade tensions were not surprising (Haley and Haley
2013).
The exact situation on the EU market is difficult to assess with certainty from public data, as calculating market shares and prices often require proprietary information. This provided the opportunity for both sides to mobilise data that reflected their ideological points of view. Thus, the two protagonists—AFASE and ProSun—presented very different perceptions of the market situation and, especially, of the reasons for market difficulties. Table
1 provides an overview of the situation in as much as it can be gauged from public data and other sources, together with the claims of both sides. It is commonly accepted that the market share of Chinese firms was high and growing, although academic analysis indicates that this was, at least in part, due to a historical lack of capacity within the EU in the face of rising market demand (Quitzow
2015). Where the two sides differ fundamentally, as explored below, is in their conclusions on the reasons for this rapid increase in market share.
Table 1
EU market situation according to official figures, to ProSun and to AFASE
Market share | Trade figures (from the ITC Trademap database) indicate that Chinese imports represented 44 % of EU imports by $ value (including internal EU trade) in 2011 | Claimed that Chinese companies had 80 % EU market share in 2011 (ProSun 2012a) | Indicated, in a press interview, that Chinese market share was 57 %. Claimed that this was mainly due to lack of supply capacity in the EU (Choudhury 2013) |
Price falls | Trade figures indicate that Chinese $ prices per ton fell by 48 % between June 2011 to August 2012. Unit prices from all sources fell by 42 %. Chinese prices remained 20 % below the average import price. | Claimed that price falls were due to dumping, enabled by low cost loans, export support and direct government support to failing companies (ProSun 2013a) | Claimed that price falls were an inevitable result of economies of scale, but also related to major falls in price of polysilicon. EU companies were locked into long-term contracts above the market price, increasing their costs, and many were small (AFASE 2012a) |
Bankruptcies | No official figures. In March 2013, the specialist press reported that over a dozen German solar companies had gone bankrupt in the previous 12 months (Blau 2013) | Provided a long list of companies that went bankrupt/left the solar industry on website (ProSun 2013b). When last updated, in October 2013, it included over 70 companies, including Gehrlicher | Claimed that EU companies had adopted inappropriate strategies. Pointed out that 35–40 % of Chinese companies had also gone bankrupt (AFASE 2013a). Claimed that Gehrlicher’s bankruptcy was due to AD duties (AFASE 2013b), although ProSun argued that dumping had caused it (ProSun 2013c) |
As further background for the case, Table
2 presents the timeline of the EU solar anti-dumping (AD) dispute, with US developments for information. Given the focus of this paper, and in view of existing published work mentioned above, we do not go into specific legal details but will discuss relevant aspects where needed. As the overview shows, the key events of the European case were basically concentrated in one year. Interestingly, two German companies (SolarWorld and Conergy) had apparently already tried to instigate an investigation in the EU in August 2009 (Lewis
2014). While unsuccessful, this attempt illustrated rising attention to the issue in the course of a few years. Following a complaint from ProSun, the AD investigation was formally launched by the European Commission in September 2012. It was acknowledged to be the most significant anti-dumping investigation to date, with Chinese PV panel exports to the EU amounting to around 8 % of overall Chinese exports to the EU at that time (CEC
2012a). While the analysis was not made public, as is common in AD cases, interim duties were first imposed in June 2013 (CEC
2013).
