Mali training mission

EU foreign ministers have agreed to back a 15-month training mission for Mali's armed forces. At a crisis meeting on Thursday, ministers agreed to send out 500 non-combat troops and 200 soldiers to train Malian soldiers.
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EU Unemployment Surged To Record 26 Million In November

Record unemployment and fraying social welfare systems in southern Europe risk creating a new divide in the continent, the EU warned Tuesday, when figures showed joblessness across the 17 EU countries that use the euro hit a new high. 

Eurozone unemployment rose to 11.8 percent in November, the highest since the euro currency was founded in 1999, according to the statistical agency Eurostat. The rate was up from 11.7 percent in October and 10.6 percent a year earlier.In the wider 27-nation European Union, the world's largest economic bloc with 500 million people, unemployment broke the 26 million mark for the first time.

But the trend is not uniform. Unemployment is increasing mainly in those countries, mostly in southern Europe, where market concerns over excessive public debt have pushed governments to make the toughest savings, pushing the economies into recession.States have raised taxes and slashed spending – including by cutting wages and pensions, measures that hit the labor force in the pocket and reduce demand in the economy.

Laszlo Andor, the EU's Employment Commissioner, warned the uneven impact of the crisis could create a rift. "A new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience," said a statement from Andor's office. Last year `'has been another very bad year for Europe in terms of unemployment and the deteriorating social situation," said Andor. `'It is unlikely that Europe will see much socio-economic improvement in 2013."

More...

How America's Shale Revolution Could Ruin The European Union Read more: http://www.businessinsider.com/shale-will-ruin-the-eu-2012-12#ixzz2IhDMsDN1

The story of the year is arguably the growth of shale oil and gas as a viable part of the U.S. economy. In a New York Times op-ed yesterday, Alan Riley, a professor of energy law at The City Law School at City University London, says that the European Union will get crushed because of it.

The reason is that America will soon become nominally self-sufficient and draw down its fuel exports. As a result, he says, the EU will lose its principal muscle guaranteeing stable fuel flows from classic megaproducers like Russia and Saudi Arabia.

American self-sufficiency in oil is of greatest concern to the European Union. The danger is that the United States will no longer have any direct interest in ensuring supply flows out of the Gulf. At the very least this will mean that Washington is likely to demand greater European investment in its own energy security.

 The EU will have to spend even more on new infrastructure to ensure fuel stability, he says. And where that money will come from is anyone's guess.

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EU happily closes the books on tumultuous 2012

Deutsche Welle analysis.

Russia's Putin says EU energy law is "uncivilized"

Russian President Vladimir Putin on Friday condemned European Union energy legislation as "uncivilised", particularly the retroactive application of new competition rules. 

Russia is the European Union's biggest natural gas supplier, and in turn the European Union is Russia's biggest customer, but relations between the two are frosty. An EU antitrust case against Russian gas export monopoly Gazprom as well as EU attempts to diversify its energy suppliers away from Russia and legislation to encourage competition have particularly angered Moscow. 

Putin was particularly critical of the Third Energy Package of EU legislation to create a single energy market and prevent those that dominate supply, such as Gazprom, from also dominating distribution networks."Of course the EU has the right to take any decisions, but as I have mentioned ... we are stunned by the fact that this decision is given retroactive force," Putin told reporters on the sidelines of a Russia-EU summit in Brussels. "It is an absolutely uncivilised decision." (...)

http://www.reuters.com/article/2012/12/21/us-russia-eu-energy-idUSBRE8BK0WA20121221

