Any China solar pact would help defuse wine spat: EU official

BEIJING (REUTERS) - The European Union's top trade official said on Friday that any agreement with China over a solar panel dispute would also help resolve a Chinese probe into EU wine exports.

Infuriated by the European Commission's decision this month to impose anti-dumping duties on Chinese solar panels, China responded by announcing an anti-dumping and anti-subsidy investigation of European wines.

EU Trade Commissioner Karel De Gucht, following talks with China's Commerce Minister Gao Hucheng in Beijing, said his understanding of China's wine probe was that it had "nothing to do with dumping".

"If we aspire to an agreement on the solar panel case, we should also do away with actions that are linked to the solar panel case," Mr De Gucht told reporters when asked about the wine investigation.

Mr De Gucht said European officials met their Chinese counterparts in Beijing on Thursday and Friday to push for a resolution to the solar dispute before the full duties kick in on August 6.

By levying punitive tariffs at 11.8 per cent for two months, instead of an earlier plan for an immediate levy averaging 47 per cent, Mr De Gucht had left a window for Brussels and Beijing to negotiate.

In a joint statement with Mr De Gucht earlier on Friday, Mr Gao said both sides had repeated their desire to resolve the solar panel case by agreeing on a floor price for Chinese products.

But neither official offered details on pricing negotiations.

"The two sides' consultations and negotiations are positive and constructive. We hope that in the upcoming talks both sides will adopt a practical and flexible approach," Mr Gao said.

The European Commission, the EU's executive body, accuses China of dumping billions of euros of solar panels in Europe at below production cost.

It imposed punitive tariffs on China's imports on June 6, despite the majority of EU member states opposing the move, partly out of fear of retaliation.

Trade disputes between China and Europe have multiplied as commercial ties have grown.

The European Union is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports of goods to the 27-member bloc totalled 290 billion euros (S$490 billion) last year, with 144 billion euros going the other way.

China's newly well-to-do, whose ranks are growing as fast as the economy, have a seemingly unquenchable thirst for European wines, especially those from France, which make up more than half the total. China is now the biggest importer of Bordeaux wines, whose consumption soared 110 per cent in 2011 alone.

EU officials have said there is no dumping or subsidy of European wine exports to China and that EU authorities would defend their producers.