Chinese and European Commission negotiators have agreed to a minimum price for imported solar modules, a settlement expected to end the threat of a China-European Union solar trade war.

In June, the EC imposed tariffs on modules sold into the EU at below-market prices by Chinese manufacturers.

The agreed settlement price, according to widely quoted diplomatic sources, was 0.56 euro cents per watt for the first 7 gigawatts of imported modules. Beyond that quantity, it is speculated (but has not been officially announced) that EC tariffs will apply. The EU added an estimated 16.9 gigawatts of modules in 2012.

“I am satisfied with the offer of a price undertaking submitted by China’s solar panel exporters,” EU Trade Commissioner Karel De Gucht announced. “We are confident this price will stabilize the European solar panel market and remove the injury that the dumping practices have caused to the European industry.”

De Gucht also said the agreement would produce “a new equilibrium on the European solar panel market at a sustainable price level.”

The fact that the agreement was brokered is evidence of the "pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue,” Chinese commerce ministry spokesman Shen Danyang was quoted as saying by Channel NewsAsia.

Official approval by the EC is expected to be granted without controversy.

The 90 Chinese module manufacturers that accepted the agreement represented approximately 60 percent of the 2012 European market, according to the New York Times. Some 140 of China’s module makers were found by an EC investigation to be selling into the EU market at an average rate that was 88 percent below “fair value” and using “dumping margins of up to 112.6 percent.”

Source: PV Technology and Cost Outlook, 2013-2017

The investigation also found that in 2012, Chinese exporters’ excess production capacity was twice as much as EU demand, allowing the Chinese exporters to dominate “more than 80 percent” of the EU solar market. That resulted in 40 EU solar producer insolvencies, six EU producers being forced to partially halt production, two EU producers being forced to leave the solar business, and the absorption of four EU producers by Chinese companies.

The approximately 50 manufacturers that did not accept the agreement are expected to remain subject to the anti-dumping duties imposed on imported Chinese modules, cells, and wafers. The duties are now at an average 11.8 percent across all manufacturers and were scheduled to increase to an average 47.6 percent on August 6.

Dominant Chinese manufacturers Yingli, Trina Solar, Suntech Power Holdings, LDK Solar, and JinkoSolar cooperated with the EC investigation and are expected to accept the agreement.

Leverages may have further shifted in China’s favor with its July 24 announcement, as reported by Energy Trend, that it would impose a 53.3 percent to 57 percent anti-dumping tariff on U.S. polysilicon imported into China in retaliation for the tariffs that the U.S. imposed on China solar module imports in October 2012.

A similar tariff imposed on EU polysilicon manufacturers could provide a significant advantage to China’s GCL-Poly Energy Holdings and Daqo New Energy over Germany’s Wacker Chemie, one of the world's biggest polysilicon producers, according to Businessweek.

EU ProSun, a coalition of Western solar manufacturers led by Germany’s SolarWorld, will appeal the settlement to the European Court of Justice, according to Fox News.

Source: REN21's Renewables Global Status Report 2013