Issues concerning the friction in China-EU photovoltaic products trade

On June 5, the information office of the Chinese Ministry of Commerce held a special press conference on “Friction in China-EU Photovoltaic Products Trade”. Shen Danyang, Spokesman of the Ministry of Commerce, Liu Danyang, Deputy Director-general of the Bureau of Fair Trade for Imports and Exports, and Zhang Yujing, Chairman of China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), attended the Conference and took questions from reporters. Conference minutes are as follows:

Shen Danyang: Good afternoon, everybody! Much attention has been paid to the preliminary ruling of the anti-dumping case against Chinese photovoltaic products by the EU these two days. Some questions were raised, and many media called me for interviews. This morning, I delivered a speech on behalf of the Ministry of Commerce. As you may still want to know more about relevant issues, today we have invited here Liu Danyang, Deputy Director-general of the Bureau of Fair Trade for Imports and Exports, and Zhang Yujing, Chairman of CCCME. The three of us will take your questions.

Reporter from CCTV News Channel: Since the EU has released its preliminary ruling on Chinese photovoltaic products, how will the Ministry of Commerce regard this ruling? What changes will we see in China’s attitude?

Shen Danyang: As for the preliminary ruling released by the European Commission, I have shown China’s position in the speech I delivered on behalf of the Ministry of Commerce this morning. I would like to take this opportunity to make some supplements.

As we all know, Chinese government and the industry have made great efforts and shown utmost sincerity to jointly solve photovoltaic products trade disputes with the EU through dialogues and consultations. With respect to the decision of the European Commission, we will not change our attitude towards three aspects. First of all, our attitude of resolutely opposing the abuse of trade remedy measures will not change, because such unfair taxation measures are abuse of trade remedy measures. Falling price of raw materials of photovoltaic products and progress of China’s photovoltaic industry are the main reasons for the price competitiveness of Chinese photovoltaic cells, rather than dumping and subsidy act alleged by some EU enterprises. Such allegation that dumping and subsidy exist in Chinese photovoltaic products is ungrounded. Second, our position of insisting on resolving trade disputes through negotiations and consultations will not change. Third, our determination to resolutely safeguard the interests of the state, the industry and enterprises will not change. It is the very duty of Chinese government.

Without doubt, China also noticed the certain extent of flexibility showed by the EU in the provisional anti-dumping duty, down to 11.8% from 47.6% as proposed We wish EU could show sincerity and flexibility, and have practical talks with Chinese industry in the next two months, so as to come up with a reasonable and win-win solution which is acceptable to both parties through consultations.

Reporter from International Business Daily: My questions are for Chairman Zhang. I pay special attention to the progress of the China-EU bilateral negotiations. As far as I know, the CCCME plays a role as the leading department in the negotiations in the next two months, so would you please tell us what the negotiations are mainly about? What are the focuses? To what extent of the flexibility China hopes the EU can show if China and the EU want to reach a consensus and achieve a result which is acceptable to both parties?

Zhang Yujing: First of all, the CCCME opposes the taxation in the preliminary ruling by the EU due to the wrong taxation basis. Main reasons for the price competitiveness of Chinese photovoltaic products are the development and progress of China’s photovoltaic industry, the technological progress, as well as the falling price of raw materials and silicon material. There are no subsidy and dumping. Therefore, based on such assertion, the duty imposed by the EU on Chinese photovoltaic products is ungrounded and unreasonable, to which we resolutely oppose. Secondly, we have always wished for settlement of trade issues between China and the EU through dialogues and consultations. The EU has previously expressed its intention to work out a solution which is acceptable to both parties in the way of price undertaking. Lately, the CCCME dispatched a working group to carry out the first round of negotiations with the EU , but unfortunately, the EU neither accept our proposal, nor carefully listen to our opinions on the questions raised and explanations made by us. The preliminary ruling made by the EU recently showed certain extent of flexibility, based on which, the CCCME communicated with major enterprises in the photovoltaic industry this morning, aiming to work out a feasible solution through further dialogues and consultations. Thirdly, we wish for the EU’s sincerity and flexibility, and adequately consideration of the production and export conditions of China’s photovoltaic industry, so that both parties can come up with a fair, reasonable and feasible price scheme acceptable to both parties through dialogues and consultations. As such, the CCCME has made adequate preparations and fully exchanged its opinions with enterprises. We are prepared to carry out such negotiation and consultation at any time.

