WT/DS562/R  
 
2 September  2021 
(21-6333) Page: 1/96 
  Original: English  
 
  
 
 
 
UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF  
CRYSTALLINE SILICON PHOTOVOLTAIC PRODUCTS  
REPORT  OF THE PANEL  
 
 WT/DS562/ R 
 
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  TABLE OF CONTENTS  
1   INTRODUCTION  ................................ ................................ ................................ ........  12 
1.1   Complaint by China  ................................ ................................ ................................ ... 12 
1.2   Panel establishment and composition  ................................ ................................ ..........  12 
1.3   Panel proceedings  ................................ ................................ ................................ ..... 12 
2   FACTUAL ASPECTS  ................................ ................................ ................................ ..... 13 
2.1   The measures at issue  ................................ ................................ ...............................  13 
2.2   Other factual aspects  ................................ ................................ ................................  14 
3   PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  ................................  14 
4   ARGUMENTS OF THE PARTIES  ................................ ................................ ...................  15 
5   ARGUMENTS OF THE THIRD PARTIES  ................................ ................................ ........  15 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 15 
7   FINDINGS  ................................ ................................ ................................ .................  15 
7.1   General principles regarding treaty interpretation, standard of review, and  
burden of proof  ................................ ................................ ................................ ...............  15 
7.1.1   Treaty interpretation  ................................ ................................ ..............................  15 
7.1.2   Standard of review  ................................ ................................ ................................ . 16 
7.1.3   Burden of proof  ................................ ................................ ................................ ..... 16 
7.2   "Unforeseen developments " and "the effect of the obligations incurred" under  
the GATT 1994  ................................ ................................ ................................ ................  16 
7.2.1   Introduction  ................................ ................................ ................................ ..........  16 
7.2.2   Applicable legal requirements of Article  XIX:1(a) of the GATT 1994  ...............................  17 
7.2.3   Whether the USITC's publishe d report demonstrated compliance with the  
requirements of Article  XIX:1(a) of the GATT 1994  ................................ ...............................  19 
7.2.3.1    The existence of "unforeseen  developments"  ................................ ...........................  19 
7.2.3.1.1    Factual background  ................................ ................................ ..........................  19 
7.2.3.1.2    Main arguments of the parties  ................................ ................................ ............  20 
7.2.3.1.3    Evaluation of the Panel  ................................ ................................ ......................  21 
7.2.3.2    The relationship between increased imports and "unforeseen developments"  ...............  22 
7.2.3.2.1    Factual background  ................................ ................................ ..........................  22 
7.2.3.2.2    Main arguments of the parties  ................................ ................................ ............  22 
7.2.3.2.3    Evaluation of the Panel  ................................ ................................ ......................  24 
7.2.3.3    The relationship between increased imports and "obligations incurred" by the  
United  States  ................................ ................................ ................................ ..................  26 
7.2.3.3.1    Factual background  ................................ ................................ ..........................  26 
7.2.3.3.2    Main arguments of the parties  ................................ ................................ ............  27 
7.2.3.3.3    Evaluation of the Panel  ................................ ................................ ......................  28 
7.2.4   Whether the Agreement on Safeguards obligates the competent authorities of a  
Member to demonstrate in their published report that imports increased "as a result of  
unforeseen developments and of the effect of the obligations incurred"  ................................ ... 30 
7.3   The causal link between increased imports and serious injury  ................................ .........  30 
7.3.1   General factual background  ................................ ................................ .....................  30 WT/DS562/ R 
 
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  7.3.2   Applicable legal requirements concerning the causal link between increased  imports  
and serious injury under Articles  2.1, 3.1, and 4.2(b) of the Agreement  on Safeguards  ..............  32 
7.3.3   Whether the USITC acted inconsistently with Articles  2.1, 3.1, and 4.2(b) of  
the Agreement on Safeguards in respect of its determination of a causal link between the 
increased imports of CSPV produc ts and serious injury of the domestic industry  ........................  33 
7.3.3.1    Introduction  ................................ ................................ ................................ ....... 33 
7.3.3.2    The USITC's findings concerning the relationship between increased imports  
and negative factors of serious injury  ................................ ................................ .................  35 
7.3.3.2.1    Key conditions of competition  ................................ ................................ .............  36 
7.3.3.2.1.1    Segmentation in the US  market for CSPV products  ................................ .............  37 
7.3.3.2.1.2    Substitutability of domestic and imported CSPV  products  ................................ ..... 40 
7.3.3.2.2    Adverse price conditions  ................................ ................................ ....................  43 
7.3.3.2.2.1    Factual background  ................................ ................................ ........................  43 
7.3.3.2.2.2    Main arguments of the parties  ................................ ................................ .........  44 
7.3.3.2.2.3    Evaluation of the Panel  ................................ ................................ ...................  46 
7.3.3.2.3    Lost market share  ................................ ................................ ............................  47 
7.3.3.2.3.1    Factual background  ................................ ................................ ........................  47 
7.3.3.2.3.2    Main arguments of the parties  ................................ ................................ .........  48 
7.3.3.2.3.3    Evaluation of the Panel  ................................ ................................ ...................  49 
7.3.3.2.4    Financial deterioration  ................................ ................................ .......................  50 
7.3.3.2.4.1    Factual background  ................................ ................................ ........................  50 
7.3.3.2.4.2    Main arguments of the parties  ................................ ................................ .........  51 
7.3.3.2.4.3    Evaluation of the Panel  ................................ ................................ ...................  52 
7.3.3.2.5    Plant closures  ................................ ................................ ................................ .. 53 
7.3.3.2.5.1    Factual background  ................................ ................................ ........................  53 
7.3.3.2.5.2    Main arguments of the parties  ................................ ................................ .........  53 
7.3.3.2.5.3    Evaluation of the Panel  ................................ ................................ ...................  54 
7.3.3.3    The USITC's findings concerning the relationship between increased impor ts and  
the seemingly positive factors of serious injury  ................................ ................................ .... 56 
7.3.3.3.1    Capacity, production, and shipments  ................................ ................................ ... 57 
7.3.3.3.1.1    Factual background  ................................ ................................ ........................  57 
7.3.3.3.1.2    Main arguments of the parties  ................................ ................................ .........  57 
7.3.3.3.1.3    Evaluation of the Panel  ................................ ................................ ...................  58 
7.3.3.3.2    Employment  ................................ ................................ ................................ .... 58 
7.3.3.3.2.1    Factual background  ................................ ................................ ........................  58 
7.3.3.3.2.2    Main arguments of the parties  ................................ ................................ .........  59 
7.3.3.3.2.3    Evaluation of the Panel  ................................ ................................ ...................  59 
7.3.3.3.3    Capital expenditures, R&D expenses, and value of production assets  .......................  60 
7.3.3.3.3.1    Factual background  ................................ ................................ ........................  60 
7.3.3.3.3.2    Main arguments of the parties  ................................ ................................ .........  61 
7.3.3.3.3.3    Evaluation of the Panel  ................................ ................................ ...................  61 WT/DS562/ R 
 
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  7.3.3.4    Overall conclusion regarding the USITC's  determination of a causal link between 
increased imports of CSPV products and serious injury of t he domestic industry  ........................  62 
7.4   "Other" factors allegedly causing injury to the domestic industry  ................................ ..... 62 
7.4.1   General factual background  ................................ ................................ .....................  62 
7.4.2   Applicable legal requirements concerning the assessment of "other" factors  
allegedly causing injury to the domestic industry under Article  4.2(b) of the  
Agreement  on Safeguards  ................................ ................................ ................................ . 63 
7.4.3   Whether the USITC failed to ensure that the injurious effects of "other" factors  
were not attrib uted to increased imports  ................................ ................................ .............  63 
7.4.3.1    Introduction  ................................ ................................ ................................ ....... 63 
7.4.3.2    Alleged missteps by the domestic industry  ................................ ..............................  64 
7.4.3.2.1    The alleged decision of the domestic industry to focus on the commercial and 
residential segments and to avoid competing in the utility segment  ................................ .........  65 
7.4.3.2.1.1    Factual background  ................................ ................................ ........................  65 
7.4.3.2.1.2    Main arguments of the parties  ................................ ................................ .........  66 
7.4.3.2.1.3    Evaluation of the Panel  ................................ ................................ ...................  67 
7.4.3.2.2    The alleged quality and product -type issues  ................................ .........................  68 
7.4.3.2.2.1    Factual background  ................................ ................................ ........................  68 
7.4.3.2.2.2    Main arguments of the parties  ................................ ................................ .........  69 
7.4.3.2.2.3    Evaluation of the Panel  ................................ ................................ ...................  70 
7.4.3.2.3    The alleged service and delivery issues of the domestic industry  .............................  73 
7.4.3.2.3.1    Factual background  ................................ ................................ ........................  73 
7.4.3.2.3.2    Main arguments of the parties  ................................ ................................ ........  73 
7.4.3.2.3.3    Evaluation of the Panel  ................................ ................................ ...................  74 
7.4.3.3    Non-import factors that allegedly caused prices of CSPV products to decline  ................  75 
7.4.3.3.1    Changes in availability of government incentive programmes  ................................ .. 76 
7.4.3.3.1.1    Factual  background  ................................ ................................ ........................  76 
7.4.3.3.1.2    Main arguments  of the parties  ................................ ................................ .........  77 
7.4.3.3.1.3    Evaluation  of the Panel  ................................ ................................ ...................  78 
7.4.3.3.2    Declining  raw material  costs and increased  production  efficiencies  ...........................  81 
7.4.3.3.2.1    Factual  background  ................................ ................................ ........................  81 
7.4.3.3.2.2    Main arguments  of the parties  ................................ ................................ .........  81 
7.4.3.3.2.3    Evaluation  of the Panel  ................................ ................................ ...................  82 
7.4.3.3.3    The need to attain  "grid parity " with other  sources  of electricity  ..............................  84 
7.4.3.3.3.1    Factual  background  ................................ ................................ ........................  84 
7.4.3.3.3.2    Main arguments  of the parties  ................................ ................................ .........  84 
7.4.3.3.3.3    Evaluation  of the Panel  ................................ ................................ ...................  85 
7.4.3.4    Overall conclusion regarding the USITC's  assessment of "other" factors allegedly  
causing injury to the domestic industry  ................................ ................................ ...............  89 
7.5   The USITC's  treatment of confidential information  ................................ .........................  89 
7.5.1   Applicable legal requirements of Article  3 of the  Agreement on Safeguards  .....................  89 
7.5.2   Whether the USITC failed to provide sufficient non -confidential summaries of  
confidential information to allow for interested parties to present a meaningful defence  .............  90 WT/DS562/ R 
 
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  7.5.2.1    Introduction  ................................ ................................ ................................ ....... 90 
7.5.2.2    The procedure followed  by the USITC in providing non -confidential summaries of 
confidential information to interested parties  ................................ ................................ ....... 90 
7.5.2.2.1    Factual backgr ound ................................ ................................ ..........................  90 
7.5.2.2.2    Main arguments of the parties  ................................ ................................ ............  91 
7.5.2.2.3    Evaluation of the Panel  ................................ ................................ ......................  93 
7.5.2.3    The substance of non -confidential summaries of confidential information in  
the USITC final report and final staff report  ................................ ................................ .........  94 
7.5.2.3.1    Factual background  ................................ ................................ ..........................  94 
7.5.2.3.2    Main arguments of the parties  ................................ ................................ ............  94 
7.5.2.3.3    Evaluation of the Panel  ................................ ................................ ......................  95 
8   CONCLUSIONS AND RECOMMENDATION  ................................ ................................ ... 96 
 WT/DS562/ R 
 
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  LIST OF ANNEXES  
ANNEX A  
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex  A-2 Additional Working Procedures of the Panel on Business Confidential Information  11 
Annex  A-3 Additional Working Procedures of the Panel Concerning Substantive Meetings 
Conducted via Cisco Webex  13 
Annex  A-4 Additional Working Procedures of the Panel Concerning Substantive Meetings 
Conducted via Cisco Webex – Second Substantive Meeting Update  18 
Annex  A-5 Interim Review  22 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of China  46 
Annex  B-2 Integrated executive summary of the arguments of the United  States  66 
ANNEX C  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Brazil  89 
Annex  C-2 Integrated executive summary of the arguments of Canada  91 
Annex  C-3 Integrated executive summary of the arguments of the European Union  96 
Annex  C-4 Integrated executive summary of the arguments of Japan  100 
Annex  C-5 Integrated executive summary of the arguments of the Republic of Korea  104 
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  CASES CITED IN THIS REPORT  
Short Title  Full Case Title and Citation  
Argentina – Footwear (EC)  Appellate Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R , adopted 12  January  2000, DSR 2000:I, p. 515 
Argentina – Footwear (EC)  Panel Report, Argentina – Safeguard Measures on Imports of Footwear , 
WT/DS121/R , adopted 12  January  2000, as modified by Appellate Body Report 
WT/D S121/AB/R, DSR 2000:II, p. 575 
Argentina – Preserved 
Peaches  Panel Report, Argentina – Definitive Safeguard Measure on Imports of 
Preserved Peaches , WT/DS238/R , adopted 15  April 2003, DSR 2003:III, 
p. 1037 
Australia – Salmon  Panel Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/R  and Corr.1, adopted 6 November 1998, as modified by 
Appellate  Body R eport WT/DS18/AB/R, DSR 1998:VIII, p. 3407  
Canada – Continued 
Suspension  Panel Report, Canada – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS321/R  and Add.1 to Add.7, adopted 
14 November  2008, as modified by Appel late Body Report WT/DS321/AB/R, 
DSR 2008:XV, p.  5757 
China – Cellulose Pulp  Panel Report, China – Anti-Dumping Measures on Imports of Cellulose Pulp 
from Canada , WT/DS483/R  and Add.1, adopted 22  May 2017, DSR 2017:IV, 
p. 1961 
Dominican Re public – 
Safeguard Measures  Panel Report, Dominican Republic – Safeguard Measures on Imports of 
Polypropylene Bags and Tubular Fabric , WT/DS415/R , WT/DS416/R , 
WT/DS417/R , WT/DS418/R , and Add.1, adopted 22  February  2012, 
DSR 2012:XIII, p. 6775 
India – Agricultural Products  Panel Report, India – Measures Concerning the Importation of Certain 
Agricultural Products, WT/DS430/R  and Add.1, adopted 19  June 2015, as 
modified by Appellate Body Report WT/DS430/AB/R, DSR 2015:V, p.  2663 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R , adopted 1 6 January  1998, 
DSR 1998:I, p. 9 
Indonesia – Iron or Steel 
Products  Panel Report, Indonesia – Safeguard on Certain Iron or Steel Products , 
WT/DS490/R , WT/DS496/R , and Add.1, adopted 27  August  2018, as modified 
by Appellate Body Report WT/DS490/AB/R, WT/DS496/AB/R  DSR 2018:VII, 
p. 3707 
Japan – Alcoholic 
Beverages  II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R , 
WT/DS10/AB/R , WT/DS11/AB/R , adopted 1  November  1996, DSR 1996:I, 
p. 97 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R , adopted 12  January  2000, 
DSR 2000:I, p. 3 
Korea – Dairy  Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain 
Dairy Products , WT/DS98/R  and Corr.1, adopted 12  January  2000, as modified 
by Appellate Body Report WT/DS98/AB/R, DSR 2000:I, p. 49 
Russia – Pigs (EU)  Panel Report, Russian Federation – Measures on the Importation of Live Pigs, 
Pork and Other Pig Products from the European Union , WT/DS475/R  and Add.1, 
adopted 21 March 2017, as modified by Appellate Body Report 
WT/DS475/AB/R , DSR 2017:II, p. 361  
Ukraine – Passenger Cars  Panel Report, Ukraine – Definitive Safeguard Measures o n Certain Passenger 
Cars, WT/DS468/R  and Add.1, adopted 20  July 2015, DSR 2015:VI, p. 3117 
US – Contin ued Suspension  Panel Report, United States – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS320/R  and Add.1 to Add.7, adopted 
14 November  2008, as modified by Appel late Body Report WT/DS320/AB/R, 
DSR 2008:XI, p.  3891 
US – Lamb  Appellate Body Report, United  States  – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopted 16  May 2001, DSR 2001:IX, 
p. 4051 
US – Lamb  Panel Report, United  States  – Safeguard Measures on Imports of Fresh, Chilled 
or Frozen Lamb Meat from New Zealand and Australia , WT/DS177/R , 
WT/DS178/R , adopted 16  May 2001, as modified by Appellate Body Report 
WT/DS177 /AB/R, WT/DS178/AB/R, DSR 2001:IX, p. 4107 WT/DS562/ R 
 
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  Short Title  Full Case Title and Citation  
US – Line Pipe  Appellate Body Report, United  States  – Definitive Safeguard Measures on 
Imports of Circular Welded Carbon Quality Line Pipe from Korea , 
WT/DS202/AB/R , adopted 8  March  2002, DSR 2002:IV, p. 1403 
US – Steel Safeguards  Appellate Body Report, United  States  – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10  December  2003, DSR 2003:VII, 
p. 3117 
US – Steel Safeguards  Panel Reports, United  States  – Definitive Safeguard Measures on Imports of 
Certain Steel Products , WT/DS248/R  and Corr.1 / WT/DS249/R  and Corr.1 / 
WT/DS251/R  and Corr.1 / WT/DS252/R  and Corr.1 / WT/DS253/R  and Corr.1 / 
WT/DS254/R  and Corr.1 / WT/DS258/R  and Corr.1 / WT/DS259/R  and Corr.1, 
adopted 10  December  2003, as modified by Appellate Body Report 
WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, 
WT/DS253/AB/R, WT/DS254/AB/R, WT /DS258/AB/R, WT/DS259/AB/R, 
DSR 2003:VIII, p. 3273 
US – Tyres (China)  Appellate Body Report, United  States  – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/AB/R , adopted 
5 October  2011, DSR 2011:IX, p. 4811 
US – Tyres (China)  Panel Report, United  States  – Measures Affecting Imports of Certain Passenger 
Vehicle and Light Truck Tyres from China , WT/DS399/R , adopted 
5 October  2011, upheld by Appellate Body Report WT/DS399/AB/R , 
DSR 2011:IX, p. 4945 
US – Washing Machines 
(Article  22.6 – US) Decision by the Arbitrator, United  States  – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea – Recourse to Article  22.6 
of the DSU by the United  States , WT/DS464/ARB  and Add.1, 8  February  2019 
US – Wheat Gluten  Appellate Body Report, United  States  – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R , 
adopted 19  January  2001, DSR 2001:II, p. 717 
US – Wheat Gluten  Panel Report, United  States  – Definitive Safeguard Measures on Imports of 
Wheat Gluten from the European Communities , WT/DS166/R , adopted 
19 January  2001, as modified by Appellate Body Report WT/D S166/AB/R, 
DSR 2001:III, p. 779 
US – Wool Shirts and 
Blouses  Appellate Body Report, United  States  – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R , adopted 23  May 1997, 
and Corr.1, DSR 1997:I, p. 323 
 
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  EXHIBITS REFERRED TO IN THIS REPORT  
Exhibit  Short Title (if any)  Description  
CHN-1 Presidential Proclamation  Presidential Documents, United  States Federal Register, Vol.  83, 
No. 17 (25  January  2018), pp. 3541-3551 
CHN-2 USITC final report  USITC, Public report, Crystalline silicon photovoltaic cells 
(whether or not  partially or fully assembled into other products), 
Inv. No. TA -201-75, Pub. 4739, Vol . I (November  2017)  
CHN-3 USITC final staff report  USITC, Public report, Crystalline silicon photovoltaic cells 
(whether or not partially or fully assembled into other p roducts), 
Inv. No. TA -201-75, Pub. 4739, Vol . II (November  2017)  
CHN-6 USITC supplemental report  USITC, Supplemental report regarding unforeseen 
developments  (27 December 2017)  
CHN-9 Transcript of the USITC injury 
hearing  Transcript of the USITC hearing on injury (15  August  2017)  
CHN-19 Econometric report  Thomas J. Prusa  and J . Landon -Lane, Econometric Analysis of 
Residential and Utility -Scale CSPV Pricing  (4 August  2017)  
CHN-20 SEIA prehearing brief  Solar Energy Industries Association, prehearing injury brief 
(8 August 2017)  
CHN-60  SEIA executive summary of US solar market on 2016  
CHN-69 Affidavit of Jay Miles, Russell 
Pacific   Affidavit of Jay Miles, Russell Pacific  (4 August  2017)  
CHN-98 Affidavit of Kenny Hughes, 
Radiance Solar  Affidavit of Kenny Hughes, Radiance Solar  (4 August 2017)  
CHN-99 Affidavit of Laura E. Stern, 
Nautilus Solar  Affidavit of Laura E. Stern, Nautilus Solar  (7 August  2017)  
CHN-100 Affidavit of Zaid Ashai, 
Nexamp  Affidavit of Zaid Ashai, Nexamp  (3 August  2017)  
CHN-101 Affidavit of Richard Matsui, 
kWh Analytics  Affidavit of Richard Matsui, kWh Analytics  (4 August  2017)  
CHN-104 Affidavit of George W. 
Hershman, Swinerton 
Renewable Energy  Affidavit of George W. Hershman, Swinerton Renewable Energy  
(4 August 2017)  
CHN-157 Affidavit of Craig Cornelius, 
NRG Affidavit of Craig Cornelius, NRG  (22 August  2017)  
CHN-170  Supporting footnotes regarding purchasers complaints on 
service and delivery  issues  
USA-1 19 C.F.R. § 206.17  Limited disclosure of certain confidential business information 
under administrative protective order, United  States  Code of 
Federal Regulations, Title 19, Section 206.17 
(7 November  2011)  
USA-7 Application for disclosure of 
CBI under administrative 
prote ctive order  USITC, Application for disclosure of confidential business 
information  under administrative protective order  (revised 
March  2005)  
USA-9 Notification of final date for 
compliance with APO CBI  
requirements  USITC, Notification of final date  for compliance with 
Administrative Protective Order confidential business 
information  requirements , Crystalline silicon photovoltaic cells 
(whether or not partially or  fully assembled into other products)  
(14 November  2017)  
USA-10 SEIA's posthearing reme dy 
brief Solar Energy Industries Association 's written response to 
comments  concerning the administration 's action following a 
determination of import injury with regard to  certain crystalline 
silicon photovoltaic cells  (29 November  2017) 
USA-11 USITC CSPV I final report  USITC, Certain crystalline silicon photovoltaic cells and modules 
from China, Inv. Nos. 701 -TA-481 and 731 -TA-1190 (Final), 
Pub. 4360 (Nov ember 2012)  
USA-12 USITC CSPV II final report  USITC, Certain crystalline silicon photovoltaic products from 
China and Taiwan,  Inv. Nos. 701 -TA-511 and 731 -TA-1246 to 
1247 (Final), Pub.  4519 (February 2015)  
USA-16 SolarWorld's posthearing 
injury brief  Crystalline silicon photovoltaic cells (whether or  not partially or  
fully assembled into other products) : posthearing brief on injury  
of SolarWorld Americas, Inc.  (23 August  2017)  
USA-17 Suniva's posthearing injury 
brief Crystalline silicon photovoltaic cells (whether or not partially or  
fully assembled into other products) : posthearing brief of 
Suniva, Inc. (22  August  2017)  WT/DS562/ R 
 
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  Exhibit  Short Title (if any)  Description  
USA-24 USDOC final CVD 
determination  Crystalline silicon photovoltaic cells, whether or not assembled 
into modules, from the People 's Republic of China: final 
affirmative countervailing duty determination and final 
affirmative critical circumstances determination, United  States 
Federal Register, Vol. 77, No. 201 (17  October  2012)  
USA-25 Issues and decision 
memorandum on CVD  Memorandum dated 9 October  2012 from C. Marsh to 
P. Piquado  concerning the issues and decision memorandum for 
the final determination in the countervailing duty investigation 
of crystalline silicon photovoltaic cells, whether or not assembled 
into modules, from the People 's Republic of China  
 WT/DS562/ R 
 
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  ABBREVIATIONS USED IN THIS REPORT  
Abbreviation  Description  
APO administrative protective order  
California Solar Systems  California Solar Systems , Inc.  
CBI confidential business information  
CSPV  products  crystalline silicon photovoltaic cells, whether or not partially or fully 
assembled into other products (including, but not limited to, modules, 
laminates, panels, and building -integrated materials)  
CSPV I  US anti -dumping and countervailing duties on impo rts of CSPV from 
China (2012)  
CSPV II  US anti -dumping and countervailing duties on certain CSPV products 
from China and Chinese Taipei (201 5) 
CVD countervailing  duty 
DEPCOM  DEPCOM Power, Inc.  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
FITC Federal Investment Tax Credit  
GATT 1994  General Agreement on Tariffs and Trade 1994  
Hanwha  Hanwha Q Cells  
Hanwha Qidong  Hanwha Q Cells (Qidong) Co., Ltd.  
HS Harmonized system  
HTS Harmonized Tariff Schedule  
LCOE  levelized cost of electricity  
MW MegaWatt  
NRG NRG Energy Inc . 
PERC  passivated emitter and rear contact  
P-max maximum  power  
POI period of investigation  
PRW production and related workers  
R&D research and development  
SEIA Solar Energy Industries Association  
SolarWorld  SolarWorld Americas, Inc.  
Suniva  Suniva, Inc.  
SunPower  SunPower Corporation  
TPSC Trade Policy Staff Committee  
USDOC  United  States  Department of Commerce  
USITC  United  States  International Trade Commission  
USTR  United  States  Trade Representative  
Vienna Convention  Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 
1155 UNTS 331; 8 International Legal Materials 679  
WARN Act  Worker Adjustment and Retraining Notification  Act 
WTO World Trade Organization  
Wp watt-peak 
 WT/DS562/ R 
 