EU and Singapore agree free trade deal

The European Union and Singapore agreed terms of a free trade deal (...), a move that should further open the Asian country's markets for financial services and make it easier for European automakers to export there.(...)
After the completion of negotiations by the European Commission, the EU executive, member states and the European Parliament need to sign off for the agreement to come into force. Though EU countries have in the past sometimes rejected such deals for political reasons, this is unlikely to happen with Singapore, as EU leaders in October called for a swift conclusion of negotiations.(...)
The bloc hopes the agreement will give it better access to Singapore, one of Asia's richest countries per head of population, where currently the United States enjoys preferential access. Singapore has a population of only 5 million, but it is also a gateway to the 600 million people in the fast-growing economies of the 10-member Association of South East Asian Nations (ASEAN).
The EU is the city state's second biggest trade partner after neighboring Malaysia, with bilateral trade in goods amounting to 46 billion euros ($60 billion) in 2011. The EU had a trade surplus of 8 billion euros, with cars making up a large chunk of its exports.
Singapore's import tariffs are low. The deal will remove non-tariff barriers such as the double testing of cars, as Singapore would start to recognize EU standards, EU officials say. Other key benefits would be the further opening of Singapore's banking and financial services sector, as well as better access to its public procurement markets.
The push for free trade agreements comes as the EU struggles with a sovereign debt crisis and tries to supplement stagnant domestic consumer demand with free trade pacts with major economies. A deal with South Korea came into effect last year and one with Canada is near completion. EU trade ministers agreed in November to start negotiations with Japan, while preliminary talks are underway for an agreement with the United States.
EU trade officials want the Singapore deal to set a precedent for trade deals with other countries in ASEAN. The EU is currently negotiating free trade pacts with Malaysia and Vietnam, and hopes one day to forge a region-to-region trade agreement. "What I think is more important" than just trade with Singapore, said De Gucht, is "setting a number of standards in services that we will try to enlarge to the whole region".
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European governments clinched a landmark deal on bank supervision

EU finance ministers agreed after marathon overnight talks to create a single banking supervisor for the euro zone and like-minded countries. The 27 leaders were set to give their stamp of approval at a summit that opened in a mood of optimism. (...)

"Since the summer, we have made a lot of progress in our efforts to overcome the immediate crisis in the euro zone," European Council President Herman Van Rompuy told the leaders as he opened the summit. "The worst is now behind us but of course much still needs to be done." At the summit, held days after the EU received its Nobel Prize in Oslo, leaders were to discuss closer fiscal integration in the currency union, a drive that some officials worry has lost momentum since ECB President Mario Draghi calmed markets by pledging in July to do "whatever it takes" to save the euro. European officials acknowledge privately that bolder steps towards closer integration of the single currency area will be on hold until after a German general election next September.

The next stages of banking union - creating a resolution fund for winding up troubled banks and coordinating deposit guarantees to protect savers - will be fought over even harder. And then there will be political and financial hurdles to negotiate through the year. "The fact that the situation in the financial markets is now better than before should not be seen by the governments as a way to procrastinate," European Commission President Jose Manuel Barroso told reporters.

The immediate priority is to finalize the legal framework for banking union and get European Parliament backing. Then the ECB must hire staff and decide how to carry out its mandate. It is not expected to be fully operational before March 2014. Under the deal sealed on Thursday, officials said the ECB would regulate some 150 to 200 banks directly - all major cross-border lenders and state aided institutions - with the power to delve into all 6,000 banks in case of problems.

Non-euro Britain, Sweden and the Czech Republic, the most skeptical EU members, allowed the agreement to go through but said they would not be joining the banking union. Other non-euro members left the decision open.

Completing such a complex process would be one of the EU's biggest achievements since the region's debt crisis first erupted three years ago. The aim is to begin to sever the so-called doom loop between indebted banks and shaky governments that has hit Ireland and Spain particularly hard.

Still, creating a full banking union, with powers to wind down failed banks and guarantee deposits across the euro zone, is likely to take several years. And it forms just part of the bloc's masterplan to bolster the architecture of the euro zone and prevent a repeat of the crisis that has threatened to tear the single currency project apart. It promises to be a long and tortuous journey requiring political commitment from euro zone and non-euro members alike, something that countries such as Britain, with a restive Eurosceptic population, will find particularly stressful.

Each step towards closer union means a greater surrender of sovereignty by independent nations and spurs a political backlash, especially in times of economic hardship, social tension and high unemployment.Van Rompuy and the heads of the European Commission, ECB and Eurogroup put forward a bold blueprint for closer euro zone fiscal, economic and political integration to the sumit.