Reporter from Xinhua News Agency: My questions are for Deputy Director-general Liu. As we all know, the anti-dumping duty recommended in the proposal of the EU was 47.6%, but it was reduced to 11.8% in the preliminary ruling, so what’s the specific reason for such an adjustment? What influence will the duty of 11.8% have on the photovoltaic industry? What should we do in the next step?

Liu Danyang: As Director-general Shen and Chairman Zhang have just mentioned, China has always advocated solving issues concerning the photovoltaic case through dialogues and consultations. China has repeatedly urged the European Commission not to release the preliminary ruling and not to take provisional measures at least in this stage, so as to create conditions for further consultations and communications between both parties. Today, the EU released its preliminary ruling result, deciding to impose a provisional duty of 11.8%. As far as Chinese government is concerned, its attitude towards such a decision is resolute opposition. However, it also can be seen that the European Commission showed a certain extent of flexibility reflected on the basis of the work done in certain aspects, to which China shows its welcome. Such a reduction provides us with certain conditions for future dialogues and consultations. We wish for EU’s further sincerity in the future price negotiation, and with Chinese industry an agreement in actual favor of both parties, so as to properly resolve trade disputes and avoid other issues.

This preliminary ruling will be harmful to export enterprises to some extent. As we all know, with a relatively fierce competition and a lower profit margin in the photovoltaic industry, the anti-dumping duty of 11.8% was harmful to the whole industry to some extent, and may cause greater damages to certain enterprises. The range of damage is still being calculated, so no accurate data have been available yet.

Reporter from Economic Information Daily: Could you please brief on the efforts China have made in negotiations since the case was filed for investigation in September last year? Did Premier Li Keqiang’s conversation over the phone with Barroso, Chairman of the European Commission, on June 3, play a key role?

Shen Danyang: China is not quite satisfied with the outcome up to present. However, it is hard-earned. It is the result of China’s persistency in its principles and utmost efforts to strive on the basis of reasons. I believe that Premier Li Keqiang’s efforts have played a key role.

Chinese government has attached great importance to and made a lot of efforts on this case. The EU conducted anti-dumping and anti-subsidy investigations against our photovoltaic products in September and November in 2012, and China initiated counter-measures and negotiations immediately. Along with the progress of this case, China has been negotiating more and more frequently this year. Mr. Gao Hucheng, Minister of Commerce of PRC, talked with De Gucht, the commissioner of the European Commission over the phone for several times. Mr. Zhong Shan, China International Trade Representative, and Mr. Chong Quan, Deputy China International Trade Representative, led delegations to Europe for negotiation for several times. The working level of the Ministry of Commerce conducted negotiations on the technological level with the EU. Besides the efforts made by Chinese government, CCCME entered into negotiations with the European Commission on behalf of the industry on May 15 and 17, and exchanged opinions with the EU on price undertakings and technical details.

I believe that the flexibility the EU presents at present is the result of great importance attached by Chinese government, especially by Premier Li Keqiang, who has made a lot of important and key efforts. For instance, days ago, Premier Li Keqiang expressly indicated during this visit to Switzerland and Germany that, this case would cause serious damages to relevant industries, enterprises and employment in China, and meanwhile, it would also damage the vital interests of European users and consumers, making the situation worse for all involved. China makes a stand against trade protectionism and abuse of trade remedial measures. Premier Li Keqiang also pointed out several times that the acts of trade protection might send a wrong signal to the international society and would do harm to China-EU relation. He repeated over and over that trade frictions should be resolved through dialogues and negotiation. On the evening of June 3, Premier Li Keqiang had a conversation with Barroso, Chairman of the European Commission, on the phone to make negotiations personally with respect to the EU’s “anti-dumping and anti-subsidy” against imports of photovoltaic products in China. Premier Li said that, China understood that the EU’s enterprises were in troubles right now, and also saw the important and key role the EU played in European matters. However, failure to handle the case of photovoltaic products would not only affect the interests of Chinese and the EU’s interest, but might also lead to trade wars, in which there would be no winners. Premier Li expected that China and the EU were able to solve the trade disputes through negotiations from the general situation. Premier Li also pointed out that given the large scale of economic trade between China and the EU, it was normal to have trade frictions. The key was how to handle such frictions properly. He also frankly expressed to Barroso that if the EU determined to take punitive measures, China would inevitably take counter-measures. Premier Li emphasized that China always firmly supported the European integration progress, and provided assistance as possible at the most difficult time in European debt crisis. We are unwilling to see subsequence of various aspects arising from trade disputes. In our view, it is the efforts made by Premier Li Keqiang that have played a key role in certain flexibility in this preliminary ruling by the EU.

