China Agrees to Set Minimum Prices For Solar Panel Exports to Europe

The European Union (EU) and China have agreed to resolve a dispute over the alleged dumping of solar panels by Chinese companies in Europe, following six weeks of talks.

The deal sets a minimum price for China's solar panel exports to Europe, which were worth €21bn ($27bn, £18bn) last year. The deal means that the EU no longer intends to impose punitive tariffs on Chinese solar panels.

"We found an amicable solution," EU Trade Commissioner Karel De Gucht said.

"I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters."

The Chinese ministry of commerce, cited by the official Xinhua news agency, said China welcomes the deal, which "showcased pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue".

Earlier this month, a senior Chinese industry official said that China expects to resolve the multi-billion dollar solar trade dispute with the EU by next month. In order to tackle the issue, China offered to cap its export volume and set minimum prices for its solar products.

According to Wang Sicheng, a National Development and Reform Commission researcher, China expected to cap its annual solar panel exports to the EU at 10 gigawatts of photovoltaic modules. The country will also set a minimum price of €0.5 per watt. In return, the EU will levy no further taxes on Chinese solar panels.

Trade Spat

The deal is hugely important to China, which feared a trade war would hit demand for Chinese-made solar products.

China's solar production quadrupled between 2009 and 2011, to exceed global demand. The EU accounts for around half of China's solar exports.

Eurozone regulators had earlier accused Chinese solar panel makers, including Trina Solar, Yingli Green Energy and Suntech Power Holdings, of damaging the European solar industry by selling their products at below cost price, a practice known as dumping.

The spat between China and the EU worsened, after the latter imposed anti-dumping duties on China's solar exports.

In retaliation, China launched an anti-dumping and anti-subsidy probe into various imports from Europe, including chemicals and wine.

China was also expected to extend the anti-dumping probe into European luxury car imports, a rapidly growing source of income for companies in the struggling EU economies.

China's commerce ministry recently said the country will impose duties ranging from 19.6% to 36.9% on European exports of toluidine, a chemical used to produce dyes, medicines and pesticides.