EU probes subsidies for Chinese solar panel makers

(BRUSSELS) - The European Commission opened a fresh probe into Chinese solar panel makers on Thursday, raising the heat in the latest tit-for-tat dispute between China and its Western trading partners.

The Commission said it had "launched an anti-subsidy ... investigation into imports of solar panels and their key components" made in China after industry lobby group EU ProSun charged Beijing was giving its companies unfair subsidies.

"In terms of value of imports affected, this is the most significant anti-subsidy complaint ... so far: in 2011, China exported solar panels and their key components worth around 21 billion euros ($26.7 billion) to the EU," it said.

The investigation will take 13 months but duties could be imposed within nine months if the probe finds sufficient evidence of illegal subsidies, it added.

The move comes after China announced last week a similar probe into European exports of solar-grade polysilicon, a key component, escalating a bitter trade row with the EU after Brussels had launched an anti-dumping inquiry in September.

Beijing said it would examine whether European firms sold at artificially low prices in China and had received subsidies which allowed them to compete unfairly with Chinese companies.

European companies affected were given 20 days to respond, with China aiming to complete the investigation within a maximum of 18 months.

Then on Monday this week, China filed a complaint with the World Trade Organization against the EU over what it claimed to be unfair help for European solar energy firms, a source close to the WTO said.

"China is claiming that certain measures affecting the renewable energy generation sector ... include domestic content restrictions and are inconsistent with the WTO rules," the source said.

EU ProSun welcomed Thursday's EU decision, saying it was confident that the EU would "quickly impose substantial countervailing duties."

The EU has made a "landmark decision ... to scrutinise the many ways that central and local governments in China dish out illegal subsidies to their manufacturers," EU ProSun head Milan Nitzschke said in a statement.

In contrast, the Alliance for Affordable Solar Energy which champions free trade in the sector, said it opposed the imposition of duties on Chinese solar imports as they would only increase costs for all concerned.

More than 60 percent of China's $35.8 billion worth of solar product exports went to the EU last year, according to Chinese industry figures, while the country imported $7.5 billion of European solar equipment and raw materials.

Beijing on July 20 launched an investigation into alleged US subsidies in the industry, urging Washington at the same time to end anti-dumping and anti-subsidy duties of up to 250 percent it had imposed on Chinese solar-cell firms.

In June, the EU, the United States and Japan asked the WTO to help resolve a dispute over Beijing's export controls on rare earths, key minerals used in many high-tech products.

There was no immediate Chinese reaction to Thursday EU move -- it had said it "deeply regretted" the September probe -- but Beijing did announce after another probe that it was imposing duties on steel tube imports from the EU and Japan as of Friday.

EU anti-subsidy investigation on solar 
panel imports from China - background guide