Table 2
Timeline of the EU solar anti-dumping investigation (with US developments as reference information)
October 2011 | | Coalition of US solar panel makers, led by SolarWorld, file anti-dumping case against Chinese solar cells and panels with the US Department of Commerce |
November 2011 | | US investigation launched |
May 2012 | | Preliminary findings of dumping margins of between 31.14–249.96 % |
July 2012 | EU ProSun (also led by SolarWorld) files a complaint to the European Commission against Chinese exports of solar wafers, cells and panels | |
September 2012 | European Commission initiates EU investigation | |
October 2012 | | Definitive duties of 18.32–249.96 % imposed |
June 2013 | Provisional duties of 11.8 % imposed until August 2013. In case an agreement would be lacking by then, duties to be increased to 47.6 % | |
July 2013 | Agreement announced between Commission and the key Chinese exporters on a minimum price undertaking and quota limitation | |
ProSun files challenge in European Court | | |
December 2013 | | SolarWorld files new case against exports of certain Solar cells and panels from China and Taiwan with US Department of Commerce |
January 2014 | | Second investigation launched |
July 2014 | ProSun indicates that it has submitted over 1500 proposals by Chinese solar companies offering prices below minimum level agreed by EU and Chinaa
| Preliminary findings of dumping margins of between 26.33–165.04 % |
Member states were divided on the issue, however: a majority of 18 of the 28 reportedly opposed these duties (De Gruyter
2014), including most notably Germany, which had been against the investigation throughout (Curran
2015; Oliver
2014; Yu
2013). This discord complicated a final imposition of duties and created the conditions for a very intense and more ideologically charged debate. In contrast to the US, where anti-dumping duties were imposed, the final agreement reached in the EU was for a so-called ‘minimum price undertaking’, which resulted in a price floor and a limit on market share—a decision supported by 22 member states (AFASE
2013c), but heavily criticised by ProSun. While the outcome reduced the flexibility for Chinese firms, the strong contestation and appeal by ProSun revealed its perception of who had ‘won’ and who had ‘lost’ the case. Following the July 2013 agreement, it submitted a formal appeal to the European Court and continues to monitor developments, resulting in the presentation of evidence of alleged infringement of minimum prices to the Commission as well as a request for an anti-circumvention investigation into alleged transhipment via Taiwan and Malaysia (ProSun
2015; SETI
2015).
The solar case thus became highly politicised, a contestation involving governments, business and their associations, although it did not really become a serious issue for public debate or for consumers. Even before any conclusions were reached, the Chinese government reacted strongly to the investigation and instigated parallel anti-dumping cases against the EU (especially regarding polysilicon, just after the launch of the case and wine, after the initial conclusions), thus implicating other companies, sectors and related countries. This move illustrates the tendency, confirmed in empirical studies, for many AD cases to be instigated in retaliation (Feinberg and Reynolds
2006; Prusa and Skeath
2001), with the consequence that fear of retaliation is an important factor in EU member states’ voting decisions (Nordström
2011).
A legal peculiarity relevant to this specific case (and to the ideological nature of some of the arguments) is that the EU and the US treat China as a so-called non-market economy (NME) for anti-dumping investigations. Even though the protocol of China’s accession to the World Trade Organisation enables market-economy status (applied by many other countries), the EU does not yet consider China to have fulfilled the requirements (CEC
2012b; EP
2012). This classification matters to China. Being cast as an NME is seen as a hindrance to the country’s global economic ambitions and the government vehemently advocates change (Halper
2010; Ding
2011; Yu
2013). Moreover, as firms from an NME can more easily be targeted in AD investigations, Chinese MNEs are disadvantaged, casting a shadow over their capacity to develop global markets (Hou and Ren
2006).
China is the country targeted most often in EU anti-dumping procedures: of the 117 EU AD measures in force at the end of 2011, 53 involved China (next most affected were India and Thailand with 7 each; CEC
2012b). Chinese scholars have highlighted the ideological underpinnings of the NME status, which they consider a ‘political tool’, even questioning whether AD investigations can be objective in democracies. “In the multi-party, election-based democracies, politicians normally pay too much attention to the voice of unions and lobby groups… However, consumers’ loss is ignored in the system…” (Hou and Ren
2006, p. 79). Thus, on both sides, the status of Chinese MNEs in AD seems underpinned by ideological differences. Although such divergence between home and host attitudes is of course not a new challenge for Chinese MNEs (Kolk
2010b), the stakes are particularly high in AD investigations.
In terms of the actors, SolarWorld played a prominent role in the EU and in the US in the respective ad-hoc industry groups that filed complaints on dumping; in both regions, counter-alliances were also created to lobby against the duties. As mentioned in the previous section, EU ProSun launched the case in the EU, with AFASE as the opponent; these two coalitions, established in 2012 even before the investigation started, were the key business actors.
