Cooler heads prevail in EU, China trade row over wine and solar panels


China has agreed to discuss dropping its inquiry into whether Europe is dumping wine, the EU's trade chief said on Monday (29 July), after EU and Chinese officials made a deal to avoid tariffs on solar panels from China.

After resolving their biggest trade dispute yet, Beijing and Brussels will tackle accusations that French, Spanish and Italian wine is being exported for sale at below the cost of production, as well as another dispute over exports of polysilicon, a raw material used in solar panels.

"There is a window for discussions between the European Union and Chinese [wine] producers," EU Trade Commissioner Karel De Gucht told a news conference. "The Chinese government has promised to facilitate such discussions."

China's openness to resolving a string of related disputes could signal an easing of tensions between two of the world's biggest economies, but their relationship remains delicate as both sides seek to protect industries from unfair competition.

Europe is China's most important trading partner, while for the EU, China is second only to the United States, but ties are strained as China seeks to increase its production of sophisticated products that Europe makes.

De Gucht said he remains ready to launch an investigation into Chinese mobile telecom equipment producers suspected of dumping and illegal subsidies, after first warning Beijing of a possible inquiry in May.

In the solar dispute, De Gucht reached a deal with Beijing on Saturday by setting a minimum price for Chinese solar panel imports in Europe, which were worth €21 billion last year.



Underscoring the tensions, French Trade Minister Nicole Bricq said France was reserving judgment on the solar agreement, which some analysts said was too generous to the Chinese because the minimum import price is the current market price.

"We are currently waiting to know the exact terms of the accord before pronouncing on it," she said in a statement.

Anti-dumping inquiry

The wine dispute dates back to the EU's initial plan to impose punitive duties on solar panels in June, when China launched an anti-dumping inquiry into European wine sales in a retaliatory move that could lead to duties on exporters in France, Spain and Italy.

China's commerce ministry could not confirm any freeze into its wine investigation.

A lawyer representing the Chinese industry association that filed the wine complaint said the firm had not received any notice on the freezing of the probe, the website said.

"The relevant investigation is still proceeding regularly," Yao Fengwen, a lawyer with Bo Heng law firm, told the site.

Wine sales are only a fraction of overall exports to China, but the threat of duties appeared to be symbolic because France and Italy were in favour of hefty levies on Chinese solar panels, while Germany and Britain opposed them.

An official at Germany's economy ministry told Reuters that Berlin had been reassured that "it is part of the current agreement that China abstains from measures relating to polysilicon".

Germany's Wacker Chemie is the world's second biggest maker of polysilicon and would be hurt by any tariffs in China. Beijing placed duties on US and South Korean polysilicon exports earlier this month.

China is the world's biggest importer of Bordeaux wines and consumption soared 110% in 2011. France called the decision to consider duties "inappropriate and reprehensible".

EU wine exports to China excluding Hong Kong, which EU officials said was not covered by the investigation, reached 257.3 million litres in 2012 for a value of nearly €750 million. More than half - 139.5 million litres - came from France.

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