But Merkel has lowered expectations for progress now on that agenda, saying EU leaders should focus on steps notably to improve economic competitiveness that can be implemented in the coming months. She is determined not to frighten German taxpayers with talk of sharing more liability for banks or debts, and wants to avoid any such decisions until after the election in Germany, with campaigning already beginning to warm up.

(...)

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Elfogadta az EP az egységes uniós szabadalmi szabályokat

Az uniós feltalálók hamarosan folyamodhatnak az egységes szabadalmi oltalomért, mivel harmincévi tárgyalássorozat után ugyanis megállapodás született az új rendszerről. Ez 80%-kal csökkentheti az uniós szabadalmak oltalom alá helyezésének költségét és versenyképesebbé teheti őket az amerikaiakkal és japániakkal szemben. A tagállamokkal megkötött kompromisszumos megállapodást, amely tartalmazza az EP költségcsökkentő javaslatait is, kedden szavazták meg a képviselők.

A „szabadalmi csomag” három részből áll - szabadalmi rendszer; fordítási szabályok; szabadalmi bíróság -, amelyet az EP külön-külön szavazott meg. 

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Szabadalmi oltalom olcsóbban és egyszerűbben - Az új rendszerben olcsóbb és egyszerűbb lesz beszerezni a szabadalmi oltalmat, ami nagyobb védelmet jelent az uniós találmányok számára. A jövőben ugyanis automatikusan jár a szabadalmi oltalom az együttműködésben részt vevő 25 uniós országban. Ez csökkenti az uniós vállalatok költségeit és növeli azok versenyképességét. Az Európai Bizottság szerint egy uniós szabadalom beszerzése a jelenlegi 36 ezer eurós átlag helyett 4725 euróba kerül majd.

Így lehet oltalomért folyamodni - Az új rendszerben a szabadalmi oltalmat az Európai Szabadalmi Szervezettől kell igényelni angol, francia vagy német nyelven. A szervezet által e három nyelven kiállított oltalom mind a 25 tagállamban érvényes lesz. Kérelmet más nyelven is be lehet nyújtani, ilyen esetben viszont mellékelni kell annak fordítását is. 

(...)
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Malta's Borg appointed EU health commissioner

Former Maltese foreign minister Tonio Borg was appointed the European Union's new health commissioner after a vote in the European parliament on Wednesday.

European lawmakers approved his nomination by 386 votes in favour, 281 against, to replace fellow countryman John Dalli, who resigned last month after being cited in a tobacco-linked influence-peddling probe. 

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Borg, who is a well-known Catholic conservative, was put up by Malta to replace Dalli but there were questions as to his suitability over statements he had made in the past on abortion and gay marriage.

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EU steps up solar panels trade battle with China

The European Union launched an investigation (...) into alleged state subsidies for Chinese solar panel manufacturers, intensifying the conflict over the multi-billion dollar solar power equipment market that is straining trade ties.

The EU's executive body is already investigating allegations of Chinese manufacturers "dumping" solar panels in overseas markets, meaning deliberately selling products for less abroad than at home or at less than cost.
It also follows a decision by the United States to impose duties on solar power products from China, although Brussels says its decisions are completely separate from Washington's.
"Industries in the United States and Europe are becoming increasingly aware there is much more evidence of subsidies in China," said an EU official involved in the investigation. "But this is not a purely adversarial process. We have said to the Chinese government that we are open to finding a solution."
The friction comes at a bad time for the economies of both sides with the EU China's biggest trade partner and China the EU's second biggest after the United States.
EU Trade Commissioner Karel De Gucht has complained China subsidizes "nearly everything" but also told Reuters last month that he believed the two sides would avoid a trade war.