2 The European Photovoltaic Industry Association (EPIA) chose to remain neutral, as did intermediary producers that supplied firms on both sides of the divide. While AFASE has been relatively open about its membership (see below), ProSun deliberately refrained from disclosing details. Its website contains a “statement on anonymous supporters” that clearly reveals the overall positioning: “Unfortunately companies who take a public stance against China are sometimes targeted by the authorities there. As EU Trade Commissioner Karel de Gucht recently stated, ‘
It is undeniable that many European companies are unwilling to come forward and make justified trade defence complaints due to fear of consequences for their business’. Hence the European Commission accepts confidentiality in filing trade complaints, and most of EU ProSun supporters wish to stay anonymous.”
3 Although impossible to verify, SolarWorld (
2012) claimed that the majority of the industry backed the complaint. Interview data indicate that ProSun supporters generally had limited links to the Chinese market. This was also said to apply, most notably, to SolarWorld itself.
AFASE maintained a full list of supporters and their country of origin on its website. It was dissolved as a separate entity on 31 October 2013 and integrated into SETI (the Sustainable Energy Trade Initiative Alliance, an industry coalition initiated and hosted by the International Centre for Trade and Sustainable Development, ICTSD, in Geneva). AFASE consistently mentioned the number of supporters, with 850 as the final count, to characterise itself as “a coalition of over 850 companies in the European Photovoltaic (PV) industry. We work to prevent protectionism in the sector and promote the benefits of free trade for solar energy products”.
4 This formulation does not imply that all companies were ‘European’ in terms of head office; several were not. Nine Chinese companies were listed on AFASE’s website in November 2012, including most notably Trina Solar and Yingli (the two largest solar PV firms worldwide at this point). Non-EU members accounted for 23 % of the total then, including not only Chinese companies but also six from the US and one each formally from Canada and Pakistan (although the Canadian firm appeared to have all of its manufacturing facilities in China and the one from Pakistan seemed to be an American company with an important Chinese partner). However, the nationality and number of firms varied considerably over time. As AFASE developed, most of the Chinese firms dropped out. By March 2013, the two Chinese firms that remained—Trina Solar and Yingli—were listed as Swiss. Three months later, both had disappeared from the list of members, even though Trina Solar (
2013) continued to make public statements against the duties. In June 2013, only 3 % of AFASE members were non-EU firms, although by then there were members from all 28 member states.
All informants we spoke to concur that a key actor in the inception of AFASE was Trina Solar, a private Chinese company based in Changzhou, founded in 1997 and listed on NYSE and Nasdaq in 2006. Trina Solar’s sales have historically been strongly focused on the European market, although its importance declined from 93 % in 2009 to 68 % in 2011, concurrent with an increasing presence in the US, accounting for 22 % of sales in 2011 before the US AD case restricted market access (Trina Solar
2012). Its total sales increased from $845 million to $2048 million over the same period, although profits fell from $96 million to a loss of $38 million in 2011. The company attributed this to deteriorating market conditions, including declining government support. Trina Solar has an extensive network of sales offices and regional headquarters in Europe (Zurich), North America (San Jose) and South East Asia (Singapore). When we first spoke to Trina Solar’s representative in Brussels, the firm was unambiguous about its important role in AFASE. Over time, however, its involvement in the alliance dwindled and finally ceased in June 2013. The Trina employee who was the key spokesperson for AFASE for the first few months of their operations was replaced in January 2013 by two European representatives of the public relations consultancy G Plus.
Yingli Solar was the other key Chinese firm involved in the case. Based in Baoding, Hebei Province, where most of its manufacturing takes place, it is also a private company, quoted on the NYSE, although it has a joint venture in China with Tianwei Baobian, a state-owned manufacturer of large electricity transformers. Yingli was a member of AFASE since its inception in summer 2012, until June 2013 when, like Trina, it withdrew from the alliance. Although was not as active as Trina, the company noted the importance of the issue, for example in the annual report (Yingli
2015, p. 11): “While we were exempted from paying any antidumping and anti-subsidy duties to the EU starting from August 6, 2013, increased sale prices and reduced consumption in the European market under the Undertaking may bring significant uncertainties to our business in the European market”.
