No ray of sunshine in solar panel dispute

On World Environment Day, which falls on Wednesday, European environmentalists and clean-tech leaders are campaigning a stone's throw away from the European Union headquarters to expand the use of solar power and other alternative energy sources.

However, in the building nearby EU trade officials will most likely be choosing to slam the door on China's multibillion-dollar exports of competitive solar products by exerting an average 47 percent of anti-dumping tariffs on China's solar panel producers.

It is a decision that could trigger a trade war and damage EU-China relations at a time when Beijing's new leadership is seeking to further boost the so-called strategic partnership.

What's more, the EU trade officials will decide in August whether to impose temporary high-rate penalties of anti-subsidy on the same products, and European state leaders will decide in December whether these temporary penalties will be extended to five years.

If introduced, such penalties would do great damage to both European and Chinese businesses, which are closely interlocked into a supply chain because of Europe's encouraging solar power policies in previous years.

After the tariffs are imposed, more than 250,000 European jobs and 400,000 Chinese jobs will be at risk. Some Chinese companies have already chosen to leave the European market because of the mounting uncertainties and started to explore opportunities in other regions.

But the consequences of this decision go beyond economy and trade and may damage the EU's status as a global leader in environmental protection.

Emerging economies, such as China and Brazil, are facing up squarely to the danger of global warming and have shown determination to change their energy supply mix and realize low-carbon economic development through evolution of their development models. But Europe's prolonged wintry weather this year has probably made the decision-makers in Brussels temporarily forget the pressing challenge of global warming. But atmospheric carbon dioxide concentrations have surpassed 400 parts per million, which scientists say should ring alarm bells.

Meanwhile, the trade friction also mirrors the splits in the European Union. This trade dispute initiated by a slate of European companies has not won widespread support. German Chancellor Angela Merkel has publicly expressed her disagreement with the move. And about 1,000 European downstream companies have already written to Trade Commissioner Karel De Gucht, asking him to stop penalizing Chinese companies. Sources say petitions on Wednesday may be flooding the trade commissioner, who is reportedly keen to be tough on China's producers.

It is true that legal procedures may allow De Gucht and his colleagues to do this, but their investigative action is not in the interests of the majority, which is a huge flaw in the EU's institutional arrangement. The majority of member states - 8 out of 27, including Germany and United Kingdom - have voted against De Gucht's proposal.

What's more, the proposal flies in the face of China's willingness to continue the constructive momentum in bilateral relations, which have deepened during the eurozone's debt crisis. China's new leadership was intending to further boost bilateral relations to celebrate the 10th anniversary of strategic partnership this year. The visit of Premier Li Keqiang to Germany signaled this intention.

But as Beijing has said, it will not sit idly by, because this case involves more than 20 billion euros ($26 billion) and all frictions in total cover nearly 4-5 percent of China's trade with Europe. This endangers a large number of jobs in China.

So there is a big risk of a trade war between China and Europe. And Beijing will retaliate both in words and actions before two sides sit down to negotiate a solution.

Ideally, a compromise can be reached between two sides prior to their scheduled summit in Beijing later this year. Then the European politicians can decide to end the tariff penalty at their December summit in Brussels and wrap up this drama.

If this is not the case, bilateral relations between China and EU will encounter a new low in the coming months, with Beijing focusing on ties with member states.

The author is chief correspondent of China Daily European Union Bureau.