The world’s two largest economic powers avoided an escalation in their trade dispute on Saturday when they agreed to limit Chinese solar panel sales to Europe.
After six weeks to talks, and days before a European tariff on Chinese solar panels was slated to be raised, the body’s trade chief and his Chinese counterpart agreed to set a minimum price for panels from China and restrict its share of the European solar energy market.
The European Commission announced an 11.8 percent import duty on China’s solar panels last month and accused it of “dumping” its products on the European market at low prices, putting European firms out of business. Although European green energy companies are also usually subsidized by their national governments, they could not compete with China’s lower production costs and state subsidies for solar panel producers.
The tariff was due to be raised to 47.6 percent next month. Northern European countries, including Germany, Sweden and the United Kingdom, feared that such a high tariff might provoke Chinese retaliation. China already launched a probe into European wine exports, prompting the European Commission to join Japan in a World Trade Organization case against Chinese import duties on stainless steel tubes.
European wine growers received €2.8 billion in agricultural subsidies in 2008. China taxes steel tubes made overseas.
Under the deal, China would be able to sell solar panels in Europe at .56 euro cents per watt, near the spot price for Chinese panels in July. China would be allowed to meet approximately half of Europe’s solar panel demand without being subject to tariffs.