The European Commission has began an anti-dumping investigation against China-based firms,however,possible punitive duties may be low because of the German Chancellor,Angela Merkel's,agreement with Chinese Premier Wen Jiabao's opposition to trade protectionism.Some China-based solar firms believe that if the duties are low,Taiwan-based firms are unlikely to benefit from increased OEM orders.

Taiwan's production costs of solar cells and modules are 30%higher than those of China-based makers.Hence,if the punitive duties are between 5-10%,Taiwan-based firms may not benefit,said China-based solar firms.

China-based solar firms explained that the current OEM cost for modules in China is US$0.24/watt,while in Taiwan,the cost is US$0.32/watt.Also,the OEM cost for cells is US$0.13-0.14/watt in China and US$0.17-0.18/watt in Taiwan.If the punitive duties are low,the 30%difference in cost will not be narrowed and China-based firms may choose to be taxed than rely on Taiwan-based peers.

Solar firms in Europe indicated that the price of China-made solar modules in Europe is around US$0.60-0.65/watt,relatively low compared to the price of Europe-or Taiwan-made solar modules,which is around US$0.75-0.80/watt.With duties of 15%,the price of China-made solar modules will increase to US$0.70/watt.In addition,if customers take the cost/performance ratio into account,Europe-and Taiwan-made solar modules will appear attractive.

If the European Commission decides to initiate punitive duties on China-made solar products,each member country in the EU can choose to implement them or not.