The Chinese government did not immediately respond to the EU decision to go ahead with an investigation but the move comes within a week of China lodging a complaint with the World Trade Organisation accusing Italy and Greece of illegally favoring domestic solar panel producers in promoting new solar power installations and warning it could put tariffs on EU exports of the raw material polysilicon.
(...)
Chinese companies sold about 21 billion euros ($27 billion) worth of solar panels and components to the EU in 2011 - about 60 percent of all Chinese exports of the products and some 7 percent of all Chinese exports to the EU.
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The United States late on Wednesday gave final approval to duties on billions of dollars of solar-energy products from China for five years, which China has protested against. "The decision has seriously distorted the situation of the Chinese solar energy industry and the exports of the Chinese solar energy products to the U.S.," China's Chamber of Commerce for Import and Export of Machinery and Electronic Products said, quoted by the official Xinhua news agency.
The European Commission can impose provisional duties within nine months and the EU has within 13 months of an investigation's launch to impose definitive duties for up to five years.
Solar panel anti-subsidy and anti-dumping cases against China are likely to be decided at the same time, within 13 months, unless a compromise is found, the EU official said.
Reuters

Summit on bancing union

EU leaders have agreed to allow the European Central Bank to supervise banks from next year, but questions remain about how the process will work, which lenders will be involved and whether those in trouble can be helped. 

The European Commission has proposed making the ECB responsible for supervision as a step towards a banking union in which euro zone countries and any others that want to join would together resolve problem banks and protect savers' deposits.

But at a meeting of EU leaders that ended on Friday, issues such as what method will be used to accommodate non-euro nations that join the scheme, how many banks the ECB will directly supervise and whether that can lead to countries sharing the cost of resolving problems, were left undecided. 

German Chancellor Angela Merkel acknowledged that the details needed to be worked out, including how the new supervision will fit with existing regulatory structures.

Poland, a non-euro-member country that is interested in joining the banking union scheme, underscored the complexity of the negotiations that lie ahead if the new supervision is to become a reality in the course of next year."Forecasts around the table on when it would start working last night were very different - some thought it would take 2-3 years," Prime Minister Donald Tusk told journalists.

Investors are following the negotiations closely in part because they expect cross-border supervision to allow the euro zone rescue fund, the European Stability Mechanism (ESM), to inject capital directly into struggling lenders. 

This pledge, first made in June, helped drive down borrowing costs for countries such as Ireland and Spain. Merkel signaled, however, that a further element of a banking union would first need to be in place before that can happen, namely the establishment of a resolution fund, and cautioned that direct aid would not cover existing problems. "The critical question is whether the recapitalization by the ESM of bad banks or problems of the past is possible," said Graham Bishop, an adviser to banks on European financial policy. "That has not been answered."

(...) a banking union is expected to establish financial backstops or central funds, paid into or guaranteed by banks or governments, to back problem lenders and shield savers. But such steps are a long way off.

Establishing a unified deposit-guarantee scheme would be a major stumbling block, with Germany regarding a single guarantee as akin to the mutualisation of euro zone debt - something it firmly opposes. The idea appears to have been dropped for now.

Setting up a scheme for the resolution or winding up of troubled banks could be similarly problematic. David Mackie, an economist with JP Morgan, said even a simple banking union combined with other support measures would be sufficient to calm investors: "You don't have to have the federalist dream of full debt mutualisation or the euro bond."

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EU to plan military training mission for Mali

The European Union said on Monday it would draw up plans for a possible military training mission to help Mali's army regain control of the Islamist-dominated north of the country.

Mali descended into chaos in March when soldiers toppled the president, leaving a power vacuum that enabled Tuareg rebels to seize two-thirds of the country. But Islamists, some allied with al Qaeda, have hijacked the revolt in the north.

"We believe there's a real risk for the region if Mali remains an ungoverned space, free for terrorists and drug traffickers to operate," said EU foreign affairs chief Catherine Ashton. "I hope that what we'll see in the future is a Malian government with a credible roadmap for the restoration of democratic government."

Announcing humanitarian and other measures to help Mali, the bloc said it would in particular consider ways to retrain the Malian defense forces, and develop plans for an eventual military mission. The decision was taken at a meeting of EU foreign ministers in Luxembourg, where they called for such a plan to be drawn up for their next meeting on November 19.

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Nobel Gives Peace Prize to Crisis-Ridden EU

Norway's Nobel Committee handed its 2012 Peace Prize to the European Union.