How many external resources were mobilised by AFASE itself to develop and implement its strategy and how many of those resources came from Chinese firms has been impossible to establish. Throughout 2014, neither AFASE, nor the European companies directly involved in the board, or AFASE’s official PR company—G Plus—declared their lobbying activity on the solar panel case under the EU’s transparency register of lobbyists. In mid-November 2014, G Plus finally provided details of its clientele for 2013, which included the AFASE members Trina, Yingli and Suntech from China, as well as Canadian Solar and the British installer Solar Century. All were indicated as clients representing a turnover of less than €50,000. Trina Solar also registered individually and indicated that that they spent €50–100,000 annually, a figure that seems rather low given the level of their activity in Brussels when the case was being debated. Kreab Gavin Anderson, another PR company in Brussels, listed Trina Solar as a client, but indicated that spending on their services was under €50,000 (CEC
2014). In the later months of the campaign, the firm disappeared from the public lobbying radar. Press releases quoted mainly the CEOs of the three board members of AFASE, who are Dutch or German (e.g. AFASE
2013b).
Arguments Used in the Case: Exploring Ideologies
The preceding overview of key developments and actors has already provided the background to some of the most prominent arguments used in this highly contested case. This section will explore these in more detail and also highlight their ideological nature where applicable. In the solar panel case, arguments focused on job losses and employment numbers, the importance of renewables in the context of sustainability, cost and affordability of solar, and the issue of government support. Table
3 contains some illustrative quotes and views from both AFASE and ProSun, including assertions of a more ideological nature on the various aspects.
Table 3
Illustrative quotes related to arguments used in the EU solar case
Job losses and employment | AFASE | The whole chain should be considered to judge impacts: “The employment by companies up and down the supply chain far outweighs the number of people employed by the Union producers of modules, cells and/or wafers” (AFASE 2012a) Initial duties led to job losses and closures: “We are coming to Brussels to plead against continuing these harmful and detrimental duties, as they are only leading to market contraction and are costing many green jobs across Europe” (Quote from CEO of Soventix GmbH in AFASE 2013b).“…the independent economic research institute Prognos which concludes that duties of 20 percent would cost the European economy up to 175,500 jobs and 18.4 billion Euros of value added over the next three years” (AFASE 2013d) “…we conclude that 218,200 jobs are at risk in the EU Member States. Losses in value added in the EU would be also be very significant. These would range between €4740 million and €7500 million (scenario 1) and €7860 million and €10,220 million (scenario 3)” (Prognos 2013, pp. 1–2) | Statements along the line of ‘nasty lobbyists’ using ‘our nationality against us’, as illustrated by the following quote from a January 2013 interview with the AFASE spokesperson: “…it’s something that the ProSun group is really using, waving a red communist flag and saying, you know, those bad Chinese are going to put us out of jobs” |
| ProSun | Several press releases highlight closures and job losses. For example: “…Chinese dumping has already cost thousands of jobs in Europe. Only in the production of solar modules some 15,000 jobs have been lost since 2011, as well as thousands of supplier and installation jobs” (ProSun 2013d) The PWC report commissioned by ProSun mainly uses US experience to argue that jobs were saved: “…even though Chinese imports dropped considerably, local production and imports from other countries were able to compensate this effect and lead to the above-mentioned increase in demand and jobs” (PWC 2013, p. 16); “…there is a high probability that the European wafer, cells and modules industry would disappear almost completely within a relatively short period of time if no tariffs are introduced” (PWC 2013, p. 25) | ‘China is killing our industry and our jobs’ argument, as in ProSun ( 2012b) “Chinese manufacturers continue to undercut each other with heavily dumped prices and thereby destroy jobs and technologies in Europe”. Very much presented as a zero-sum game; any positive externalities of Chinese firms’ market growth seen as illusory or temporary |
Cost and affordability of solar | AFASE | Costs are higher in Europe because EU firms are smaller and thus less competitive. It is inevitable that Chinese producers will be more efficient. In addition, many firms had long-term contracts for polysilicon, which has locked them into high prices (AFASE 2012a) “The combined effect of stagnating market demand and excess production capacity will continue to exercise pressure on prices in order to stimulate demand to the extent possible”(Prognos 2013, p. 3) | Lower prices are a good thing for Europe. The EU is not competitive. It is natural that China’s companies will be more efficient. With anti-dumping and regulation “natural selection won’t happen” (as stated in January 2013 interview with AFASE spokesperson) |
