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Chinese Solar-panel Maker Challenges Exclusion from Price Undertaking Before EU’s General Court

It was reported on 18 December 2017 that the Chinese solar-panel maker Wuxi Saijing Solar has lodged an appeal against the EU on 30 November 2017 for excluding it from the price undertaking that allowed it to avoid high trade defence tariffs on the importation of solar cells and solar modules to the EU.

The European Commission excluded Wuxi Saijing Solar from the price undertaking in September 2017, arguing that the exporting producer broke the rules by striking a deal with an EU importer. Due to the fact that the European Commission declared past invoices of Wuxi Saijing Solar invalid, the company is challenging a decision that retroactively imposes duties on its imports to the EU.

Definitive EU trade defence measures have been imposed on solar cells and solar modules from mainland China since 6 December 2013. The measures were imposed as a combination of tariffs on the one hand (anti-dumping duties ranging from 27.3% to 64.9% and countervailing duties ranging from 0% to 11.5%), and a minimum import price (MIP) on the other hand.

With regard to the MIP, the European Commission accepted a price undertaking, whereby certain exporting producers from mainland China agreed to sell their solar cells and solar modules to EU customers at a price at or above an MIP. In return for doing so, the anti-dumping and countervailing duties are not being levied on their imports into the EU. Wuxi Saijing Solar was originally included in the price undertaking, which enabled the exporting producer to avoid the high anti-dumping and countervailing duties upon importation to the EU.

While the trade defence measures on solar cells and solar modules were initially imposed for a period of two years, the EU extended the duties and MIP for a period of 18 months in March 2017. As a result, the trade defence measures are now set to expire in September 2018.

Simultaneous to the extension of the trade defence measures on solar cells and solar modules, the European Commission initiated a partial interim review investigation on 3 March 2017, which was explicitly limited to the form of the trade defence measures. On the basis of this review, the European Commission replaced the original price undertaking by a new, reduced and variable MIP as of 1 October 2017, creating separate MIPs for mono-crystalline solar cells, mono-crystalline solar modules, multi-crystalline solar cells and multi-crystalline solar modules.

As of 1 October 2017, the amount of the definitive anti-dumping and countervailing duties applicable to the solar cells and solar modules produced by the legal entities from mainland China to which the variable duty MIP is applicable is the difference between the MIP fixed in the table below and the net free-at-Union-frontier price, before duty, if the latter is lower than the former. As set forth in the table below, the MIP will decrease each quarter for each corresponding product type.

 

Period of application of the MIPMIP multi-crystalline cells (EUR/Watt)MIP mono-crystalline cells (EUR/Watt)MIP multi-crystalline modules (EUR/Watt)MIP mono-crystalline modules (EUR/Watt)
From 1 October 2017 until 31 December 20170.190.230.370.42
From 1 January 2018 until 31 March 2018
0.190.220.340.39
From 1 April 2018 until 30 June 2018
0.190.220.320.37
As from 1 July 2018
0.180.210.300.35

 

On 5 September 2017, the European Commission decided to remove two solar producers from mainland China from the price undertaking, namely AE Solar and Wuxi Saijing Solar. This withdrawal was spelt out in Commission Implementing Regulation 2017/1524, which was published in the Official Journal on 6 September 2017. The decision to withdraw Wuxi Saijing Solar from the price undertaking was based on the European Commission’s understanding that the company had breached the terms of the MIP deal.

The price undertaking is, evidently, subject to a number of conditions. Amongst others, the exporting producers subject to it have agreed not to sell their products to the first independent customer in the EU below a certain MIP, to sell products only by means of direct sales, and to provide the Commission with quarterly reports containing complete and correct information on all their export sales to and re-sales in the EU. In addition, the undertaking clarifies (in a non-exhaustive list) what constitutes a breach of the undertaking. That list includes making compensatory arrangements with customers, taking part in a trading system leading to a risk of circumvention, giving misleading descriptions of the characteristics of the modules, and selling indirectly to the EU by companies other than those listed in the undertaking.

The European Commission argued that Wuxi Saijing Solar had set up a trading system with one unrelated importer to sell solar modules below the MIP since the entry into force of the undertaking. While Wuxi Saijing Solar issued undertaking invoices respecting the MIP to this customer and the customer first paid the face value that was due for these transactions to Wuxi Saijing Solar, Wuxi Saijing Solar and its unrelated customer apparently kept a parallel sales record tracking the difference between the face value of the undertaking invoice prices and the actual sales prices, the latter of which were systematically below the MIP. Wuxi Saijing Solar compensated its unrelated customer for the difference between the face value and the actual sales price by payments through private invoices.

In sum, the European Commission argued that Wuxi Saijing Solar was, by striking a deal with an EU importer, effectively selling below the minimum price once reimbursements to its client were taken into account. As a result of the withdrawal from the price undertaking, solar cells and solar modules from Wuxi Saijing Solar were – as of 7 September 2017 – automatically subject to the definitive anti-dumping and countervailing duties upon importation into the EU.

In addition to Wuxi Saijing Solar’s withdrawal from the price undertaking, the European Commission declared 58 invoices linked to Wuxi Saijing Solar invalid. These invoices were issued between 21 August 2013 and 18 July 2016. This means that the high EU trade defence tariffs are due on those past imports of solar cells and solar modules, and that the company is challenging a decision that retroactively imposes duties on its imports into the EU. This case may thus be relevant for other solar panel companies that may find themselves in the same position, or indeed for other companies subject to a price undertaking where the European Commission imposes duties retroactively.

Wuxi Saijing Solar lodged its appeal against Regulation 2017/1524 on 30 November 2017, by filing its action for annulment before the EU General Court. The action for annulment is not yet publicly available. The reference of the General Court for this appeal is T-782/17.

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