EU and China move closer to settlement in solar panel row

The EU and China have agreed the broad outlines for a possible settlement to their trade dispute over solar panels but must still wrestle with the details, Europe's trade chief said after high-level meetings in Beijing.

Karel De Gucht, the trade commissioner, called his discussions with Gao Huacheng, China's commerce minister, positive and said the two sides were now working from a "common canvas" to resolve a trade dispute that has threatened to spill over into a trade war.

“We have more or less agreed on the structure,” Mr De Gucht said. “It’s very clear in the solar panel case that we both have interests in finding an amicable solution.”

Meanwhile, Mr Gao said both sides were working to reach a “reasonable, mutually acceptable price undertaking deal”.

The improved prospects for a peaceful settlement come amid an unusually tense stretch in one of the world’s largest trading relationships.

Beijing responded to Mr De Gucht’s decision earlier this month to impose provisional duties on Chinese solar products by opening its own trade investigation into European wine and threatening another into luxury cars.

Mr De Gucht at one point accused China of asserting undue pressure on EU member states while China's state media lectured Europe about the need to recognise its decline.

The provisional duties imposed by the EU are to counter alleged dumping – or selling below cost – by Chinese solar manufacturers. Mr De Gucht set them at an unusually low 11.8 per cent with the warning that they would jump to 47 per cent after August 6th if the two sides have not found a deal.

The most likely settlement would be a price undertaking, which would require Chinese firms to agree not to sell their goods below a minimum price. Such an agreement could also include a maximum volume of solar products that the Chinese could export to the EU. – Copyright The Financial Times Limited 2013