EU imposes 11 per cent duty on Chinese solar panels, move could hurt firms and consumers

Reuters reports that the EU will enforce duties of 11 per cent on Chinese solar panels, in a gesture intended to avoid a tit-for-tat trade war. The European Commission claims that China is "dumping" panels, selling them below cost.

"We are willing to reach a deal," said one EU official close to the talks. "Our strategy is a phased-in approach, although the threat of punitive duties remains."

EU trade chief Karel de Gucht has said that the ball is in China's court, and that China needs to come up with an alternative by 6 June before tariffs are imposed.

Gucht said that this is not about protectionism, but about following international trade rules and claimed that Chinese solar panels should cost 88 per cent more.

The Adam Smith Institute's Ben Southwood on the EU move:

Though there are certainly real efficiency-related problems with systems where some producers of a good face different taxes and subsidies to others—this situation is not so clear.

While the EU could certainly enhance world efficiency by mirroring China's solar panel subsidies in doing so it would impoverish the great majority of European firms and consumers, as well as efforts to reduce greenhouse gas emissions.

This is because China is bearing most of the cost of the silly policy of subsidising exports. By contrast, we are reaping the benefit of their largesse. In fact, we are effectively being sent charity.