* EU and China agree minimum import price near spot price
* China allowed to provide almost half EU solar consumption
* Deal follows six weeks of talks to avoid wider trade war
By Robin Emmott and Ben Blanchard
BRUSSELS/BEIJING, July 27 China and the European
Union defused their biggest trade dispute by far on Saturday
with a deal to regulate Chinese solar panel imports and avoid a
wider war in goods from wine to steel.
After six weeks of talks, the EU's trade chief and his
Chinese counterpart sealed the deal over the telephone, setting
a minimum price for panels from China near spot market prices.
European solar panel makers accuse China of benefitting from
huge state subsidies, allowing them to dump about 21 billion
euros ($28 billion) worth of below-cost solar panels in Europe
last year, putting European firms out of business.
Other European industries that have accused China of dumping
have faced imports of about 1 billion euros a year.
Europe planned to impose hefty tariffs from Aug. 6 but, wary
of offending China's leaders and losing business in the world's
No. 2 economy, a majority of EU governments - led by Germany -
opposed the plan, which led to the compromise deal.
"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," he
said, referring to the minimum price for China's imports.
Chinese Commerce Ministry Spokesman Shen Danyang welcomed
the deal, hailing a "positive and highly constructive outcome".
An EU diplomatic source said that in the solar agreement,
the agreed price was 0.56 euro cents per watt, near the spot
price for Chinese solar panels in July in Europe, according to
solar exchange pvXchange.
Under the terms of the deal, China will also be allowed to
meet about half Europe's solar panel demand, if taken at last
year's levels. 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, the EU source said.
That did not satisfy some EU solar manufacturers who said
the minimum import price agreed still constitutes dumping and
accused the European Commission of breaking EU law by failing to
protect European industry.
European solar panel manufacturer association EU ProSun said
it will go to the European Court of Justice in Luxembourg to
challenge the deal.
"Even the biggest EU trade conflict ever must still be
resolved on the basis of the applicable law," said EU ProSun's
president, Milan Nitzschke.
However, China has sold solar panels for as little as 0.38
cents a watt, according to the European Commission, which
handles trade issues for EU states, and tariffs would also hurt
EU panel installers, who benefit from cheaper Chinese panels.
Chinese manufacturers such as U.S.-listed Trina Solar
, Yingli Green Energy and Suntech Power Holdings
are among those exporting to Europe.
Chinese solar panel production quadrupled between 2009 and
2011 to more than the world's entire demand as it took advantage
of a growing market for renewable energy in the face of concerns
about climate change.
But the global financial crisis and ensuing euro zone crisis
have forced European governments to withdraw generous subsidies
for solar energy. That, along with Chinese imports pushing down
prices, have sent many European solar companies into bankruptcy.
German group Conergy filed for insolvency this
Still, those concerns have become secondary to the much
larger EU-China trade relationship at stake over the panels
Europe is China's most important trading partner, while for
the EU, China is second only to the United States. Chinese
exports of goods to the bloc totalled 290 billion euros last
year, with 144 billion going the other way.
Responding to the EU's move to impose duties, China launched
an anti-dumping inquiry into European wine sales, which may have
led to exporters in France, as well as Spain and Italy, being
hit with retaliatory duties.
EU and Chinese diplomats now expect that case to be dropped
as a goodwill gesture, although officials declined to comment on