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  1  INTRODUCTION  
1.1  Complaint by China  
1.1.  On 14 August  2018, China requested consultations with  the United  States  pursuant to 
Articles  1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes 
(DSU) , Article  XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) , and Article  14 
of the Agreement on Safeguards  with respect to the measures and claims set out below.1 
1.2.  Consultations were he ld on 22 October  2018, but failed to resolve the dispute . 
1.2  Panel establishment and composition  
1.3.  On 11 July 2019, China  requested the establishment of a panel pursuant to Articles  4.7 and  6 
of the DSU , Article  XXIII of the GATT 1994 , and Article  14 of the Agr eement on Safeguards  with 
standard terms of reference.2 At its meeting on 15 August  2019, the Dispute Settlement Body (DSB) 
established a panel pursuant to the request of China  in document WT/DS 562/8 , in accordance with 
Article  6 of the DSU.3 
1.4.  The Panel's terms of reference are the following:  
To examine, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by China  in document 
WT/DS 562/8  and to make such findings as wil l assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.4 
1.5.  On 14 October  2019, China  requested the Director -General to determine the composition of 
the panel, pursuant to Article  8.7 of the DSU . On 24 Octobe r 2019, the Director -General composed 
the Panel as follows:  
Chairperson:  Mr Guillermo Valles  
 
Members:   Mr José Antonio de la Puente León  
   Ms Chantal Ononaiwu  
 
1.6.  Brazil, Canada, the European Union, India, Japan, the Republic of Korea, Malaysia, Philippines, 
the Russian Federation, and Chinese Taipei  notified their interest in participating in the Panel 
proceedings as third parties.  
1.3  Panel proceedings  
1.7.  After consultation with the parties, the Panel adopted its Working Procedures5, Additional 
Working Procedures on Business Confidential Information6, and timetable on 20 December  2019. In 
adopting its Working Procedures, the Panel declined the request of the United States to make the 
first and second substantive meetings – in whole o r in part – open to public observation by other 
WTO Members and the public . The timetable was further revised during the panel proceedings in 
light of subsequent developments.7 
1.8.  China submitted its first written submission on 10  January 2020 , and the United States  
submitted its first written submission on 21  February  2020. Due to the imposition of various 
restrictions on gatherings and international travel in relation to the COVID -19 pandemic, on 
14 April 2020 the Panel postponed the original dates for the first substantive meeting.  To facilitate 
 
1 Request for consultations by China, WT/DS562/1  (China's consultations request) . 
2 Request for the establishment of a panel by China, WT/DS562/8  (China's panel request) . 
3 DSB, Minutes of meeting held on 15  August 2019, WT/DSB/M/433.  
4 Constitution note of the Panel, WT/DS562/9.  
5 See the Panel's Working Procedures in Annex A -1. 
6 See the Panel's Working Procedures on Business Confidential Information in Annex A -2. 
7 The timetable was updated and revised on 14  April 2020, 9 June 2020, 14  August 2020, 
4 September  2020, 21  September 2020, 9 October 2020, 23 November 2020, 8 March 2021, and 19 May 
2021.  WT/DS562/ R 
 
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  its continued work on the dispute, on 8 May 2020 the Panel posed written questions to the parties 
and third parties concerning certain factual and legal issues, pursuant to its authority under the 
chapeau  of paragraph 9 of the Working Procedures of the Panel and Article  13 of the DSU. The Panel 
received the parties' and  certain third parties' responses to these questions on 29  May 2020, and 
comments from the parties on these responses on 30  June 2020.  
1.9.  Thereafter, i n light of the continuation of the restrictions imposed on gatherings and 
international travel in relation to the COVID -19 pandemic, the Panel determined that it would still 
not be possible to hold the first substantive meeting in person at the WTO premises  within a 
reasonable timeframe . Accordingly, a fter several rounds of consultations with the parties,  
on 14 August  2020 the Panel decided to hold the first substantive meeting virtually  through the 
Cisco Webex platform . The Panel decided to proceed in this manner after careful consideration of 
the circumstances at hand. Since it did not appear likely that the p arties and the Panel would be 
able to meet in person at the WTO premises in the foreseeable future, the Panel considered that 
conducting the first substantive meeting virtually was a reasonable and secure alternative that would 
comply with the requirements  of the DSU, preserve the parties' due process rights, and avoid further 
delay in the proceedings.8 For the purpose of the virtual substantive meeting , after again consulting 
with the parties,  the Panel adopted Additional Working Procedures of the Panel Concerning 
Substantive Meetings Conducted via Cisco Webex9 on 9  September  2020. These procedures 
stipulated how the virtual meeting  would be conducted and set out certain technical and security 
requiremen ts. Throughout this process , the Panel made its best effort to accommodate technological 
and logistical concerns raised by  the parties.  The Panel held the first substantive meeting with the 
parties on 15  and 18  September  2020. The third-party session of th e first substantive meeting  took 
place on 17  September  2020.  On 21  September  2020, the Panel posed the second set of written 
questions to the parties and third parties. The Panel received the parties' and certain 
third parties'  responses to these questions on 12  October  2020. This was followed by the 
second  written submission s of the parties, which the Pan el received on 6 November  2020. 
1.10.  Due to the continuing restrictions imposed on gatherings and international travel in relation 
to the COVID -19 pandemic , the Panel determined that it would not be possible  to meet with the 
parties in person at the WTO premise s for the second substantive meeting  within a reasonable 
timeframe . Therefore, after consultations with the parties, the Panel decided to hold the 
second  substantive meeting virtually  through the Cisco Webex platform . For the purpose  of this 
virtual substa ntive meeting , after again consulting with the parties, the Panel adopted Additional 
Working Procedures of the Panel Concerning Substantive Meetings Conducted via Cisco Webex – 
Second Substantive Meeting Update10 on 3 December  2020. Throughout this process , the Panel 
again made its best effort to accommodate technological and lo gistical concerns raised by the 
parties . The Panel held its second substantive meeting with the parties on 9, 10 , and 
11 December  2020. On 15 December  2020, the Panel posed the third set of written questions to the 
parties. The Panel received the parties' responses to these questions on 15  January  2021, and 
comments from the parties on these responses on 29  January  2021. 
1.11.  On 12 March  2021, the Panel issued the descriptive part of its Report to the parties. The Panel 
issued its Interim Report to the parties on  26 May 2021 . The Panel issued its Final Report to the 
parties on  16 July 2021 . 
2  FACTUAL ASPECTS  
2.1  The measures at issue  
2.1.  This dispute concerns a safeguard measure imposed by the United  States  with regard to 
imports of certain crystalline silicon pho tovoltaic cells, whether or not partially or fully assembled 
into other products (including, but not limited to, modules, laminates, panels, 
and building -integrated materials) (CSPV products) , pursuant to "Proclamation 9693 of 
 
8 In this regard, we note that Article 3.3 of the DSU contemplates the prompt settlement of disputes 
while Article 12 of the DSU provides panels with flexibility in terms of the proced ures that govern the panel 
process.  
9 See the Additional Working Procedures of the Panel Concerning Substantive Meetings Conducted via 
Cisco Webex in Annex A -3. 
10 See the Additional Working Procedures of the Panel Concerning Substantive Meetings Conducted via 
Cisco Webex – Second Substantive Meeting Update in Annex A -4. WT/DS562/ R 
 
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  January  23, 2018 – To Facilit ate Positive Adjustment to Competition from Imports of Certain 
Crystalline Silicon Photovoltaic Cells (Whether or Not Partially  or Fully Assembled Into Other 
Products) and for Other Purposes" , published in the 83 U S Federal Register 3541 on 
25 January  2018.11  
2.2  Other factual aspects  
2.2.  In May 2017, two firms representing the United  States ' domestic industry, Suniva, Inc. 
(Suniva)  and SolarWorld  Americas, Inc. (SolarWorld) , petitioned the United  States  International 
Trade Commission (USITC) seeking the imposition of a safeguard measure on imports of CSPV 
products from all sources. After conducting an investigation, the USITC unanimously determined in 
its final report of 13  November  2017 that CSPV product s were being imported into the United  States  
in such increased quantities as to be a substantial cause of serious injury to the domestic industry  
producing an article like or directly competitive with the imported article . In response to a request 
from the  United  States  Trade Representative (USTR) for further information, the USITC issued a 
supplemental report on 27  December  2017, wherein the USITC  determined that unforeseen 
developments  had resulted in CSPV products being imported into the United  States  in such increased 
quantities as to be a substantial cause of serious injury to the domestic industry. Following the 
receipt of these reports, on 23  January  2018 the President  of the United  States  decided to  impose a 
safeguard measure beginning on  7 February  2018.12 
2.3.  The safeguard measure took the form of ( a) a 2.5GW tariff -rate quota on imports of solar cells 
not parti ally or fully assembled into other products  for a period of four years, with unchanging 
in-quota quantities and annual reductions in the rates of duty applicable to goods entered  in excess 
of those quantities in the second, third, and fourth years ; and ( b) ad valorem  duties on imports of 
modules for a period of four years, with annual reductions in the duty rates in the second, third, and 
fourth year s.13 
3  PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
3.1.  China  requests the Panel to find that the safeguard measure imposed by the United  States  is 
inconsistent with the United  States ' obligations under  Article  XIX:1(a) of the GATT 1994 and 
Articles  2.1, 3 , and 4.2(b) of the Agreement on Safeguards .14 Specifically, China contends that the 
United  States  acted inconsistently with:  
a. Article  XIX:1(a) of the GATT 1994 and Article  3.1 of the A greement on Safeguards because 
the United  States  failed to establish, prior to the application of the measures, that the 
increases in imports were the result of "unforeseen development s" and were the "effect of 
obligations incurred" under the GATT 1994 by the United  States15; 
b. Articles  2.1, 3.1 , and 4.2(b) of the Agreement on Safeguards because the United  States  
failed to establish the required "causal link" between the increased imports and the serious 
injury found to exist16;  
c. Articles  2.1, 3.1 , and 4.2(b)  of the Agreement on Safeguards because the United  States  
failed to ensure that injury caused by other factors was not attributed to increased 
imports17; and 
d. Articles  3.1 and 3.2 of the Agreement on Safeguards because the United  States  provide d 
non-confide ntial summaries to interested parties with such delay that the parties were not 
 
11 Presidential Proclamation, (Exhibit CHN -1). The safeguard measure excludes (a) thin film 
photovoltaic  products produced from amorphous silicon, cadmium telluride, or copper indiu m gallium selenide; 
(b) CSPV cells, not exceeding 10,000 mm2 in surface area, that are permanently integrated into a consumer 
good whose primary function is other than power generation and that consumes the electricity generated by 
the integrated CSPV cell ; and (c) CSPV cells, whether or not partially or fully assembled into other products, if 
such CSPV cells were manufactured in the United  States . (Presidential Proclamation, (Exhibit CHN -1), annex I ). 
12 Presidential Proclamation, (Exhibit CHN -1). 
13 Preside ntial Proclamation, (Exhibit CHN -1). 
14 China's first written submission, para. 318; second written submission, para. 324.  
15 China's panel request, pp. 2 -3; first written submission, para. 293.  
16 China's panel request, p. 2; first written submission, headi ng to section III(A).  
17 China's panel request, p. 2; first written submission, heading to section III(B)(2).  WT/DS562/ R 
 
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  provided with an adequate opportunity to exercise their right to present a defence , and 
because the actual public summaries were not sufficient so as to permit interested part ies 
to reasonably present a defenc e.18 
3.2.  The United  States  requests  the Panel to find that China has failed to establish any inconsistency 
with Article  XIX of the GATT 1994 or the  Agreement on Safeguards.19  
4  ARGUMENTS OF THE PARTIES  
4.1.  The arguments of the parties are reflected in their executive summaries, provided to the Panel 
in accordance with paragraph 23 of the Working Procedures adopted by the Pan el (see Annexes B -1 
and B -2). 
5  ARGUMENTS OF THE THI RD PARTIES  
5.1.  The arguments of  Brazil,  Canada, the European Union, Japan, and the Republic of Korea are 
reflected in their executive summaries, provided in accordance with paragraph 26 of the Working 
Procedures adopted by the Panel (see Ann exes C -1, C-2, C-3, C-4, and C -5). India, Malaysia, 
Philippines, the Russian Federation, and Chinese Taipei did not submit written or oral arguments to 
the Panel.  
6  INTERIM REVIEW  
6.1.  On 26 May 2021 , the Panel issued its Interim Report to the parties. On 9 June 2021 , China and 
the United States each submitted written requests for the review of precise aspects of the Interim 
Report.  Following a request from China, the Panel  held an interim review meeting with the parties 
on 23 June 2021. On 30 June 2021 , both parties submitted comments on the other party's request 
for interim review  and oral statement at the interim review meeting .  
6.2.  The parties' requests made at the interim review stage as well as the Panel's discussion and 
disposition of those requests are set out in  Annex A -5. 
7  FINDINGS  
7.1  General  principles  regarding  treaty  interpretation,  standard  of review,  and burden  of 
proof  
7.1.1   Treaty  interpretation  
7.1.  Article  3.2 of the DSU provides that the WTO dispute settlement system serves "to preserve 
the rights and obligations of Members under the covered agreements, and to clarify the existing 
provisions of those agreements in accordance with customary rules of interpretation of public 
international law". It further provides that " [r]ecommendations and rulings of the DSB cannot add 
to or diminish the rights and obligations provided in the covered agreements".  
7.2.  The customary rules of interpretation are codified in Articles  31 and 32 of the 
Vienna  Convention on the Law of Treaties (Vie nna Convention).20 Article  31(1)  of the 
Vienna  Convention provides that a "treaty shall be interpreted in good faith in accordance with the 
ordinary meaning to be given to the terms of the treaty in their context and in the light of its object 
and purpose" . Moreover, Article  32 of the Vienna Convention provides for recourse to supplementary 
means of interpretation, including the preparatory work of the treaty and the circumstances of its 
conclusion, to confirm a meaning resulting from the application of Article 31, or where application 
 
18 China's panel request, p. 2; first written submission, para. 302.  
19 United  States' first written submission, para. 322.  
20 In this respect, we agree with d ispute settlement reports previously adopted by the 
Dispute  Settlement Body  (previous DSB reports) that have confirmed this understanding. (See, 
e.g. Appellate  Body Repo rts, Japan  – Alcoholic  Beverages  II, para.  22; and India – Patents  (US), 
paras.  45-46). WT/DS562/ R 
 
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  of Article  31 leaves the meaning ambiguous or obscure, or leads to a result  that is manifestly absurd 
or unreasonable.  
7.1.2   Standard  of review  
7.3.  Article  11 of the DSU sets out a general standard of review for panels, providing, in re levant 
part, that:   
[A] panel should make an objective assessment of the matter before it, including an 
objective assessment of the facts of the case and the applicability of and conformity 
with the relevant covered agreements[.]  
7.4.  With respect to the review  of safeguard measures, dispute settlement reports previously 
adopted by the Dispute Settlement Body ( previous DSB reports ) have found  that the obligation to 
conduct an "objective assessment" requires panels to evaluate whether the competent authorities 
provided a "reasoned and adequate explanation" that demonstrates compliance with the relevant 
obligations .21 When carrying out this  assessment, panels should not engage in a de novo review of 
the evidence or substitute their judgment for that of the competen t authorities.22  
7.5.  Moreover, Article  3.1 of the  Agreement on Safeguards requires that the competent authorities 
publish a report that sets forth their "findings and reasoned conclusions reached on all pertinent 
issues of fact and law".23 Based on this requi rement, previous DSB reports have found  that the 
competent authorities'  published report must contain the "reasoned and adequate explanation" that 
demonstrates compliance with the relevant obligations.24  
7.6.  As we agree with these findings , we will conduct our review of the present matter accordingly.  
7.1.3   Burden  of proof  
7.7.  The general allocation of the burden of proof in WTO dispute settlement requires that the 
complaining party assert and prove its claim.25 Therefore, as the complaining party in these 
proceedings, China bears the burden of demonstrating that the challenged aspects of the 
safeguard  measure at issue are inconsistent with the relevant obligations under the  GATT  1994 and 
the Agreement on Safeguards.  
7.2  "Unforeseen developments " and "the effect of  obligations incurred" under 
the GATT  1994  
7.2.1   Introduction  
7.8.  The parties disagree on whether the United  States ' safeguard measure on CSPV products 
complied with the requirement in the first clause of Article  XIX:1(a)  of the GATT 1994 that imports 
increased "as a result of unforeseen developments and of the effect of the obligations incurred".  
7.9.  China claims that the Agreement on Safeguards obligated the USITC to demonstrate in its 
published report that imports increased "as a result of unforeseen developments and of the effect of 
the obligations incurred".26 China  further claims that the USITC 's supplemental report failed to 
appropriately demonstrate compliance with these requirements and advances several lines of 
 
21 Appellate  Body Report, US – Steel Safeguards , paras.  296-297. This standard is accepted by the 
parties in the present dispute. (See, e.g. China 's first written submission, para. 79; and United  States'  first 
written submission, para. 90). As explained below , these principles align with Article  3.1 of the  
Agreement  on Safeguards , which requires the competent authorities in a safeguard investigation to publish a 
report that sets forth "findings and reasoned conclusions reached on all pertinent issues  of fact and law".  
22 Appellate  Body Report, US – Steel Safeguards , para. 299. 
23 Appellate  Body Report, US – Steel Safeguards , paras.  296 and 299.  
24 Appellate  Body Report, US – Steel Safeguards , paras.  296-297. 
25 In this respect, we agree with the previous DSB reports that have confirmed this principle. (See, 
e.g. Appellate  Body Report, US – Wool Shirts  and Blouses , p. 16). 
26 See, e.g. China's  first written submission, section III(C)(1); and second written submiss ion, 
section  IV(A).  WT/DS562/ R 
 
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  argumentation to this effect.27 Based on these claims, China submits that the safeguard measure on 
CSPV products is inconsistent with the United  States ' obligations under Article  XIX:1(a)  of the 
GATT  1994 and Article  3.1 of the Agreement on Safeguards.  
7.10.  For its part, the United  States  argue s that China misapprehends the legal relationship 
between  the Agreement on Safeguards and Article  XIX:1(a)  of the GATT 1994. In its view, the 
Agreement  on Safeguards does not require the competent authorities of a Member to demonstrate 
in their published report that the safeguard measure complied with the requirements in the 
first clause of Article  XIX:1(a)  of the GATT 1994. Thus, in WTO dispute settlement proceedings, a 
Member can modify or supplement the competent authorities'  explanation as to whether im ports 
increased "as a result of unforeseen developments and of the effect of the obligations incurred" .28 
Nevertheless, the United  States  maintains that this interpretive issue does not arise in the present 
case, because the USITC appropriately demonstrate d compliance with the requirements of the 
first clause of Article  XIX:1(a)  of the GATT 1994.29 
7.11.  In this context, our analysis below first addresses China's  substantive claim under 
Article  XIX:1(a)  of the GATT 1994 and is organized as follows. In section 7.2.2, we set out the 
applicable legal requirements under the first clause of Article XIX:1(a)  of the GATT 1994, focusing 
on the meaning of the various elements in the phrase "as a result of unforeseen developments and 
of the effect of the obligations incurred". Thereafter, in section 7.2.3, we turn to China's  substantive 
claim concerning these requirements and specifically address:  
a. whether China has established that the USITC failed to  appropriately demonstrate the 
existence of "unfor eseen developments" (section 7.2.3.1 ); 
b. whether China has established that the USITC failed to  appropriately demonstrate that 
imports increased as a r esult of the "unforeseen developments" (section 7.2.3.2 ); and  
c. whether China has established that  the USITC failed to  appropriately demonstrate that 
imports increased as a result "of the effect of the obligations incurred" by the United  States  
(section 7.2.3.3 ). 
7.12.  After doing so, and to the extent necessary for the resolution of China's  overall claim under 
Article  XIX:1(a)  of the GATT 1994 and Article  3.1 of the Agreement on Safeguards, in section  7.2.4  
we address the disagreement between the parties concerning the interpretative issue of whether  the 
Agreement on Safeguards requires the competent authorities to demonstrate in their published 
report that imports incr eased "as a result of unforeseen developments and of the effect of the 
obligations incurred".  
7.2.2   Applicable legal requirements of Article  XIX:1(a) of the GATT 1994  
7.13.  Article  XIX:1(a)  of the GATT 1994, in full, provides:  
If, as a result of unforeseen development s and of the effect of the obligations incurred 
by a contracting party under this Agreement, including tariff concessions , any product 
is being imported into the territory of that contracting party in such increased quantities 
and under such conditions as to cause or threaten serious injury to domestic producers 
in that territory of like or directly competitive products, the contracting party shall be 
free, in respect of such product, and to the extent and for such time as may be necessary 
 
27 See, e.g. China's  first written submission, section III(C)(2); and second written submission, 
section  IV(B).  
28 United  States ' second written submission, para. 164; response to the Panel question No. 27(e)  of the 
second set , para. 73; and first written submission, para. 232.  
29 United  States ' second written submission, para. 176: " [a]t the outset, the United  States  notes that 
the USITC November Report and Supplemental Report demonstrated compliance with both the unforeseen 
developments and obligations incurred elements of the first clause of GATT Article  XIX:1(a).  Therefore, the 
legal issue addressed by this questio n is not necessary to a resolution of the claims raised by China in this 
regard." See also Unites States'  first written submission, para. 232, which makes the same point.  WT/DS562/ R 
 
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  to prevent or rem edy such injury, to suspend the obligation in whole or in part or to 
withdraw or modify the concession.30  
7.14.  Thus, in addition to the requirements of the Agreement on Safeguards, a safeguard measure 
may only be lawfully imposed if the relevant increase in im ports occurs " as a result of unforeseen 
developments and of the effect of the obligations incurred by a contracting party under this 
Agreement, including tariff concessions".31 As we see it, this requirement contains three main 
elements.  
7.15.  First, Article  XIX:1(a)  of the GATT 1994 requires the existence of "unforeseen developments". 
Previous DSB reports have found  that "unforeseen developments" are those developments that were 
"unexpected" at the time the importing Member incurred the relevant GATT obligation.32 As such, 
"unforeseen developments" have both subjective (i.e. what was unforeseen in particular 
circumstances for specific negotiators)  and objective (i.e. what should or c ould have been foreseen 
in light of the circumstances)  elements.33 
7.16.  Second, Article  XIX:1(a)  of the GATT 1994 requires that imports increased " as a result of  the 
unforeseen developments".34 In US – Steel Safeguards , the Appellate Body addressed this 
require ment and found : 
Turning to the term "as a result of"  that is also found in Article  XIX:1(a), we note that 
the ordinary meaning of "result"  is, as defined in the dictionary, "an effect, issue, or 
outcome from some action, process or design". The increased i mports to which this 
provision refers must therefore be an "effect, or outcome " of the "unforeseen 
developments ". Put differently, the "unforeseen developments"  must "result"  in 
increased imports of the product ("such product")  that is subject to a 
safegua rd measure.35  
7.17.  Third, Article  XIX:1(a)  of the GATT 1994 requires that imports increase d "as a result … of the 
effect of the obligations incurred by a contracting party under this Agreement, including tariff 
concessions". In Korea – Dairy and Argentina – Footwear (EC) , the Appellate Body found  that: 
[T]his phrase simply means that it must be demonstrated, as a matter of fact, that the 
importing Member has incurred obligations under the GATT 1994, including tariff 
concessions . Here, we note that  the Schedules annexed to the GATT 1994 are made an 
integral part of Part I of that Agreement, pursuant to paragraph 7 of Article  II of the 
GATT 1994. Therefore, any concession or commitment in a Member's  Schedule is 
subject to the obligations contained in  Article  II of the GATT 1994.36  
 
30 Emphasis added.  
31 Appellate Body Report, Korea – Dairy , para. 77: "any safeguard m easure imposed after the entry into 
force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and 
Article  XIX of the GATT 1994" (fn omitted; emphasis original). See also Appellate Body Report, Argentina – 
Footwear (EC) , paras.  83-84; and Panel Reports, US – Lamb , para. 7.11; and US – Steel Safeguards , 
para. 10.36.  
32 Appellate Body Report s, Argentina – Footwear  (EC), para. 91; Korea – Dairy , para. 84 . 
33 Panel Reports,  US – Steel Safeguards , paras.  10.42 -10.43. See also Appellate Body Report,  
US – Lamb , para.  73; and Panel Report,  Argentina – Preserved Peache s, para.  7.23.  
34 Emphasis added.  
35 Appellate Body Report, US – Steel Safeguards , para. 315 (emphasis added). While China uses the 
term "clear linkage " to describe the requisite relationship between increased imports and "unforeseen 
developments", it explains that it uses this phrase " to summarize Appellate Body and panel decisions 
characterizing this concept as a  'logical connection ', a 'clear temporal  connection ', and 'clear' relationship ". As 
such, it does not appear that, by using this phrase, China is arguing that a heightened legal standard should 
apply. ( China's  response to the Panel question No. 24 of the second set , para. 232). Moreover , we note that 
the findings from previous DSB reports to which China refers concern the meaning of the treaty text "as a 
result of" in the first clause of Article  XIX:1(a)  of the GATT 1994 . (See, e.g. Appellate Body Report, US – Steel 
Safeguards , paras.  317-318). In our view, the term "as a result of" is sufficiently clear on its own; therefore, 
we will analyse China's claims against the USITC's findings concerning the relationship between increased 
imports and "unforeseen developments" on that basis.  
36 Appell ate Body Reports, Korea – Dairy , para. 84; Argentina – Footwear  (EC), para. 91 (emphasis 
added). See also Panel Reports, Indonesia – Iron or Steel Products , para. 7.52: "[ t]he expression 'the effect of 
 WT/DS562/ R 
 