Reporter from Phoenix TV: The EU announced the preliminary ruling last night, and the Ministry of Commerce announced its “anti-dumping and anti-subsidy” investigations against imports of wines from the EU this morning. Mr. Liu, at this time point, is it a retaliation against EU?

Liu Danyang: The wine case is a normal trade investigation initiated according to the petition from domestic wine industry and in light of relevant Chinese laws and procedures. As the investigation authority of Chinese government, we always oppose trade protectionism, and Chinese government also holds a prudent view on the adoption of trade remedial measures. We understand that winery industry is a part of agriculture in the EU, which is an important and sensitive industry. Although the sum is not so large, we know it is very important. China’s investigation authority will review and conduct investigations in a fair, just and open way according to laws in the progress of investigation and will also conduct investigations according to facts.

Reporter from China Daily: what channels and platforms will Chinese government adopt to keep communication with the EU to prevent the EU from raising the anti-dumping tax rate further after two months?

Shen Danyang: China and the EU are important strategic partners to each other. China always cherishes and cares about the general situation of relations between China and the EU. When the EU was in the most difficult time during European debt crisis, Chinese government provided assistance and stayed together and worked closely to overcome the difficulties. Economic and trade relation is an important foundation of China-EU relation. We really do not expect that the photovoltaic trade frictions affect the good economic and trade relation between China and the EU. At present, the industries in China are ready to enter into price negotiations with the European Commission, expecting the EU to start such negotiations with them and make agreement on the price as soon as possible so as to avoid the expansion and escalation of trade frictions and practically maintain the general situation of the economic and trade cooperation between China and the EU.

At present, the communications between higher government levels of China and the EU are smooth. Upon the negotiation between China and the EU, the meeting of China-EU Economic and Trade Joint Committee is expected to be held in Beijing in the middle of this month, when the economic and trade issues such as photovoltaic trade disputes will be discussed. If the EU can create good atmosphere and conditions, the China-EU economic and trade high level dialogue will be held at a proper time this year. In addition, China has set out to study the negotiation of China-EU investment agreements.

Reporter from CCTV Finance Channel: What is the trade value of wine between China and the EU? What is the proportion of China’s imports of wine from the EU in the total production volume in the EU?

Liu Danyang: maybe I only know a part of the sum, but I can offer you some figures. The imports of wine by China from the EU increased from 64,000 kiloliters to 257,000 kiloliters with an average annual growth of up to 59.83% from 2009 to 2012. The import volume grows rapidly, the proportion of which in total imports of wine of China increased from 37.15% in 2009 to 65.16% in 2012. The total amount of import of wine from the EU was 257,000 kiloliters, involving a sum of USD1.04 billion. The countries in the EU that export wines to China are France, Spain, Italy and Germany. In 2012, the above four countries exported 140,100 kiloliters, 71,400 kiloliters, 31,200 kiloliters and 3,800 kiloliters of wines, respectively to China. The total export amount of these four countries accounted for 96.33% of that of the EU to China.

Shen Danyang: The press conference today is over now. Zhang Yujing, Chairman of CCCME, is the chief industry representative of negotiations. If you have any question, please ask him to grant an interview. Thank you.

Source: Ministry of Commerce Website; http://english.mofcom.gov.cn/article/newsrelease/press/201306/20130600157511.shtml

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