On November 30th, US local time, the US Court of International Trade (hereinafter referred to as “US Courtâ€) made a Chinese PV company, Artes and Trina Solar, suing the US Department of Commerce for countervailing of photovoltaic products. The round of administrative review of the final ruling.
US courts in the buyer's credit, low-cost aluminum frame project speciality, low-cost external frame selection of aluminum frame and photovoltaic glass project, low-cost external reference selection of polysilicon project and low-cost power supply special 5 The point of appeal supported the plaintiffs Artes and Trina Solar, and ruled that the US Department of Commerce re-submitted the third round of review of countervailing.
The case involved China's US$1 billion export of US PV products during the annual review period. If the US Department of Commerce implements the court decision, Chinese PV companies will receive huge tax rebates. Not only that, the judgment denied some common violations of the US Department of Commerce against China's countervailing practices, so it was not only a breakthrough victory in the countervailing investigation of PV products, but also against the US countervailing investigation of Chinese products. The general practice has an important positive impact.
1. Chinese PV companies have been responding to the US “double-reverse†investigation for 7 years.
In 2011, at the time, the US photovoltaic company SolarWorld applied for, the US Department of Commerce launched an anti-dumping and countervailing investigation. In October 2012, the US Department of Commerce announced the final ruling and decided to impose a countervailing duty of 14.78% to 15.97% and an anti-dumping duty of 18.32% to 249.96% on China's solar cells exported to the United States. Up to now, the US anti-dumping and countervailing investigations against China's PV have passed four rounds of annual review, and the fifth round of annual review is underway.
Although the “double-reverse†case of photovoltaic products has achieved breakthroughs in anti-dumping tax rates, the countervailing duty rate has been at a relatively high level. The fundamental reason is that the US Department of Commerce policyly provides production factors through buyer credit and low prices based on unfavorable facts. The project has inflated the countervailing duty rate. It can be said that in the administrative investigation process, Chinese PV companies have exhausted all defense efforts, and seeking domestic judicial remedies, the US Department of Commerce's unfair ruling results to the US courts is the ultimate means of US domestic law.
In this US court decision, the Chinese PV companies sued against the US Department of Commerce's third round of annual review of China's PV battery countervailing investigation. The third round of the annual review of the case was launched in February 2016. Artes and Trina Solar are two of the world's leading PV manufacturing companies and were selected as mandatory responding companies. In July 2017, the US Department of Commerce announced the final result. The tax rate for Chinese companies was 17.14% to 18.16%.
Since then, Artes and Trina have filed suits in US courts on August 3 and August 5, 2017, respectively. The third round of countervailing review will be finalized in the US Department of Commerce on buyer credit, raw materials external benchmarks, and raw material projects. There are violations of the eight subsidies identified on the specialization and the US court. Subsequently, Shanghai BYD and SolarWorld also filed separate suits. In September 2017, the US court decided to merge the above litigation cases.
In the end, after one year and four months of trial, the US courts ruled that Chinese companies won the case on five key disputes and sent the US Department of Commerce's countervailing finals back to retrial. According to the judgment, the US Department of Commerce needs to make a review of the case before January 29, 2019. Stakeholders have the opportunity to comment on the U.S. Department of Commerce’s review of the ruling. After that, the US court will make a final judgment, and it may be sent back to the US Department of Commerce for retrial.
2. Unfavorable facts are not magic words that can skip legal analysis
The biggest win in this case is that the US Department of Commerce's policy practice in the practice of countervailing against China has been subject to US judicial review. In order to increase the countervailing duty rate of Chinese enterprises, the US Department of Commerce policyly uses the fact that some departments in China do not provide information, and applies unfavorable facts to artificially greatly increase the countervailing rate of Chinese enterprises.
For example, one of the disputes in this case is the “buyer credit†project, which is a traditional old project of the US countervailing investigation against China. It can be said that Chinese companies have been suffering from this project. The so-called subsidy rate in this case alone It is as high as 5.46%. And do Chinese companies really accept government subsidies on buyer credit? The answer is obviously not. In the photovoltaic case, the prosecution accused the Export-Import Bank of China of providing buyer credit to Chinese exporters. The Chinese government has fully cooperated with the US Department of Commerce in answering many questions raised by the US Department of Commerce, and the Chinese responding company submitted a statement to its US customers to the US Department of Commerce that it did not enjoy the buyer's credit program. However, the US Department of Commerce, while requesting the Chinese government to submit the internal documents of the Export-Import Bank, failed to ignore the evidence that had been obtained, and applied the unfavorable facts to the project on the grounds that the Chinese government did not cooperate. Section 776(d) of the US Tariff Act stipulates that the US Department of Commerce may apply the subsidy rate determined by a similar subsidy program in a countervailing investigation involving the same country in the application of unfavorable factual rules, so 5.46 under the item The tax rate of % is derived from the subsidy rate of Hebei Guangwei Green New Energy Co., Ltd. under the policy loan project in the first round of PV annual review.
