Sour Grapes and Solar Panels

FRIDAY, JUNE 7, 2013

Trade wars, like politics, make strange bedfellows. And so it is that a fine and costly whine has erupted between the European Union and China over—sacré bleu!—solar panels and bottles of bubbly.

Both products are the targets of brand-new trade actions that could end up hurting not only both markets, but the parties' whole €480 billion ($636+ billion USD) trade relationship, analysts say.

China is the EU’s second-biggest trading partner after the United States; the EU is China’s biggest market.

Solar Standoff

The standoff has been smoldering for some months, as the EU has voiced growing concern over an influx of cheap solar panels from China. Worse, the flood coincides with a historically shaky time for the European economies and with the recent decline of longstanding subsidies for solar products in Europe.

The triple whammy leaves the European solar products industry fighting for survival, EU trade commissioner Karel De Gucht told CNN Money this week.

Unable to reach an agreement on the products, the EU abruptly announced Tuesday (June 4) that it would slap heavy tariffs—starting at 11.8 percent and rising to a whopping 47.6 percent—on Chinese solar panel imports, beginning Thursday (June 6).

De Gucht said he wasn’t trying to pick a fight, but needed to help “reinstate a level playing field” for the industry.

Blowing its Cork

Wasting no time, however, China fired back Wednesday (June 5) with an announcement of a “serious investigation” into allegations that the Europeans were doing some dumping of their own—with wines—on the Chinese market.

In a public statement, China's Ministry of Commerce said it had "received requests from domestic wine companies, accusing European wine companies of entering the Chinese market by dumping products, receiving subsidies and other unfair measures."

"Based on these requests, the Ministry of Commerce will initiate a serious investigation according to laws and regulations."

Solar panel French wine
Wikimedia Commons

A vintage trade dispute is heating up between China and the European Union. Will consumers have to choose?

The announcement struck at the heart of one of Europe’s most culturally sacred industries. France alone shipped more than 700,000 bottles of wine to China in 2012—more than four times the volume of second-place Australia, according to CNN, citing the China Customs Information Center.

Competition Brewing

Meanwhile, Europe's wine industry may be one of the oldest games in town, but it is no longer the only one, analysts note. The continent's prestigious vineyards, winemakers and distributors are all facing new competition from every corner of the globe—including Chinese suppliers like Great Wall, Chang Yu and Dynasty.

Observers hope the trade skirmish will push all parties to the table—preferably, accompanied by some sun and a corkscrew.

If not, the hardball will continue. And citizens of both lands may end up drinking in the dark.


Tagged categories: Asia Pacific; Building Envelope; Construction; Europe; Market; Market share; Solar; Solar energy

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