EU On Collision Course With Germany Over Tariffs; Yet Another Reason for UK to Exit EU

The threat by the EU to impose huge tariffs on solar panels from China has run into staunch opposition. The Financial Times reports Germany warns EU solar tariffs would be ‘grave mistake’

Germany’s vice-chancellor and economy minister put Berlin on a collision course with Brussels by warning that imposing anti-dumping duties on solar panels from China would be a “grave mistake”.

Philipp Rösler’s statement came as Germany’s leading manufacturing industry organisation also called for urgent negotiations with China to head off the threatened import duties, which are expected to be announced formally by the European Commission in early June.

The comments risk undermining Karel De Gucht, the trade commissioner, as he faces off against Beijing in the EU’s largest ever trade case, based on the €21bn of solar products China exported to Europe in 2011.

Mr De Gucht has recommended that such products face duties averaging 47 per cent after concluding that Chinese manufacturers illegally dumped their products, or sold them below cost, in Europe.

In an interview with the Welt am Sonntag newspa per, Mr Rösler said that “punitive duties are the wrong instrument” to deal with the dispute. “German industry is quite rightly very concerned” about the threatened action, he said, and its potential for retaliatory action by China affecting German exports.

A study commissioned by a group known as the Alliance of Affordable Solar Energy claimed that more than 242,000 jobs would be put at risk in Europe if punitive tariffs were imposed.

The commission’s own review, seen by the Financial Times, heaped doubt on those figures, predicting the negative impact would be far more limited.

Damage of Tariffs

I do not believe it is possible to accurately predict the damage caused by inane tariffs. Much depends on how China would respond. But even if China did not respond, there is no advantage to artificially forcing up prices.

Tariffs are simply a bad idea, period. As I have pointed out, much of the European overcapacity that led to the price crash was caused by European subsidies.

Somehow it is OK for Europe to offer subsidies but not China. EU policy is also hypocritical in regards to its stated emphasis on clean energy. For further discussion, please see Paul Krugman "Was" Right.


Yet Another Reason for UK to Exit EU

Note the continual bickering by Germany with the EU and with France over trade, over eurobonds, over a political union, over agricultural policy, over everything.

Why Cameron wants the UK to stay in the EU is a complete mystery, especially when the UK fears additional nannycrat idiocies like financial transaction taxes.

Fortunately the UK tide is changing, as a recent Poll Shows 46% in UK Want to Exit EU, 30% Want to Stay In.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com