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  7.18.  As we agree with the findings  in the previous DSB reports noted above, we will assess  
China's  claims concerning the three elements in the first clause of Article  XIX:1(a)  of the GATT 1994 
accordingly.  
7.2.3   Whether the USITC 's p ublished  report demonstrated compliance with the 
requirements of Article  XIX:1(a) of the GATT 1994  
7.19.  As a preliminary matter, we recall  that the USITC directly addressed the issue of "unforeseen 
developments" in its supplemental report that was prepared in r esponse to a request for additional 
information from the USTR. Specifically, the USTR requested that the USITC "identify any unforeseen 
developments that led to the articles at issue being imported into the United  States  in such increased 
quantities as to be a substantial cause of serious injury".37 
7.20.  The Agreement on Safeguards does not dictate the precise format of the "report" that the 
competent authorities of a Member must publish following their investigation.38 We therefore 
consider that the USITC  final report  and the USITC final staff report , along with the supplemental 
report, collectively constitute the relevant  published  "report" within the meaning of Article  3.1 of the 
Agreement on Safeguards. Accordingly, in the sections that follow, we address whether China has 
established that this report failed to demonstrate compliance with the requirement in 
Article  XIX:1(a)  of the GATT 1994 that imports increased "as a result of unforeseen developments 
and of the effect of the obligations incurred" by the United  States .  
7.2.3.1   The existence of "unforeseen developments"  
7.2.3.1.1   Factual background  
7.21.  In its supplemental report, the USITC found that US negotiators could not have foreseen, a t 
the time that the United  States  acceded to GATT 1947, at the time that the United  States  acceded 
to the WTO, or at the time that the United  States  agreed to China's  accession to the WTO39, the 
series of events that culminated in CSPV products being impor ted into the United  States  in increased 
quantities. In particular, the USITC found that US negotiators could not have foreseen that:  
a. China would implement a series of industrial policies, five -year plans, and other 
government support programmes favouring r enewable energy product manufacturing, 
including CSPV products.40  
 
the obligations incurred by a  Member  under this Agreem ent' requires a  competent authority to factually 
demonstrate 'that the importing Member has incurred  obligations under the  GATT 1994, including tariff 
concessions '"; Dominican Republic – Safeguard Measures , paras.  7.145 -7.146: "in the opinion of the Panel, it 
is clear that as a matter of fact the importing Member must have incurred obligations under the GATT 1994, for 
example, tariff concessions, with respect to the product in question. It then falls to the importing Memb er to 
identify those obligations incurred under the GATT 1994 that are linked with the increase in imports causing 
serious injury to its domestic industry"; and US – Steel Safeguards , para. 10.140: "the logical connection 
between tariff concessions and inc reased imports causing serious injury is proven once there is evidence that 
the importing Member has tariff concessions for the relevant product" . 
37 USITC supplemental report, (Exhibit CHN -6), p. 1. 
38 Accordingly, we disagree with the suggestion in China's  first written submission that it was improper 
for USITC to address "unforeseen developments" in a separate report. (China's  first written submission, 
paras.  245-248 and 280). In this regard, we obser ve that the panel in US – Steel Safeguards also found that it 
was appropriate to publish the "report" in parts:  
[N]othing in the requirement to publish a report dictates the form that the report must take, 
provided that the report complies with all of the  other obligations contained in the Agreement on 
Safeguards and Article  XIX of GATT 1994. In the end, it is left to the discretion of the Members to 
determine the format of the report, including whether it is published in parts, so long as it contains 
all of the necessary elements, including findings and reasoned conclusions on all pertinent issues 
of fact and law. Together, these parts can form the report of the competent authority.  
(Panel Reports, US – Steel Safeguards , para. 10.49. See also Brazil's  third-party submission, para. 10; and 
Japan's  third-party submission, para. 10) 
39 USITC supplemental report, (Exhibit CHN -6), p. 5. 
40 USITC supplemental report, (Exhibit CHN -6), pp.  5 and 10.   WT/DS562/ R 
 
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  b. The effect of such industrial policies, plans, and support programmes would lead to the 
development and expansion of capacity to manufacture CSPV products in China to levels 
that substantia lly exceeded the level of its internal consumption.41  
c. This increased capacity would be largely directed to export markets such as the 
United  States  and would take advantage of the existence of programmes implemented by 
the US government to encourage renew able energy consumption.42 
d. The United  States ' use of authorized tools, such as anti -dumping and countervailing duty 
measures on imports from China, would have limited effectiveness and instead lead to 
rapid changes in the global supply chains and manufactu ring processes in order to facilitate 
US imports of non -covered products from China and Chinese Taipei, and later US imports 
from Chinese producers'  affiliates in other countries.43 In this regard, the USITC explained 
that in 2012 the United  States  imposed  anti-dumping and countervailing duties on imports 
from China ( CSPV I ). Before the CSPV I orders could have a meaningful effect, Chinese 
producers reorganized their production facilities to avoid being subject to the anti -dumping 
and countervailing duties. Consequently, in 2013, US CSPV producers filed another petition 
seeking the imposition of anti-dumping and countervailing duties on imports from China 
and Chinese  Taipei, which ultimately resulted in additional duties bei ng imposed on certain 
CSPV products from these sources ( CSPV II ).44 However, before the CSPV II orders went 
into effect, imports from third countries started to enter the US market. By the end 
of 2015, total imports had almost doubled their level from 2014 , and imports continued 
to grow into 2016 . At the same time, the six largest firms producing CSPV products in 
China increased their global manufacturing capacity by expanding investments in the same 
third countries without reducing their capacity in China.45 Between 2015 -2016, imports 
from four different third countries where Chinese affiliates had added CSPV production 
capacity increased their share of US consumption, just after the CSPV II orders went into 
effect.46 
7.22.  As such, the USITC considered these eve nts constituted "unforeseen developments" within 
the meaning of Article  XIX:1(a)  of the GATT 1994.  
7.2.3.1.2   Main arguments of the parties  
7.23.  China argues that the USITC failed to demonstrate that the events to which it referred were 
unforeseen by US negotiators.47 In particular, China claims that the USITC failed to appropriately 
identify the "series of industrial policies, five -year plans, and other government support programs 
favouring renewable energy product manufacturing, including CSPV products" and explain why it 
 
41 USITC supplemental report, (Exhibit CHN -6), pp. 5 and 7 -10.  
42 USITC supplemental report, (Exhibit CHN -6), p. 5. 
43 USITC supplemental report, (Exhibit CHN -6), pp. 5-10. 
44 USITC supplemental report, (Exhibit CHN -6), pp. 5-7. Pursuant to the CSPV I investig ation, the 
United  States  imposed anti -dumping duties ranging from 18 % to 249.46 %. The United  States  further identified 
12 programme s as providing countervailable subsidies to CSPV producers/exporters in China that resulted in 
the imposition of countervaili ng duties ranging from 14 % to 16%. Among others, the countervailable subsidies 
included  programme s involving preferential policy lending; provision of polysilicon, land, and electricity for less 
than adequate remuneration; preferential taxes; import tariff  and value added tax exemptions for use of 
imported equipment; value added tax rebates on foreign -invested enterprises'  purchase of Chinese -made 
equipment; and export credit subsidies.  
Furthermore, pursuant to the CSPV II  investigation, the United  States  imposed anti -dumping duties 
ranging from 26.71 % to 165.04 % on imports from China and 11.45 % to 27.55 % on imports from 
Chinese  Taipei, and countervailing dut ies ranging from 27.64 % to 49.79 % on imports from China. The 
United States  again identified a variety of countervailable programme s in China, including grants; provision of 
inputs or land for less than adequate remuneration; preferential loans and directed credit; tax benefit 
programme s; value added tax rebates on equipm ent purchases; export guarantees and insurance for green 
technology; and export credit subsidies.  
45 USITC supplemental report, (Exhibit CHN -6), p. 8 (referring to Canadian Solar (China), 
Hanwha  Qidong (China), Shanghai JA Solar, Jinko Solar (China), Changz hou Trina (China), and Yingli Green).  
46 USITC supplemental report, (Exhibit CHN -6), pp. 8-9 (referring to  Korea, Malaysia, Thailand, and 
Viet Nam).  
47 China's  first written submission, paras.  260-273; comments on the United  States' response to Panel 
question No. 23 of the first  set, paras.  175-190. WT/DS562/ R 
 
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  considered those developments to be unforeseen.48 In China's  view, it is "hardly 'unforeseen ' that 
countries would seek economic development and energy security".49 In addition, China argues that 
the USITC failed to demonstrate that it was "completely unforeseen" that, in a situation where 
US demand for CSPV products significantly exceeds US CSPV production capability, the imposition 
of anti -dumping and countervailin g duties against China would lead to increased imports from other 
countries.50 China further claims that US negotiators would have foreseen that the imposition of 
anti-dumping and countervailing duty orders on products from one country would naturally lead  to 
increased imports from another country with lower duties, especially considering that this proposition 
is well -established in economic literature.51 According to China, the USITC recognized this very 
dynamic in its 2001 safeguard investigation against steel products.52 
7.24.  For its part, the United  States  submits that the USITC identified a number of developments 
that were unforeseen.53 According to the United  States , WTO Members have declared that their 
economies will participate in the international trading system based on "open, market -oriented 
policies and the commitments set out in the Uruguay Round Agreements and Decisions".54 In this 
context, the United  States  argues that the USITC appropriately identified the "industrial policies, 
five-year plans, and other government support programs" by reference to China's  subsidy 
programmes and explained that they resulted in a massive and unforeseen increase in 
Chinese  production capacity for CSPV products.55 The United States asserts  that, con trary to 
China's  argument concerning economic development and energy security, the USITC found "what 
was unforeseen was the scale of the effort, the speed  with which it boosted Chinese production, the 
overcapacity  that it created, and the degree to which these effects spilled into other countries where 
Chinese producers expanded their operations".56 In this respect, the United  States  contends that 
China essentially ignores "the speed of its industry 's growth and th e overcapacity that resulted, 
which are central to the USITC's  conclusions".57 Relatedly, the United  States  advances that the 
intentional development of overcapacity in China and in other countries after the imposition of the 
CSPV I and CSPV II  orders demo nstrates that China is incorrect to argue that CSPV production 
"naturally" shifted to countries with lower duties and therefore would have been foreseen.58  
7.2.3.1.3   Evaluation of the Panel  
7.25.  We do not consider that China has demonstrated that it was inappropriate fo r the USITC to 
find that "unforeseen developments" existed during the period of investigation  (POI) .  
7.26.  First, in line with the United  States ' argument, we note that the USITC identified 
China's  "industrial policies, five -year plans, and other government sup port programs" by reference 
to the findings in the previous countervailing duty investigations on CSPV products from China 
(i.e. CSPV I and CSPV II ).59 We further note that the USITC found that the same "industrial policies, 
five-year plans, and other gove rnment support programs" were connected to the rapid increase of 
 
48 China's  first written submission, paras.  261-263.  
49 China's  first written submission, para.  261.  
50 China's  second written submission, paras.  269-277. 
51 China's  response to Panel question No. 21 of the second set, para. 220; first written submission, 
para. 270.  
52 China's  second written submission, paras.  277-279; first written submission, paras.  271-272; and 
response to Panel question No. 21 of the second set, paras.  221-222. 
53 United  States ' first written submission, paras.  262-266 and 276 -285; second written submission, 
paras.  157-158; and response to Panel question No. 23 of the first  set, paras.  67-77. 
54 United  States ' response to Panel question No. 23 of the first  set, para. 76; second written submission, 
para. 157. 
55 United  States'  first written submission, paras.  277-278. 
56 United  States ' first written submission, para. 278 (emphasis original). See also 
United  States ' response to Panel question No. 23(a)  of the first  set, paras.  67-73.  
57 United  States ' first written s ubmission, para.  278.  
58 United  States ' first written submission, paras. 279 and 281; second written submission, 
paras.  157-158.  
59 USITC supplemental report, (Exhibit CHN -6), pp.  5-7. In this respect, we recall that the USITC 
referred to a variety of countervailable programme s in China  that were identified in the CSPV I and CSPV II 
investigations and the resultant countervailing duty rates that were imposed on imports from China. (See fn 44 
above).  WT/DS562/ R 
 
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  CSPV capacity in China that significantly exceeded domestic consumption  within China .60 Based on 
these findings, we do not consider that the USITC failed to appropriately identify development s that 
could not have been foreseen by US negotiators, contrary to China's view.  
7.27.  Second, we are not persuaded by China's  claim that it was inappropriate  for the USITC to find 
that the ineffectiveness of anti -dumping and countervailing duty orders could no t have been foreseen 
by US negotiators. As noted above, China bases its argument on general economic principles and 
on a statement from the USITC in its 2001 steel safeguard investigation, both of which allegedly 
suggest that the USITC would have anticipat ed that the imposition of trade remedy orders on 
products  from one country would lead to an increase in imports from other countries. However, even 
if it was generally foreseeable that anti -dumping and countervailing duty orders might lead to trade 
diversi on, the USITC's finding in the present case was more specific. The USITC  found that what was 
unexpected was the "rapid changes in the global supply chains and manufacturing processes" that 
immediately followed the imposition of the CSPV I  and CSPV II  orders, combined with the significant 
increase in global capacity of CSPV prod uction.61 As these particular developments are documented 
in record evidence (which China does not contest)62, we agree with the United  States  that China has 
not demonstrated that it was inappropriate for the USITC to find that these developments could not  
have been foreseen  by US negotiators .63  
7.28.  Based on the foregoing, we reject China's  claim that the USITC failed to appropriately identify 
the existence of "unforeseen developments" within the meaning of Article  XIX:1(a)  of the 
GATT  1994.  
7.2.3.2   The relationship b etween increased imports and "unforeseen developments"  
7.2.3.2.1   Factual background  
7.29.  The USITC found that the unforeseen developments described in section 7.2.3.1.1  above  "led 
to CSPV products being imported into the United  States  in such increased quantities as to be a 
substantial cause of serious injury to the domestic industry producing an article like or directly 
competitive with the imported article".64 
7.2.3.2.2   Main arguments of the parties  
7.30.  China argues that the USITC failed to establish the requisite connection between increased 
imports and the "unforeseen developments".65 China contends that the USITC failed to demonstrate 
that increased imports "were largely attributable to increased Chinese CSPV capacity and 
China's  government policies".66 China further contends that the USITC failed to demonstrate that 
China's  governmen t policies encouraged production outside of China67 and that Chinese producers 
actually took advantage of such policies to build production facilities in countries outside of China.68 
 
60 In this respect, we note that record evidence identified by the USITC shows that, within China, 
CSPV  capacity grew significantly and far exceeded domestic consumption, particularly for CSPV modules. 
Record evidence identified by the USITC also shows that the largest Chinese producers substantially increased 
their global capacity over the 2012 -2016 period.  (USITC supplemental report, (Exhibit CHN -6), fns 24, 25, 
and 29; see also USITC final staff report, (Exhibit CHN -3), pp. IV-20-IV-35). In addition, we note that the 
findings in the CSPV I and CSPV  II investigations are pertinent to the safeguard investigation due to the 
temporal connection between the POIs in all three proceedings. (USITC CSPV I final report , (Exhibit USA -11), 
fn 63 (noting that the POI was January 2009 to June 2012) ; USITC CSPV II fin al report , (Exhibit USA -12), 
fn 30 (noting that the POI was January 2011 to June 2014) ).  
61 USITC supplemental report, (Exhibit CHN -6), p.  10. 
62 USITC supplemental report, (Exhibit CHN -6), p.  10 and fn 32; USITC final staff report, 
(Exhibit  CHN-3), pp. IV-26-IV-29. See also United  States ' response to Panel question No. 23 of the first set, 
paras.  67-77; and China's  comments on the United  States ' response to Panel question No. 23 of the first set, 
paras.  178-190. 
63 United  States ' second written submission, paras.  157-158. 
64 USITC supplemental report, (Exhibit CHN -6), p. 10. 
65 China's  second written submission, paras.  280-305; first written submission, paras.  279-292.  
66 China's  first written submission, para.  284. 
67 China's  second written submission, paras.  284 and 290.  
68 China's  second written submission, paras.  284 and 291. According to China, although some Chinese 
producers constructed factories outside China, there is no evidence that these Chinese producers received any 
support  from the government of China to do so.  WT/DS562/ R 
 
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  China considers that such a demonstration was necessary because imports of CSPV products from 
China decreased in the 2015 -2016 period when imports from other sources increased.69  
7.31.  In a related line of argumentation, China claims that the USITC failed to establish that 
increased imports originated  from Chinese -affiliated companies that had expanded to 
third countries.70 In China's  view, it was improper for the USITC to infer that Chi nese-affiliated CSPV 
producers that had expanded to third countries contributed to the increase in US imports because 
the increase "could have come from other non -Chinese producers in these countries".71 In addition, 
China advances that Korea was responsib le for the single largest increase in imports72; however , no 
Chinese producer had "substantial CSPV production factories"73 or "controlled" the export market in 
Korea.74 Accordingly, China argues that, even if the USITC correctly found that the increase in  
imports from certain third countries other than Korea came from Chinese -owned companies, " there 
is still a very large increase in imports that has nothing to do with the USITC's alleged unforeseen 
development" , and therefore there is no "clear linkage" be tween the alleged unforeseen 
development and the increase in imports .75 
7.32.  The United  States  argues that the USITC appropriately demonstrated that imports increased 
"as a result of unforeseen developments".76 Contrary to China's  argument, the USITC explained how 
China's  policies, plans, and programmes resulted in increased imports not only from C hina, but also 
from third countries where Chinese -affiliated producers had expanded their production capacity, 
without reducing their production capacity in China.77 By demonstrating that US imports from the 
same third countries increased massively after t his expansion, the USITC established that increased 
imports were the result of this unexpected development.78  
7.33.  In response to China's  argument that it was improper for the USITC to infer that imports 
increased as a result of the expansion of Chinese -affiliated producers in third countries, the 
United  States  advances the following arguments. The United  States  asserts that the unforeseen 
developments requirement in Article  XIX:1(a)  of the GATT 1994 does not require import -specific 
information on a transaction -by-transaction (or company -by-company, or country -by-country)  
basis.79 Thus, the United  States  contends that it was appropriate for the USITC to base its conclusion 
that imports increased "as a result" of unforeseen developments on evidence demonstrating that 
Chinese -affiliated producers massively increased their production in Korea, Malaysia, Thailand, and 
Viet Nam, and that the imports from these countries, collectively, more than doubled  their share of 
the US market during the time just after the trade remedy orders in CSPV II  took effect.80 According 
to the United  States , China cannot reasonably argue that its producers'  massive increase in 
production capacity in third countries is unrelated to the significant increase in US imports from 
those same coun tries, when both developments occurred at the same time .81 
 
69 China's  second written submission, para. 281; response to Panel question No. 54 of the third set, 
para. 144. 
70 China's  second written submission, paras.  284 and 292 -302; response to Panel question No. 21 of the 
second set, paras.  216-217.  
71 China's  second written submission, paras.  237 and 286 -288. 
72 China's  second written submission, para. 301. 
73 China's  second written submission, para. 294. 
74 China's  second written  submission, paras.  297-302. 
75 China's  second written submission, para. 303. 
76 United  States ' first written submission, para. 293. 
77 United  States ' first written submission, paras.  282-285; second written submission, 
para. 17; response to Panel question No . 22 of the second set, paras.  52-54; and response to Panel question 
No. 55 of the third set, paras.  48-52.  
78 United  States ' first written submission, paras.  282-285; second written submission, paras.  154-155.  
79 United  States ' second written submission, para.  156. 
80 United  States ' second written submission, para. 17. The United  States  further argues that the USITC 
also found that four of the six largest Chinese firms added CSPV module capacity in two additional countries 
(Canada and Indonesia) . This, coupled with the USITC's  findings concerning the "large and attractive nature of 
the U.S. market and the large and growing size of the export -oriented foreign industries", reveals that the 
increased imports resulting from China's  efforts to target the United  States ' market are not limited to Korea, 
Malaysia, Thailand, and Viet  Nam. (United  States ' response to Panel question No. 22 of the second set, 
para. 53). 
81 United  States ' second written submission, para.  156; response to Panel question No. 22 of the 
second  set, para. 54; and response to Panel question No. 55 of the third set, para. 52. WT/DS562/ R 
 
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  7.34.  Finally, the United  States  argues that China's  argument concerning Korea is flawed on several 
fronts. According to the United  States , the USITC found that Hanwha Qidong was one of the 
six largest C SPV cell and module producers in China, and that Hanwha Qidong 's corporate parent 
(Hanwha)  produced CSPV cells and modules in Korea.82 Thus, regardless of whether Chinese 
producers controlled significant production in Korea, Korea was one of the countries where 
Chinese -affiliated CSPV producers expanded their production "in efforts to circumvent the CSPV I 
and CSPV II  orders".83 The United  States  also argues that China fails to cite the most accurate record 
evidence regarding the increase in imports from Korea.84 Yet, even the record evidence to which 
China refers shows that imports from Malaysia, Thailand, and Viet  Nam (the three other countries 
where Chinese firms had added both cell and module capacity)  accounted for almost two -thirds of 
the total increase in imports.85 In the United  States ' view, this was sufficient for the USITC to 
establish that increased imports were "as a result of unforese en developments" for purposes of 
Article  XIX:1(a)  of the GATT 1994.86 
7.2.3.2.3   Evaluation of the Panel  
7.35.  Article  XIX:1(a)  of the GATT 1994 requires that increased imports occur " as a result of  the 
unforeseen developments".87 Consistent with the ordinary meaning of th is phrase, we consider that 
this element of Article  XIX:1(a)  of the GATT 1994 may be satisfied where increased imports are an 
effect or outcome of the "unforeseen developments".88 
7.36.  In this context, the parties'  arguments raise two main issues: (a)  whether t he USITC 
appropriately demonstrated that imports increased as a result of China's  "industrial policies, 
five-year plans, and other government support programs" that supported the development of CSPV 
capacity; and (b)  whether the USITC appropriately demonst rated that imports increased as a result 
of the overall increase in global capacity and the rapid reorganization of global supply chains that 
followed the imposition of the CSPV I and CSPV II orders. Since the "unforeseen developments" 
found by the USITC c onsisted of a series of events, we do not consider that it was necessary for the 
USITC to directly connect each specific development to the increase in imports so long as there was 
sufficient evidence to find that the "unforeseen developments", overall, re sulted in increased 
imports.  
7.37.  Turning to the first main issue, we  recall  that the USITC identified record evidence 
demonstrating that China adopted "industrial policies, five -year plans, and other government 
support programs" that benefit ted CSPV producers and exporters in China and led to a significant 
and rapid expansion of their capacity and production for CSPV cell s and modules.89 We also recall 
that the USITC found that this increased capacity significantly exceeded domestic consumption  
within China .90 In addition, the USITC identified record evidence demonstrating that US imports of 
CSPV products from China increased significantly over the POI, from 326,846  kW in 2012 
to 2,720,193  kW in 2016.91 The USITC further recognized that, with the exception of 20 13 
(i.e. immediately after the imposition of the CSPV I order), imports from China were consistently a 
significant source of CSPV imports in the US market.92 Based on this evidence, contrary to 
China's  view, we do not consider that the USITC failed to demo nstrate that increased imports were 
attributable to "increased Chinese CSPV capacity and China's  government policies".93 
 
82 United  States'  response to Panel question No. 56 of the third set , para.  53. 
83 United  States'  response to Panel question No. 56 of the third set , para.  54. 
84 United  States'  response to Panel question No. 56 of the third set , para.  55. 
85 United  States'  response to Panel question No. 56 of the third set , para.  56. 
86 United  States'  response to Panel question No. 56 of the third set , para. 56. 
87 Emphasis added.  
88 See section 7.2.2  above.  
89 USITC supplemental report, (Exhibit CHN -6), pp. 6-7 (referring to the US Department of Commerce 
(USDOC) investigations that determined countervailable subsidies were being provided to  producers and 
exporters of CSPV products from China;  USITC CSPV I final report , (Exhibit USA -11), p. I-5; USITC CSPV II 
final report , (Exhibit USA -12), p. I-5). See also USDOC final CVD determination , (Exhibit USA -24); and  Issues 
and decision memorandum on CVD , (Exhibit USA -25).  
90 USITC supplemental report, (Exhibit CHN -6), fns 24, 25, and 2 9; see also USITC final staff report, 
(Exhibit CHN -3), pp. IV-20-IV-35. 
91 USITC final staff report, (Exhibit CHN -3), p. IV-2, table IV -1. 
92 USITC final report, (Exhibit CHN -2), p. 29. 
93 China's  first written submission, para.  284. WT/DS562/ R 
 
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  7.38.  In line with China's argument, we note that record evidence does not appear to directly 
connect China's  "industrial policies, five -year plans, and other government support programs" to the 
expansion of capacity and production of CSPV products in third countries. However, we do not 
consider that the absence of such direct evidence undermines the linkage that the USITC established 
between t hose policies, plans, and programmes and the significant volume of increased imports from 
China. Nor do we consider that the relevance of imports from China, or the connection between 
those imports and the "industrial policies, five -year plans, and other government support programs", 
is undermined by the fact that import volumes from China declined in 2016. As noted above, CSPV 
imports from China were consistently a significan t source of the overall imports of CSPV products in 
the US market.  
7.39.  This br ings us to the second main issue. As indicated above, the USITC found that the overall 
increase in global CSPV capacity and the rapid reorganization of global supply chains that followed 
the imposition of the CSPV I and CSPV II orders was part of the "unfo reseen developments" that 
resulted in increased imports of CSPV products.94 In particular, the USITC found that, after the 
imposition of the CSPV I  order, "rapid changes in the global supply chains and manufacturing 
processes" facilitated US imports of non -covered products from China and Chinese Taipei.95 It also 
found that, after the imposition of the CSPV II order, "rapid changes in the global supply chains and 
manufacturing processes" facilitated US imports from Chinese producers'  affiliates in third 
countries.96 
7.40.  China argues that the USITC's  finding on this point is deficient because it (a)  relied on an 
inference to find that Chinese -affiliated CSPV producers in third countries contributed to the increase 
in US imports97; and (b)  ignore d that a significa nt share of the increased imports originated from 
Korea, where no Chinese producer that had "substantial CSPV production factories"98 or "controlled" 
the export market.99 However, for the reasons explained below, we are not convinced by either of 
China's  arguments.  
7.41.  Regarding China's  argument that it was inappropriate for the USITC to infer that 
Chinese -affiliated CSPV producers in third countries contributed to the increase in imports, we note 
that the USITC relied on evidence demonstrating that the six la rgest firms producing CSPV cells and 
modules in China increased their global capacity over the POI.100 Four of these six firms added CSPV 
cell manufacturing capacity in one or more of the following countries: Korea, Malaysia, the 
Netherlands, Thailand, and Viet Nam.101 Meanwhile, four of these six firms added CSPV module 
manufacturing capacity in one or more of the following countries: Canada, Indonesia, Korea, 
Malaysia, Thailand, and Viet  Nam.102 In addition, imports from four countries where Chinese affiliat es 
added both CSPV cell and CSPV module capacity, i.e.  Korea, Malaysia, Thailand, and Viet  Nam, 
increased their share of apparent US consumption, particularly in 2015 and 2016.103 Collectively, 
imports from these countries more than doubled their share of t he US market just after the CSPV II  
orders took effect in 2015.104 
7.42.  Aside from its argument concerning Korea, China does not contest any of these findings. 
Rather, China claims that it was inappropriate for the USITC to infer that the increase in production 
capacity of Chinese -affiliated CSPV producers in these countries contributed to the increased imports 
in the United  States , advancing that the "increase in exports could have come from other 
 
