More than just a price undertaking
A deal largely criticised
What next?


Two months after imposing provisional anti-dumping duties on imports of solar panels from China,(1) and days before these duties were to be significantly increased, the European Commission accepted a price undertaking from leading Chinese exporting producers with the assent of Chinese authorities.(2) EU Trade Commissioner Karel De Gucht described the deal as "the amicable solution that both the EU and China were looking for" and expressed confidence that the agreement reached "will lead to a new market equilibrium at sustainable prices."(3)

Imports into the European Union of solar panels covered by the price undertaking agreement are not subject to the provisional ad valorem anti-dumping duties, which range between 47.6% and 67.9%, but must be priced at or above the accepted minimum price of €0.56 per watt of power production. Between June 6 2012 and August 5 2012, all Chinese imports were subject to a provisional ad valorem anti-dumping duty of 11.8%.

The agreement came amid escalating tensions between the European Union and China, whose trade relationship was worth €415 billion in 2012. Reactions to the agreement were mixed and its implications are potentially wide ranging, as an anti-subsidy investigation is conducted in parallel to the anti-dumping investigation and a majority of the European Union's trade remedy proceedings target imports from China.

More than just a price undertaking

Price undertakings constitute an alternative to anti-dumping duties. The commission can accept satisfactory voluntary undertaking offers submitted by exporting producers to revise their prices or cease to export at dumped prices if it is satisfied that they result in the elimination of the injurious effect of the dumping.(4) Undertakings must be susceptible to monitoring by the commission. Their breach or withdrawal results in the imposition of anti-dumping duties.

The undertaking was not offered only by Chinese exporting producers of solar panels; it was submitted together with the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), an organisation which qualifies itself as "a bridge between the government and enterprises", and expressly supported by Chinese authorities. The undertaking accepted by the commission is therefore more than just an agreement between the commission and Chinese producers within the framework of an anti-dumping proceeding.

The commission's acceptance of the Chinese producers' offer to "ensure that the volume of imports made under the undertaking would be at annual levels corresponding roughly to their current market performance" is also surprising. By definition, undertakings are agreements setting the price – not the volume – of imports found to have been dumped and causing injury. The World Trade Organisation (WTO) Agreement on Safeguards prohibits the use of voluntary export restraints. Given the central role played by CCCME and the Chinese authorities in the negotiation of the undertaking, it could be qualified as an understanding entered into by two WTO members with a view to limiting exports. One justification for the agreement was the need to ensure security of supplies in the European Union, given the limited production of the EU industry.

A deal largely criticised

Within Europe's solar panel industry, the settlement has been assailed from all sides. European producers through industry association ProSun insist that imported Chinese solar panels must be priced at €0.70 or more per watt in order to reflect the true cost of their production, which has also been subsidised by China, allegedly to the detriment of some 15,000 lost European solar panel manufacturing jobs. It is the alleged failure of the European Union's negotiated settlement to fully remove the injury caused by dumped Chinese solar panels and the approved quota that has prompted ProSun to challenge the commission's decision to accept the undertaking at the General Court.

Meanwhile, further downstream, Europe's solar panel installers – through their own industry association, the Alliance for Affordable Solar Energy (AFASE) – insist that the negotiated price floor not only removes the upstream injury to solar panel producers, but overcorrects it by adding 20% to the pre-undertaking price of Chinese solar panel imports. AFASE notes that solar panel prices in Europe fell steadily over the course of the European Union's anti-dumping investigation, settling below the negotiated price floor, as the climate policies of EU member states came up against austerity budgets and solar energy subsidies were withdrawn.

If the commission's provisional findings are confirmed and definitive measures are imposed, Chinese exporting producers may also consider challenging some of the commission's findings, particularly those concerning product definition and normal value determination, before the General Court.

What next?

At the end of August 2013 the commission issued its findings to interested parties in the parallel anti-subsidy investigation. It concluded that Chinese exporting producers received subsidies in the form of discounted inputs, preferential financing and marketing support of up to 11.5% of their export turnover.

The commission indicated that its findings in the anti-subsidy investigations do not undermine the undertaking accepted in the anti-dumping investigation. It had previously signalled its readiness to "follow the necessary procedures to include the anti-subsidy investigation in the undertaking at the definitive stage, should such action be warranted". Negotiations concerning a consolidated agreement should take place between the issuance of the definitive findings in the anti-dumping investigation and the deadline for imposition of definitive anti-dumping and anti-subsidy measures on December 5 2013.

Even though the agreement between the European Union and China is considered by ProSun to reflect the triumph of division over unity and projects weakness in the face of trading practices harmful to EU producers, it was largely welcomed by member states, such as Germany, opposing the imposition of anti-dumping duties, and others, including France, whose exports are subject to Chinese trade remedy investigations that are widely seen as retaliatory. It is precisely because of existing divisions within member states and the desire to avoid further trade frictions with China that, despite inherent flaws, EU authorities will be tempted to secure a new agreement with China in the coming weeks. However, such an agreement is unlikely to be amicable and may prove unsustainable for the parties concerned in the future because of market fluctuations and new trade disputes.

For further information on this topic please contact Charles Julien at King & Spalding LLP by telephone (+41 22 591 0800), fax (+41 22 591 0880) or email ([email protected]).

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(1) See EU Regulation 513/2013, June 4 2013, imposing a provisional anti-dumping duty on imports of crystalline silicon photovoltaic modules and key components (ie, cells and wafers) originating in or consigned from China and amending EU Regulation 182/2013 making these imports originating in or consigned from China subject to registration (, as last amended by EU Regulation 748/2013, August 2 2013 (

(2) See commission decision of August 2 2013 accepting an undertaking offered in connection with the anti-dumping proceeding concerning imports of crystalline silicon photovoltaic modules and key components (ie, cells and wafers) originating in or consigned from China (

(3) See DG Trade memorandum (

(4) See Article 8, EU Regulation 1225/2009 on protection against dumped imports from countries not members of the European Community (