| ProSun | Improvements will stop once China has a monopoly: “It is unlikely that Chinese manufacturers would boost innovation in a more concentrated and dominated market where there is less pressure to innovate from competing European manufacturers” (PWC 2013, p. 26) | Lower prices are not necessarily a good thing. The result of Chinese growth will be a monopoly, which will result in higher prices and reduced innovation |
Importance of renewables in the context of sustainability | AFASE | Trade disputes are very bad for the environment: “If we tax all our mitigation options, we’re just waiting until we have to do much more expensive work on adaptation” (January 2013 interview with AFASE spokesperson) Quotes WWF Director of Global Energy Policy Stephan Singer in press release: “No doubt the coal, oil, nuclear and gas lobbies will be cracking open the champagne as the Commission is failing to tackle their continued and detrimental impact on nature and society as well as ignoring sky-rocketing fossil fuel subsidies. Destroying new clean commercial activities and engaging in a trade war with China on clean energy technology is the last thing we need right now.” (AFASE 2013d) “…the duties will have a stifling effect on the growth of PV energy in the EU which is inconsistent with the renewable energy mandates adopted by the EU itself” (Prognos 2013, p. 67) | Low-cost solar is the only way to ensure grid parity and thus increase uptake and reduce global warming. Anyone trying to stop that is against saving the planet |
| ProSun | Low prices are bad for take up because they put pressure on support schemes “…due to disastrous effects of Chinese dumping on European support schemes, the number of new installations is heavily dropping…” (ProSun 2013f) “…China´s dumping is responsible for a drop in European political support for feed-in-tariffs and thereby a decline in solar installations” (quote from Milan Nitzschke, President of ProSun, in ProSun 2013c) | Low cost panels are bad for the environment because they have resulted in too much uptake! There is also an underlying implication that China has in effect skimmed off the EU subsidies that were given to solar |
Issue of government support | AFASE | “The European Commission alleges that some subsidies have been provided by the Chinese authorities but this is far from what EU ProSun calls ‘massive subsidies’. In reality, the subsidy findings … contradict the EU ProSun allegations that Chinese solar producers could operate only because of the subsidies they received” (AFASE 2013e) | Any support is marginal; it is not a key source of competitive advantage. EU firms are just looking for excuses for their own lack of competitiveness |
| ProSun | “The government of the People’s Republic of China, in its 12th Five-Year Plan for the Solar Photovoltaic Industry,… expressed its main tasks as promoting domestically manufactured equipment and integration technology and also enlarging production of polysilicon in China. Therefore, the assumption that export volumes of production inputs from Europe to China will remain constant in a non-tariff scenario is highly questionable” (PWC 2013, p. 8) “Meanwhile the Chinese Ministry of Industry announced this month that a total of 161 solar companies will be subsidised by the state. The major part of the production of these companies is exported to the EU, wiping out jobs and factories here” (Quote from Milan Nitzschke, ProSun President, in ProSun 2014b) | The Chinese state is behind the increase in exports and its key objective is to wipe out EU industry to ensure Chinese dominance EU industry would not want to be protectionist if the ‘opponent’ was engaging in fair competition Chinese industry is different from all the others in this regard |
In terms of the more ideologically charged arguments, the ProSun statement quoted above referring to company confidentiality and fear of retaliation explicitly mentioned the role of China, i.e. its government. This framing of Chinese companies as inseparable from the Chinese state pervaded the arguments used by ProSun (and by SolarWorld). Sometimes it was left (largely) implicit, for example when emphasising the loss of European jobs, of the EU’s technological and market position in solar, and of its long-term energy security. Frequently, however, these aspects were linked to China ‘taking over’ the sector, a policy instigated directly by its government, or indirectly through Chinese firms (with AFASE as ‘front organisation’), and the need for the EU to draw a line in this case to signal action against the more generic ‘China threat’ beyond the solar sector. As ProSun (
2013d) put it, “From steel production to the automobile industry, no one can be certain to be able to obtain redress against even the most flagrantly illegal subsidised dumping by producers from third countries. For Europe’s industrial base, this would be devastating”. In a sense, ProSun’s argument was helped by the legal status of China as an NME, given the country’s persistent failure to qualify as a market economy, reflecting a wider difficulty in acceptance of the Chinese economic model abroad (Halper
2010), as also noted in an EU report “…there is no denying that some of China’s industrial and macro-economic policies imply an approach based on state capitalism.” (CEC
2010, p. 5).
