European Union, China settle solar panels dispute

European Union Trade Commissioner Karel De Gucht The European Commission said Saturday it has reached an "amicable solution" with Beijing over imports of Chinese solar panels, a dispute that had threatened a full-blown trade war between two of the world's largest trading powers.
"We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices," EU Trade Commissioner Karel De Gucht said in a statement.
The breakthrough comes as Brussels and Beijing remain locked in a series of tit-for-tat disputes on other products ranging from steel pipes and telecoms equipment to wine and chemicals.
The two sides are major trading powers, rivals and partners. Total trade last year came to nearly $550 billion (415 billion euros), with China enjoying a significant surplus as Europeans snap up Chinese-made goods from iPhones to steel.
The Chinese government welcomed the deal which it said "showcased pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue" and which would also encourage "an open, cooperative, stable and sustainable economic and trade relationship."
De Gucht said that "after weeks of intensive talks," the two sides had agreed a minimum price for imported Chinese solar panels, which EU manufacturers had claimed were being dumped in the EU market.
In June, after months of mutual recriminations, Brussels imposed an emergency anti-dumping tariff of 11.8 percent on imports of Chinese solar panels - its largest ever such action
The tariff was set to rise to 47 percent if no settlement was reached by August 6.
De Gucht claimed at the time that Chinese solar panels were being sold to Europe at nearly 90 percent below cost, forcing EU manufacturers out of business with the loss of thousands of jobs.
According to Chinese figures, China exported $35.8 billion worth of solar products in 2011, more than 60 percent to the EU, and imported $7.5 billion worth of European solar equipment and raw materials.
De Gucht's statement said the accord "is intended to strike a balance between two key elements - it (will) remove the injurious dumping found and allows at the same time for a stable solar panel supply to the EU market."
In practice, it means Chinese exporters will respect a minimum price, providing a floor for the market.
The statement gave no further details but diplomatic sources said the minimum panel price would be equal to 56 cents per watt of power they produced.
This regime would apply to the first seven gigawatts of solar panels imported, with any above that threshold incurring an average anti-dumping tariff of 47.6 percent, the sources said.
Lobby group EU ProSun, which had pushed for the levies in June, said it would take Brussels to court as the deal violated European law and sounded the death-knell for the industry by handing China some 70 percent of the market at around current prices.
The accord "endangers the very existence of the European solar industry, which has already lost 15,000 jobs due to Chinese dumping, and now is at risk of losing most if not all of the remaining producers in Europe," it said in a statement.
Other parts of the industry however had not been in favour of the tariffs, arguing that they benefited from cheap Chinese imports when it came to installing solar energy systems as opposed to making the actual panels.
Germany, the EU's top economy, was lukewarm and had lectured Brussels on the need to avoid the dispute degenerating to the point where it harmed the overall trade relationship with China.
"It is a good thing there is a compromise," German Economy Minister Philipp Roesler said Saturday. "We always stressed that a negotiated deal was better than a conflict."
France, which backed the June tariff decision, said it too welcomed the outcome.
But Trade Minister Nicole Bricq also pointedly voiced the hope that in return, "the Chinese authorities will end their anti-dumping probe into imports of EU wine" which Beijing launched in apparent retaliation for the solar levies.
France is a major exporter of wine to China which is now a key, fast growing market.
EU officials said full details of the accord will be available once it is approved by EU member states which they hope will come before the August 6 deadline.