Impact of anti-dumping and/or countervailing measures on imports of solar modules, cells and wafers from China on EU

GERMANY: On September 6th 2012, the European Commission started an anti-dumping proceeding against China in order to investigate if the prices of Chinese manufactured crystalline photovoltaic wafers, cells and modules are dumped. On November 8th 2012, it also commenced a parallel anti-subsidy proceeding.

In its study, Prognos sets forth the effect that anti-dumping and / or countervailing duties would have on the demand for solar installations and, as a consequence, on employment and value added along the photovoltaic (“PV”) value chain in the EU. We have concluded that, if anti-dumping and / or countervailing duties were imposed, these would increase the market price of Chinese PV modules, cells and wafers.

This price increase would result in increased costs of installations. As a result, the viability of installing PV modules in many markets will be negatively impacted, in other words, the European PV market will shrink.

This reduction in market size will cause a commensurate decrease in installation, engineering and other related services. Moreover, upstream operators in the EU, such as production equipment producers or suppliers of raw materials and components, would suffer due to the decrease in demand from Chinese producers. EU producers of PV modules, cells and wafers might increase production and sales in certain areas, but any increased employment or value added would be significantly outweighed by the much larger decrease in employment and value added that would be suffered by upstream and downstream operators.

On the basis of the market size, the estimation of employment effects of anti-dumping and / or countervailing duties on the imports of solar panels from China leads to four main findings.

1. Employment in the solar sector in Europe decreases because the demand for PV products decreases which results in less value added, i.e. less solar installations and less demand of BOS components.

2. Employment and value added are also affected by the decrease of exports of raw materials and machinery from EU Member States to China.

3. Moreover, all other segments of the EU economy such as the supply of engineering or other services are suffering from the decrease in demand for solar products.

4. Employment and value added in the EU may be somewhat positively affected by a limited increase of production of solar products in the EU.

We use dynamic Input-Output-Tables (IO-Tables) to calculate the employment effects and additional value added reductions in the European economies as a whole. Our analysis is conducted in detail for the five major EU-countries named above. To cover the European market as a whole, the employment effect on the aggregate of the EU-27 is estimated in addition.

Impact on EU employment and value added
The anti-dumping and / or countervailing duties cause a reduction in demand, which is directly followed, on the one hand, by a shrinking demand for installations and services and thereby results in less value added in the crafts sector. On the other hand, the supply of intermediate inputs (including raw materials, components, production equipment) from Europe to China decrease. Additionally, the IO-Tables account for the (indirect) value added reductions in the European economies as a whole (i.e., the impact on other sectors of the EU economy that will suffer from spill-over effects of the decreased demand for solar installations).

In our calculations, in an optimistic view, only anti-dumping and / or countervailing duties of 35 percent and above, may have have some positive effect on the production of solar products in the EU as their relative position in the market improves. In case the EU producers gain some market share and augment their outputs, this will lead to some increase of employment and value added in the EU. However, this positive impact is dwarfed by the impact of the loss of demand for solar products and the spill-over effects this has for the EU solar value chain and the other branches of the EU economy linked thereto.

This study demonstrates that anti-dumping and / or countervailing duties would have a negative impact on employment in the EU with 115,600 (scenario 1) to 193,700 (scenario 3) jobs being lost within the first 12 months. However, in the third year, the total job losses would range between 175,500 (scenario 1) and 242,000 (scenario 3). As these job losses have to be interpreted as an average over the three year we conclude that 218,200 jobs are at risk in the EU Member States.

The job increases as a result of increased production of EU solar products represent at the very most 17-20 percent of the jobs lost along the PV value chain due to the imposition of anti-dumping duties.

Losses in value added in the EU would be also be very significant. These would range between € 4,740 million and € 7,500 million (scenario 1) and € 7,860 million and € 10,220 million (scenario 3) from the first to the third year of implementation of the duties. In total over three years € 18.4 billion would be lost in scenario 1 and € 27.2 billion in scenario 3.

If, as mentioned above, in an optimistic view EU producers can somewhat increase their production, the additional value added might be between 10 percent to not more than 20 percent of the loss in value added along the PV value chain.

Irrespective of the three scenarios which are given for illustration purposes, we conclude that, any imposition of a duty at whatever level will cause demand for solar installations to decrease thereby triggering important losses of jobs and value added.