EU Trade Commissioner Karel de Gucht said in a statement on Saturday that the two sides had reached a deal "after weeks of intensive talks."

Solar panel production in China quadrupled between 2009 and 2011, to more than the entire global demand. The European Commission had accused China of dumping its solar panels in Europe at below cost.

That led the EU executive in June to slap a punitive tariff on Chinese solar imports of 11.8 per cent, rising to 47 per cent in August, which under the deal will now be avoided. Imports of solar products from China into Europe were worth 21 billion euros ($27 billion) last year.

Following the decision in June, China announced it would impose anti-dumping tariffs on a chemical imported from various nations in the European Union. The taxes affect a substance called toluidine which is an important agent required to produce dyes, medicines, pesticides and other products.

Beijing said at the time that the duties would be imposed as of June 28 and stay in place for five years, but it is now not known whether China will review this tax given Saturday's apparent breakthrough.

"We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices," De Gucht said on Saturday. "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."

jr/msh (Reuters, AFP, dpa)