German U-turn as Merkel backs fair-trade measures on Chinese PV

Chancellor Angela Merkel has for the first time backed anti-dumping measures against Chinese PV kit and asked for their extension, in a turnaround of German policy over the issue.

Germany in principle favours granting China its wish to gain the status of a market economy, she said, but added that the Asian country still needs to do some homework, in particular over the question of public procurement.

Merkel added that in the steel and solar sectors the question of fair trade needs to be looked at again. "I also hope that maybe we can extend the rules found in the solar sector," she added while speaking in Hefei.

Following an EU investigation that found illegal Chinese trade practices, the EU and China in 2013 reached a compromise to avoid a full-scale imposition of tariffs called an 'undertaking agreement' that set a minimum price and quota system for Chinese manufacturers selling their products in the EU.

By the end of this year the commission is likely to decide upon opening an enquiry into whether to extend the current measures. As that enquiry can take up to 15 months, current anti-dumping measures will likely remain in place until early 2017.

The German government so far had opposed the trade measures, as the minimum price has had the effect to make solar panels in Europe more expensive than in most world regions, contributing to a dramatic decline in European solar installation figures and life-threatening problems for many solar developers and installers.

The solar sector in Europe is split on the issue. EU ProSun, a lobbying group of PV manufacturers spearheaded by German panel maker SolarWorld, is pushing hard for an extension of the anti-dumping measures as it argues Chinese modules sold at dumping prices have destroyed most of the once mighty European solar manufacturing sector.

Solar Power Europe, the continent's most important solar group that mostly represents the downstream solar sector, earlier this year dropped its previous neutral stand and now lobbies for an end to minimum prices and duties.

The EU has to decide at the end of next year whether to back China in the World Trade Organization (WTO) to gain the coveted "market economy status" (MES).

With that status, it would be more difficult for the EU to impose measures to protect its industries from cheap Chinese competition.