* Chinese, EU officials optimistic about a deal in July
* China offers to cap export volume and set minimum price
* China needs a deal by Aug. 6 or will face hefty tariffs
* German solar firm Conergy files for insolvency
By Robin Emmott, Ethan Bilby and Samuel Shen
BRUSSELS/SHANGHAI, July 5 The European Union and
China are moving towards a deal to defuse a conflict over
alleged dumping of solar panels in Europe, officials from both
sides said on Friday, aiming to head off a damaging trade war in
goods from steel to wine.
The European Commission, the EU's executive, accuses China
of flooding Europe with billions of euros of cheap solar panels
sold at below the cost of production, and has imposed duties
that will jump up to punitive levels in August.
Brussels and Beijing have until then to find a solution in
their biggest ever trade dispute. Europe's free trade-advocates
Britain and Germany want to avoid angering China and risk
business with Europe's second largest trading partner.
However, the impact of overcapacity and plunging prices on
European solar firms was underscored on Friday as German group
Conergy filed for insolvency.
Officials from Europe and China said more than two weeks of
negotiations in Beijing were going well and they aimed to agree
a minimum price for Chinese importers above their production
costs, although numbers are still fluid.
"We remain highly optimistic about the direction we are
moving in," said Sun Guangbin, head of a government-industry
association authorised to represent Chinese solar companies in
The European Commission, which handles trade cases for EU
governments, declined to comment, but four officials close to
the negotiations told Reuters they were also very positive.
"The architecture of the deal is there," said one person who
declined to be named because of the sensitivity of the talks.
"The atmosphere in the talks is very business-like, there's a
good chance of a deal before the August deadline."
Punitive tariffs have the potential to affect 21 billion
euros ($27.1 billion) of imported Chinese solar panels, cells
and wafers from manufacturers such as Trina Solar,
Yingli Green Energy and Suntech Power Holdings.
The EU accounts for about half of China's solar exports,
which have already been affected by the euro zone public debt
crisis that forced major European countries such as Germany to
slash subsidies for renewable power.
DEAL ON THE TABLE
The proposed deal involves an annual quota for Chinese
panels that cannot be sold at less than the cost of production
in China. Analysts say that was around $0.59 per watt in 2012,
but could go down to as low as $0.48 this year. That compares
with about $0.65 per watt in Europe.
Under the proposal, panels sold in excess of the quota would
be subject to duties, although the final level and the amount
are still under discussion. The agreement could set quotas for
two to three years, with a review thereafter.
"Figures reported in the media are not the official
numbers," said one person involved, noting that the many
companies have their own calculations.
German and Chinese media have reported that Beijing has made
an offer of a minimum price of 0.50 euros ($0.65) per watt for
an annual volume of panel exports of up to 10 gigawatt (GW) of
But that quota may be too generous in European eyes because
it is still 80 percent of the EU market. Meanwhile the minimum
import price for Chinese panels would probably not go far enough
to protect European industry and satisfy EU negotiators.
Chinese solar panel production quadrupled between 2009 and
2011 to more than the entire global demand. EU producers say
Chinese companies have captured more than 80 percent of the
European market from almost zero a few years ago.
As a result, Chinese-made panels are as much as 45 percent
cheaper than those made in Europe, industry executives say.
Europe accounted for half of the global market in 2012,
which was worth $77 billion, according to research firm IHS.
Beijing is deciding whether to levy its own duties on
imported European solar-grade polysilicon, a raw material used
in solar panel production.
In an apparent response to the solar dispute, China also
formally began an investigation this month into whether Europe
is selling wine in China below cost.
EU Trade Commissioner Karel De Gucht, in China last month
for talks, said he hoped any agreement on solar panels would
help to resolve the wine dispute. EU officials deny dumping wine
in China or subsidising exports.