The 27-nation bloc will impose a tariff of about 12% on the import of solar panels, cells and wafers this week, EU trade commissioner Karel De Gucht announced on Tuesday. That will increase to an average of 47% in August unless a settlement is reached with China in the next 60 days.
China, the world's largest producer of solar panels, is accused by the EU of dumping them, or selling at improperly low prices, and hurting European competitors. Its exports of solar panels to Europe totalled 21 billion euro (£18 billion) in 2011.
According to EU calculations, a fair sale price for Chinese solar panels should be 88% higher than what they are currently being sold for. "It has the potential to destroy an important industry in Europe if we don't act today," said Mr De Gucht in Brussels. He said more than 20,000 jobs in Europe are at stake.
The Chinese Ministry of Commerce rejected the European measures and expressed hope for a settlement through consultations. "The Chinese side expresses its resolute opposition," said a ministry statement. "We hope the European Union will further show sincerity and flexibility and a mutually acceptable solution can be found through consultations." The brief statement made no mention of possible concessions or other details.
The EU decision is another blow to Chinese government efforts to promote an industry that it sees as a future source of better-paid technology jobs. Last year, the US imposed anti-dumping duties on Chinese solar products.
The EU Commission, the bloc's executive arm, has decided not to slap a punitive 47% tariff on all solar panel imports straight away in an attempt to avoid an escalating trade war, where each side engages in tit-for-tat tariffs and boycotts. Instead it is looking for a negotiated solution: Beijing now has 60 days to reach a settlement with the Commission. "The ball is now in China's court," Mr De Gucht said. "This is a one-time offer to the Chinese side to negotiate."
The trade row between the EU and China is the world's biggest anti-dumping case by sales volume, according to EU officials. "The Commission is making a gesture in order to avoid an all-out trade war," said leading conservative European Parliament lawmaker Daniel Caspary, adding that is now China's turn to show equally responsible behaviour. China has to show it is willing to stick to the rules of a globalised economy."
The global solar panel market is suffering from significant overcapacity, which has led to falling prices throughout the industry and stiff competition that has forced several European manufacturers out of business. Chinese Premier Li Keqiang warned last month that imposing punitive tariffs would hurt European consumers and might encourage trade protectionism, although he stopped short of threatening retaliation.