94 Based on our reading of the supplemental report, we understand that the USITC found that the 
increase in global CSPV capacity and the rapid reorganization of global supply chai ns, as well as the 
consequent ineffectiveness of the CSPV I and CSPV II orders, collectively constituted an independent 
explanation for why imports of CSPV products increased in the US market. As such, we do not consider that the 
appropriateness  of the USI TC's findin g concerning the connection between  these unforeseen developments and  
increased imports depends on  whether record evidence showed that the same developments directly resulted 
from China's  "industrial policies, five -year plans, and other governme nt support programs ". 
95 USITC supplemental report, (Exhibit CHN -6), pp. 6-7 and 10. 
96 USITC supplemental report, (Exhibit CHN -6), pp. 8-10. 
97 China's  second written submission,  paras. 286 -287. 
98 China's  second written submission, para. 294. 
99 China's  second written submission, paras.  297-302. 
100 USITC supplemental report, (Exhibit CHN -6), p. 8; USITC final report, (Exhibit CHN -2), p. 44.  
101 USITC final report, (Exhibit CHN -2), pp. 40-41 and 44.  
102 USITC final report, (Exhibit CHN -2), pp. 40-41. 
103 USITC supplemental report, (Exhibit CHN -6), pp. 8-9.  
104 USITC supplemental report, (Exhibit CHN -6), p. 9. WT/DS562/ R 
 
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  non-Chinese producers in these countries".105 Yet, in our view, even if this were a hypothetical 
possibility, the circumstantial evidence relied upon by the USITC suggests otherwise. Indeed, in line 
with the United  States ' argument, the fact that Chinese -affiliated companies significantly increased 
their production capacity in third countries in the same years when imports from those countries 
into the US market significantly increased suggests to us that there was a meaningful connection 
between these developments.106 Therefore, we disagree with China  that it was inappropriate for the 
USITC to rely on this evidence to find that US imports increased as a result of the increase in global 
capacity and the rapid reorganization of global supply chains, particularly from Chinese -affiliated 
producers that exp anded outside of China in the 2015 -2016 period.  
7.43.  We are also not persuaded by China's  argument concerning the significant share of increased 
imports that originated in Korea. The USITC found that, following the imposition of the CSPV II  
order, the largest f irms producing CSPV products in China increased their global manufacturing 
capacity by expanding investments in affiliated companies in third countries without reducing their 
capacity in China.107 With respect to Korea, record evidence indicates that Hanwha , a Korea -based 
CSPV producer, also produced CSPV products in China under the affiliated company Hanwha 
Qidong108, and that Hanwha increased its production of CSPV products in Korea following the 
imposition of the CSPV  II order. Based on these circumstances , and noting that Hanwha is therefore 
a "Chinese -affiliated" company that increased its production in Korea, we do not consider the fact 
that no Chinese producers had "substantial CSPV production factories"109 or "controlled" the 
market110 in Korea would con tradict the USITC's  finding regarding the activities of Chinese -affiliated 
companies, contrary to China's  argument.  
7.44.  In any event, even if we were to accept China's  contention that a significant share of the 
increased imports originated from Korea had noth ing to do with the "unforeseen developments", we 
fail to see why this would undermine the USITC's  finding that a significant share of imports also 
increased as a result of the expansion of Chinese -affiliated CSPV operations in other third countries, 
partic ularly Malaysia, Thailand, and Viet  Nam.111 In this regard, we do not read Article  XIX:1(a)  of 
the GATT 1994 to require that all of the increased imports are a result of the "unforeseen 
developments".  
7.45.  Based on the foregoing, we reject China's  claim that the USITC failed to appropriately 
demonstrate that imports increased "as a result of unforeseen developments".  
7.2.3.3   The relationship between increased imports and "obligations incurred" by the 
United  States  
7.2.3.3.1   Factual background  
7.46.  In its final staff report, the USITC noted:  
The imported articles are provided for in subheading 8541.40.60 (statistical reporting 
numbers 8541.40.6020 ("solar cells, assembled into modules or made up into 
panels")  and 8541.40.6030 ("solar cells, other"))  of the Harmonize d Tariff Schedule of 
the United  States  ("HTS"), and have been free of duty under the general duty rate since 
at least 1987.112 
 
105 China's  second written submission, para. 237.  
106 United  States ' second written submission , para. 156. 
107 USITC supplemental report, (Exhibit CHN -6), pp. 8-10.  
108 USITC final staff report, (Exhibit CHN -3), tables IV -16, IV -17, and IV -18. See also ibid . fn 38: 
Hanwha is based in Korea, but *** of its cell and module production occurred in China. 
Hanwha's  first large scale entry into the solar business was via its 2010 acquisition of 49.99 percent 
of Solarfun, a Chinese firm that was at the time the fourth largest module producer in China. In 
2012, Hanwha acquired bankrupt German manufacturer QCells, which had production in Germany 
and Malaysia.  (redacted original)  
109 China's  second written submission, para. 294. 
110 China's  second written submission, paras.  297-302. 
111 USITC final staff report, (Exhibit CHN-3), pp. C-10-C-11; USITC supplemental report, 
(Exhibit  CHN-6), pp. 7-9 and  fns 24, 26-28, and 29-31. 
112 USITC final staff report, (Exhibit  CHN-3), p. I-38. WT/DS562/ R 
 
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  7.47.  The USITC referred to the same tariff treatment of CSPV products in footnote 10 in the 
supplemental report:  
In this case, the increased imports were largely attributable to increased CSPV cell and 
CSPV module capacity by Chinese producers both within China and globally.[9] The 
United  States  has been a GATT member since January 1, 1948, and has incurred the 
obligations of WTO memb ership since January 1, 1995, whereas the government of 
China acceded to the WTO effective December 11, 2001. Prior to China's  WTO 
accession, there were a series of negotiations with individual and collective WTO 
members, including the United  States , befor e they agreed to extend the WTO's  trade 
liberalization and market access benefits to China.[10] 
9 USITC Pub. 4739 at 40 -41, 44 -45; Confidential Injury Views at 54 -55, 61 -63. 
10 Imported articles that are provided for in subheading 8541.40.60 of the U.S. Ha rmonized Tariff 
Schedule have been free of duty under the general duty rate since at least 1987. CR at I -52; 
PR at I-38.113 
7.2.3.3.2   Main arguments of the parties  
7.48.  China advances a series of arguments in support of its claim  that the USITC failed to 
appropriately dem onstrate that imports increased "as a result … of the effect of the obligations 
incurred" by the United  States . In particular, China argues that the USITC failed to identify the 
specific obligations that the United  States  incurred114, as the US general zero  duty rate on CSPV 
products since at least 1987 is neither a "commitment" nor a "tariff concession" reflecting an 
obligation incurred by the United  States  under Article  II of the GATT  1994, or through any prior 
GATT round of negotiations.115 China further a rgues that the USITC supplemental report provides 
no discussion at all "of the effect of" th ose obligations and how they resulted in increased imports , 
and specifically how and why those obligations constrained the United  States ' ability to react to 
increased imports of CSPV products.116 To do so, t he USITC was required to analyse the timing and 
magnitude  of the tariff concessions on CSPV products to demonstrate that imports increased as a 
result of those obligations.117 Finally, China claims that, even  if the USITC identified a zero bound 
tariff rate as the obligation incurred, the WTO covered agreements allow Members to impose 
anti-dumping , countervailing , and safeguard measures. Therefore, it would not necessarily be 
inconsistent with Article  II of th e GATT 1994 to use a safeguard measure to increase tariffs above 
the bound levels to remedy the serious injury caused by increased imports.118 
7.49.  In addition to these arguments, China advances that the United  States  engages in 
impermissible post hoc  rationaliz ation in its defence of the USITC report on this issue , contending 
that the United States is now asserting that the zero general duty rate was the actual bound rate 
established during the GATT negotiations, and that the USITC intended to refer to this bound rate 
as the obligation incurred. China argues that this fact was not s et forth in the USITC supplemental 
report . Moreover, China argues that the United States did not identify where the USITC mentioned 
the bound duty rate of zero on CSPV products under GATT 1994.119  
7.50.  For its part, the United  States  argues that the USITC appro priately demonstrated that the 
increase in imports was the result of the obligations incurred. In its view, the supplemental report 
clearly identified that CSPV products covered by the safeguard measure "are provided for in 
subheading 8541.40.60 of the U.S . Harmonized Tariff Schedule [and] have been free of duty under 
 
113 USITC supplemental report, (Exhibit CHN -6), p. 4. 
114 China's  first written submission, paras.  251, 253 , and 255; second written submission, 
paras.  258-268. 
115 China's  second written submission, paras.  263 and 265; first written submission, paras.  257-258. 
China further argues that the United  States  cannot submit that it logically follows  that subheading 8541.40.60 
of the US HTS is part of the US Schedule annexed to the GATT 1994 as its binding tariff. (China's  second 
written submission, para. 264). 
116 China's  first written submission, para. 282; comments on the United  States' response to Panel 
question No.  27 of the first set , para. 206; and response to Panel question No. 26 of the second set, para. 250. 
117 China's  second written submission, para.  266; response to Panel question No. 26 of the second set , 
paras.  255-258. 
118 China's  response to Panel question No. 23 of the second set, para. 229. 
119 China's  response to Panel question No. 57 of the third set , para. 163. WT/DS562/ R 
 
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  the general duty rate since at least 1987".120 This "commitment represents a tariff concession that 
the United  States  undertook as part of its obligation to bind its Schedule under Article  II of the 
GATT  1994".121 The United  States  further advances that, due to this concession, it was unable to 
increase its tariffs above the duty -free bound level, so as to modulate the increase in imports.122 
As such, the USITC's  reference to this concession established that the increased imports were a 
result of the "obligations incurred".123 Finally, the United  States  argues that China is incorrect to 
argue that Members'  ability to use anti-dumping , countervailing , and safeguard measures (if  they 
meet the requisite conditions)  means that tariff concessions do not prevent Members from increasing 
tariffs to remedy the serious injury caused by increased imports.124  
7.51.  With respect to China's  claim that the United  States  engages in post hoc rationalization, the 
United  States  responds by arguing that " it is an incontrovertible fact  that the U.S. duty rate for 
imports of CSPV products is bound at zero percent".125 Thus, "[t]he only thing necessary to carry 
out this task is an identification of t he tariff lines in question for a cross reference within the WTO 
systems".126  
7.2.3.3.3   Evaluation of the Panel  
7.52.  Article  XIX:1(a)  of the GATT 1994 stipulates that imports must increase "as a result … of the 
effect of the obligations incurred" by the Member implementi ng the safeguard measure. We agree 
with previous DSB reports to the effect that this requirement may be satisfied when the Member 
implementing the safeguard measure identifies a WTO obligation that would have prevented it from 
raising tariffs on the produc t at issue.127 
7.53.  In the present case, the USITC identified the United  States ' domestic tariff treatment of CSPV 
products when it observed that CSPV products covered by the safeguard measure "are provided for 
in subheading 8541.40.60 of the U.S. Harmonized Tar iff Schedule [and] have been free of duty 
under the general duty rate since at least 1987".128 Although we recognize that this statement does 
not explicitly establish that such tariff treatment was required under the United  States ' WTO 
obligations, we consi der that the supplemental report appropriately demonstrates that this was the 
implication of the USITC's  statement.  
7.54.  In the supplemental report, we recall that the USITC found:  
In this case, the increased imports were largely attributable to increased CSPV cell and 
CSPV module capacity by Chinese producers both within China and globally.[9] The 
United  States  has been a GATT member since January 1, 1948, and has incurred the 
obligations of WTO membership  since January 1, 1995, whereas the government of 
China acceded to the WTO effective December 11, 2001. Prior to China's  WTO 
accession, there were a series of negotiations with individual and collective WTO 
members, including the United  States , before they agreed to extend the WTO's  trade 
liberalization and mar ket access benefits  to China.[10] 
 
120 United  States ' first written submission, paras.  272-273; comments on China's response to Panel 
question No. 57 of the third set, para. 91. 
121 United  States'  first written submission, paras.  272-273; comments on China's response to Panel 
question No . 57 of the third set , para. 91. 
122 United  States ' second written submission , para.  159; response to Panel question No. 28 of the 
first set, para. 82; first written submission , para. 218; and comments on China's  response  to Panel question 
No. 57 of the third set , para.  91. 
123 United  States ' first written submission, paras.  269 and 275. Additionally, the United  States  advances  
that a tariff rate bound at 0% is more than sufficient to constitute a restraint on a Member's  freedom to raise 
its ordinary customs duties, and thereby qualif ies as a per se  commitment that satisfies the requirement in 
Article  XIX:1(a)  concerning the "effect of obligations incurred" . (United  States ' second written submission , 
para. 175; opening statement at the first meeting of the Panel , para. 43; response to Panel question No. 26 of 
the second set, para. 59; and comments on China's response to Panel question No. 57 of the third set , 
para. 91). 
124 United  States ' second written submission, para.  161. 
125 United  States'  comments on China's response to Panel question No. 57 of the third set , para.  90. 
(emphasis omitted)  
126 United  States'  comments on China's response to Panel question No. 57 of the third set , para.  90. 
127 See section 7.2.2  above.  
128 USITC supplemental  report, (Exhibit CHN -6), fn 10.  WT/DS562/ R 
 
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  9 USITC Pub. 4739 at 40 -41, 44 -45; Confidential Injury Views at 54 -55, 61 -63. 
10 Imported articles that are provided for in subheading 8541.40.60 of the U.S. Harmonized Tariff 
Schedule have been free of duty under the general duty rate since at least 1987. CR at I -52; 
PR at I-38.129 
7.55.  In our view, the USITC's  placement of footnote 10 imm ediately after two sentences 
concerning the United  States ' rights and obligations under the WTO agreements – including those 
arising from its trade liberalization and market -access commitments to China following a series of 
negotiations – reasonably reflec ts a connection between those rights and obligations and the 
duty-free treatment of CSPV products under subheading 8541.40.60 of the US HTS.130 Implicitly, 
therefore, the USITC  supplemental report indicates that the United  States ' duty-free treatment of 
CSPV products was related to its WTO obligations. In a similar vein, the placement of the same 
two sentences immediately after a sentence explaining why imports increased logically establishes 
a connection between the United  States ' WTO obligations and the in crease in imports during the  POI.  
7.56.  While we recognize that the USITC could have been clearer on this issue, we consider the 
foregoing aspects of the USITC supplemental report appropriately  identified a WTO obligation that 
would have prevented the United  States from raising its tariffs on CSPV products. On this basis, we 
consider that the USITC appropriately demonstrated that imports increased "as a result … of the 
effect of the obligations incurred", as required under Article  XIX:1(a)  of the GATT 1994. Acco rdingly, 
we reject China's  argument that the USITC's  reference to the United  States ' domestic tariff 
treatment of CSPV products 
the
Indeed, accepting China's argument would 
involve an overly formalistic approach to Article  XIX:1(a) of the GATT 1994  and would ignore the 
connection drawn in the USITC supplemental report between the United  States ' WTO obligations and 
the treatment of CSPV products under its domestic tariff schedule . 
We are also not persuaded by the other arguments  raised by China on this issue. 
7.58.  First, contrary to China's  position concerning when the United  States  started applying 
duty-free treatment to CSPV products132, we do not think that the fact that the United  States  
extended this treatment prior to incurring WTO obligations (i.e. since at least 1987)  means that it 
did not incur relevant obligations within the meaning of Article  XIX:1(a)  of the GATT 1994. In this 
regard, we consider that the USITC was correct to point  out that the United  States  incurred 
obligations when it joined the WTO and agreed to make its tariff concessions subject to Article  II of 
the GATT 1994 – treatment that was later extended to China when the Members agreed to its 
accession to the WTO.133 In our view, the legal status of these obligations , and their practical 
consequences ( such as the  inability to raise tariffs rates beyond the bound rate),  are unaffected by 
the fact that the relevant tariff treatment existed before they were incurred.  
7.59.  Second, w e disagree with China's arg ument that it  was necessary  for the USITC  to assess the 
magnitude of a tariff concession to determine whether imports increase d as a result of that 
obligation.134 While it is true that a tariff concession involving a significant reduction in the applied 
 
129 USITC supplemental report, (Exhibit CHN -6), p. 4. (emphasis added)  
130 More generally, we observe  that the tariff code used for import classifications under the US HTS 
corresponds with the United  States ' WTO Schedule of Concessions . In this regard, we note that the arbitrator 
in US – Washing Machines  made the factual observat ion that "[t] he Harmonized System (HS)  classifies goods 
by six -digit codes. The United  States  classifies imports  on the basis of a 10 -digit classification system, the 
Harmonized Tariff Schedule (HTS). Notably, an HTS code  shares the same beginning six digi ts as an  HS code ." 
(Decision by the Arbitrator, US – Washing Machines (Article 22.6 – US), fn 248). Moreover, as noted by the 
Appellate Body in Korea – Dairy , "the Schedules annexed to the GATT 1994 are made an integral part of Part I 
of that Agreement , pursuant to paragraph 7 of Article  II of the GATT 1994. Therefore, any concession or 
commitment in  a Member's  Schedule is subject to the obligations contained in Article  II of the GATT 1994 ." 
(Appellate Body Report, Korea – Dairy , para.  84). 
131 China's commen ts on the United  States' response to Panel question No. 57 of the third set, para. 99.  
In arriving at this finding, we note that China has not referred to record evidence that demonstrates – directly 
or indirectly – that the United  States  had not incurred GATT 1994 obligations that would have prevented it 
from raising tariffs on CSPV products.  
132 China's  second written submission, paras.  263 and 265; first written submission, paras.  257-258. 
133 See, e.g. USITC supplemental report, (Exhibit CHN -6), p. 4. 
134 China's  second written submission, para.  266; response to Panel question No. 26 of the second set , 
paras.  255-258. WT/DS562/ R 
 
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  duty rate may result in increased imports due to the increased market access that becomes available 
after the concession, it is a lso true that tariff concessions in the form of bound rates prevent Members 
from being able to raise tariff rates beyond the bound rate in reaction to an increase in imports. This 
fact is unchanged by the magnitude of the tariff concession.  
7.60.  Finally, we dis agree with China's  contention that, because the United  States  could have 
increased duties on CSPV products through the imposition anti-dumping , countervailing , and 
safeguard measures, "obligations incurred" did not prevent the United  States  from raising du ties on 
CSPV products.135 Although the WTO agreements permit Members to raise tariffs through , inter alia , 
the application of trade remedies under certain circumstances, we fail to see why the existence of 
these rights means that tariff concessions – i.e. "obligations" – do not prevent Members from being 
able to raise tariffs in reaction to an increase in impor ts. In this respect, we note that 
China's  argument is at odds with the text of Article  XIX:1(a)  of the GATT 1994, which explicitly 
contemplates that "obligations incurred" include "tariff concessions".  
7.61.  For the above reasons, we reject China's  claim that th e USITC failed to appropriately 
demonstrate in its report that imports increased "as a result … of the effect of the obligations 
incurred" by the United  States . 
7.2.4   Whether the Agreement on Safeguards obligates the competent authorities of a 
Member to demonstr ate in their published report that imports increased "as a result of 
unforeseen developments and of the effect of the obligations incurred"  
7.62.  In the sections above we have rejected China's claims that the USITC failed to appropriately 
demonstrate that import s of CSPV products increased "as a result of unforeseen developments and 
of the effect of the obligations incurred". Based on these findings, we do not consider it necessary 
to resolve the disagreement between the parties concerning the interpretative issu e of whether the 
Agreement on Safeguards requires the competent authorities of a Member to make this 
demonstration in their published report.  
7.3  The causal  link between  increased  imports  and serious  injury  
7.3.1   General  factual  background  
7.63.  In the safeguard investiga tion, the USITC adopted a single product definition  (CSPV products)  
that included CSPV cells and modules .136 The USITC also determined that imports of CSPV products 
increased significantly over the 2012 -2016 POI, specifically along the following trajectory:  
Imports of CSPV products increased by 492.4 percent between 2012 and 2016. 
They increased each year, from 2.1 million kW in 2012 to 3.1 million kW in 2013, 
4.6 million kW in 2014, 8.4 million kW in 2015, and 12.8 million kW in 2016. Imports 
as a ratio to domestic production also increased overall and in each year, from 
733.9  percent in 2012 to 948.4 percent in 2013, 1,141.0 percent in 2014, 
1,593.5  percent in 2015, and 2,276.2 percent in 2016.137 
7.64.  In addition, the USITC found that the domestic industry producing CSPV products was 
seriously injured during the POI. The USITC based this determination on a variety of factors 
concerning the condition of the domestic industry, specifically finding : (a) significant idling of 
domestic production facilities138; (b) significant unemployment and underemployment139; 
(c) inability of a significant number of firms to operate at a reasonable level of profit140, generate 
adequate capital to finance plant and equipment modernization, and maintain existing research and 
development ( R&D) expenditures141; (d)  declines in sales, market share, and other operating 
 
135 China's  response to Panel question No. 23 of the second set, para. 229. 
136 USITC final report, (Exhibit  CHN-2), pp.  13-16. 
137 USITC final report, (Exhibit  CHN-2), p.  21. (fns omitted)  
138 USITC final report, (Exhibit  CHN-2), pp.  31-33. 
139 USITC final report, (Exhibit  CHN-2), pp.  33-34. 
140 USITC final report, (Exhibit  CHN-2), pp.  34-35.  
141 USITC final report, (Exhibit  CHN-2), pp.  35-37. WT/DS562/ R 
 
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  indicators142; and (e)  adverse price conditions.143 The USITC noted that the domestic 
industry's  condition particula rly declined in 2015 and 2016, and appeared to be continuing to decline 
in 2017.144 The USITC further took into account that the US  market was a focal point for exports.145 
7.65.  As part of its serious injury determination, the USITC also recognized that certain i njury 
factors improved during the POI, such as the domestic industry's  capacity, production, and 
shipments.146 However, for certain of these factors, the USITC found that , because the 
improvements were not commensurate with the increase in demand in the US  market , they 
supported its overall conclusion that the domestic industry was seriously injured.147 
7.66.  China does not challenge the USITC's  determinations concerning the product definition , 
increased imports, or serious injury in these proceedings. Rather, China challenges the 
USITC's  determination that a causal link existed between increased imports and serious injury.148  
7.67.  The USITC determined that such a causal link existed based on the following subsidiary 
findings:  
a. Declining prices and market shar e: During a period of substantial and growing volumes of 
low-priced imports , the domestic industry had to reduce price s and/or  roll back announced 
price increases to compete with imported CSPV products, which were highly 
substitutable  for US -manufactured C SPV products and were generally lowered priced. 
Prices declined substantially in 2012, but temporarily stabilized as a result of the CSPV  I 
and CSPV  II orders. However, as imports from additional sources rapidly entered the 
US market  and increased to highe r volumes , the domestic industry's  prices fell 
significantly throughout 2016 as the domestic industry's  market share fell to its lowest 
level.149 Although the domestic industry increased its shipments during the POI, this 
overall increase was dwarfed by gro wth in US  consumption . Domestic producers reported 
losing sales to low -priced imports of CSPV products, and the majority of purchasers 
reported that they had increased their purchases of imported CSPV products.150 
b. Deteriorating financial conditions : The dom estic industry's  financial condition, which was 
at its worst at the beginning of the POI, improved marginally after the imposition of the 
CSPV  I and CSPV  II orders, but remained poor and deteriorated further in 2016, as imports 
peaked and market share and prices dropped anew. Consequently, a significant number 
of domestic producers  were unable to generate adequate capital to finance plant and 
equipment moderni zation, and a significant number of domestic producers were unable to  
maintain existing R&D expenditures.151 
c. Poor operating indicators : Despite the need in the CSPV industry to increase capacity in 
order to achieve economies of scale, domestic capacity and production did not grow 
commensurately with demand, and capacity utilization remained low and dropped at the 
end of the POI when imports reached their summit. This resulted in the closure of facilities, 
layoffs, and increased trade adjustment assistance cl aims.152 
 
142 USITC final report, (Exhibit  CHN-2), pp.  37-38. 
143 USITC final report, (Exhibit  CHN-2), pp.  41-43. 
144 USITC final report, (Exhibit  CHN-2), p.  43.  
145 USITC final report, (Exhibit  CHN-2), pp.  38-41. 
146 USITC final report, (Exhibit  CHN-2), pp.  32-33 and 37.  
147 USITC final report, (Exhibit  CHN-2), pp.  33 and 37 -38 (finding this dynamic to exist specifically with 
respect to increases in the domestic industry's  capacity, production, and shipments) . 
148 We note, however, that China claims that its lack of challenge should not be construed as acceptance 
that there was serious injury . (China 's comments on the United States ' response to Panel question No. 33 of 
the third set, para. 4; response to Panel ques tion No. 33 of the third set, paras. 9 -10; second written 
submission, para. 17 and fn 25; and response s to Panel question Nos. 1(a) and 1(b) of the second set ).  
149 USITC final report, (Exhibit  CHN-2), pp.  45-46. 
150 USITC final report, (Exhibit  CHN-2), p.  49. 
151 USITC final report, (Exhibit  CHN-2), p.  47. 
152 USITC final report, (Exhibit  CHN-2), pp.  47-48. WT/DS562/ R 
 
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  7.68.  Based on these findings, the USITC determined that "increased imports are a substantial 
cause of serious injury to the domestic industry manufacturing CSPV products based on a clear 
causal link between them".153 
7.3.2   Applicable  legal  requirements  concern ing the causal  link between  
increased  imports  and serious  injury  under  Articles  2.1, 3.1, and 4.2(b)  of the 
Agreement  on Safeguards  
7.69.  The core conditions for applying a safeguard measure are set out in Article  2.1 of 
the Agreement on Safeguards, which in full provides:   
A Member may apply a safeguard measure to a product only if that Member has 
determined, pursuant to the provisions set out below, that such product is being 
imported into its territory in such increased quantities, absolute or relative to domestic 
production, and under such conditions as to cause or threaten to cause serious injury 
to the domestic industry that produces li ke or directly competitive products.154  
7.70.  Accordingly, a safeguard measure may only be imposed when a product  (a) is being imported 
in such increased quantities, (b) and under such conditions, that (c) cause or threaten to cause 
serious injury to the domesti c industry.  
7.71.  The requirements concerning serious injury are elaborated in Article  4 of the  
Agreement  on Safeguards. Article  4.1(a)  defines "serious injury" as " a significant overall impairment 
in the position of a domestic industry", while Article  4.1(c)  clarifies that a "domestic industry" is "the 
producers as a whole of the like or directly competitive products operating within the territory of a 
Member, or those whose collective output of the like or directly competitive products constitutes a 
major propo rtion of the total domestic production of those products".  
7.72.  Articles  4.2(a)  and 4.2(b)  specifically pertain to the causal link between increased imports 
and serious injury. In full, they provide:  
(a) In the investigation to determine whether increased impor ts have caused or are 
threatening to cause serious injury to a domestic industry under the terms of 
this Agreement, the competent authorities shall evaluate all relevant factors of an 
objective and quantifiable nature having a bearing on the situation of t hat industry, in 
particular, the rate and amount of the increase in imports of the product concerned in 
absolute and relative terms, the share of the domestic market taken by increased 
imports, changes in the level of sales, production, productivity, capac ity utilization, 
profits and losses, and employment.  
(b) The determination referred to in subparagraph  (a) shall not be made unless this 
investigation demonstrates, on the basis of objective evidence, the existence of the 
causal link between increased imp orts of the product concerned and serious injury or 
threat thereof. When factors other than increased imports are causing injury to the 
domestic industry at the same time, such injury shall not be attributed to increased 
imports.  
7.73.  Pursuant to these provisi ons, the competent authorities of a Member must analyse whether 
increased imports are causing, or threatening to cause, serious injury to the domestic industry. They 
must also consider whether " factors other than increased imports are causing injury to the  domestic 
industry at the same time" as increased imports and ensure that the injury caused by those factors 
is not "attributed to increased imports".  
 
