EU solar trade dispute diffused

China and the European Union sealed a deal on Saturday to end their long-term trade dispute over Chinese solar panels that has threatened to escalate into a full-blown trade war involving European wines.

The settlement - with Chinese manufacturers agreeing to sell domestically produced panels at a minimum near spot market prices - came after six weeks of negotiations that began when the EU decided to impose provisional anti-dumping duties averaging 47.6 percent on imports of Chinese solar panels, cells and wafers, starting in August.

EU Trade Commissioner Karel de Gucht said in a statement that he was "satisfied with the offer of a price undertaking submitted by China's solar panel exporters", referring to a minimum price for imports from China.

"We found an amicable solution that will lead to a new market equilibrium at sustainable prices," De Gucht said.

He said the next step is to submit this offer for European Commission approval.

Under the deal, China will also be allowed to meet about half of Europe's solar panel demand, if taken at last year's levels, an EU diplomatic source was quoted by solar exchange pvXchange as saying.

EU consumption was about 15 gigawatts in 2012, and China will be able to provide 7 gigawatts without being subject to tariffs under the deal, Reuters quoted a pvXchange source as saying.

But whether those terms are in the deal has not been confirmed by the authorities of the China Chamber of Commerce for the Import and Export of Machinery and Electronic Products and the European Commission.

The Chinese Ministry of Commerce said China welcomes the deal, which "showcased pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue".

Ministry of Commerce spokesman Shen Danyang called the agreement "open, cooperative and stable". He said the dispute's resolution has led to a sustainable economic and trade relationship.

Shen added that China is willing to expand photovoltaic industry exchanges and cooperation.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the rest of the total global. The European Commission accused China of dumping its solar panels at below production costs in Europe.

Since June 6, EU imports of Chinese solar products have been subject to a punitive 11.8 percent duty until Aug 6. The duty would have been raised to 47.6 percent the following day if the two sides could not sort out the dispute.

China's commerce ministry conducted an anti-dumping probe into wine exports from Europe that has already affected the imports of French wines in response.

Experts said the disputes come second to the two parties' business relationship. The EU is China's most important trading partner. China is second only to the United States for the EU.