(...)

The committee, whose decision Europeans both celebrated and mocked, said the prize recognized more than six decades during which the conflict-ridden continent pulled together and became a harbinger of "peace and reconciliation, democracy and human rights" at home and beyond.

But Thorbjørn Jagland, the committee's chairman, also stressed that Europeans should see the prize as a warning of what the 27-country bloc stands to lose if the current economic turmoil breaks its cohesion.

"This year we saw that the prize could be important in giving a message to the European public of how important it is to secure what they have achieved on this continent," he said as he announced the award in Oslo.

(...)

"We don't have a position on how to solve the economic crisis, but we believe it will be important to solve it and that European unity can be kept so that Europe can move forward," Mr. Jagland said.

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Rompuy warns Cameron over sensitive budget issues

The European Union's top official fleshed out his ideas for a separate budget for euro zone countries on Thursday, and indirectly warned British Prime Minister David Cameron about using the proposal for his own political gain. 

At a conference to discuss the state of Europe after nearly three years of debt and financial crisis, Herman Van Rompuy, the president of the European Council, said a separate euro zone budget was an idea that needed close examination. 

Even if it is a long-term project and there are a host of political and financial obstacles to overcome, it could help underpin the stability of the single currency, he said. 

"We have to do everything to stabilise the situation in the euro zone, and if a fiscal capacity or a separate budget can help and can contribute to this stability, then you have to reflect on it, to discuss it," he told conference delegates, who included several ministers from EU member states. "Every currency union needs also a fiscal capacity, and certainly a fiscal capacity to stabilise the euro zone."

The 27 countries in the European Union currently finance a budget which amounts to around 130 billion euros a year - 1 percent of EU output - and which is used for spending on agriculture, science, infrastructure and other areas.
But there is no equivalent budget among the 17 countries that share the euro, a shortcoming that many economists believe has undermined the stability of the currency project.
Van Rompuy first raised the possibility of a separate euro zone budget in September and developed his thinking in a document sent to EU capitals in early October. It forms part of a series of initiatives to try to resolve the debt crisis.
Germany and France strongly support the proposal and, in a surprise to many EU diplomats, Britain does too, but for different reasons. Cameron sees a euro zone budget as a way of further separating Britain and its increasingly EU-sceptical electorate from the currency bloc and its problems.
He also sees a euro zone fund as a way of potentially reducing the amount Britain has to pay into the EU budget, which is negotiated annually as part of a seven-year framework. The issue has become particularly acute as the EU prepares to negotiate the next seven-year plan at a summit in November, a deal Cameron has threatened to veto unless he gets his way.
"There will come a time when you need to have two European budgets, one for the single currency, because they are going to have to support each other more, and perhaps a wider budget for everybody else," Cameron said on Sunday, the first day of his Conservative Party's annual conference.
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David Cameron 'would veto' EU budget

Prime Minister David Cameron has said he would veto a new European Union budget "if necessary".

The EU is beginning negotiations on its next budget for 2014 to 2020. Mr Cameron also told the BBC that in the longer term the EU should have two different budgets - one for countries in the eurozone and one for those outside the single currency. 

Last year Mr Cameron vetoed an EU-wide treaty to co-ordinate budget policies and impose penalties on rule-breakers. Speaking on the Andrew Marr show, on the first day of the Conservative Party conference, Mr Cameron said experience showed that "people in Europe know I mean what I say".

"I sat round that table - 27 countries, 26 of them signing up to a treaty and I said, 'This is not in Britain's interests, I don't care how much pressure you put on, I'm not signing, we're not having it.' "They know I'm capable of saying no and if I don't get a good deal I'll say no again." He said he would block talks if "massive increases" in the budget were proposed or if a deal that "does not have proper control" was put forward.