153 USITC final report, (Exhibit  CHN-2), p.  50. 
154 Fn omitted.  WT/DS562/ R 
 
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  7.74.  Previous DSB reports  have found  that the  Agreement on Safeguards does not establish  any 
specific methodol ogy as to how the existence of a causal link must be determined ; as a consequence, 
the competent authorities of a Member have discretion in this regard.155 
7.75.  Moreover, when assessing whether the causation requirement in Article  4.2(b)  of 
the Agreement on Safeguards has been fulfilled, previous DSB reports have considered , 
inter alia: (i) whether an upward trend in imports coincides with downward trends in relev ant injury 
factors, and if not, whether an appropriate explanation was provided as to why nevertheless the 
data show causation; and (ii)  whether the conditions of competition between the imported and 
domestic products as analy sed demonstrate the existence of a causal link between the imports and 
serious injury.156  
7.76.  Previous DSB reports have also found that, i f the competent authorities decide to base their 
causation analysis on the coincidence between increased imports and downward injury factors, 
"overall  coincidence" is what matters and not whether coincidence or lack thereof can be shown in 
relation to a few selected factors. Thus, the mere presence of positive injury factors does not 
necessarily negate the existence of an "overall coincidence".157 Moreover, in the absence of an 
"overall coincidence", the competent authorities may still be able to demonstrate the existence of a 
causal link if they can explain why a causal link nevertheless exists.158 
7.77.  Lastly, p revious DSB reports have found  that, rega rdless of the methodology used, in order 
to demonstrate that increased imports are causing serious injury, the competent authorities must 
find a "sufficiently clear " contribution  by those imports.159 However, the increased imports do not 
need to be the sole  cause of injury, and the causal link between increased imports and serious injury 
may exist even though other factors are also contributing at the same time to the situation of the 
domestic industry.160  
7.78.  As we agree with the  foregoing  findings  in previous DSB reports, we will assess China's  claims 
against the USITC's  determination  of a causal link between increased imports and serious injury 
accordingly.  
7.3.3   Whether  the USITC  acted  inconsistently  with Articles  2.1, 3.1, and 4.2(b)  of 
the Agreement  on Safeguards  in respect  of its determination  of a causal  link between  the 
increased  imports  of CSPV  products  and serious  injury  of the domestic  industry  
7.3.3.1   Introduction  
7.79.  The parties disagree on whether the USITC appropriately demonstrated that increased 
imports caused serious injury to the domestic industry.  
7.80.  China argues that the USITC failed to establish an "overall coincidence" between increased 
imports and the indicato rs of serious injury due to the prevalence of significant positive injury trends 
during the POI.161 Relying on previous DSB reports, China contends that the failure of the USITC to 
establish an "overall coincidence" meant that it was required to explain why, notwithstanding the 
 
155 Panel Reports, Korea  – Dairy , para.  7.96; US – Steel Safeguards , paras.  10.294 and 10.296; and 
Ukraine  – Passenger  Cars, para.  7.296.  
156 See also Panel Reports, Argentina  – Footwear  (EC), para.  8.229 (confirmed in Appellate  Body Report, 
Argentina  – Footwear  (EC), para.  145); US – Wheat  Gluten , para.  8.91; and US – Lamb , para.  7.232.  
157 Panel Reports, US – Steel Safeguards , para.  10.302; US – Wheat  Gluten , para.  8.101. 
(emphasis  omitted)  
158 Panel Reports, US – Steel Safeguards , paras.  10.303 -10.304.  
159 Appellate  Body Report, US – Wheat  Gluten , para.  67. 
160 Appellate  Body Report, US – Wheat  Gluten , para.  67. See also Panel Report, China  – Cellulose  Pulp, 
paras.  7.26-7.27.  
161 China's  first written submission, paras.  111-115; response to Panel question No. 2 of the second set, 
para. 11: "China argues that an ov erall coincidence is absent in the underlying investigation because even as 
imports increased, significantly important injury factors such as U.S. cell and module production, production 
capacity, cell capacity utilization, U.S. shipments, employment for ce ll manufacturing, and capital expenditures 
and financial performance actually improved " (fns omitted; emphasis original). See also China's  second written 
submission, paras.  56-57.  WT/DS562/ R 
 
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  absence of a coincidence , a causal link  existed by providing an explanation that was "compelling" .162 
According to China, the USITC did not meet this standard , as it failed to appropriately explain "why 
any negative trends that might e xist are in fact linked to imports, and in fact demonstrate the 
required nexus between imports and the trends".163 In this context, China submits that the 
USITC's  analysis failed to properly account for key conditions of competition in the US  market.164 
China alleges that , as a consequence of these deficiencies, the USITC's explanation is not 
"compelling".165 
7.81.  For its part, the United  States  claims that the USITC grounded its causation analysis in the 
findings that imports increased and that the domestic indust ry was experiencing serious injury, 
which are not challenged in this dispute.166 The United  States  further argues that, contrary to 
China's  claims, the USITC appropriately demonstrated an "overall coincidence" between the 
increased imports and the serious i njury that it determined to exist, taking into account positive and 
negative injury trends, as well as the prevailing conditions of competition in the market.167  
7.82.  At the outset, we note that the USITC determined that increased imports caused serious injury 
to the domestic industry based on a coincidence between increased imports and a variety of injury 
factors, as well as on the conditions of competition between domestic and imported CSPV products. 
As noted above, the USITC identified downward injury factors , as well as fluctuating or positive 
injury factors that, when viewed in light of the conditions of competition, the USITC considered to 
support its determination that increased imports caused serious injury to the domestic industry.  
7.83.  China argues that the  presence of positive injury trends during the POI means that there was 
no "overall coincidence" between increased imports and serious injury factors.168 We disagree. In 
our view, the mere presence of positive trends or lack of perfect correlation between increased 
imports and serious injury trends do not necessarily preclude the existence of an "overall 
coincidence".169 Moreover, contrary to China's  view, we consider that our assessment of whether 
the USITC appropriately  demonstrated an "overall coincidence" requires that we account for the full 
context of the USITC's  causation determination , and specifically the relative importance of particular 
injury factors to the overall causal link. We base t his understanding on  the fact that certai n injury 
factors may be  less relevant due to the prevailing conditions of competition in the market or the 
nature of serious injury found to exist, and therefore are less relevant to whether a coincidence 
between increased imports and serious injury exists  overall .170  
7.84.  China also argues that, due to the absence of an "overall coincidence", the USITC was required 
to provide a "compelling explanation as to why a causal link exists notwithstanding the absence of 
coincidence".171 Based on this requirement, China contends that the USITC was further required to 
provide a "compelling" explanation to justify the linkage that it found between increased imports 
and specific injury factors.172 Here we also disagree. As noted above, previous DSB reports  have 
 
162 China's  first written submission, paras.  116-125. For a general overview of the structure of 
China's  causation claims, see China's  first written submission, paras.  106-110; and second written submission, 
paras.  13-18. 
163 China's  first written submission, para.  126. 
164 China's  second written submission, para.  54; first written sub mission, paras.  130-132. 
165 China's first written submission, paras. 116 -125; second written submission, paras. 51 -55.  
166 United  States ' first written submission, paras.  109-111. 
167 For an overview of the United  States ' response to China's  causation claims, see United  States ' first 
written submission, paras.  112-113; and second written submission, paras.  22-30.  
168 China's  first written submission, paras.  111-115; second written submission, paras.  46-50. 
169 We agree with previous DSB reports that have addressed this issue. See Panel Reports,  
US – Steel Safeguards , para.  10.302; US – Wheat  Gluten , para.  8.101; and  US – Tyres  (China) , para.  7.244 
(upheld on appeal ; see Appellate  Body Report, US – Tyres  (China) , paras.  244-248).  
170 In this regard, we note that the panel in US – Tyres  (China)  found that it was appropriate for the 
USITC to "support its determination of 'significant cause'  with a finding of overall coincidence between an 
upward trend in subject impo rts from China and downward trends in the relevant  injury factors". (Panel 
Report, US – Tyres  (China) , para.  7.234 (emphasis  added)). In the same case, the Appellate  Body similarly 
observed that "[w]e do not consider that a single injury factor should be d eterminative, provided that the 
investigating authorities'  correlation analysis provides a reasoned and adequate explanation for a 
determination that subject imports are a significant cause of material injury to the domestic industry". 
(Appellate  Body Repo rt, US – Tyres  (China) , para.  246).  
171 China's  first written submission, paras.  25 and 116 (quoting Panel Report s, US – Steel Safeguards , 
para. 10.308). See also China's  second written submission, paras.  51-52. 
172 See, e.g. China's  second written submission,  paras.  18, 91, 102, 115, and 119-120.  WT/DS562/ R 
 
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  found  that the  Agreement on Safeguards does not establish any specific methodological 
requirements with respect to the causation analysis so long as the competent authorities of a 
Member provide a reasoned and adequate explanation demonstrating a causal link between 
increased imports and serious injury.173 This standard remains the same irrespective of whether an 
"overall coincidence" has been demonstrated between increased imports and relevant serious injury 
factors. While it may be the case that, as a factual matter, it is more difficult to demonstrate a causal 
link when a significant number of injury factors are positive, we reject the notion that a more 
exacting legal standard would be applicable in those circumstances. Rather, the explanation 
demonstrating the causal link would need to properly account for any positive injury factors to be 
reasoned and adequate.174  
7.85.  In accordance with these considerations, our analysis below focuses on whether China has 
demonstrated  that the USITC's  determination that "increased imports are a substantial cause of 
serious injury to the domestic industry" failed to appropriately address the relevant injury factors 
and account for the prevailing conditions of competition in the US  market for CSPV products. 
In section  7.3.3.2 , we address whether China has established that the USITC failed to provide a 
reasoned and adequate explanation linking increased imports to the negative injury factors. We do 
so by first addressing the USITC's  findings concerning certain key conditions of competition before 
addressing the USITC's  specific findings concerning the relationship between increased imports and 
the specific negative injury factors that existed during the POI, i.e. adverse price conditions, lost 
market share, deteriorat ing financial performance, and plant closures. Thereafter, in section  7.3.3.3 , 
we address whether China has established that the USITC failed to appro priately reconcile the 
seemingly positive injury factors that existed  during the POI with its determination that increased 
imports caused serious injury to the domestic industry, focusing on the USITC's  specific findings 
concerning increases in the domesti c industry's  capacity, production, and shipments; employment; 
and capital expenditures, R&D expenses, and value of production assets. Finally, we conclude in 
section  7.3.3.4  by addressing whether China has established that the USITC's  overall causation 
determination failed to comply with the requirements of the  Agreement on Safeguards.  
7.3.3.2   The USITC 's findings  concerning  the relationship  between  increased  imports  and 
negative  factors  of serious  injury  
7.86.  As noted above, China contends that the USITC failed to appropriately explain why the 
negative trends were linked to imports, so as to demonstrate an "overall coincidence" between 
imports and trends.175 According to China, the USITC overstated the importance of negative trends 
in light of the conditions of competition and thereby failed to provide a "compelling" explanation to 
justify the causal link.176 The United  States  responds to these claims by arg uing that the USITC 
provided a reasoned and adequate explanation demonstrating an overall coincidence between 
increased imports and negative injury trends that took into account relevant conditions in the 
US market.177  
7.87.  Below, we address this disagreement b y first considering the parties'  arguments concerning 
the USITC's  analysis of the conditions of competition in the US  market, focusing on the key issues 
of market segmentation and the substitutability of domestic and imported CSPV products. We 
address thes e conditions of competition at the outset as they directly pertain to several aspects of 
the parties'  disagreement concerning the USITC's  analysis . After doing so, we address the 
parties'  disagreement concerning the USITC's  analysis of  the relationship bet ween increased imports 
 
173 Panel Reports, Korea  – Dairy , para.  7.96; US – Steel Safeguards , paras.  10.294 and 10.296; and 
Ukraine  – Passenger  Cars, para.  7.296. In this context, we disagree with China's  argument that, as a 
consequence of the  USITC's  "choice" to conduct a coincidence analysis, the USITC was required  to "first 
demonstrate the existence of such overall coincidence, and then provide a reasoned and adequate explanation 
for its finding of causality", which must be "compelling" explanation because it "failed to establish that an 
overall coincidence exists". (Ch ina's second written submission, para.  51).  
174 China effectively concedes this point. (China's  second written submission, para.  29: "[t]o be clear, 
asking for the explanation to be 'compelling'  does not mean that the panels – or China – are reading additio nal 
requirements into Article  3.1 of the  Agreement on Safeguards, nor a 'heightened standard'  under Article  3.1 as 
alleged by the United  States . This is merely a reflection of the requirement that the explanation must be 
'reasoned and adequate' in a contex t where there is an absence of a coincidence in trends, and how the 
requirement ought to be applied in such a scenario" (fn omitted)).  
175 China's  first written submission, paras.  126-127.  
176 China's  second written submission, paras.  87-90. See also China's  first written submission, 
paras.  158-159. 
177 United  States ' first written submission, paras.  114-116. WT/DS562/ R 
 
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  and the specific negative injury factors that existed during the POI, i.e. adverse price conditions, 
lost market share, deteriorating financial performance, and plant closures.  
7.3.3.2.1   Key conditions of competition  
7.88.  The parties disagree on wh ether the USITC's  analysis of the causal link between increased 
imports and serious injury appropriately accounted for the prevailing conditions of competition in 
the US  market.  
7.89.  China argues that the USITC failed to properly account for key conditions of competition, 
which weighed in favour of a finding that no causal relationship existed between increased imports 
and serious injury.178 According to China, the relatively small size of the domestic industry and the 
explosive growth in demand "severely attenu ated the ability of changes in imports to affect the 
domestic industry".179 China contends that this was the case particularly because the domestic 
industry focused on the residential and commercial segments of the US  market, whereas the 
explosive growth in  demand occurred in the utility segment.180 As a consequence of this 
segmentation, as well as differing product features and customer preferences, China claims that the 
domestic industry was unable to supply CSPV products that were substitutable  with import s.181 
China  contends that it was for these reasons, rather than competition from low -priced imports, that 
the domestic industry was unable to capitalize on the growth in the US  market during the POI.182  
7.90.  The United  States  disputes China's  characterization of these conditions of competition in the 
US market. According to the  United  States , "China's  argument that the domestic industry did not 
have the ability to meet increasing demand fails because it misses the point that i ncreased imports 
themselves directly impeded the domestic industry's  ability to compete with low -priced imports in 
the first instance".183 In this context, the United  States  contends that the USITC properly found that 
domestic and imported CSPV products com peted in the residential, commercial and utility 
segments184 and also that domestic and imported CSPV products were "highly substitutable".185  
7.91.  Overall, we are not persuaded by China's  argument  that key conditions of competition (rather 
than increased import s) meant that the domestic industry was unable to capitalize on growth in the 
domestic market. As an initial matter, we fail to see why the small size of the domestic industry in 
relation to the overall US  market necessarily demonstrates that the domestic industry would have 
been unaffected by the significant increase  in imports that occurred over the POI. This is particularly 
the case because the USITC found  that the domestic industry had significant unused capacity186 and 
was prevented by increased imports  from meaningfully increasing its capacity to become more 
competitive.187 In addition, by focusing on the significant growth in the utility segment, 
China 's argument  concerning the conditions of competition fails to account for  the USITC's findings 
that the residential and commercial segments of the market also grew considerably during the 
POI.188 Further to these shortcomings, as explained below, we do not consider that China has 
 
178 China's  second written submission, para.  54.  
179 China's  second written submission, para.  54; first written submission, paras.  130-132. 
180 China's  second w ritten submission, para.  54 ("the explosive growth in demand in the utility segment 
explains the increase in imports, which focused on satisfying that unmet demand. The relatively small domestic 
industry, focused on the residential and commercial segment, simply could not satisfy this rapidly growing 
demand"), para. 96 ("[i]f imports can better meet changing needs because the domestic industry cannot offer 
products demanded by the growing market, as a result of its focus on a different market segment and th e 
consequent lack of product substitutability, imports might well grow faster than the competing domestic 
industry"), and heading of section  II(B)(2)(b)(iii) ("The US  industry chose to focus on the residential and 
commercial segments, giving up the more pr ofitable  utility segment"); first written submission, 
paras.  134-137. 
181 China's  second written submission, paras.  97-101. See also China's  first written submission, 
paras.  138-139. 
182 See fns 180-181 above.  
183 United  States ' first written submission, para.  119. See also United  States ' second written submission, 
paras.  31-36.  
184 United  States ' first written submission, paras.  121-125; second written submission, paras.  31-50. 
185 United  States ' first written submission, para.  119; second written submission, paras.  51-65. 
186 USITC final report, (Exhibit  CHN-2), fn  261; USITC final sta ff report, (Exhibit  CHN-3), 
pp. III-10-III-13. 
187 USITC final report, ( Exhibit  CHN-2), pp. 60-61. 
188 USITC final staff report, ( Exhibit  CHN-3), p. V-1 and figure V -1; USITC final report, (Exhibit  CHN-2), 
p. 58. WT/DS562/ R 
 
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  demonstrated that the USITC erred in finding that domestic and imported CSP V products competed 
in the residential, commercial, and utility segments and were "highly substitutable". As such, we do 
not consider that China has established that, as a general matter, the USITC's  causation 
determination was deficient as a result of fai ling to account for these conditions of competition.  
7.3.3.2.1.1   Segmentation in the US  market for CSPV products  
7.92.  In its final report, the USITC found that CSPV products are sold into three main segments in 
the US  market, i.e.  the residential, commercial, and utility segments:   
The vast majority of CSPV modules sold in the U.S. market are connected to the 
electricity grid, although some CSPV products are sold for off -grid applications. There 
are three grid -connected market segments – residential, non -residential/commercial, 
and utility – although the segments overlap somewhat. Installation sizes vary by 
segment, but th e size of installations generally has grown over time in each segment 
due to a combination of greater cell efficiency (more kW/cell)  and/or larger installations 
(more modules/installation).  
Annual U.S. installations of on -grid photovoltaic systems increase d from 3,373 MW 
in 2012 to 14,762 MW in 2016, an increase of 338 percent. All three on -grid segments 
experienced considerable growth in both the number of installations and the total 
wattage of installation projects during the POI. By December 2016, more 
than 19,770  MW of utility photovoltaic generating capacity was in operation across the 
United  States , representing 60 percent of total U.S. solar photovoltaic installations 
(including thin film).  
Since 2009 – the first year of the period examined in the CSPV I antidumping and 
countervailing duty investigations – there has been a shift in the distribution of sales 
among the three market segments. In 2009, the commercial segment accounted for 
the largest share of the market, followed by the residential and ut ilities segments, 
whereas throughout the 2012 to 2016 POI in the instant safeguard investigation, utilities 
were the largest segment of the U.S. market, followed by the residential and commercial 
segments. During the POI, the domestic industry and importer s each sold CSPV 
products in the U.S. market to distributors, residential and commercial installers, and 
utility customers. The vast majority of the domestic industry's shipments served 
residential and commercial installers in 2016, whereas a majority of i mports were 
shipped to the utility segment.189 
7.93.  In the final staff report, the USITC further explained:   
CSPV products are generally sold in the United  States  to distributors, residential and 
commercial installers, and utility/developers. Domestic producers sold CSPV products 
to all channels of distribution during the period of investigation, but sold a majority of 
their products to distributors (a majority of which were then sold to residential 
installers)  and a substantial amount to commercial installers. …  A majority of sales of 
imported products by U.S. importers were to utility/developers, with a substantial 
amount going to commercial and residential installers.190 
7.94.  China challenges the USITC's  finding that domestic and imported CSPV products competed in 
the residential, commercial, and utility segments in the US  market.  
7.95.  With respect to the residential and commercial segments, China argues that the USITC failed 
to precisely analyse both the extent to which domestic and imported products competed in the 
residential and commercial segments, and record evidence that showed that non -price factors 
limited competition between domestic and imported products.191 Yet, in line with the 
 
189 USITC final report, (Exhibit  CHN-2), pp.  27-28. (fns omitted)  
190 USITC final staff report, (Exhibit  CHN-3), p.  I-28. (fns omitted)  
191 China's  response to Panel question No. 3 of the second set, paras.  14-21; response to Panel question  
No. 4 of the second set, paras.  22-30. See also China's  response to Panel question No. 38 of the third set, 
paras.  36-38; second written submission, para. 98. China points to the difference in technological requirements 
 WT/DS562/ R 
 
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  United  States ' response to China's  arguments192, we do not consider that record eviden ce supports 
the view that only "limited" competition existed between domestic and imported products in the 
residential and commercial market segments.193 To the contrary, based on evidence provided by 
US producers and import ers concerning their commercial shipments, the USITC found that a 
majority of domestic products were sold to residential and commercial segments where a substantial 
amount of imports were also sold.194  
7.96.  With respect to the utility segment, China contends th at the USITC improperly focused on the 
"limited instances in competition in the small utility segment" , which was not sufficient to support a 
finding that the domestic industry competed in the utility segment as a whole.195 China further 
argues that the USI TC's analysis of competition in the "small utility" segment was "absolutely 
insufficient" in light of the record evidence that showed that the domestic industry was not 
competitive even in this part of the market for reasons unrelated to imports.196 In resp onse to these 
arguments, the United  States  submits that China fails to discredit the appropriateness of the 
USITC's  findings.197  
 
between the residential and commerc ial segments, which typically required 60 -cell modules, and the utility 
segment, which typically used 72-cell modules.  
192 United  States ' second written submission, paras.  37-38; response to Panel question No. 4 of the 
second set, paras.  6-7; and comments on  China's response to Panel question No. 38 of the third set, 
paras.  25-26. See also United  States ' first written submission, para.  122.  
193 In particular, China does not explain why the relatively small size of the domestic industry and the 
increase in dema nd in the residential and commercial market segments show that domestic and imported 
products did not meaningfully compete. As support for its position, China relies on the domestic 
industry's  limited capacity and inability to supply the full extent of the  market during the POI  as well as the 
technological differences between the CSPV products typically demanded in the different segments . (See , 
e.g. China's  response to Panel question No. 3 of the second set, paras.  16-19; response to Panel question 
No. 38 of the third set, paras.  36-38; and second written submission, para. 98 ). However, in our view, this 
evidence does not demonstrate that domestic and imported products did not compete in the residential and 
commercial segments.  
In addition, we do not think t hat it was necessary for the USITC to delineate more precisely the extent 
to which domestic and imported products competed in the residential and commercial market segments. As 
already noted, the USITC found that domestic and imported CSPV products were so ld to overlapping market 
segments through overlapping channels of distribution, particularly to residential and commercial installers, 
which was supported by questionnaire responses it received from domestic producers and importers. Based on 
this evidence,  we do not consider that it was inappropriate for the USITC to find that domestic and imported 
products both competed in the residential and commercial market segments. ( USITC final report, 
(Exhibit  CHN-2), pp.  29-30; USITC final staff report, (Exhibit  CHN-3), p.  I-28).  
Furthermore, China fails to explain why the non -price factors to which it refers establish that imported 
products had a clear competitive advantage over domestic products, such that domestic and imported products 
did not compete  for sales to residential and commercial installers. While China refers to evidence that generally 
establishes that non -price factors were relevant to US  purchasers of CSPV products, we do not consider that 
this establishes that domestic and imported produ cts did not compete for sales in the residential and 
commercial segments of the US  market. (China's  response to Panel question No. 7 of the second set; response 
to Panel question No.  38(1)  of the third set).  
194 USITC final staff report, (Exhibit  CHN-3), p.  I-28. 
195 China's  response to Panel question No. 5 of the second set, paras.  46-49. See also China's  second 
written submission, para.  115. 
196 China's  response to Panel question No. 5 of the second set, para.  49; response to Panel question 
No. 38 of the third set, paras.  40-43. See also China's  second written submission, para.  112. We further note 
that, as part of its non -attribution claim that "[t]he USITC conducted an insufficient and contradictory analysis 
of the participation of the domestic industry in the utility segment ", China alleges that the domestic industry 
only participated "to a limited degree in the smaller projects " of less than 10 MW, which represented 
"about  15-20% of the market ". (China 's second written submission, para. 151 ). 
197 United  States' second written submission, paras.  46-49 and 54; first written submission, 
paras.  124-125. In particular, the United  States  contends that China is wrong to assert that the USITC failed to 
assess competition in the utility market segment as a whole, as the USITC "examined the effect of imports on 
sales that domestic producers could supply and also on sales that they could not supply, inc luding sales for 
high-volume projects. In so doing, it accounted for the prevailing conditions of competition in the market and 
fully explained how, in that context, increased imports caused serious injury throughout the utility segment ". 
(United  States ' second written submission, para.  46). In this connection, the United  States  contends that China 
ignores or fails to discredit the record evidence demonstrating that the domestic industry in fact competed in 
the utility segment.  WT/DS562/ R 
 
