China Files WTO Complaint Against EU Over Solar Subsidies

November 6, 2012

Given China’s own problems with solar panels and state subsidies, this is somewhat amusing. However, that doesn’t mean they don’t have a good case.

China filed a complaint to the World Trade Organization on Monday charging the European Union with violating rules governing subsidies to its solar-components industry, in the latest move in a global spat over the solar industry.

China is complaining that power generated in Europe that uses solar-energy components made in the EU receives a subsidy. In a statement on its website on Monday, China’s Ministry of Commerce said EU subsidies have affected China’s solar exports and violated China’s rights as a WTO member. (Wall Street Journal)

The argument here is that Greece and Italy treat producers of electricity that use locally-sourced components better than those that go with foreign providers such as China. The preferred energy producers enjoy a higher price from the state. According to a Reuters report, this is an argument similar to one currently being used at the WTO by the EU and Japan over Canada, and it looks as though the complainants will win. Good news for China perhaps.

This is a somewhat narrow case involving the solar production sector in two relatively small economies. In other words, this isn’t just about actual losses in Greece and Italy. This was pushed not only by Chinese solar manufacturers, but also by their EU solar customers, who say they are being discriminated against and who have already complained about the policy to the EU commission.

For China, a win against the EU, a victory in the solar industry, and official evidence that other major economies are engaged in state subsidies would all be extremely good PR fodder when it comes to international trade rhetoric. In addition to the obvious benefits to Chinese solar firms, if this moves forward and China wins, it would be a tremendous marketing tool.

A few other links:

BBC News: China files EU solar subsidy complaint with WTO

Xinhua: China files WTO complaint over EU solar subsidies

Financial Times: China takes solar power dispute to WTO

Guardian: China accuses EU of breaching world trade rules over solar panels

AP: China launches WTO case against EU solar subsidies