The US court held in the judgment that the US Department of Commerce needs to explain: The Chinese government did not cooperate with the information provided to lead to the application of unfavorable facts, and what facts or information made the US Department of Commerce make an unfavorable presumption that the responding company enjoyed the buyer's credit program. In addition, the US Department of Commerce needs to explain why the respondent company’s statement that its US customers have not used the project cannot be verified. If the US Department of Commerce reconsiders that the US customer statement can be verified, it must do so. Final determination. Although the US court gave the US Department of Commerce an opportunity to explain the issue in a re-arbitration, it directly repudiated the analysis method of the US Department of Commerce in the final ruling. In other words, the US Department of Commerce needs to do a more thorough analysis in the re-finalization, rather than simply repeating its reasons for consistent use of the project in its countervailing investigations against China.
In addition, in the special nature of raw material procurement and the special issue of power procurement, the judgment of this case also has an important breakthrough. In the countervailing investigation, the investigating agency is obliged to prove whether a benefit is a special subsidy to the enterprise or industry within the jurisdiction of the granting authority. In its final ruling, the US Department of Commerce believes that according to the Chinese government's answer, a total of six industries use aluminum frames, namely 1) construction industry; 2) transportation industry; 3) electrical industry; 4) machinery and equipment industry; The consumer goods industry; and 6) other industries, so only six of the industries receiving subsidies believe that the project is special. The US court ruled that the US Department of Commerce needs to explain why subsidies to such a wide range of industries can be concluded with specificity rather than universal benefits. This analysis method is ridiculous if it is simply to judge the specificity by accepting the figures of the benefiting industry, rather than analyzing the specific composition of each industry. The US court sent the issue back to the US Department of Commerce for review, requiring a rigorous analysis of the methodological issues identified.
On the special issue of power procurement projects, the US Department of Commerce decided that the project was special because the Chinese government refused to provide some information on the grounds that it was unfavorable. The US court wrote in the ruling that "the unfavorable fact is not that the US Department of Commerce can skip the magic word that directly leads to unfavorable results in legal analysis." The US court ruled that the US Department of Commerce must rigorously analyze the case file and explain how to obtain a special conclusion from the power procurement project through unfavorable facts.
3. There are new positive precedents for the US countervailing investigation
This case will serve as a precedent for Chinese companies to respond to US countervailing investigations in the future. In response to several subsidy projects involved in the judgment, including buyer credit and low-cost cost element projects, the US Department of Commerce must change the current practice, and must fully consider the evidence of the case and adopt the correct analysis method to get the final conclusion, but not On the grounds of missing part of the information, the analysis of the existing evidence is skipped and the facts are directly obtained based on the unfavorable facts, and the determination against the Chinese enterprises is made based on the policy unfavorable inference.
At present, Chinese companies such as Artes have sued the final court of the fourth round of anti-subsidy annual review to the US courts. Under the guidance of this judgment, we believe that we will get results that will benefit us. At the same time, the fifth round of administrative review is underway, and this US court decision will also affect the current fifth round of annual review procedures. In addition, since almost every US countervailing duty investigation against China involves providing buyer credit and low-cost supply cost elements, the judgment is instructive for a large number of US countervailing investigations against China.
4. The US Department of Commerce wants to play "policy cards". Chinese enterprises should not give up playing "legal cards".
Compared with the US Department of Commerce, the US International Trade Court has made independent decisions based on legal provisions and precedents. This is one of the means of assistance that Chinese companies can resort to. This case also illustrates the abuse of discretion by the US Department of Commerce. In particular, the abuse of unfavorable factual rules is bound by US domestic jurisdiction. The significance of this judgment is that when the US Department of Commerce plays a "policy card", Chinese responding companies should not give up playing "legal cards" and should resort to subjective initiative to appeal to US courts. This case is an example of Chinese companies seeking judicial relief in the face of unfair administrative rulings. Although the Trump administration has ignored the WTO rules to initiate trade wars, US domestic court proceedings are still an important way to correct the wrong administrative actions of the US government.
In the context of Sino-US trade frictions, Chinese companies must protect their own interests through various channels. If the fear is retreating, the situation can only get worse, protectionism will become more prevalent, and the US industry application for “double-reverse†investigation will become more arbitrary, and the discriminatory policy orientation and practice of the US Department of Commerce will be even more unscrupulous.
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