Chinese firms in the dispute sought to distance themselves from the state apparatus and underlined their private status, insisting that they were competing in the EU on a level-playing field, as part of an industry that is global in nature, with firms from a range of nationalities spread over the whole supply chain. Nevertheless, the fact that their home country is labelled an NME means that they are inevitably disadvantaged, both in arguing their case and concretely in the manner in which AD investigations are conducted (Hou and Ren
2006; Liu
2005). This also enabled ProSun to cast them as representative of a different type of competition. As a spokesperson mentioned during an interview in August 2013, “European companies are not afraid of competing with Korean or Japanese or Americans or whoever, but they can’t compete with China, because China has this incredible state support”. Thus, ProSun clearly presented the priorities of the Chinese government and of its exporting firms as one and the same (referring to AFASE as a “Chinese lobby group” (ProSun
2013c). AFASE obviously felt the need to respond to these charges. Indications of this include its evolving membership, examined above, in terms of nationalities and dwindling involvement of Chinese firms, and its disbandment and integration into the well-respected SETI (see next subsection). ProSun (
2013a) cast an ever wider net, however, in the firms they targeted, implying that all those involved in AFASE were suspect, “Chinese solar manufacturers are backing a European front group of installers who use their products called AFASE”.
ProSun’s statements became most ferocious and ideologically oriented after the minimum price undertaking was concluded in July 2013, with attacks on Chinese producers and others involved in the trade in solar panels (labelled “shady middlemen”) and even on the EU authorities. Examples include the accusation that “Chinese solar manufacturers, illegal [sic] subsidised and state financed, sell their products in Europe far below production costs” and “Chinese manufacturers never cease to trick, deceive and circumvent their own undertaking and EU rules” (ProSun
2013d,
2014a). The EU authorities were portrayed as passive bystanders at best and, at worst, as extremely weak and complicit in undermining the industry. According to ProSun (
2013d): “Throughout the negotiations, China appears to have blackmailed and mocked the EU”. This unequal relationship apparently continued into the administration of the minimum price undertaking. When the Chinese government requested a revision to the minimum price to reflect currency evolution, ProSun stated (
2014b) that “Beijing gave Brussels ‘an offer they could not refuse’ increasing injury to European industry and neutering EU trade defence measures”. This was presented as “currency trickery” and heavily criticised: “DG Trade has already forwarded China’s proposal to other services for rubber-stamp approval, and intends to gloss over it as a technicality in a meeting with EU Member States” (ProSun
2014b).
There were also more economically grounded concerns in Europe about the specific threat posed by the growth and spread of EMNEs, a phenomenon discussed more generally in relation to the established position of western firms on their home markets (Kothari et al.
2013; Kumar et al.
2013). However, these also had an ideological dimension, as the issue of ‘how’ support is garnered in different countries has been fundamental to much of the debate in this case. As noted above, the EU mostly focuses on subsidisation of the uptake of renewable energy on the buyer side, whereas government support in China has mainly taken the form of support for production, as part of a broader effort to move up the value chain to more innovative manufacturing (Dunford et al.
2013; Grau et al.
2012; Haley and Haley
2013; Nahm and Steinfeld
2014; Zhang et al.