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  7.97.  In line with the United  States ' position , we are not convinced by China's  claim that it was 
inappropriate for the USITC to find  that the domestic industry competed in the utility segment.198 
While the USITC found that a majority of imports were shipped to the utility segment, it also found 
that domestic CSPV products were sold to utility customers.199 As noted by the United  States200, this 
finding is supported by record evidence that indicates (a) that the utility segment covered projects 
of a capacity of 1  MW or above201 and that these projects had a  median  size of 4.9  MW during the 
POI202; and (b) that the domestic industry was capable of supplying, and did in fact participate in, 
utility projects that were larger than 1  MW.203  
7.98.  In addition, when rejecting respondents'  argument that the domestic industry focused on the 
residential and commercial segments and decided not to compete  for utility sales until late in the 
POI, the USITC found that the domestic industry had participated in bids in the utility segment.204 
The USITC also found that, throughout the POI, the domestic industry produced the types of CSPV 
modules that the utility  installations typically required ( in particular 72-cell modules, which became  
the standard for utility installations by 2013 -2014).205 These findings informed the 
USITC's  conclusion that the domestic industry "sold or tried to sell CSPV products to utiliti es 
throughout the POI" and "clearly sought to compete" in the utility segment.206 
7.99.  We are also not convinced by the allegedly contrary evidence to which China refers. Most 
notably, China argues that the USITC failed to properly account for the domestic industry's  smaller 
size207 and for complaints  from market participants that identify instances where the domestic 
industry was allegedly unable to fulfil specific orders or otherwise did not satisfy customer 
requirements or expectations.208 In our v iew, however, the alleged inability of the domestic industry 
to supply large -scale projects in the utility segment does not render inappropriate the USITC's finding 
that the domestic industry nevertheless competed in the utility segment based on the capacity that 
it had.209 Moreover, certain of the complaints  to which China refers show that the domestic industry 
made sales to customers in the utility segment.210 As a result, we do not consider that these 
statements support China's view that the domestic industry did not participate in the utility segment  
or otherwise undermine the appropriateness of the USITC's finding on this point .211  
 
198 As a result, we reject Chi na's argument that the USITC failed to explain why "its unitary analysis was 
valid for the three market segments described in its determination which were not subject to the same 
conditions of competition". (China's  response to Panel question No. 37 of the  third set, paras.  28-33).  
199 USITC final report, (Exhibit  CHN-2), pp.  27-28. 
200 United  States ' second written submission, para.  47.  
201 USITC final report, (Exhibit  CHN-2), fn  334 (indicating that, pursuant to the US  Energy Information 
Administration, "util ity projects are defined as those having a capacity of 1  MW and above"); SEIA prehearing 
brief, (Exhibit  CHN-20), p.  19 and fn 49.  
202 USITC final report, (Exhibit  CHN-2), fn  334; USITC final staff report, (Exhibit  CHN-3), p.  I-27. 
203 Transcript of the USITC injury hearing, (Exhibit  CHN-9), pp.  163-165.  
204 USITC final report, (Exhibit  CHN-2), p.  59; USITC final staff report, p.  V-3 and fn  13. See also 
Suniva's posthearing injury brief, (Exhibit  USA-17), exhibit  9, pp.  1-2; SolarWorld's  posthearing injury brief, 
(Exhibit  USA-16), exhibit  1, p. 23. We further note that Suniva referred to the portion of the utility segment 
where it competed as the "small utility" market. ( USITC final report, (Exhibit  CHN-2), pp.  59-60; Transcript of 
the US ITC injury hearing, (Exhibit  CHN-9), p.  101).  
205 USITC final report, (Exhibit  CHN-2), p.  60. 
206 USITC final report, (Exhibit  CHN-2), pp.  58-61. In this regard, we note that the USITC found that, 
regardless of the domestic industry's  presence in the utility segment, "the large volume of imports at low and 
declining prices adversely impacted the domestic industry's  financial performance, making it difficult for the 
domestic industry to increase capacity to a scale that made i t more competitive in this segment, even if it 
managed to develop and even pioneer innovative products that utilities and others sought" . (USITC final 
report, (Exhibit  CHN-2), pp.  60-61). T hese findings show that the USITC's  analysis of the conditions of 
competition was not confined to the "small utility" segment, contrary to China's  view. (China's  response to 
Panel question No. 5 of the second set, para.  46). 
207 China's  response to Panel question No. 5 of the second set, paras.  35, 41, and 48.  
208 China's  response to Panel question No. 5 of the second set, para.  49; response to Panel question 
No. 38 of the third set, paras.  40-43.  
209 China appears to concede this point  when it notes, in the context of its non -attribution claim, that 
the domestic industry parti cipated in projects of less than 10 MW, "about 15 -20% of the market".  
(China's  second written submission, para.  151).  
210 China's  response to Panel question No. 5 of the second set , para.  49; response to Panel question 
No. 38 of the third set, paras.  40-43.  
211 In this regard, we agree with the United  States' observation that the evidence to which China refers 
does not " cast doubt on the reasonableness of the Commission 's finding that the domestic industry was 
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  7.100.   Finally, regarding China's  argument that it was improper for the USITC to rely on the  "limited 
instances in competition in the small utility segment"  as support for its finding that the domestic 
industry competed in the utility segment as a whole, we note the following . Article  4.1(c)  of 
the Agreement on Safeguards requires that serious in jury be demonstrated in respect of the 
domestic industry as a whole , while Article  2.1 stipulates that safeguard measures may be applied 
with respect to a "product" when " such product is being imported into its territory in such increased 
quantities, absol ute or relative to domestic production, and under such conditions as to cause or 
threaten to cause serious injury to the domestic industry that produces like or directly competitive 
products" . Thus, when a singular "product" is under investigation, the com petent authorities are 
only required to conduct a single causation analysis; they are not required to conduct disaggregated 
analyses in which serious injury and causation must be demonstrated with respect to individual 
market segments.212 In this context, we do not consider that it is necessary to analyse or find 
competition in specific market sub -segments, provided that the conditions of competition, overall, 
are properly accounted for in the analysis.213 
7.101.   In the present case, the USITC ado pted a single product definition, which China does not 
challenge in these proceedings. Moreover, as we have found above, China has not demonstrated 
that it was inappropriate  for the USITC to find that domestic and imported CSPV products competed 
for sales in the residential and commercial segments of the US  market, as well as in a portion of the 
utility segment.214 We further note that, during the POI, all three market segments grew 
considerably215 and the domestic industry had significant unused production c apacity.216 Based on 
these circumstances, we do not consider that the limited participation of the domestic industry in a 
portion of the utility segment would undermine the ability of increased imports to adversely impact 
the domestic industry as a whole. A s a result, we do not consider that the USITC's  analysis of the 
conditions of competition, or causation more generally, is flawed in this regard, contrary to 
China's  view.  
7.3.3.2.1.2   Substitutability  of domestic  and imported  CSPV  products  
7.102.   The USITC also found that d omestic and imported CSPV products were "highly substitutable" 
based on the following considerations:  
Throughout the POI, U.S. producers and importers made commercial shipments of a 
wide variety of CSPV products, predominantly in the form of modules. Impor ted and 
U.S.-manufactured CSPV products were sold in a range of wattages and conversion 
efficiencies, and modules were sold in both 60 -cell and 72 -cell forms. Imported and 
U.S.-manufactured CSPV products also were sold to overlapping market segments 
throug h overlapping channels of distribution, particularly to residential and commercial 
installers. In the U.S. market for CSPV products, purchasers consider a variety of factors 
in their purchasing decisions, but price continues to be an important factor. Addi tionally, 
 
competitive in the portion of the utility segment  it was able to supply ". (United  States'  comments on 
China's  response to Panel question No.  38 of the third set, para. 28).  
212 This approach has been adopted in previous dispute settlement proceedings involving 
safeguard  measures. (Panel Reports, Argentina  – Footwear  (EC), para.  8.137; Korea  – Dairy , para.  7.58).  
We further note that China agrees with this general approach, although it contends that the causation analysis 
"needs to take into account the existence and factual relevance of different market segments ". 
(China 's response to Panel question No. 36 of the third set, paras. 24 -26).  
213 In this regard, we recall that Article  2.1 of the  Agreement on Safeguards stipulates that a Member 
may only apply a safeguard measure if it has determined that imports increased "under such conditions  as to 
cause or threaten to cause serious injury to the domestic industry that produces like o r directly competitive 
products" (emphasis  added). As such, we do not consider that the  Agreement on Safeguards establishes an 
independent requirement to precisely delineate the competitive conditions between domestic and imported 
products. Rather, it requ ires that the conditions of competition be properly accounted for in the analysis of the 
causal link between increased imports and serious injury. ( Panel Report, Ukraine  – Passenger  Cars, para.  7.190 
(noting that conditions of competition "must be such as to make it possible for those increased quantities to 
cause serious injury or threat thereof")). More generally, we note that the phrase "and under such conditions" 
has been previously interpreted to "not provide for an additional criterion or analytical r equirement to be 
performed before imposing a safeguard measure ", but rather refers to the substance of the causation analysis 
that must be performed under Articles  4.2(a)  and 4.2(b)  of the  Agreement on Safeguards. (Panel Reports, 
Korea  – Dairy , para.  7.52; US – Wheat  Gluten , para.  8.108).  
214 USITC final staff report, ( Exhibit  CHN-3), p. I-28. 
215 USITC final staff report, ( Exhibit  CHN-3), p. V-1 and figure V -1. 
216 USITC final report, (Exhibit  CHN-2), pp.  32 and 47 and fns  261 and 262.  WT/DS562/ R 
 
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  most U.S. producers, importers, and purchasers reported that U.S. -produced CSPV 
products were interchangeable with imported CSPV products. Accordingly, we find that 
imported CSPV products are highly substitutable  for U.S. -manufactured CSPV produc ts 
and price is an important consideration in purchasing decisions.217 
7.103.   China advances a series of arguments contending that the USITC's  finding on substitutability 
is deficient. In particular, China argues that the USITC ignored or failed to properly analys e (a) the 
distinction between 60 - and 72 -cell modules218 as well as other technological differences between 
domestic and imported products219; and (b) evidence demonstrating that market participants did 
not consider domestic and imported products to be inter changeable220, and that customers preferred 
imported over domestic CSPV products irrespective of their similar physical properties.221 For its 
part, the United  States  contends that the USITC's  analysis appropriately accounted for all relevant 
evidence and that China's  claims do not withstand scrutiny.222  
7.104.   Here also we agree with the United  States . The USITC found that domestic and imported 
products were "highly substitu table" based on questionnaire responses that indicated that 10 of 11 
domestic producers, 33 of 47 importers, and 78 of 102 purchasers considered CSPV products 
produced in the United  States  and in other countries to be interchangeable.223 Although 
questionna ire responses also indicated that product differentiation existed within the market, and 
that non -price factors were relevant to purchasing decisions, they indicated that price was still an 
important factor in competition between domestic and imported CSPV  products.224 As we see it, this 
price competition confirms the USITC's  finding that CSPV products from domestic and imported 
sources were substitutable.  
7.105.   The USITC also found that the domestic industry sold both 60 -cell and 72 -cell modules 
throughout the POI and lost market share to imports for both types of modules.225 It observed that 
SolarWorld added a 72 -cell module assembly line to its facilities in 2016 due to increasing demand 
in the utility market, and that Suniva devoted 45%  of its c ell manufacturing capacity to 72 -cell 
modules.226 As such, although China may be correct in asserting227 that 60 -cell modules were 
typically used in the residential and commercial segments of the US  market, whereas 72 -cell 
modules were typically used in the utility segment (particularly as of 2013-2014) , we consider that 
the USITC appropriately  accounted for this distinction by finding that the domestic industry sold both 
types of modules and competed in all three market segments.228 
7.106.   Relatedly, we are not convinced by China's  claim that the USITC ignored technological 
differentiation between domestic and imported products. While the USITC found that the domestic 
industry focused on the production of more efficient monocrystalline cell modules, it also found that 
purchasers did not generally specify whether they wanted monocrystalline or less efficient 
multicrystalline CSPV products.229 The USITC further found that, since both technologies were sold 
in all segments of the US  market, price s of multicrystalline CSPV products affected prices of 
monocrystalline products and vice versa .230 These findings, which China has not challenged, serve 
to disprove China's  claim. The same findings also align with certain of the statements from the USITC 
injury hearing cited by China, which indicate that differences in technology between domestic and 
 
217 USITC final report, (Exhibit  CHN-2), pp.  29-30. (fns omitted)  
218 China's  second written submission, para.  98; comment on the United States' response to Panel 
question No. 36 of the third set, para. 15 . 
219 See, e.g. China's  response to Panel question No. 6 of the second set, paras.  59-60 and 76 -77; and 
response to Panel question No.  13 of the second set, para.  152. 
220 See, e.g. China's  response to Panel question No. 6 of the second set, paras.  59-60 and 73 -78. 
221 See, e.g.  China's  response to Panel question No. 13 of  the second set, paras.  151-155. 
222 United  States ' second written submission, paras.  51-65. See also United  States ' response to 
Panel  question No. 4 of the first set, para.  7; response to Panel question No. 20 of the first set, para. 49; 
comments on China's  response to Panel question No. 38 of the first set, para.  27; and comments on 
China's  response to Panel question No. 40 of the first set, paras. 37 -42.  
223 USITC final staff report, (Exhibit  CHN-3), table V -8. 
224 USITC final report, (Exhibit  CHN-2), pp. 29-30; USITC final staff report, (Exhibit  CHN-3), 
pp. V-13-V-15 and tables V -4-V-6. 
225 USITC final report, (Exhibit  CHN-2), p.  60.  
226 USITC final report, (Exhibit  CHN-2), p.  60. 
227 China's  second written submission, para.  98. 
228 USITC final report, (Exhib it CHN-2), p.  60. 
229 USITC final report, (Exhibit  CHN-2), p.  60. 
230 USITC final report, (Exhibit  CHN-2), p.  60. WT/DS562/ R 
 
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  imported products could have been accounted for by price.231 In our view, this dynamic corroborates 
the USITC's  finding that domestic and imported products were substitutable, despite any 
technological differences that may have existed. Moreover, while the USITC recognized that certain 
types of products were only available from foreign sources, it found that this was only a small share 
of all product offerings.232  
7.107.   China more generally contends that the USITC's  finding that the domestic and imported 
CSPV products were interchangeable failed to account for the segmentation in the US  market and 
for any capacity limitations of the domestic industry.233 However, as we ha ve already found in the 
section  above, we do not consider that China has established that the USITC erred in finding that 
domestic and imported CSPV products competed in each of the residential, commercial, and utility 
market segments. Moreover, China fail s to explain why any capacity limitations that may have 
prevented the domestic industry from producing certain types and quantities of CSPV modules would 
vitiate the USITC's  more general finding that domestic and imported products were interchangeable. 
Again, the USITC based this finding on the clear majority view among producers, importers, and 
purchasers.234 
7.108.   China also argues that the role of non -price factors in sales competition demonstrates that 
customers did not actually consider domestic and imported CSPV products to be interchangeable.235 
Yet, in our view, the simple fact that non -price factors were relevant in CSPV market competition 
does not show that it was inappropriate  for the USITC to find that domestic and imported products 
were interchangeable.  China  further  advances that "the Final Staff Report also showed that reasons 
reported [by purchasers] for not purchasing the domestic product included 'limited availability'  and 
no possibility to send 'stand -alone CSPV products'".236 However, we note that only seven of the 
35 responding purchasers that reported that they did not purchase US -origin CSPV produc ts 
provided these reasons.237 In addition, China observes that "[r]easons  adduced for decreasing 
purchases of U.S. -origin products included 'lack of availability'  as well as 'longer -lead times'".238 But 
purchasers also cited "lower import prices" as a reason for decreasing purchases of US -origin CSPV 
products, which supports the  USITC's  finding that domestic and imported products were 
interchangeable.239  
7.109.   Finally, we are not convinced by China's  assertion that the USITC based its determination of 
substitutability "fundamentally … on similarities in the physical properties" and ign ored 
customers ' preferences with respect to other product features.240 Indeed, it appears that the USITC 
accounted for such features when it assessed the interchangeability between domestic and imported 
products. For example, the USITC noted that "[t]hree i mporters stated that performance data and 
bankability of the CSPV products can limit the degree of interchangeability".241 The USITC also noted 
that certain importers reported that technological differences affected interchangeability.242 These 
views, howeve r, were ultimately in the minority , as only 14 of 47 reporting importers indicated that 
 
231 China's  response to Panel question No. 6 of the second set, para.  60: "Affidavit Craig Cornelius 
(NRG  Energy):  'By end of the POI, Suniva's  modu les has only increased to 340W while conventional 72 -cell 
mono PERC [i.e. passivated emitter and rear contact ] modules had improved to 360W; this 20W deficit for 
Suniva panels would require a $0.02/W price discount to yield equivalent project returns on ut ility-scale 
projects, and higher discounting for commercial rooftop projects. Thus, in order to remain competitive due to 
the deterioration in the competitiveness of its technology, Suniva would have had to decrease its pricing during 
the POI by as much as $0.07/W or more than other supplier s'". (emphasis  added)  
232 USITC final report, (Exhibit  CHN-2), p.  52. 
233 China's  response to Panel question No. 8 of the first set, paras.  56-60; response to Panel question 
No. 6 of the second set, paras.  52-61. 
234 Based on these views, we disagree with China's  contention that the USITC's  conclusion was 
"overbroad" and that the evidence on this issue was "mixed". (China's  response to Panel question No. 6 of the 
second set, para.  52; response to Panel question No . 13 of the second set, para.  152).  
235 China's  response to Panel question No. 8 of the first set, paras.  60-61; response to Panel question 
No. 13 of the second set, paras.  153-154. 
236 China's  response to Panel question No. 13 of the second set, para.  155.  
237 USITC final staff report, (Exhibit  CHN-3), pp.  V-15-V-16. 
238 China's  response to Panel question No. 13 of the second set, para.  155.  
239 USITC final staff report, (Exhibit  CHN-3), p.  V-16.  
240 China's  response to Panel question No. 13 of the second set, paras.  151-155; second written 
submission, para.  159. 
241 USITC final staff report, (Exhibit  CHN-3), p.  V-16. 
242 USITC final staff report, (Exhibit  CHN-3), p.  V-16.  WT/DS562/ R 
 
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  domestic and imported products were not interchangeable in addition to 1 of 11 reporting producers 
and 24  of 102 reporting purchasers.243 
7.110.   Based on the foregoing, we do n ot consider that China has established that the USITC erred 
in finding that domestic and imported CSPV products were "highly substitutable". As such, we do 
not consider that China has demonstrated that the USITC's  causation determination is deficient on 
this basis.  
7.3.3.2.2   Adverse  price  conditions  
7.3.3.2.2.1   Factual  background  
7.111.   As part of its causation determination, the USITC found  that the domestic industry 
experienced adverse price conditions as a result of increased low -priced imports.244 According to the 
USITC, these adverse price conditions led to several other aspects of serious injury experienced by 
the domestic industry during the POI, such as the overall financial deterioration of the domestic 
industry; the inability of a significant  number of domestic producers to finance plant and equipment 
modernization and maintain R&D expenditure levels; and the inability of the domestic industry to 
increase its capacity to achieve economies of scale.245 
7.112.   In its final report, the USITC found that the domestic industry experienced adverse price 
conditions as a result of increased low -priced imports , based on the following subsidiary findings:  
a. Domestic and imported products were highly substitutable,  and price was an important 
factor in purchasing decisions.246 
b. Imports were priced lower than domestic products.247 
c. Prices for surveyed types of CSPV cells and modules declined over the POI.248 
 
243 USITC final staff report, (Ex hibit CHN-3), table  V-8. 
244 USITC final report, (Exhibit  CHN-2), pp.  45-46. See also ibid. pp.  41-43. 
245 USITC final report, (Exhibit  CHN-2), p.  47.  
246 USITC final report, (Exhibit  CHN-2), pp.  29-30, 41, and 45. In particular, the USITC found that 
imported a nd US -manufactured CSPV products were sold in a range of wattages and conversion efficiencies, 
and modules were sold in both 60 -cell and 72 -cell forms. It also found that  imported and US -manufactured 
CSPV products were sold to overlapping market segments through overlapping channels of distribution, 
particularly to residential and commercial installers. In addition, although purchasers consider a variety of 
factors in their purchasing decisions, price was an important factor. Further, most US  producers, importers, 
and purchasers reported that US -produced CSPV products were interchangeable with imported CSPV products. 
(USITC final report, (Exhibit  CHN-2), pp.  29-30). 
247 USITC final report, (Exhibit  CHN-2), p.  42. In particular, the USITC found that imported CSPV 
products were priced lower than US -manufactured products in 33 of 52 instances involving approximately 
two-thirds of the total volume in the pricing data and were priced higher in 19 instances. Seven domestic 
producers reported that they had l ost sales to imported CSPV products since 2012. The majority of purchasers 
reported that they had increased their purchases of imported CSPV products, and they identified lower price 
most often as the reason for increasing their purchases of imported CSPV products. Purchasers reported that 
imported CSPV modules as a share of their total purchases of CSPV products increased by 15.6 % points from 
75.6% of total CSPV purchases in 2012 to 91.2% of total CSPV purchases in 2016.  
248 USITC final report, (Exhibit  CHN-2), pp.  41-42 and 45; USITC final staff report, (Exhibit  CHN-3), 
pp. V-21 and V -26. In particular, t he USITC found that quarterly prices for all five products declined between 
January 2012 and December 2016, with prices of US -manufactured products declining between 48.5 % and 
73.2% and imported CSPV products declining between 45.7% and 51.0%. ( USITC final report, 
(Exhibit  CHN-2), p.  42; USITC final staff report, (Exhibit  CHN-3), p. V-26). The USITC based this finding on the 
following five product typ es: (a) Monocrystalline cells with an efficiency between 17.0% and 22.0%; (b)  60 cell 
Multicrystalline silicon module, with a peak power wattage between 240w to 290w, inclusive, P -max or Wp; 
(c) 60 cell Monocrystalline silicon module, with a peak power wat tage between 250w to 300w, inclusive, P -max 
or Wp; (d)  72 cell Multicrystalline silicon module, with a peak power wattage between 290w to 340w, inclusive, 
P-max or Wp; a nd (e)  72 cell Monocrystalline silicon module, with a peak power wattage between 300w t o 
350w, inclusive, P -max or Wp.  (USITC final staff report, (Exhibit  CHN-3), p.  V-21). WT/DS562/ R 
 
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  d. Prices for domestic products were reduced or prevented from increasing due to imports.249 
e. Movements in p rices of domestic CSPV products correlated with import trends and the 
imposition of the CSPV  I and CSPV  II orders.250 
7.3.3.2.2.2   Main  arguments  of the parties  
7.113.   China argues that the USITC improperly assumed that declining US  prices were the result of 
increased imports , and that low -priced imports injured the domestic industry.251 Although China 
concedes that "some" record evidence shows that price is one of several  factors considered by 
domestic purchasers for their purchasing decisions252, it advances that the USITC's  analysis of price 
is flawed for two primary reasons.  
7.114.   First, China argues that the USITC exaggerated the importance of price as the dominant 
explanatory factor and failed to appropriately account for evidence that showed that factors other 
than price were th e most important in purchasing decisions.253 In particular, China contends that 
the USITC's  finding that price was an important factor is flawed because only 38 of 
103 US purchasers reported that US  producers had reduced prices to compete with imports, while 
other purchasers did not know if this was true.254 Further, China notes that purchasers most 
frequently cited "quality/performance", rather than price, as the first and second most important 
factor.255 China also argues that the USITC's  findin g that price was an important factor in purchasing 
decisions is problematic because:  (a) a majority of purchasers chose higher priced products due to 
non-price factors when a lower priced product was available256; (b) a majority of purchasers chose 
imported  instead of domestic products for non-price reasons257; and (c) a majority of domestic 
producers did not announce price rollbacks to compete with imports.258 
7.115.   Second, China argues that the USITC failed to properly account for evidence demonstrating 
that non -import factors better explained declining market prices for CSPV products.259 According to 
China, price declines occurred because of decreasing costs, increasing efficiency, and technological 
innovation, which benefitted the CSPV industry as a whole.260 In this context, China argues that in 
the CSPV  II investigation the USITC correctly found that imports were not the cause of price 
suppression or depression due to various other factors exerting downward pressure on US  prices, 
 
249 USITC final report, (Exhibit  CHN-2), pp.  42 and 45 -46. In particular, the USITC found that 8 of 
12 responding domestic producers reported that they had to reduce prices , and three reported having to roll 
back announced price increases in order to avoid losing sales to competitors selling imported CSPV products 
during the POI. Of the 103 responding purchasers, 38 reported that US  producers had reduced prices of their 
CSPV  products in order to compete with lower -priced imports, and 44 of them reported that they did not know 
whether US  producers had reduced their prices to compete with lower -priced imports. Several purchasers 
reported steeper price reductions in 2016.  
250 USITC final report, (Exhibit  CHN-2), p.  46. In particular, the USITC found that : 
"Prices declined substantially in 2012, but stabilized somewhat after imports from China became 
subject to antidumping and countervailing duty orders in December 2012, additional investigations 
on imports from China and Taiwan were commenced at the end of 2013, and imports grew at a 
slower pace than apparent U.S. consumption between 2013 and 2014. As imports from additional 
sources entered the U.S. market and rapidly inc reased to higher volumes, however, the domestic 
industry 's prices steadily fell throughout 2016. Several purchasers also reported steeper price 
reductions in 2016, as the domestic industry 's share of the market fell to its lowest level. "  
(USITC final report, (Exhibit  CHN-2), p.  46 (fns omitted))  
251 China's  first written submission, paras.  149-150. 
252 China's  response to Panel question No. 7 of the second set, para.  79. 
253 China's  first written submission, para.  150; response to Panel question No. 7 of the second set, 
paras.  79-88. 
254 China's  first written submission, para.  150. 
255 China's  response to Panel question No. 7 of the second set, para.  83. Relatedly, China also argues 
that the USITC final report, particularly table V -5 of the USITC final staff rep ort, is ambiguous regarding the 
frequency with which purchasers cited decisions based on price. ( China's  response to Panel question No. 7 of 
the second set, para.  84). 
256 China's  response to Panel question No. 7 of the second set, para.  85.  
257 China's  response to Panel question No. 7 of the second set, para.  86.  
258 China's  response to Panel question No. 7 of the second set, para.  87.  
259 China's  second written submission, paras.  104-109. See also China's  response to Panel question 
No. 7 of the s econd set, para.  79.  
260 China's  first written submission, paras.  151-153; second written submission, para.  104.  WT/DS562/ R 
 
