The European Commission said yesterday it had reached an "amicable solution" with Beijing over imports of 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.
Beijing welcomed the deal, which it said "showcased pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue". It would also encourage "an open, co-operative, stable and sustainable economic and trade relationship".
The two sides are major trading powers, rivals and partners. Total trade last year came to nearly US$550 billion, with China enjoying a significant surplus as Europeans snapped up Chinese-made goods.
De Gucht said that "after weeks of intensive talks", the two sides had agreed on a minimum price for Chinese solar panels, which EU manufacturers claim are being dumped in the EU market.
In June, after months of mutual recriminations, Brussels imposed an emergency anti-dumping tariff of 11.8 per cent on the Chinese solar panels - its largest ever such action.
The tariff was set to rise to 47 per cent 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 per cent below cost, forcing EU manufacturers out of business with the loss of thousands of jobs.
According to Chinese figures, China exported US$35.8 billion worth of solar products in 2011, more than 60 per cent to the EU, and imported US$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.
But lobby group EU ProSun, which pushed for the levies, 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 per cent of the market at around existing prices.
It said the deal "endangers the very existence of the European solar industry".