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Brussels is scaling back tariffs on Chinese solar panels as it seeks to settle divisions over penalties against Beijing for dumping products on European markets.

Two sets of EU tariffs will be extended for 18 months under a decision on Wednesday by the European Commission, which previously wanted to prolong the penalties for two years.

The commission has also set out plans to phase out tariffs in a case dating from 2013 that has long been a source of tension between Europe and China, two of the world’s biggest trading blocs.

“We are opening an interim review, which will lead to a gradual reduction of the level of the measures in line with cost reductions in the solar industry,” said a commission spokesman.

“Together, the prolongation of the measures and the revision of their level will result in a gradual phase-out of the current regime.”

The affair has split both EU member states and Europe’s solar sector, setting off bitter arguments about the risk of Chinese retaliation to penalties imposed by Brussels against ultra-cheap imports.

EU member states delivered a bloody nose to the commission in January by voting down its proposal to extend anti-dumping tariffs against Chinese panels for two years. On the same day, member states agreed to prolong related anti-subsidy tariffs for two years.

The new plan is seen by trade experts in Brussels as a big concession by the commission after its first anti-dumping proposal was rejected by 18 member states. The case then went to an appeal panel, but its deliberations were inconclusive. The revised proposal was opposed by 13 member states, which was not enough to block it.

The commission spokesman said the latest proposal followed a “constructive discussion” with member states.

“This approach balances our legitimate right to protect our industry from unfair competition from dumped or subsidised imports, with the need to consider other companies that rely on these imports to develop their final products and employ thousands of people.”

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