2013). As such differential support systems have divergent impacts in economic, political and environmental terms, they paved the way for a debate on what counts as ‘fair’ government support for realising societal goals. As Haley and Haley (
2013) point out, although most economists regard trade protection as an inefficient and distortive tool, some have argued that in cases of government production subsidies and asymmetric market access the reaction of MNEs to seek protection is perfectly rational. There is thus some intellectual underpinning to the ideological arguments for protection which emerge in this case.
Interestingly, while the literature on LOR also refers to the use of negative perceptions of the products/service from a specific country (Ramachandran and Pant
2010), this aspect was rarely highlighted in our case. ProSun mentioned the lower quality of Chinese panels during an interview, and could have used it for stereotyping and promoting fear and distrust. However, it did not really play a role in the public discourse. Perhaps ProSun felt it had insufficient evidence to come out with firm public statements as many of those interviewed (including EPIA and SETI) see solar panels as a mere commodity, with little difference between products. Still, ProSun argues that they differ from basic commodities on the grounds that, unlike mobile phones, solar panels need to continue working for over 20 years (ProSun
2013a).
There is, however, little objective evidence that Chinese panels are sub-standard. Several in-depth studies of the Chinese solar sector indicate that many firms have successfully reached technological equivalence with Western producers (Dunford et al.
2013; Nahm and Steinfeld
2014; Quitzow
2015). In their analysis of the evolution of the key Chinese solar companies, Dunford et al. (
2013) describe how Chinese industry—through a combination of imported machinery, repatriated skilled scientists and acquisitions—managed to develop capacities very rapidly. Quitzow (
2015) describes similar strategies, highlighting how Chinese firms have benefitted from substantial technology transfer from German solar panel producers and equipment manufacturers. He argues that this technology transfer, together with indigenous innovation, take-overs and returnee scientists, have enabled the companies to overcome initial customer distrust. Nahm and Steinfeld (
2014) similarly argue that Chinese firms have combined international technology with unique domestic capacity to develop cutting-edge solar and wind capacities.
In addition to the more ideologically charged arguments explored above, protagonists of the duties used traditional economic arguments concerning the negative impacts of low-price imports, a common strategy in dumping disputes (see, for example, the analysis of the EU case against Chinese and Vietnamese footwear in Eckhardt
2011). The arguments used in the solar panel case differed little from those in previous anti-dumping disputes, regardless of the ideological underpinning of the country of origin. They reflect the legal reality that, for anti-dumping duties to be imposed there must be evidence, not only that dumping has taken place, but also that it has caused ‘material injury’ to local industry (CEC
2012a). In this context, the focus is not on the nature of the competition, as in the ideological arguments outlined above, but on the socio-economic implications.
Thus, a very prominent argument used by ProSun involved the negative economic impact of imports on the EU solar panel industry, especially concerning job losses. On its website, ProSun kept a list of EU companies that had become insolvent or ceased solar production to help establish the harm caused by Chinese dumping (Prosun
2013b). Interestingly this list also included companies that had been taken over by Chinese investors. AFASE’s generic response was to point to the fact that most solar employment and value creation was in Europe if one includes both upstream and downstream jobs in the EU PV industry (polysilicon, ancillary inputs, machinery and the installation sector). It also argued that EU production of intermediate products for the solar sector was very important and that instigating anti-dumping duties would increase prices in the EU, thus reducing demand for both the final product and these intermediate inputs, and creating a ‘boomerang’ effect in Europe (AFASE
2012b).
To provide further counter-evidence, AFASE commissioned an external Swiss consultancy, Prognos, to examine the economic implications. The resulting report stressed the very negative effects of possible anti-dumping duties in terms of both job losses and value creation in the EU (see Table
3). Germany was expected to suffer the most (Prognos
2013; cf. Curran
2015). To be able to reply as effectively as possible, ProSun engaged Price Waterhouse Coopers (PWC), resulting in a report that was highly critical of Prognos’ methodology and claimed that anti-dumping duties would in fact increase local employment, although, in contrast to the Prognos study, it did not seek to calculate exact figures (PWC
2013). Although primarily based on economic analysis, the report also stressed the wider context, particularly the Chinese government’s five-year plan, to which ProSun press releases also referred (see last row in Table
3). A key point was that China’s objective was not only to develop the solar panel industry, but the whole value chain (ProSun
2013e). We thus see very different ‘stories’ emerging from the two camps, which served to underscore their relative positions (Fine and Sandstrom
1993).
