What do you call it when one side takes a shot, the other side fires back, and then the process continues onward in an escalating cycle? That’s right, the term is “war” -- and it comes to mind now as the back-and-forth between China and the West on solar power shows increasing signs of morphing from trade dispute to trade war.

The latest round -- a double-barreled action -- was fired by China, which on Monday alleged through the World Trade Organization that the European Union and member states (Italy and Greece in particular) gave added and illegal subsidies to solar PV projects that used EU-produced equipment.

The Chinese officially asked for “consultations” on the issue, the first step in the WTO dispute resolution process.

The WTO move came just a few days after the Chinese commerce ministry announced it would launch antidumping and countervailing investigations on solar-grade polysilicon -- the key component in crystalline silicon PV cells -- that’s sold into the country from the EU.

The U.S. International Trade Commission yesterday locked in duties on Chinese solar PV products coming into the country, ending a 13-month case brought by the U.S. unit of Germany-based SolarWorld.

That was the one that started it all (although, of course, SolarWorld and its allies argue that the Chinese industry brought the complaints on itself by dumping products in the U.S. and taking unfair subsidies from the government).

In the months after the SolarWorld case began, China launched a probe of the U.S. polysilicon industry. Then in the summer of 2012, the EU launched an antidumping investigation into solar panels and their key components originating in China.

According to state-owned (but often surprisingly independent) China Daily, the Chinese WTO issue is twofold: first, with a 2009 EU directive “on the promotion of energy from renewable sources,” and second, with programs in Italy and Greece that flowed from that directive that gave preference and additional support to homegrown goods.

The paper said that according to the commerce ministry, Italian imports of Chinese solar products slid from $4.8 billion in 2010 to $3.9 billion in 2011 and, nine months into 2012, were at just $760 million.

The dip in 2011 could be considered a bit suspicious, given that Italy was the fastest-growing market in the world that year, adding 9,300 megawatts to give it 12,700 megawatts at the end of the year. But forecasts are for this year’s installations to be dramatically lower, perhaps as little as a third of what 2011 brought.

With the mad growth in solar installations ebbing a bit, at least, and wildly excessive capacity, China’s domestic solar manufacturing is in shambles. But an industry rep flatly told China Daily that the WTO action wasn’t going to fix things.

“It won’t help China’s solar industry by starting a trade war,” said Li Junfeng, head of the China Renewable Energy Industry Association.

***

Editor's note: This article is reposted in its original form from EarthTechling. Author credit goes to Pete Danko.

 

Tags: china, europe, solar, solarworld, trade, usitc, wto