Sweden, Denmark and Netherlands call for action to stop looming trade war

PUBLISHED : Sunday, 16 June, 2013, 12:00am
UPDATED : Sunday, 16 June, 2013, 7:45am

A group of free-trade-oriented northern European nations urged the EU's trade chief on Friday to defuse a growing dispute with Beijing or risk action that could choke exports.

Sweden, Denmark and the Netherlands said EU Trade Commissioner Karel De Gucht should find a diplomatic solution with the mainland to avoid a tit-for-tat trade war, after Brussels imposed tariffs on Chinese solar panels and Beijing retaliated with an investigation into European wine.

"It is not the right way to go," Swedish Trade Minister Ewa Bjorling told reporters at a meeting in Luxembourg. "When the one side begins to close up, the other continues. And then we have a negative spiral that doesn't stimulate trade."

De Gucht went ahead with sanctions on Chinese solar panels on June 6, despite opposition from 18 EU governments that fear retaliation from Beijing.

The European Commission, the EU's executive, accuses Beijing of selling billions of euros worth of solar panels below cost price, unfairly winning 80 per cent of the EU market.

However, De Gucht softened his earlier plan to levy punitive tariffs averaging 47 per cent immediately, instead opting for tariffs of 11.8 per cent for two months, leaving a window for a negotiated solution.

De Gucht is expected to travel to Beijing on Thursday for talks, diplomats said, to try to agree a solution by setting a minimum price at which Chinese firms can sell solar panels in Europe and sales quotas.

"Naturally we want a solution as quickly as possible," Bjorling said. "One where we don't lose trade with China, and [that] makes sure there are reasonable prices on solar panels so we can reach our climate goal."

China responded to the EU's move with a decision to investigate accusations of dumping of EU wine, an apparent attempt to target France and Italy, the two countries most in favour of EU tariffs on Chinese solar panels.

De Gucht has said that China subsidises "nearly everything" and wants to force Beijing to respect rules set by the World Trade Organisation in Geneva.

China said it could retaliate with further cases against the EU if no negotiated solution is found.