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ABSTRACT
Governments invested substantially in renewable energy industries in responding to climate change, while seeking to promote economic growth. They also engaged in a series of major trade disputes, notably in the solar photovoltaic and wind sectors. The European Union (EU)–China solar dispute is one of the largest such cases. In 2013, the European Commission (EC) announced duties on imports of solar products from Chinese manufacturers. This decision was at odds with the fact that the majority of the European solar industry opposed tariffs. We propose that the decision was affected by a shift in negotiating power between business and the EC. We suggest that the rise of global supply chains undermined the structural power of industry by dividing manufacturers over trade policy and by fragmenting the information conveyed to policy-makers. This provided an opportunity to the Commission to engage in ‘interest shopping’ by selecting an industry position that matched its own interest. Evidence from a comparative case study on EU and German responses to solar imports supports our argument. The findings suggest that the globalisation of production can strengthen the negotiating power of policy-makers, and implies that policy-makers face new trade-offs at the intersection of manufacturing and climate policy.
Acknowledgements
The authors would like to thank Lucy McKenzie for outstanding research assistance, and the anonymous reviewers for comments and suggestions.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Jonas Meckling is Assistant Professor of Energy and Environmental Policy at the University of California, Berkeley. Previously, he served as a Senior Advisor to the German Federal Ministry for the Environment, the lead agency for Germany’s clean energy transition. Prior to his work in government, he was a Research Fellow at Harvard University’s John F. Kennedy School of Government. He is the author of several articles and two books, the latest of which is Carbon Coalitions: Business, Climate Politics, and the Rise of Emissions Trading (MIT Press). Recent articles were published in journals Global Environmental Politics, International Studies Quarterly, the Review of International Political Economy and Science. He previously worked at the European Commission and the Allianz Group. Jonas holds a PhD in International Political Economy from the London School of Economics and Political Science.
Llewelyn Hughes is Associate Professor at the Crawford School of Public Policy, Australian National University (ANU). In 2014 his book Globalizing Oil was published through the Business and Public Policy series with Cambridge University Press. Other work is published or forthcoming in Annual Review of Political Science, Climatic Change, Energy Policy, International Security, International Studies Quarterly, Journal of East Asian Studies, and Energy Research and the Social Sciences. Prior to joining faculty at the ANU, Llewelyn Hughes was an Assistant Professor at the Elliott School of International Affairs at George Washington University in Washington DC, and before that a research fellow in the Consortium for Energy Policy Research at the John F. Kennedy School of Government, Harvard University. More information is available at: llewelynhughes.net.
Notes
1 Rodrik (Citation2014: 469) defines green industrial policy as policies that promote ‘a trajectory of economic development that is based on sustainable use of non-renewable resources and that fully internalizes environmental costs, including most critically those related to climate change’.
2 In the paper we use the general term trade sanctions to refer to the specific policy instruments used by the EC.
3 This is despite the fact that empirical estimates suggest governments value general welfare considerations more highly than lobby contributions. See Goldberg and Maggi (Citation1997).
4 For a summary of the concept and application of ‘structural power’ in business-government relations see Culpepper (Citation2015), especially pp. 397–8.
5 Study of the international political economy of trade have tended to focus on the interests of producers, rather than consumers also because of the assumption that producers tend to face lower barriers to collective action than consumers. There is some evidence, however, that consumer interests can trump those of producers, despite their diffuse nature. See Trumbull (Citation2012).
6 Since the trade cases are very recent or ongoing, a number of interviewees offered a conversation on the basis of confidentiality. The level of confidentiality differed case by case. The specificity of attribution of interview date therefore varies throughout the article.
7 In 2012, the top 15 global PV module producers accounted for half of the 35.5 GW capacity installed that year. Yingli (China) was the largest producer, followed by Suntech (China) and First Solar (USA). See REN21 (Citation2014).
8 Interview 3, with member of management team of major solar firm involved in the case, 30 April 2014.
9 European Commission (Citation2012).
10 Interview 2, with representative of lobby group, 10 April 2014; and interview 3, with member of management team of solar firm, 30 April 2014.
11 Interview 8, with representative of trade group, 8 July 2014.
12 The EC was not constrained by institutions in aggregating firm demands. The EU interest test allows that trade policy-makers consider the interests of non-producer firms.
13 Young and Peterson (Citation2014: 114) also note, for example, that for ‘Anti-dumping policy is distinctive among the EU's trade policies in the high degree of delegation to the Commission and its decidedly procedural nature’. This contrasts to other areas of trade policy-making, in which the degree of delegation is lower and veto players more numerous.
14 Interviews 4 and 10, 4 May and 22 July, 2014.
15 Interviews 3, 4, 5, 10, 30 April, 4 May, 7 May, and 22 July, 2014.
16 Interviews 4, 6, 10, 4 May, 23 May, and 22 July, 2014.
17 Interview 3, with member of management team of a major solar firm involved in the case, 30 April 2014.
18 Interview 1, 9 April 2014.
19 Interview 7, with representative of trade group, 8 July 2014.
20 Interview 2, with representative of lobby group involved in the case, 10 April 2014.
21 Interviews 7. 8, 9, 8, 16, 22 July, 2014.
22 Interviews 10, 22 July 2014.
23 Gereffi et al. (Citation2005), for example, identify five different governance structures organizing production within GSCs.