European Commission Introduces Decreased and Variable MIP on Solar Cells and Modules from Mainland China, Attracting Fierce Criticism from EU Industry
06 October 2017
As of 2 October 2017, the European Commission has replaced the original price undertaking on solar cells and solar modules from mainland China by a new, reduced and variable minimum import price (MIP). This change in the form of the trade defence measures is brought about by Commission Implementing Regulation 2017/1570, which was published in the Official Journal on 16 September 2017.
As previously reported, definitive EU trade defence measures have been imposed on solar cells and solar modules from mainland China from 6 December 2013 onwards. The measures were imposed as a combination of tariffs on the one hand (anti-dumping duties ranging from 27.3% to 64.9% and countervailing duties ranging from 0% to 11.5%), and an MIP on the other hand. With regard to the MIP, the Commission accepted a price undertaking, whereby certain exporting producers from mainland China agreed to sell their solar cells and solar modules to EU customers at a price at or above an MIP. In return for doing so, the anti-dumping and countervailing duties were not being levied on their imports into the EU.
While the trade defence measures on solar cells and solar modules were initially imposed for a period of two years, the EU extended the duties and the MIP for a period of 18 months in March 2017. As a result of this extension, the trade defence measures are now set to expire in September 2018.
Simultaneous to the extension of the trade defence measures on solar cells and solar modules, the Commission initiated – on its own initiative – a partial interim review investigation on 3 March 2017. This review was explicitly limited to the form of the trade defence measures, and intended to strike the right balance between the diverging interests of EU importers and producers of high quality EU products. The main findings of the partial interim review are the following:
- The Commission decided that the original price undertaking should be replaced by a variable duty under the form of an MIP. While imports with a declared value at, or above, the MIP will not be subject to duties, customs authorities will immediately levy duties if the product is imported at a price below the MIP. The variable duty MIP is aimed at alleviating the administrative burden on the exporting producers, the importers and the Commission. The level of the variable duty MIP will also be published, which will provide more transparency and enable a better enforcement of the measures.
- The Commission considered that separate MIPs should exist for mono-crystalline solar cells, mono-crystalline solar modules, multi-crystalline solar cells and multi-crystalline solar modules. Each of the four product types should have its own TARIC code.
- The Commission introduced a new adjustment mechanism for a gradual decrease of the variable duty MIP based on the price quotes by the Taiwanese market intelligence agency PV Insights, which was considered the most reliable and the most widely used by the solar industry. The starting point of this decreasing MIP system is based on the current non-injurious price for each product type, and will gradually converge towards the current prices reported by PV Insights.
- The Commission found it appropriate to limit the application of the new MIP to the legal entities listed in the Annex to Implementing Regulation 2017/1570, being the companies that were still part of the initial price undertaking or that withdrew voluntarily from the price undertaking without any previous issues identified by the Commission. The Commission considered that other companies should be excluded from the new MIP system and should, in order not to undermine the effectiveness of the new form of measures, be subject to ad valorem duties.
As a result of these findings, the Commission held that the amount of the definitive anti-dumping and countervailing duties applicable to the solar cells and solar modules produced by the legal entities from mainland China listed in the Annex to Implementing Regulation 2017/1570 shall be the difference between the MIP fixed in the table below and the net free-at-Union-frontier price, before duty, if the latter is lower than the former. As set forth in the table below, the MIP will decrease each quarter for each corresponding product type.
No duty shall be collected where the net free-at-Union-frontier price is equal to or higher than the corresponding MIP, and in no event shall the amount of the duty be higher than the combined ad valorem duty rates of the (previously imposed) definitive anti-dumping and countervailing duties. Thus, if imports are made at a price below the variable duty MIP, the lower of the difference between the applicable variable duty MIP and the net free-at-Union-frontier price, before duty, and the combined ad valorem duty rates of the definitive anti-dumping and countervailing duties previously imposed would be payable. As a result, the combined duties to be levied in the future shall not reach higher than 76.4%.
According to the Commission, the sharp decline of the MIP for multi-crystalline products is in the interest of EU installers and large utility companies, while the slightly higher prices for the high-quality mono-crystalline products will be helpful to EU producers, who are increasingly active in this area.
The decision of the Commission to reduce and amend the MIP was reached after a vote of the EU Member States’ trade representatives on 7 September 2017. While the Commission’s proposal was opposed by 13 Member States and actively supported by only 1 Member State, the remaining 14 Member States abstained. Due to the fact that abstaining votes count as positive in this procedure, the vote failed to block the Commission’s proposal, despite resistance from numerous Member States.
After the vote of the EU Member States, but before the approval of the decreased MIP on solar cells and solar modules from mainland China, the EU industry fiercely criticised the Commission’s proposal.
On 8 September 2017, the European solar producers association SolarPower Europe stated that the new measures, besides harming European solar companies, would also increase the costs of solar cells and solar modules for consumers, governments and the EU society at large. The CEO of SolarPower Europe stated that the Commission’s proposal was “the opposite of what we need to drive a cost-effective energy transition”.
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