The prime minister said the EU budget was a "classic example of where we should probably start to draw new lines".
"There will come a time I believe where you're going to need to have two European budgets - one for the single currency, because they're going to have to support each other much more, and perhaps a wider budget for everybody else."
He added that he did not think this would be achieved this time but it was an indicator of the way Europe is going.
Mr Cameron also said he favoured a referendum on a renegotiated role for Britain in the EU but once again ruled out holding a simple Yes or No vote on Britain's membership. "The fact is, I think most people in our country don't actually want to leave the European Union or just accept how it is at the moment. They want to change it."
BBC

Europe’s Richer Regions Want Out

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Europe's richer regions want out

Bad news from the economy

Unemployment in Euro Zone at Record High

Unemployment in the euro zone hovered at a record 11.4 percent in August, according to data released on Monday, underscoring the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro.

(...)

The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe’s recession is deepening despite the continued efforts of policy makers and finance ministers to cure the region’s malaise.

Unemployment in Greece and Spain, currently the euro zone’s most economically troubled members, reached euro-era highs. And as both countries move ahead with plans for even tougher austerity budgets — Greece to appease its international creditors, Spain to potentially clear the path for European aid — their job outlooks could worsen further.

Greece had an unemployment rate of 24.4 percent in June, the latest month for which data were available. Spain still had the region’s highest jobless rate, at 25.1 percent, and an even bigger problem among young people. Nearly 53 percent of Spaniards younger than 25 were classified as unemployed in August.

(...)

New York Times

East EU manufacturing dips

Central European manufacturing shrank in September, signaling a deeper than feared recession in the Czech Republic and a slowdown in Poland that economists said authorities should counter with new stimulus measures

in the region's biggest economy, Poland, a collection of dismal new data has spurred Prime Minister Donald Tusk to begin drawing up an economic contingency plan after growth there slowed by almost a third in the second quarter to 2.4 percent.

Poland's Purchasing Managers' Index (PMI) fell for the sixth straight month to a worse-than-expected 47.0 points, the worst result since the depths of the previous economic crisis in July 2009.

In the neighboring Czech Republic, PMI fell to 48.0 in September from 48.7 in August, according to the data released by Markit. It was the sixth month below the 50-point barrier separating expansion from contraction.

In both countries, the declines were driven by weak output and new orders, a factor exacerbated in Poland by the end of a 19 billion euro investment project tied to the Euro 2012 soccer tournament and in the CZech Republic by a two-year government campaign to slash spending and raise taxes.

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Hungary's PMI, calculated under different methodology, rose to 52.5 in September, versus a revised 49.6 in August.

Reuters

Germany, France push for financial transactions tax

Germany and France asked the European Commission (...) to push ahead with plans for a financial transactions tax with a core of at least nine European Union countries, after failing to win backing for such a levy across the entire EU.

Germany had originally wanted a tax covering financial transactions across the 27-nation EU but the plan ran into opposition from Britain and some other countries, prompting it to aim instead for a core group to introduce the levy.

According to a statement released by the German finance ministry, the German and French finance ministers on Friday delivered a letter to the Commission asking for so-called "enhanced cooperation" to move ahead on the tax, a process which would need the support of a minimum nine EU member states.

Italy, Spain and Austria are among countries that have expressed support for such a tax in the past, but it remains unclear whether a full nine can be rallied to back the drive.

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Dutch pro-Europe parties win heated election

Pro-European parties swept to victory in Dutch elections on Wednesday (13 September) despite concerns that eurosceptics would increase their influence on future decision-making powers.
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But exit polls give caretaker prime minister Mark Rutte's Liberals 41 seats and the centre-left Labour Party 39 in the 150-member lower house with hardliners on both sides of the political divide losing considerable ground. Pundits had initially predicted the two would only grab 70 seats.
"We won our greatest victory in history and for the second time became the largest party in the Netherlands," said Rutte. The far-left Socialists, who had campaigned against austerity and eurozone bailouts, are likely to end up with just 15 seats. Meanwhile, firebrand Geert Wilders of the anti-immigration Freedom Party had campaigned for the Netherlands to leave the euro and the European Union. The verdict has hit Wilders' party the hardest - his party is set to lose about a third of his seats, dropping from 24 to 13.
The far-left's anti-austerity message had ignited debate on Europe's future and the Netherlands' role in the Union in the run-up to the vote.
The Liberals and the Labour parties backed the eurozone rescue packages, criticised by hardliners.
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Euobserver.com

Europe Prepares to Investigate Chinese Dumping of Solar Panels

"Defying Chinese threats of retaliation against European wines and industrial materials, the European Union is preparing to begin on Thursday morning a broad investigation into whether Chinese companies have been exporting solar panels for less than it costs to make them. 

