Breaking down the walls of world trade

The solar-panel industry is tearing itself apart.

The recent flurry of self-inflicted trade spats between the European Union, China, India, the US and others makes that clear (“De Gucht: disunited EU will ‘lose’ trade battle with China, European Voice, 30 May-5 June). US-based solar-panel manufacturers have long been complaining about dumping by Chinese manufacturers, and in May 2012 the US imposed punitive tariffs on Chinese panels. 

Part of the EU-based solar industry has complained to the European Commission about similar practices, and the Commission has proposed import duties averaging 47%. The Commission announced its decision and is provisionally bringing in duties in the next few days – although more and more member states are coming out against the move.

China, in return, has lodged a complaint with the WTO about illegal subsidies in Europe. In India, an alliance of local companies last year demanded duties on solar products from the US, China, Malaysia and Taiwan. And this isn’t just about solar – the US, China, Japan, Vietnam and Canada have all been embroiled in wind turbine wars too.

Irrespective of merit (it is not for politicians to say whether dumping has occurred or not), there is no doubt that these trade spats have led to a climate of retaliation and have inhibited growth. Market uncertainty makes investors hold back and prices go up. All this in-fighting is bad for business, bad for those who pay the bills and – given the need to drive down prices in view of solar PV’s central role in the green energy switch – terrible for the planet.

By imposing import tariffs we could end up hurting ourselves more than we protect those who feel threatened. Even if tariffs are entirely justified, the EU can decide not to take action if it doesn’t make economic sense overall. I hope this is taken into consideration.

We desperately need free and fair trade in clean energy, and we need a framework to prevent and overcome disputes at source, without resorting to litigation. That is why I and others are calling for a global resolution on trade in solar and wind components – a constructive coalition of the willing of businesses, governments and civil society – with an associated administrative body that promotes fair trade and establishes binding requirements for all countries.

We should draw inspiration from the world of IT. In the 1980s, US chip-makers were suffering from competition from Japan, with many acrimonious trade disputes.

Exasperated, in 1986 the US and Japan signed a bilateral Semiconductor Trade Agreement, which was then renegotiated at regular intervals, expanded to other countries and gradually led to the combined government-industry World Semi-conductor Council.

In 1996, the Information Technology Agreement was signed by 14 governments. The results are astonishing. In the following 12 years, global trade in ICT products grew from €1.2 trillion to €4 trillion.

The renewables sector now in many ways mirrors the semiconductor sector then. I believe a global council for renewables – in the same vein as the World Semi-conductor Council, perhaps a “World Renewable Energy Council” – will provide the needed compromise. We are at a point when legal proceedings aren’t helping to solve the actual problem any more. This is the only real way forward.

I understand that people on all sides, in industry and government, in China and in Germany, are beginning to come round to the idea of such a body. This is highly encouraging. There is a Chinese proverb that says that when the winds of change blow, some build walls and others build windmills. Let’s take down the walls of the trade world – import tariffs – and build bigger and better windmills together.