EU Trade Commissioner Karel De Gucht said Chinese solar panel exporters have agreed to a "price undertaking," raising prices to answer concerns Chinese producers were flooding the market with cheap panels, undercutting international competition.
"This is the amicable solution that both the EU and China were looking for," De Gucht said in a statement.
The European Commission was ready to impose a tariff of 48 percent on Chinese solar panel equipment beginning Aug. 6. Wall Street Journal reported Saturday.
China's prominence in the solar panel market has grown rapidly in the past five years, and the price of solar panels from China has dropped by 75 percent during that time, as the industry in China has been helped by cheap government loans, The New York Times reported.
There were concerns a dispute over pricing in the multibillion solar panel market could trigger a trade war.
"This is what China expected because at the very beginning we said we would proceed in two ways, one is with the legal dispute and one is with bargaining," said He Weiwen, co-director of the China-United States-European Union Study Center at the China Association of International Trade in Beijing.
"China and the European Union have had the desire to settle this case through negotiation rather than a trade war," he said.
The current tariff is set at 11.7 percent, the Times said.
Senate Democrats to pull all-nighter on climate change
Scarlett Johansson steps out with fiance after pregnancy reveal