The case would be one of the largest trade actions in European history and could lead to steep tariffs on much of China’s $20 billion in annual exports of solar products to Europe, four people familiar with the dispute said Wednesday.

The anti-dumping case, which follows a series of bankruptcies and factory closings by European and U.S. solar panel manufacturers, would broaden what has already become one of the biggest sticking points in trade relations between China and the United States. The U.S. Commerce Department imposed preliminary anti-dumping tariffs in May of at least 31 percent on Chinese solar panels, in addition to preliminary anti-subsidy tariffs of 2.9 percent to 4.73 percent that were imposed in March.

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The Union also takes longer than the United States to investigate such cases. Preliminary tariffs could be imposed in Europe next May, and final tariffs would not be set until December of next year.

E.U. officials declined to comment on the solar panel issue. Regarding the possibility of Chinese retaliation, they repeated the Union’s standard position that foreign countries should impose trade restrictions only if they follow procedures that comply with the World Trade Organization’s rules.

The United States and the Union each follow elaborate, quasi-judicial procedures for anti-dumping and anti-subsidy cases, taking voluminous statements from affected companies before acting, and following detailed rules for setting any tariffs. China’s methods for assessing trade penalties are relatively mysterious, and have been the subject of periodic European and American criticism.

The Union is preparing to start the investigation in response to a complaint filed by a coalition of about 20 European companies led by SolarWorld, a German maker of solar panels. SolarWorld, which also has operations in Oregon, had previously set up a coalition of solar panel producers in the United States that used a legal filing to force the Commerce Department to file the cases there.

Chen Huiqing, deputy director for solar products at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said at an industry conference in Guangzhou two weeks ago that the Chinese industry had sent a team of representatives to Brussels in one last bid to talk European officials out of starting a trade case. She warned that Chinese solar panel manufacturers already faced declining profit margins, shortages of capital and weakening foreign demand.

Chinese companies played a tiny role in the global solar power industry until five years ago, when they began a surge that has now brought them two-thirds of the global market. That rapid growth has been accompanied by a steep plunge in wholesale prices for solar panels, which have dropped by up to three-quarters in the past four years.

Retail prices have fallen much more slowly, as the bulk of the cost of a solar panel system lies in installation, and those costs have not fallen nearly as fast.

Chinese industry officials and regulators have periodically denied allegations that they are selling solar panels below cost in foreign markets, insisting that their huge investments in big new factories have brought down costs. But big Chinese solar companies have been posting heavy losses, particularly in the second quarter.

Frank Haugwitz, a solar industry consultant based in Beijing, said that if the Union imposed tariffs, it would be a serious blow to a Chinese industry already suffering from overcapacity. But the Chinese government is strongly committed to having a large solar panel industry, and is starting to use subsidies to expand the modest domestic market for solar panels.

“Beijing is very committed; it will not let them down,” Mr. Haugwitz said.

(...)

Chinese retaliation against European wines could be more politically feasible in Beijing. Tales of lavish spending on expensive wines by the wealthy and by government officials periodically surface on the Chinese Internet, and feed public anxiety about the wide gap between rich and poor.

China exports over 90 percent of its solar panels. It has done so to tap into billions of dollars in subsidies from government agencies and other electricity users in the United States and Europe for homes and businesses to install solar panels. W.T.O. rules have discouraged Western countries from banning the use of their subsidies for the purchase of Chinese solar panels.

The exception has been government procurement of solar panels, for which the United States has some “buy American” provisions. China has not joined the W.T.O. side agreement on government procurement, as many Chinese provincial governments have been leery of being required to accept foreign bids for local and provincial government contracts. So Western governments also have the option not to entertain bids from Chinese companies, though this option has seldom been exercised."

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