Months after the launch of the controversial EU investigation into the imports of solar panels from China, an amicable solution has been reached between the European Commission (the Commission) and the Chinese exporting producers of solar panels. The offer of a price undertaking, submitted by the Chinese Chamber of Commerce on behalf of China’s solar panel exporters, was finally accepted on 2 August 2013 and came into effect on 6 August 2013. This settlement of the largest ever EU anti-dumping case awards 70 per cent of the EU solar panel market to Chinese exporters at a set price.

By way of background, price undertakings are a form of amicable solution in trade defence proceedings entrenched in the WTO and EU laws. It is an alternative measure, which replaces a duty to be paid with an undertaking based on a minimum import price. Price undertakings are company-specific and those Chinese companies participating in the price undertaking will have to respect the minimum price and, as a result, will be exempted from the anti-dumping duties. The purpose of the undertaking is two fold: on the one hand, it removes the harmful dumping of solar panels and, on the other hand, allows for a stable solar panel supply to the EU market.

The solar panels undertaking sets a minimum price of 56 cents for every watt peak capacity of a solar panel. (In contrast, the average price of a German-made solar panel was reportedly 77 cents per watt peak capacity in July 2013.) The minimum price, as set, applies to the first 7 gigawatts of capacity sold in the EU. Beyond that level, importers of Chinese solar panels will pay 47.6 per cent duty. The deal will last until the end of 2015 and aims to cap the level of imports.

While China's Ministry of Commerce welcomed the European Commission's acceptance of a price agreement, it is not seen as a positive by European producers. As such, EU ProSun - the group representing European solar panel manufacturers - said it is planning to take action against the Commission over the deal. ProSun is relying on the Commission’s initial calculations, according to which a duty of 47.6 per cent would redress the injury caused to the European solar industry. According to ProSun, the minimum price set is close to the “dumped” price at which Chinese exporters were selling.

Remarkably, Chinese producers may also consider challenging the EU measures in EU courts. There may be several bases for the judicial review of the case. For instance, some may want to challenge the product definition. The Commission considered solar panels (“cells” and “modules”) with “wafers”. Wafers are thin slices of silicon that do not generate an electric current when exposed to sunlight, unlike cells. Moreover, when assessing what “normal value” of the solar modules should be, the Commission took Indian production and costs information as a reference, notwithstanding the fact that India does not produce wafers. This further taints the Commission’s methodology.

Therefore, the existing measure, as well as the deal struck between the Commission and the Chinese solar manufacturers, could attract further legal challenge and scrutiny by EU courts. In fact, companies planning legal action against EU trade defence measures most commonly wait until the Commission’s findings are definitive. Nevertheless, any party can challenge an act by the Commission within a period of two months thereafter. It is noteworthy in this context that the 47.6 per cent figure was provisionally established in June 2013 and that the Commission will disclose its definitive findings in December this year. Therefore, the provisional regulation imposing anti-dumping duties, the acceptance of the price undertaking and the definitive regulation may all become the subject of judicial review in the EU.

A lot has been written about the solar panel case, its pros and cons, winners and losers, as well as the glaring gaps in European unity on trade issues. However, whilst the temporary amicable solution has been signed and sealed, the solar panel saga continues and the EU courts may well expect to play a decisive role in this case in the near future.