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  including declining raw mate rial costs.261 Since the CSPV  II investigation covered a period that 
overlapped with the safeguard investigation, China argues that it was improper for the USITC to 
ignore the role of the same factors in its analysis of price trends.262 Finally, China claims that due to 
its higher costs, smaller scale, and inefficiency, the domestic industry was unable to capitalize on 
the global decline in CSPV prices.263  
7.116.   For its part, the United  States  argues that the USITC provided a reasoned and adeq uate 
explanation demonstrating that increased imports caused declines in domestic prices and that 
China's  claims do not withstand scrutiny.264  
7.117.   First, with respect to China's  argument concerning the importance of price in purchasing 
decisions, the United  States advances that, given that 44 of the 103 US  purchasers did not know 
why domestic producers reduced prices, the 38 purchasers that blamed low -priced imports represent 
two-thirds of the 59 purchasers expressing a view.265 As such, it was appropriate for t he USITC to 
rely upon this evidence for its finding that linked imports to declining prices.266 The United  States  
also advances that, contrary to China's  view, it was reasonable for the USITC to consider the 
most-often cited top three factors – i.e. price, quality/performance, and availability – to conclude 
that price was an important factor in market competition.267 Regarding China's  other arguments, the 
United  States  contends that China misrepresents the USITC's findings with respect to  the 
questionnaire responses of purchasers and domestic producers and that China's alternative 
characterizations of the data ultimately fail to discredit the reasonableness of the USITC's  finding.268  
7.118.   Second, with respect to China's  argument that non -import factors better explained declining 
market prices for CSPV products, the United  States  argues that t he USITC found that the domestic 
industry remained unprofitable  as it continued to incur hundreds of millions of dollars in losses over 
the POI, notwithstand ing its declining costs, which should have b een beneficial .269 The United  States  
further argues that China's  reliance on the USITC's  finding of no price depression in CSPV  II is 
unavailing because those proceedings concerned anti -dumping and countervailing measures, which 
are subject to different WTO disciplines, and also concerned a different time period with different 
data.270 Finally, the United  States  contends that China fails to properly substantiate or explain the 
 
261 China's  second written submission, paras.  107-108. 
262 China's  second written submission, paras.  107-108.  
263 China's  second written submission,  paras.  105 and 109; response to Panel question No. 39 of the 
third set, paras.  44-52. 
264 United  States ' first written submission, section  II(D)(2)(a)(ii); second written submission, 
paras.  66-80. 
265 United  States ' first written submission, para.  136. 
266 United  States ' first written submission, para.  136. 
267 United  States ' second written submission, para.  69. Contrary to China's  argument that the USITC 
was ambiguous regarding the frequency with which US purchasers made purchasing decisions based on price, 
the United  States  argues that, pursuant to table V -5 of the USITC final staff report, it was not unreasonable  for 
the USITC to rely on the fact that only 23 of 105 responding purchasers reported that they never purchased 
the lowest price product, while 79 r eported that they sometimes or usually did. ( United  States ' second written 
submission, para.  70). 
268 United  States ' second written submission, paras.  71-75. Specifically, with respect to the 
USITC's  finding that the majority of purchasers reported choosing higher priced products due to non -price 
factors, the United  States  argues that the fact that 64 of the 105 responding purchasers reported an instance 
of buying a product from a source despite the availability of a comparable product at a lower price from 
another source does not say anything about the frequency with which purchasers would forego purchasing 
comparable, but lower -priced CSPV products. Moreover, with respect to the USITC's  finding that "the majority 
of purchasers reported that they had increase d their purchases of imported CSPV products, most often 
identifying lower price as the reason for increasing their purchases of imported CSPV products", the 
United  States  argues that the fact that 53 of 86 purchasers cited a variety of factors other than p rice as their 
primary reason for purchasing imported products does not undermine the fact that price was the most -often 
identified factor. Finally, wi th respect to the USITC's  finding concerning the frequency in which domestic 
producers rolled backed plann ed price increases, the United  States  argues China's  statement that " only 3 of 
8 domestic producers had to roll back planned increases" is misleading as it ignores the full context of the 
USITC's  finding:  "[o]f the 12 responding U.S. producers, eight repor ted that they had to reduce prices and 
three reported that they had to roll back announced price increases in order to avoid losing sales to 
competitors selling imported CSPV products since 2012". (Ibid. paras.  72 and 75).  
269 United  States ' first written su bmission, paras.  138-139; second written submission, para.  77; 
response to Panel question No. 20 of the first set, para.  51; response to Panel question No. 18 of the 
second  set, para.  42; and  comments on China's response to Panel question No. 47 of the third set, para.  63. 
270 United  States ' second written submission, paras.  78-79. WT/DS562/ R 
 
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  relevance of its claim that any price d ifferences between the domestic like product and lower -priced 
imports were due to "the domestic industry's  higher costs and efficiency issues".271  
7.3.3.2.2.3   Evaluation  of the Panel  
7.119.   As noted above, China contends that the USITC failed to appropriately account for evi dence 
demonstrating that:  (a) factors other than price were the most important factors behind purchasing 
decisions; and (b) non-price factors better explained declining prices for CSPV products. For the 
reasons explained below, we are not persuaded by either of these arguments.  
7.120.   With respect to China's  first argument, we are not persuaded that the USITC exaggerated 
the importance o f price as the dominant explanatory factor without giving sufficient consideration to 
record evidence concerning the role of non -price factors.272 While the evidence to which China refers 
shows that non -price factors were relevant to purchasers of CSPV prod ucts, it also shows that price 
was an important factor.273 The USITC explicitly referred to this dynamic in its finding that domestic 
and imported products were "highly substitutable" described in section  7.3.3.2.1.2  above274, which 
the USITC subsequently relied upon as support for its finding that the domestic industry experienced 
adverse price conditions as a result of increased low -priced imports.275 In addition, record evidence 
relied upon by the USITC indicates that p rices of domestic products were lowered in response to 
imports, which suggests that competition in the market was sensitive to price.276 In line with the 
United  States ' arguments, these fin dings and evidence serve to confirm that, contrary to 
China's  view, it was appropriate  for the USITC to find that price was an important factor for 
purchasing decisions. Accordingly, we do not consider that China has demonstrated that the USITC 
inappropria tely emphasized the importance of price or ignored the relevance of non -price factors.  
7.121.   With respect to China's  second argument, we are not persuaded that the USITC failed to 
account for the evidence allegedly demonstrating that non -import factors better ex plained declining 
market prices for CSPV products.  
7.122.   As an initial matter, we do not consider that the existence of long -term market trends under 
which costs for the CSPV industry as a whole declined demonstrates that it was inappropriate  for 
the USITC to f ind that the domestic industry experienced adverse price conditions as a result of 
increased imports. Conceptual ly, multiple factors may be affecting price at the same time and certain 
of those factors may not be injurious. In its final report, the USITC f ound increased imports to be an 
injurious factor affecting price on the basis of record evidence that showed , inter alia, that prices of 
imported CSPV products were regularly lower than domestic products277, and that prices of domestic 
products were reduced and prevented from increasing as a result of imports.278 In our view, the fact 
 
271 United  States ' second written submission, para.  80; comments on China's response to Panel question 
No. 39 of the third set, paras.  29-32. 
272 China's  response to Panel q uestion No. 7 of the second set, para.  79. 
273 USITC final report, (Exhibit  CHN-2), pp.  29-30 and fn  144.  
274 USITC final report, (Exhibit  CHN-2), pp.  29-30 ("[i] n the U.S. market for CSPV products, purchasers 
consider a variety of factors in their purchasing  decisions, but price continues to be an important factor").  
275 USITC final report, (Exhibit  CHN-2), p.  41 ("[a]s discussed above, imported CSPV products are highly 
substitutable  with U.S. -manufactured products, and price is an important consideration in p urchasing decisions 
in this industry")  and p.  45 ("[a]s indicated above, these imports were highly substitutable  for 
U.S.-manufactured CSPV products and generally were lower priced.")  
276 USITC final report, (Exhibit  CHN-2), pp.  42 and 45 -46. 
277 USITC final report, (Exhibit  CHN-2), p.  42 (reporting that imported CSPV products were priced lower 
than US -manufactured products in 33 of 52 instances involving approximately two -thirds of the total volume in 
the pricing data, and were priced higher in 19 insta nces. Seven domestic producers reported that they had lost 
sales to imported CSPV products since 2012. The majority of purchasers reported that they had increased their 
purchases of imported CSPV products, and they identified lower price most often as the reason for increasing 
their purchases of imported CSPV products. Purchasers reported that imported CSPV modules as a share of 
their total purchases of CSPV products increased by 15.6 % points from 75.6% of total CSPV purchases in 2012 
to 91.2% of total CSPV  purchases in 2016).  
278 USITC final report, (Exhibit  CHN-2), pp.  42 and 45 -46 (reporting that 8 of 12 responding domestic 
producers reported that they had to reduce prices, and three reported having to roll back announced price 
increases in order to avoid l osing sales to competitors selling imported CSPV products during the POI. Of 
the 103 responding purchasers, 38 reported that US  producers had reduced prices of their CSPV products in 
order to compete with lower -priced imports, and 44 of them reported that they did not know whether 
US producers had reduced their prices to compete with lower -priced imports. Several purchasers reported 
steeper price reductions in 2016).  In this respect, we agree with the United  States' argument that, given that 
 WT/DS562/ R 
 
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  that other factors may have also been affect ing price does not undermine the relevance or probative 
value of this evidence.  
7.123.   Record evidence also casts doubt on China's  contention that non -import factors (such as 
decreasing costs, increased efficiencies, and technological innovation)  "better explain" declining 
market prices for CSPV products.279 In this regard, we note that t he domestic industry's  per unit net 
sales value declined at a greater pace  than its cost of goods sold in the 2015 -2016 period.280 These 
circumstances correspond with the overall price dynamic described by the USITC under which the 
domestic industry's  prices declined significantly when imports in creased from sources not covered 
by the CSPV  I and CSPV  II orders, which also occurred in 2015 -2016.281 The same dynamic was 
confirmed in a 2016 industry publication filed by respondents during the safeguard investigation, 
which reported that "[i]n the past  few years, U.S. module price trends were largely driven by 
anti-dumping and countervailing duties on Chinese suppliers. But recently the main driver has 
shifted; current module price trends are largely a result of supply -demand imbalance" .282  
7.124.   We are also not persuaded by China's  reference to the USITC's  finding in the CSPV  II 
investigation. The United  States  correctly notes that the CSPV  II proceedings covered a different 
period of time and included different data sets and questionnaire respons es.283 However, even if it 
did not, it is not clear to us why, having regard to our standard of review, the USITC would need to 
reach the same conclusion in the safeguard investigation for us to consider that its finding was 
reasoned and adequate.284 
7.125.   Finally , we are not convinced by China's  claim that the domestic industry's  higher costs, 
small scale, and inefficiency prevented it from capitalizing on the global decline in CSPV prices. Even 
if we were to accept that the domestic industry was unable to capital ize on the global decline in 
CSPV prices to the same extent as foreign producers, we fail to see how this would undermine the 
USITC's  finding that linked the domestic industry's  adverse price conditions to increased imports. 
Moreover, in line with the United States ' argument, we do not consider that China has explained 
why this argument is relevant to its overall claim . Indeed, given that the USITC found that the 
domestic industry experienced adverse price conditions as a result of increased lower -priced im ports, 
it is not clear to us why the premise of China's  claim – which purports to establish why the domestic 
industry's  prices were higher – would undermine the USITC's  finding.  
7.126.   Based on the foregoing, we reject China's  argument that the USITC failed to a ppropriately 
explain why the domestic industry experienced adverse price conditions as a result of increased 
imports.  
7.3.3.2.3   Lost market  share  
7.3.3.2.3.1   Factual  background  
7.127.   The USITC found that the domestic industry lost market share to increased imports:  
Although the dome stic industry increased its U.S. shipments over the POI, this overall 
increase was dwarfed by the *** percent growth in apparent U.S. consumption during 
this period, meaning that the domestic industry lost market share to the consistently 
growing low -priced imports. The domestic industry's share of apparent 
U.S. consumption fell from *** percent in 2012 to *** percent in 2013, and increased 
to *** percent in 2014, as prices stabilized somewhat while imports temporarily grew 
at a slower pace than apparent U. S. consumption. The domestic industry's market share 
declined anew to *** percent in 2015 and *** percent in 2016, as imports peaked. 
 
44 of the 103  US purchasers did not know why domestic producers reduced prices, it was not inappropriate for 
the USITC to rely on the fact that 38 purchasers blamed low -priced imports , as it represented two-thirds of the 
59 purchasers expressing a view . (United  States ' first written submission, para.  136). 
279 China's  second written submission, para.  104.  
280 USITC final staff report, (Exhibit  CHN-3), table III -21.  
281 USITC final report, (Exhibit  CHN-2), pp.  45-46. 
282 SEIA executive summary of US solar market  on 2016, (Exhibit  CHN-60), p.  16. See also USITC final 
report, (Exhibit  CHN-2), p.  46 and fn 252 (referring to USITC final staff report, (Exhibit  CHN-3), p.  V-27). 
283 United  States ' second written submission, paras.  78-79. 
284 See section 7.1.2  above.  WT/DS562/ R 
 
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  Domestic producers reported losing sales to low -priced imports of CSPV products, and 
the majority of purchasers reported t hat they had increased their purchases of imported 
CSPV products, most often identifying lower price as the reason for increasing their 
purchases of imported CSPV products.285 
7.128.   Relatedly, the USITC found that "the large volume of imports at low and declining  prices 
adversely impacted the domestic industry's  financial performance, making it difficult for the 
domestic industry to increase capacity to a scale that made it more competitive in [the utility] 
segment, even if it managed to develop and even pioneer i nnovative products that utilities and 
others sought. "286 
7.3.3.2.3.2   Main  arguments  of the parties  
7.129.   China argues that the USITC failed to appropriately explain why the domestic industry lost 
market share as a result of increased imports .287 In its view, despite the fact there "may have been 
a superficial coincidence between increasing imports and falling domestic market share during the 
POI", the USITC failed to account for prevailing conditions of competition.288 In particular, consistent 
with its argument  concerning the prevailing conditions of competition described in section  7.3.3.2.1  
above, China contends that the USITC's  analysis of  market share  failed to account for (a) the 
massive increase in demand and market growth during the POI, which the domestic industry was 
unable to supply due its small size; (b)  the domestic industry's  lack of participation in the utility 
segment; and (c) the deficiencies associated with the quality, performance, and availability of 
domestic CSPV products.289 According to China, the USITC also failed to properly explain why the 
domestic industry still lost sales to imports when its overall sales increased du ring the POI.290  
7.130.   With respect to the USITC's  finding that increased imports prevented the domestic industry 
from expanding its capacity, China advances that the USITC incorrectly relied on (a) the false 
premise that the domestic industry had the right to g row in parallel with the market291; and (b) its 
deficient findings that domestic and imported CSPV products competed in residential, commercial, 
and utility market segments and were "highly substitutable".292 China also claims that the 
USITC's  finding on this point is undermined by the fact that the domestic industry increased its 
capacity and production during the POI.293 
7.131.   For its part, the United  States  argues that the USITC provided a reasoned and adequate 
explanation demonstrating that increased imports caused decreases in the domestic 
industry's  market share.294 In its view, the USITC properly demonstrated that changes in the 
domestic industry's  market  share correlated with import volumes over the POI, which the USITC 
situated in the broader context of the import trends that led to the imposition of the CSPV  I and 
CSPV  II orders.295 In addition, the United  States  submits that (a) the USITC properly demon strated 
that domestic producers lost bids and sales to low -priced imports ; and (b) China's  arguments to the 
contrary are based on the fallacy that the increase in the domestic industry's  shipments during the 
POI means that it did not lose sales.296  
7.132.   As explained in section  7.3.3.2.1  above, the United  States  responds to China's  claim that 
the domestic industry did not have the capacity to supply increasi ng demand by referring to the 
USITC's  findings that increased imports impeded the domestic industry's  ability to compete with 
increased low -priced imports.297 In this regard, the United  States  argues that the USITC properly 
demonstrated that increased imports caused domestic prices to decline, which led to operating and 
 
285 USITC final report, (Exhibit  CHN-2), p.  49. (fns omitted ; redacted original )  
286 USITC final report, ( Exhibit  CHN-2), pp. 60-61. 
287 China's  first written submission, para.  129; second w ritten submission, para.  91. 
288 China's  first written submission, para.  129. 
289 China's  first written submission, paras.  130-139; second written submission, paras.  91-94. 
290 China's  second written submission, para.  95; response to Panel question No. 40 of the  third set, 
paras.  53-62. 
291 China's  second written submission, paras.  96-97. 
292 China's  second written submission, paras.  97-100. 
293 China's  second written submission, para.  96. 
294 United  States ' first written submission, section  II(D)(2)(a)(i). 
295 United  States ' first written submission, para.  118; second written submission, paras.  91-95.  
296 United  States ' first written submission, para.  118; second written submission, paras.  87-90. 
297 United  States ' first written submission, para.  119.  WT/DS562/ R 
 
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  financial losses that negatively impacted the domestic industry's  ability to expand to capitalize on 
increased US  consumption.298 The United  States  further argues that China's  attempt to discredit the 
USITC's  findings on market segmentation and product substitutability do not withstand scrutiny.299 
As such, these arguments fail to support China's  claim that the USITC failed to demo nstrate that 
increased imports impeded the domestic industry's  expansion.300  
7.3.3.2.3.3   Evaluation  of the Panel  
7.133.   Although the parties agree that the domestic industry lost market share during the POI301, 
they disagree on whether the USITC appropriately accounted for pr evailing conditions of competition 
in finding that the domestic industry lost market share as a result of increased imports. Overall, we 
are not persuaded by China's  arguments that the USITC 's analysis is deficient in this regard.  
7.134.   We begin by noting that, contrary to China's  argument302, the USITC did not ignore or 
overlook the significant increase in domestic consumption when it found that the domestic industry 
lost market share to increased imports. In fact, the USITC recognized this dynamic when it found 
that, in all but one year of the POI (2013 -2014), imports increased at a greater rate than apparent 
US consumption .303 This finding supported the USITC's  conclusion noted above that increased 
US shipments were "dwarfed" by the " growth in apparent U.S. consu mption during this period , 
meaning that the domestic industry lost market share to the consistently growing low -priced 
imports".304  
7.135.   China further argues that the USITC ignored that the domestic industry lost market share to 
increased imports because it did  not have the capacity to supply the explosive growth in demand.305 
To support its argument, China points to record evidence showing that US  demand increased 
by 338% during the POI, which meant that the "domestic industry could only supply 27  percent of 
demand at the beginning of the POI, and  … only supply 8 percent towards the end of the POI".306 As 
explained in section  7.3.3.2.1.1  above , we are not persuaded by China's  contention that the 
relatively small size of the domestic industry meant that the domestic industry was not affected by 
the significant increased imports. With respect to declining market share specifically, even if the 
domestic indust ry lacked the capacity to supply the full extent of the US  market demand during the 
POI, we do not consider that this would demonstrate that it was inappropriate for the USITC to find 
that import competition contributed to the domestic industry's  declining  market share based on the 
capacity that it had.307  
7.136.   In this regard, we note that the USITC found that the domestic industry lost sales to 
low-priced imports. The USITC based  this finding  on questionnaire responses reporting that a 
majority of domestic prod ucers lost sales to imports, and that a majority of purchasers increased 
their purchases of imported CSPV products  (most often identifying  lower price as the reason for 
increasing their purchases of imported CSPV products ).308 Four of these producers estimated that 
 
298 United  States' first written submission, paras.  119-120; response to Panel question No. 41 of the 
third set, paras.  18-21. 
299 United  States ' first written submission, paras.  121-128; second written submission, paras.  51-65. 
See also United  States ' response to Panel q uestion No. 4 of the first set, para.  7; response to Panel question 
No. 20 of the first set , para.  49; and comments on China's response to Panel question No. 2 of the first set, 
paras.  27 and 37 -42. 
300 United  States ' first written submission, paras.  121-128. 
301 China accepts that the domestic industry lost market share during the POI. (China's  first written 
submission, para.  129; second written submission, para.  95; and response to Panel question No. 40 of the 
third set, para.  54). 
302 China's  first written sub mission, para.  130. 
303 USITC final report, (Exhibit  CHN-2), p.  48. 
304 USITC final report, (Exhibit  CHN-2), p.  49. (emphasis  added ; fn omitted ) 
305 See, e.g.  China's  first written submission, paras.  130-132 and 137; and  second written submission, 
para. 93. 
306 China's  second written submission, para.  93.  
307 We note in this regard that record evidence indicates that the domestic industry had significant 
unused capacity throughout the POI. (USITC final report, (Exhibit  CHN-2), fn  261; USITC final staff  report, 
(Exhibit  CHN-3), pp.  III-10-III-13). Moreover, as noted below, the USITC also found that increased imports 
impeded the domestic industry's ability to increase its capacity to achieve economies of scale . 
308 USITC final report, (Exhibit  CHN-2), p.  49; USITC final staff report, (Exhibit  CHN-3), pp.  V-16 
and V-28. WT/DS562/ R 
 
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  their lost sales totalled 950,000  kW, while another domestic producer, which did not provide a 
quantity estimate, estimated that its lost sales totalled USD 148.7 million.309  
7.137.   China claims that the USITC's  finding con cerning lost sales is flawed because the domestic 
industry increased production and shipments during the POI. Yet, as a logical matter, we fail to see 
why an increase in its production and shipments would mean that the domestic industry did not lose 
sales to imports, particularly in the context of the market that was growing. Moreover, China has 
not convincingly explained why this would be the case.310  
7.138.   China further argues  that the USITC failed to explain why the domestic industry lost sales, 
particularly i n light of the importance of non -price factors to purchasers of CSPV products. We are 
also not persuaded by this argument. As noted in section  7.3.3.2.1.2  above, the USITC assessed 
the mix of price and non -price factors in its finding that  domestic and imported CSPV products were 
"highly substitutable", and that price was an important factor in market competition. As we have 
rejected China's  arguments that these findings were inappropriate , we do not consider that it was 
inaccurate or other wise inappropriate for the USITC to highlight that the domestic industry lost sales 
to imports that were "low -priced".  
7.139.   Finally, we note that the USITC found that increased imports adversely impacted  domestic 
prices and, as a consequence, the financial con dition of the domestic industry, thereby impeding its 
ability to increase its capacity to achieve economies of scale.311 China claims that the 
USITC's  conclusion was flawed because domestic producers targeted different market segments than 
foreign producers , and consequently produced CSPV products that were not substitutable  with 
imports.312 Again, for the reasons discussed in sections  7.3.3.2.1.1  and 7.3.3.2.1.2  above, we reject 
these arguments. China's  other criticism is that the domestic industry increased its capacity and 
production during the POI.313 However, this argument misses the point. The USITC  specifically found 
that increased imports prevented the domestic industry from increasing capacity at a scale  that 
would have made it more competitive, particularly in the utility segment.314 As such, we do not 
consider the fact that the domestic industry increased its capacity and production demonstrates that 
the USITC's  finding on this point was inappropriate . 
7.140.   Based on the foregoing, we reject China's  argument that the USITC failed to appropriately 
explain why the domestic industry lost market share as a result of increased imports.  
7.3.3.2.4   Financial  deterioration  
7.3.3.2.4.1   Factual  background  
7.141.   In its serious injury determination, the USITC found that the domestic industry incurred 
"hundreds of millions of dollars in losses throughout the POI" and that its overall financial 
performance was "dismal and declining".315 The USITC based this determination on various financial 
indicators such as the value of net sales, cost of goods sold to net sales ratio, operating losses, net 
losses, and net income margin.316 The USITC further not ed that the domestic industry's  poor overall 
performance is illustrated by the closures and bankruptcies of domestic producers over the POI.317  
7.142.   Returning to these findings in its causation analysis, the USITC found that the financial 
condition of the domes tic industry deteriorated during the POI along a similar trend as the decline 
in the domestic industry's  prices and market share:  
 
309 USITC final staff report, (Exhibit  CHN-3), p.  V-28 and fn  53. 
310 China's  response to Panel question No. 9 of the second set, paras.  101-106; second written 
submission, para.  95; and  response to Panel question No. 40 of the third set, paras.  57-62. 
311 USITC final report, (Exhibit  CHN-2), pp.  47 and 60 -61. These findings directly disprove China's  claim 
that the USITC relied on the false premise that the domestic industry had the right to grow in parallel with the 
market. (Ch ina's second written submission, paras.  96-97). 
312 China's  first written submissio n, paras.  137-138; second written submission, paras.  96-101. 
313 China's  second written submission, para.  96. 
314 USITC final report, (Exhibit  CHN-2), pp. 60-61. 
315 USITC final report, (Exhibit  CHN-2), p.  35.  
316 USITC final report, (Exhibit  CHN-2), pp.  34-35. 
317 USITC final report, (Exhibit  CHN-2), p.  35.  WT/DS562/ R 
 
