The EU is going to war with China...over solar panels

Unlike the Opium Wars, the current trade war involving China may lead to a rather nasty defeat on EU soil

by David Atherton on 10 June 2013 08:46

In the 1800s Britain noticed a rather large trade imbalance with China: £27 million against £3m, mainly from tea imports. It plugged the gap by exporting Indian opium.  A crackdown down by Emperor Daogung saw Britain retaliate and it eventually became the overwhelming victor in the Opium Wars of 1842 and 1860.

Fast forward a century and a half and President Obama recently met with Chinese President Xi Jinping, with free trade and cyber espionage as some of the most pressing topics. But while America is keen to do business, the EU seems more interested in starting a trade war on solar panels.  

The EU is accusing China of subsidising its manufacturers at Europe’s expense.  In response, Belgian EU Commissioner for Trade Mr. Karel de Gucht has added a 48 percent tariff to be implemented in two tranches – 11.8 percent now and then another 35.8 percent – if the imports are not at market prices. Sixteen liberal, exporting countries, led by the UK and Germany, are very opposed.

The Chinese have replied immediately by putting tariffs on European wine, a market worth €1.31 billion to the EU. The Chinese rightly point out that under the Common Agricultural Policy (CAP), wine is subsidised, and currently is 2.3 percent of the CAP budget.

What is more, the EU’s climate obsession-cum-hypocrisy is astounding: what with global man made warming, carbon taxes, and green energy, making solar panels or “eco-bling” even more expensive to buy and install is not consistent thinking.

Needless to say, all of this disruption could prove harmful to the UK’s economic interests. In the last five years the UK has doubled exports to China, worth £8.77 billion in 2012.  Flagship initiatives include China’s plan to invest £1 billion on an “Advanced Business Park” in London’s Docklands area, which is set to be Chinese business’ “head office” in Europe.  

Having the right business climate, goods, and services, then, is a far better option than paying a higher price for the same functioning product and triggering a ruinous trade war which will simply make us all poorer.

And unlike the Opium Wars this trade war may lead to a rather nasty defeat on EU soil.

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