China, EU start trade talks aiming to resolve disputes

The European Union flag flies amongst European Union member countries' national flags in front
of the European Parliament. (AFP/Frederick Florin)

BEIJING: The European Union said Friday it had started ministerial-level talks with China, where they are expected to discuss rows over solar panels and other products, as tensions between the two risk escalating into a trade war.

Gao Hucheng, China's Minister of Commerce, and EU Trade Commissioner Karel De Gucht are in attendance at the annual meeting of the joint economic and trade commission, William Fingleton, spokesman for the EU side, said in an e-mail.

Chinese commerce ministry spokesman Shen Danyang told reporters this week that the talks would "seriously review what happened over the past year in bilateral trade relations and study how to resolve problems, including the dispute over photovoltaic (solar panel) trade".

EU Trade spokesman John Clancy said the solar panel issue would not be on the official agenda of the meeting, but De Gucht and Gao were expected to discuss it on the sidelines.

"Confidential technical-level discussions" with China have started in Brussels this week "in a bid to find a negotiated settlement", he said in a statement this week.

"It is important to underline that the EU's ambition remains to find an amicable solution as soon as possible," he said.

The European Commission, the EU's executive arm, this month imposed an average tariff of 11.8 per cent on solar panel imports from China -- rising to 47.6 per cent on August 6 if there are no negotiations based on a Chinese commitment to address the problem.

The tariffs are provisional for six months, with EU member states having a vote in December on whether to make them permanent or not.

In addition to solar cells, Brussels and Beijing are also involved in a series of disputes covering other products, ranging from steel pipes to wine, that have sparked fears of a trade war.

China said this month it will deal "appropriately" with the EU's decision to challenge it at the World Trade Organisation after Beijing slapped duties on some steel products.

Beijing has launched a probe into imports of EU wine and chemicals amid accusations it is selling goods below cost -- a process known as "dumping" -- while the EU has threatened an investigation into the country's telecom equipment firms.

The tit-for-tat trade measures have triggered concerns over the repercussions they may cause to broader business relations between the two.

Total trade between the two sides fell 3.7 per cent year-on-year in 2012, with China's imports from the bloc rising 0.4 per cent to $212 billion, while shipments in the opposite direction tumbled 6.2 per cent to $334 billion, Chinese customs data showed.

According to Chinese industry figures, China exported $35.8 billion of solar products in 2011, more than 60 per cent of them to the EU, while it imported $7.5 billion-worth of European solar equipment and raw materials.