Industry leaders have said they will likely sue over the arrangement, which eliminates a controversial 47.6 percent tariff on Chinese solar manufacturers exporting solar panels to Europe in favor of a minimum price per watt that European manufacturers say isn’t high enough.
China and Europe agreed to a deal on Saturday that would require Chinese solar panel manufacturers selling their panels in Europe to charge a minimum of 56 Euro cents per watt (74 cents).
That’s about 9 cents more than the average Chinese solar panel typically sells at today. European manufacturers say the minimum price isn’t steep enough to drive the rebound needed in the local market. Chinese solar panels make up about 60 percent of Europe’s solar market, according to news reports.
Europe implemented an 11.8 percent tariff on solar panels imported from China earlier this year with plans to increase the tax to 47.6 percent on Aug. 6. That new tax will still apply to the few Chinese manufacturers who refused the terms of the new trade arrangement.
European leaders implemented the tax after an investigation found that Chinese manufacturers, operating with cheap government loans, were selling their products in Europe for less than they cost to manufacture, a practice called dumping.
The agreement between Europe and China came as a trade war brewed between the two governments over the issue. While solar panels started the fight, the two were dueling over other imports and exports, including European wine and chemicals.
International trade analysts have speculated in national media that this agreement should cool the flames of some of the other recent trade disputes.
"We are confident that this price undertaking will stabilize the European solar-panel market and will remove the injury that the dumping practices have caused to the European industry," EU Trade Commissioner Karel De Gucht said in a statement.
While the European solar industry is skeptical that the new trade agreement will accomplish the desired goals there, Chinese manufacturers enjoyed surging stock prices Monday thanks to the news that the trade dispute was resolved and perhaps, in part, that the companies will be forced to take larger profit margins on the panels they sell. Yingli Green Energy, LDK Solar, Trina Solar, Canadian Solar and Renasolar all saw their stock prices climb 2.4 to 3.95 percent Monday.
Of course, Chinese manufacturers won market share with cost competitiveness and it’s hard to predict how the new minimum price per watt will impact the manufacturers, especially as solar panel prices continue to drop in price and are expected to fall as low as 36 cents per watt by 2017, according recent projections from Greentechmedia.