Further economic arguments marshalled by ProSun included the accusation that Chinese producers were striving for a monopoly position on the EU market and, once that had been realised, innovation would cease and prices would go up again. Although there is evidence that R&D spending in Germany fell as difficulties in the sector increased (Blau
2013), this argument sits uneasily with recent academic studies of the PV sector in China. They indicate that firms in this sector have developed quite unique innovation capabilities precisely through exploiting their international customer and supplier links, such that they are just as reliant on their international partners, including those in Germany, as the latter are on them (Nahm and Steinfeld
2014; Quitzow
2015). AFASE saw such complaints by European firms (and ProSun) as illustrating the fact that they were not able to face competition and therefore were ideologically biased in favour of protectionism, not free trade.
The nature of the product in question also provided the opportunity to mobilise wider environmental arguments. Through its website and position papers, AFASE often referred to the potential negative impacts of anti-dumping duties on the uptake of solar power in Europe. A salient, related aspect in this regard, included in Table
3, concerns the reduction in panel prices resulting from Chinese imports. AFASE emphasised the positive effects of lower prices, for Europe in general and for consumers and sustainability in particular, as it would promote the spread of renewables: “The increased use of solar energy hinges on solar energy being competitive with other sources of energy… The imposition of anti-dumping measures is blatantly inconsistent with this goal” (AFASE
2012a).
ProSun developed a circuitous argument to justify how low prices were bad for the environment. It invoked the risk that high uptake of solar would increase pressure on subsidy systems to such an extent that political support for schemes would collapse. A ProSun (
2013e) press release accused Chinese producers of undermining EU support systems for green energy by providing too much low-cost supply: “China flooded the European solar market with dumped modules, overburdening European support schemes”. AFASE (
2013f), however, countered that the phasing out of support schemes is inevitable and has nothing to do with cheap imports: “If some EU manufacturers of solar products have been complacent and expected public support schemes to stay in place for a long time and to keep prices for solar products and profitability high, they should blame themselves”.
The arguments in the case were picked up by environmental campaigners. A group of NGOs, headed by WWF, issued a position paper in May 2013 in which they strongly opposed anti-dumping duties on Chinese imports. They highlighted the negative employment effects forecast in the Prognos report, but also the impact on the EU’s long term environmental goals: “This move by the Commission [proposing interim duties] questions the continued pathway to a clean and renewable energy economy in Europe” (WWF
2013). Moreover, they questioned the argument that Chinese solar production was only for export and that China itself was not acting on global warming: “Fact [sic] is that China has one of the most ambitious targets for domestic PV installations”. By linking the outcome of the case to the negative implications for both EU employees and the environment, the NGO statement underlined the fact that the interests of the EU at large would not be best served by restricting imports. This provides an alternative ideological framing to that proposed by the supporters of duties i.e. it stresses global public goods and the need to put environmental objectives before economics (Fine and Sandstrom
1993; Garmann
2014).
AFASE referred to the WWF report in a press release (see Table
3) as an unsolicited external party’s view that strengthened their position. ProSun, on the other hand, was scathing about the involvement of NGOs in the case. In an interview, the spokesperson stated they had fundamentally misunderstood the threat from the Chinese PV industry and had, in effect, been misled by AFASE, whose focus on environmental impacts obscured wider political and economic goals. Remarkably, the campaign by NGOs and others solicited a Commission riposte early in the investigation stating that “… a market that faces dumped imports will drive local producers out of business and could discourage EU producers from developing cutting edge technologies in the renewable energy sector” (CEC
2012c). Such a spontaneous defence of the anti-dumping system is unusual and underlines the pressure felt and the importance of the issue.