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  The domestic industry's  net sales fell overall between 2012 and 2016, and its cost of 
goods sold declined by a greater amount.  The domestic industry's  cost of goods sold to 
net sales ratio was high, near or exceeding *** percent throughout this period, 
decreasing from *** percent in 2012 to *** percent in 2013, *** percent in 2014, and 
*** percent in 2015, and increasing to *** p ercent in 2016. Accordingly, the domestic 
industry's financial condition, which was at its worst at the beginning of the POI before 
the antidumping and countervailing duty orders were imposed on imports from China 
in December 2012, improved marginally afte r imposition of the orders and the filing of 
new antidumping and countervailing duty cases, but remained poor and deteriorated 
further in 2016, as imports peaked in terms of volume and market share and prices 
dropped anew.318 
7.3.3.2.4.2   Main  arguments  of the parties  
7.143.   China argues that the USITC failed to appropriately explain why the domestic 
industry's  financial performance deteriorated as a result of increased imports .319 According to China, 
the USITC ignored that the domestic industry's  financial performance improved over the POI and 
relied upon evidence concerning financial losses "divorced from their proper context".320 China 
contends that the USITC recognized "this fundamental weakness in its theory of causation" and 
"tried to explain away the improvement as due to t he imposition of anti -dumping and countervailing 
duty orders".321 In its view, this was improper because, "if the conditions already improved because 
of the anti -dumping and countervailing duty orders, that shows the increasing imports … were no 
longer the problem".322 Finally, China argues that the USITC improperly tried to shift the focus away 
from overall changes over the POI and year -over-year trends to cumulative losses over the entire 
period; those losses, however, "say[] nothing about the causal link to increased imports".323 
7.144.   For its part, the United  States  submits that the USITC provided a reasoned and adequate 
explanation demonstrating that increased imports caused the poor and deteriorating financial 
performance of the domestic industry.324 Accor ding to the United  States , the USITC reasonably 
demonstrated that the financial condition of the domestic industry was adversely affected by unfairly 
traded imports from China and Chinese Taipei at the start of the POI, then improved marginally as 
a result  of the imposition of the CSPV  I and CSPV II  orders. Thereafter, in 2016, the financial 
condition of the domestic industry declined anew when prices dropped and imports surged from 
countries not covered by the CSPV  I and CSPV II  orders.325 Based on these fi ndings, the 
United  States  argues that China ignores the explosive growth in demand and the early, but 
ineffective, imposition of trade remedy orders.326 In addition, the United  States  argues that , contrary 
to China's  suggestion,  when the domestic industry's  hundreds of millions of dollars in net and 
operating losses throughout the POI are viewed in the context of the booming demand, the marginal 
 
318 USITC final report, (Exhibit  CHN-2), p.  47 (fns omitted ; redacted original ). See also USITC final 
report, (Exhibit  CHN-2), fn  257 where the USITC observed:   
The domestic industry's  operating loss improved fro m $*** in 2012 to operating losses of $*** in 
2013, $*** in 2014, and $*** in 2015 but deteriorated to an operating loss of $*** in 2016. The 
domestic industry's net losses improved from a net loss of $*** in 2012 to net losses of $*** in 
2013, $*** in 201 4, and $*** in 2015 and deteriorated to a net loss of $*** in 2016. The domestic 
industry's net income margin improved from a loss of *** percent in 2012 to losses of *** percent 
in 2013, *** percent in 2014, and *** percent in 2015, but deteriorated to a loss of *** percent 
in 2016.  
Redacted original.  
319 China's  first written submission, paras.  140-148. 
320 China's  first written submission, paras.  140-148; second written submission, paras.  120-123; 
and response to Panel question No. 5 of the first set, para.  44. 
321 China's  first written submission, para.  144. 
322 China's  first written submission, para.  144. Relatedly, China contends that the USITC's  focus on the 
effectiveness of the trade remedies orders was flawed as it "ignores the simple truth that there could be other 
factors at work affecting pricing, volume of imports, and other competitive dynamics in the CSPV market". 
(China's  response to Panel question No. 6 of the first set, para.  53). 
323 China's  first written submission, para.  146. 
324 United  States ' first written submission, section  II(D)(2)(a)(iii). 
325 United  States ' first written submission, paras.  144-149. 
326 United  States ' comments on China's response to Panel question No. 5 of the first s et, paras.  63-64; 
second written submission, paras.  29-30.  WT/DS562/ R 
 
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  and temporary improvements of the domestic industry's  financial performance are not indicative of 
good performance.327 
7.3.3.2.4.3   Evaluation  of the Panel  
7.145.   As an initial matter, we note that the USITC's  finding that the domestic industry's  financial 
condition deteriorated as a result of increased imports largely flowed from its findings concerning 
the domestic industry's  declining prices and lost market share. In sections  7.3.3.2.2.3  
and 7.3.3.2.3.3  above we have already rejected China's  arguments that the USITC erred in respect 
of its findings concerning the relationship between increased  imports and the domestic 
industry's  declining prices and lost market share.  As such , we consider  that the USITC's  findings  
concerning the relationship  between increased imports and the domestic industry's  declining prices 
and lost market share  support  the appropriateness of its finding concerning  the domestic 
industry's  financial performance.328  
7.146.   We are also not convinced by China's  argument that the USITC failed to appropriately 
account for the fact that the domestic industry's  financial condition improved during the POI. 
As noted above, the USITC found that the domestic industry's  financial situation improved when the 
CSPV  I and CSPV  II orders were imposed and prices stabilized, and deteriorated when imports 
surged from countries not covered by those orders and prices decline d.329 In our view, these findings 
suggest that increased imports negatively impacted the financial condition of the domestic industry, 
particularly in the 2015 -2016 period. Thus, by ignoring these year -over-year developments, 
China's  claims concerning the i mprovement of the financial condition of the domestic industry are 
premised on a static – and ultimately misleading – comparison of the situation of the domestic 
industry at the start and at the end of the POI.330  
7.147.   Relatedly, we recall that China does not c hallenge the USITC's  serious injury determination 
in these proceedings.331 As a result, we accept as uncontested the USITC's  assessment that the 
overall financial condition of the domestic industry was "dismal and declining" and indicative of 
serious injury .332 With respect to the USITC's  causation determination, these findings further 
diminish the significance of any improvements to the domestic industry's  financial condition, as the 
causal link required under the  Agreement on Safeguards is between increased  imports and the 
serious injury found to exist  during the investigation.333 
7.148.   For these reasons, we reject China's  argument that the USITC failed to appropriately explain 
why the domestic industry's  financial performance deteriorated as a result of increased imports.  
 
327 United  States ' comments on China's response to Panel question No. 5 of the first set, para.  65. See 
also United  States ' second written submission, para.  26. 
328 China's  response to Panel question No. 6 of the first set, para.  53.  
329 USITC final report, (Exhibit  CHN-2), p.  47 and fn  257. 
330 China's  second written submission, para.  123. China argues that, by focusing on the cumulative 
financial losses incurred by th e domestic industry over the POI, the USITC failed to "consider the changes in a 
domestic industry over time". However, this seems to be the very approach taken by China in its argument 
that the financial condition of the domestic industry improved over th e POI. In this respect, we agree with 
previous DSB reports that have found that end -to-end comparisons do not adequately explain the relationship 
between imports and indicators of serious injury. (See, e.g. Appellate  Body Reports, US – Steel Safeguards , 
para. 354; and Argentina  – Footwear  (EC), para.  129).  
331 See section 7.3.1  above. We recall that, regardless of its lack of challenge, China maintains th at it 
does not accept the USITC's serious injury determination. ( China 's comments on the United States ' response to 
Panel question No. 33 of the third set, para. 4; response to Panel question No. 33 of the third set, paras. 9 -10; 
second written submission,  para. 17 and fn 25; and response s to Panel question Nos. 1(a) and 1(b) of the 
second set ). 
332 USITC final report, (Exhibit  CHN-2), p.  35.  
333 As noted above, in its safeguard investigation the USITC found that, regardless of the overall 
improvement of the f inancial condition of the domestic industry over the POI, the financial condition of the 
domestic industry was still indicative of serious injury due to that fact that it was "dismal and declining", 
particularly in 2015 -2016. Accordingly, the relevant ques tion with respect to causation is whether this situation  
occurred as a result of increased imports, and not whether the financial condition of the domestic industry 
improved over the 2012 -2016 period.  WT/DS562/ R 
 
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  7.3.3.2.5   Plant  closures  
7.3.3.2.5.1   Factual  background  
7.149.   In its serious injury determination, the USITC found that 33 CSPV cell or CSPV module 
facilities operated in the United  States  as of 1  January  2012, but only 13 of those facilities remained 
open by 31  December  2016. Moreover, of the 16 additional facilitie s that opened during the POI, 
5 had closed, and although 2 firms announced plans for new facilities, those facilities were not 
commercially operational by July 2017.334  
7.150.   When returning to this issue in its analysis of causation, the USITC explained:  
[D]espi te the need in this industry to increase capacity in order to achieve economies 
of scale, the domestic industry's  capacity and production levels did not increase 
commensurately with demand growth, and its capacity utilization levels remained low 
and droppe d at the end of the POI, as imports reached their summit. A substantial 
number of domestic CSPV cell and CSPV module facilities closed during the POI, 
resulting in numerous layoffs and the need for trade adjustment assistance for the 
highly trained, skille d workers affected by these closures .335  
7.151.   In a related finding, the USITC further noted that "[a] lthough many U.S. producers entered 
the U.S. market seeking to take advantage of this demand growth, the consistent inability of the 
domestic industry to compet e with low -priced imports forced many of these firms, as well as others, 
to shut down their facilities".336 The USITC  also found that this dynamic continued after the POI on 
the basis that, by July 2017, two additional US  production facilities ha d closed.337 
7.3.3.2.5.2   Main  arguments  of the parties  
7.152.   China contends that the USITC failed to appropriately explain why the domestic 
industry's  plant closures were a result of increased imports.338 According to China, the USITC  (a) did 
not address why plant closures were caused b y increased imports; (b)  ignored the fact that plants 
opened throughout the POI; (c)  did not address year -over-year trends, which showed that most 
plant closures occurred at the start of the POI when imports were at their lowest; and (d) improperly 
relied upon closures that took place after the POI.339 With respect to the USITC's  reliance on 
developments after the POI, China contends that the determinations of serious injury should focus 
on the "recent past, 'up to and including the ver y end'  of the POI".340 Based on this principle, China 
argues that it would only have been appropriate for the USITC to take this evidence into account if 
it explained why doing so was necessary and ensured that the evidence was considered in a balanced 
mann er.341 However, in its view, the USITC failed to do so.342  
7.153.   The United  States  responds by arguing that the USITC appropriately considered plant 
closures to be the natural result of the domestic industry's  poor operational and financial 
performance.343 With respect to the USITC's  reliance on evidence from after the POI, the 
United  States  contends that the only limitation set forth in the  Agreement on Safeguards is that the 
evidence be part of the competent authorities'  record.344 In the safeguard investi gation, the record 
 
334 USITC final report, (Exhibit  CHN-2), pp.  31-32. 
335 USITC final report, (Exhibit  CHN-2), pp.  47-48. (fns omitted; emphasis  added)  
336 USITC final report, (Exhibit  CHN-2), pp.  48-49. 
337 USITC final report, (Exhibit  CHN-2), p.  49.  
338 China's  first written submission, para.  154; second written submission, para.  119. 
339 China's  first written submission, paras.  154-155; response to Panel question No. 5 of the first set, 
paras.  46-47; comments on the United  States ' response to Panel question No. 4(b) of the first set, paras.  33 
and 35; and  second written submission, p aras. 117-118.  
340 China's  response to Panel question No. 35 of the third set, para.  21. 
341 China's  response to Panel question No. 35 of the third set, paras.  17-23; comments on the 
United  States ' response to Panel question No. 35 of the third set, para.  10. 
342 China's  response to Panel question No. 35 of the third set, paras.  22-23; comments on the 
United  States'  response to Panel question No. 35 of the third set, paras.  11-12. 
343 United  States ' first written submission, para.  152; comments on China's response to Panel question 
No. 5 of the first set, paras.  66-67; and  response to Panel question No. 5 of the second set, para.  11.  
344 United  States ' response to Panel question No. 35 of the third set, paras.  9-10; comments on 
China's  response to Panel ques tion No. 35 of the third set, paras.  9-11.  WT/DS562/ R 
 
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  included testimony regarding the failing operations of two of the largest domestic produc ers, 
i.e. petitioners Suniva and SolarWorld.345 This testimony specifically informed the USITC of 
Suniva's  April 2017 suspension of its cell and modu le operations as part of its chapter 11 bankruptcy 
filing, and SolarWorld's  June 2017 issuance of Worker Adjustment and Retraining Notification 
(WARN ) Act notifications and layoff of 360 employees in mid -July 2017.346 Thus, the United  States  
submits that it  was appropriate for the USITC to consider this evidence in its finding of the causal 
link between increased imports and serious injury and that China's  arguments to the contrary do 
not withstand scrutiny.347  
7.3.3.2.5.3   Evaluation  of the Panel  
7.154.   We are not persuaded by China's  argument that the USITC failed to properly explain how 
plant closures were linked to increased imports. To the contrary, the USITC appears to have found 
that plant (facility)  closures were connected to the domestic industry's  poor fina ncial circumstances 
and its inability to increase its capacity to achieve economies of scale that would have allowed it to 
compete more effectively against low -priced imports.348 As we have already rejected 
China's  arguments that it was inappropriate  for th e USITC to link these developments to increased 
imports, we do not consider that it was inappropriate  to also link these same developments to plant 
closures.  
7.155.   In addition, we are not persuaded by China's  argument concerning the coincidence between 
increase d imports and plant closures. As an initial matter, we do not consider that the 
appropriateness of the USITC's  findings on this issue turns on whether the USITC demonstrated a 
perfect correlation between increased imports and plant closures . Given that pla nt closures would 
be expected to follow from the more direct effects of the increased imports – here, adverse price 
conditions and their financial consequences – it would be logical to expect a lag between the 
increased imports and plant closures.349  
7.156.   In this context, we do not consider that the USITC's  finding concerning the relationship 
between increased imports and plant closures is vitiated by the fact that a number of plant closures 
occurred early in the POI.350 The USITC found that the financial conditi on of the domestic industry 
was at its lowest point at the start of the POI351, which coincided with the import competition from 
China that culminated in the imposition of the CSPV  I order.352 As such, it seems reasonable that 
plant closures would occur arou nd this point in time. Moreover, the fact that plant closures declined 
 
345 United  States ' response to Panel question No. 35 of the third set, para.  11. 
346 United  States ' response to Panel question No. 35 of the third set, para.  11. 
347 United  States ' response to Panel question No. 35 of the third set, para.  11.  
348 USITC final report, (Exhibit  CHN-2), pp.  47-49. 
349 In this respect, we note that previous DSB reports have similarly found  that there may be instances 
where there is a lag between the influx of imports and the manifestation of th e injurious effects on the 
domestic industry. (See, e.g. Panel Report s, US – Steel Safeguard s, paras.  10.310 -10.312). In that case, the 
panel explicitly noted that lags concerning certain factors such as employment  may be expected.  
(See ibid. para.  10.312).  
350 USITC final report, (Exhibit  CHN-2), fn  263; USITC final staff report, (Exhibit  CHN-3), table III -3. 
351 USITC final report, (Exhibit  CHN-2), p.  47. 
352 USITC final report , (Exhibit  CHN-2), p.  44: 
In 2009, the beginning of the period of investigation in the CSPV  I investigations, the domestic 
industry held the largest share of apparent U.S. consumption (*** per cent), followed by imports 
from China corresponding to the scope of those investigations (*** percent), and imports from all 
other sources (*** percent). Imports from China overtook the domestic industry's  U.S. shipments 
by 2010, and by the end of 2011, imports from China had nearly doubled from their  2009 level .  
Fns omitted; redacted original .  
See also USITC CSPV I final report, (Exhibit  USA-11), p.  38: 
Consequently, the picture emerges of a domestic industry:  (1) with a steadily declining market 
share despite phenomenal demand growth, (2)  that has lost market share due primarily to the 
significant and increasing volume of subject imports from China, (3)  that has faced significant 
underselling by subject imports from China and depr essed and suppressed prices, (4)  that 
consistently lost money throughout the POI despite the tremendous demand growth and significant 
cost reductions, (5)  that by the end of the POI experienced declines even in many of the 
performance indicators that previ ously had shown some improvement, and (6)  that reported 
recognizing asset write -offs and/or costs related to the closure of production facilities, revalued 
inventories, and/or asset impairments. Based on the foregoing trends, we find that there is a causal  
nexus between subject imports and the poor condition of the domestic industry and that the 
domestic industry is materially injured by reason of subject imports.  WT/DS562/ R 
 
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  and that new firms entered the market after the start of the POI corresponds with the improving 
financial condition of the domestic industry that followed the imposition of the CSPV  I and CSPV II  
orders and the growth in the US  market. However, as noted above, these improvements were 
short-lived; the financial condition of the domestic industry deteriorated further in 2016, as import 
volumes increased from sources not covered by the CSPV  I and CSPV II  orders, and the domestic 
industry's  market share and prices dropped anew.353 As the USITC found that plant closures followed 
these  developments354, we do not consider that the USITC failed to address year -over-year trends, 
contrary to China's  view.355  
7.157.   This brings us to whether it was appropriate for the USITC to take into account plant closures 
that occurred immediately after the POI,  i.e. following the significant increase in imports. While the 
parties agree that the  Agreement on Safeguards does not prescribe explicit rules for considering 
evidence from outside of the POI356, they disagree on when it is appropriate to do so and also on  
whether the USITC considered post -POI evidence concerning plant closures in a balanced manner.  
7.158.   As noted above, China argues that it is only appropriate for the competent authorities of a 
Member to consider developments following the POI in limited circums tances, specifically where the 
competent authorities explain why doing so is "necessary".357 However, in line with the 
United  States ' argument, we consider this understanding to be overly restrictive.358 The 
Agreement  on Safeguards does not discipline the te mporal scope of the evidence that the competent 
authorities may consider, so long as the evidence is on the competent authorities'  record and the 
procedural rights of interested parties are respected. Moreover, contrary to China's  reference to the 
principl e that the determinations of serious injury should focus on the "recent past", we think that 
the principle to which China refers favour s taking into account post -POI developments.359 Indeed, 
those developments would reflect the most recent circumstances of the domestic industry, including 
any injurious effects of increased imports.  
7.159.   Finally, we do not consider that China has demonstrated that the USITC failed to evaluate 
post-POI evide nce in a balanced manner. The USITC recognized that "[t]wo firms announced plans 
for new facilities, but those facilities were not commercially operational by July 2017" in its 
assessment of whether there was significant idling of US  productive facilities.360 The USITC also 
relied upon table III -3 in the final staff report, which shows that a limited number of cell and module 
facilities opened in the 2016 -2017 period.361 Importantly, however, this evidence contrasts with the 
larger number of closures that occ urred in the same period.362 The USITC also relied on evidence 
from Suniva – one of the largest domestic producers and one of the petitioners in the safeguard 
investigation – regarding the April 2017 suspension of operations at its cell and module facilitie s as 
 
353 USITC final report, (Exhibit  CHN-2), p.  49.  
354 USITC final report, (Exhibit  CHN-2), p.  49.  
355 Relatedly, we also reject China's  contention that the USITC ignored the fact that plants opened 
throughout the POI. Indeed, as noted by the United  States , the USITC addressed this dynamic explicitly when 
it found that of the 16 additional facilities that  opened during the POI, 5 had closed, and that, although 2 firms 
had announced plans for new facilities, those facilities were not commercially operational by July 2017. 
(United  States ' comments on China's response to Panel question No. 5 of the first set,  para. 66). As noted 
above, the USITC also found that "[a]though many U.S. producers entered the U.S. market seeking to take 
advantage of this demand growth, the consistent inability of the domestic industry to compete with low -priced 
imports forced many o f these firms, as well as others, to shut down". ( USITC final report, (Exhibit  CHN-2), 
pp. 48-49). 
356 China's  response to Panel question No. 35 of the third set, para.  17; United  States ' response to Panel 
question No. 35 of the third set, para.  9. 
357 China's  response to Panel question No. 35 of the third set, paras.  17-23; comments on the 
United  States ' response to Panel question No. 35 of the third set, para.  10. 
358 United  States ' response to Panel question No. 35 of the third set, paras.  9-10; comments on 
China's response to Panel question No. 35 of the third set, paras.  9-11.  
359 China's  response to Panel question No. 35 of the third set, paras.  20-21; Panel Report,  
US – Wheat  Gluten , para.  8.81.  
360 USITC final report, (Exhibit  CHN-2), pp.  31-32. 
361 USITC final report, (Exhibit  CHN-2), pp.  31-32 and fns 155-158. 
362 USITC final report, (Exhibit  CHN-2), pp.  31-33, 38, and 49; USITC final staff report, (Exhibit  CHN-3), 
table III -3; and Transcript of the USITC injury hearing , (Exhibit  CHN-9), pp. 95 -96. Although China claims that 
"[w]hen imports were at their highest level, the number of firm closures were at their lowest", it fails to 
demonstrate that this was the case, particularly in light of the documented closures in the 2016 -2017 period. 
(China' s second written submission, para.  118).  WT/DS562/ R 
 
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  part of its chapter 11 bankruptcy filing.363 As the balance of this evidence appears to support the 
USITC's  finding that the domestic industry's  plant closures worsened after the POI, we disagree with 
China's  claim that the USITC cherry -picked facts in  isolation or failed to consider the evidence as a 
whole.364  
7.160.   Based on the foregoing, we reject China's  argument that the USITC failed to appropriately 
explain why the domestic industry's  plant closures were a result of increased imports.  
7.3.3.3   The USITC 's findings  concerning  the relationship  between  increased  imports  and 
the seemingly  positive  factors  of serious  injury   
7.161.   The parties also disagree on whether the USITC properly addressed the seemingly positive 
factors of serious injury that were present during the POI, i.e. increases in the domestic 
industry's  capacity, prod uction, and shipments; employment; and capital expenditures, 
R&D expenses, and value of production assets.  
7.162.   China contends that the USITC largely dismissed the existence of these factors, which, in 
China's  view, cast doubt on the USITC's  finding that incre ased imports caused serious injury to the 
domestic industry.365 In opposition, the United  States  argues that China disregards that the USITC 
addressed these factors in its serious injury analysis and found that they did not detract from its 
finding that the  totality of the evidence demonstrated a significant overall impairment in the position 
of the domestic industry. Thus, the existence of the seemingly positive factors of serious injury does 
not undermine the USITC's  finding of a causal link.366  
7.163.   At the outset, we note that the parties'  disagreement directly implicates the legal status of 
the USITC's  serious injury determination in these proceedings. The fact that China has not 
challenged the USITC's  serious injury determination means that it is un contested for the purposes 
of our evaluation. Moreover, because the requ isite "causal link" under the Agreement on Safeg uards  
is between increased imports and the serious injury found to exist , the underlying serious injury 
determination establish es the factual parameters of the causal link that must be demonstrated . This 
has direct implications for our assessment of the USITC's  analysis of the seemingly positive factors 
in its causation determination. Since the USITC found that the seemingly positive facto rs either 
supported, or did not undermine, its determination that the domestic industry was seriously injured, 
we consider that these factors are necessarily less relevant to the causal link between increased 
imports and serious injury.367 
 
363 USITC final report, (Exhibit  CHN-2), pp.  33-34; Transcript of the USITC injury  hearing , 
(Exhibit  CHN-9), pp.  95-96; and USITC final staff report, (Exhibit  CHN-3), p.  III-8. 
364 China's  comments on the United  States ' response to Panel question No. 4(b) of the first set, 
para. 36.  
365 China's  second written submission, para.  56.  
366 See also United  States ' first written submission, paras.  157-159; and second written submission, 
para. 27.  
367 In this regard, we disagree w ith China's  contention that the Panel is required to review the 
reasonableness and  adequacy of the USITC's  factual findings in its serious injury determination on the basis 
that they are relevant to the Panel's  assessment of the causation determination. (C hina's  response to Panel 
question No. 1(b) of the second set, paras.  3-4). In our view, doing so would effectively amount to reviewing 
the serious injury determination, which is outside of our terms of reference.  
Based on the legal distinction between "ser ious injury" and "causal link" in the  
Agreement  on Safeguards, China further claims that the serious injury determination is "context for, but does 
not dictate, the 'causal link'  determination, even though both of these legal determinations will draw on th e 
same underlying facts". China also argues that "the overall determination about 'serious injury'  does not 
extinguish the relevance of the individual injury factors for which there is evidence on the record. Those facts 
are themselves still highly relevan t for the assessment of the alleged 'causal link'". In this context, China notes 
the analysis of the "causal link" must focus on how the injury factors have changed over time. 
(China's  response to Panel question No. 33 of the third set, paras.  3-9).  
While we agree with China that serious injury and causation are legally distinct requirements under 
the Agreement on Safeguards and that movement in individual injury factors must be accounted for in the 
causation analysis, we disagree with China to the ex tent it argues that the serious injury determination does 
not establish the factual parameters of the causal link that must be demonstrated. In this regard, we recall 
that Article  4.2(b)  of the  Agreement  on Safeguards stipulates that the requisite "causal link" is "between 
increased imports and serious injury". Thus, in our view, the underlying serious injury determination 
establish es the factual parameters of the overall causal link that must be demonstrated, and therefore 
establishes the relevance of spec ific injury factors to the competent authorities' analysis .  WT/DS562/ R 
 
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  7.164.   In this context, we now turn to the parties'  arguments concerning each of the seemingly 
positive injury factors.  
7.3.3.3.1   Capacity,  production,  and shipments  
7.3.3.3.1.1   Factual  background  
7.165.   As part of its serious injury determination, the USITC found that, although the domestic 
industry's  capacity, production, and shipments increased during the POI, those increases were 
dwarfed by the increase in US  consumption and the domestic industry lost market share as a 
result.368 On this basis, the USITC considered that the inability of the domestic indus try to 
meaningfully increase its capacity, production, and shipments during a period of favourable market 
conditions  was indicative of serious injury, regardless of whether these factors improved during 
the POI.369 
7.166.   In its examination of whether increased imports were a substantial cause of serious injury 
to the domestic industry, t he USITC found that the domestic industry lost sales and market share 
as a result of increased low -priced imports, despite the fact that it increased its shipments over  the 
POI.370 The USITC also found that increased imports prevented the domestic industry from increasing 
its capacity and production levels commensurately with demand growth.371 In particular, the USITC 
linked the inability of the domestic industry to increa se its capacity "in order to achieve economies 
of scale" to "the hundreds of millions of dollars in net and operating losses throughout the POI", 
which meant that "a significant number of domestic producers were unable to generate adequate 
capital to finan ce the modernization of their domestic plants and equipment, and a significant 
number of them were unable to maintain existing research and development expenditure levels".372 
7.3.3.3.1.2   Main  arguments  of the parties  
7.167.   China argues that the USITC failed to appropriately  explain why increased imports caused 
serious injury to the domestic industry, notwithstanding the increases in the domestic 
industry's  capacity, production, and shipments.373 For each of these factors , China claims that it was 
insufficient for the USITC to  recognize the existence of the trend and dismiss it on the basis that the 
domestic industry did not increase its performance commensurately with demand growth.374 In this 
regard, China contends that the USITC's  analysis contained an "implicit false premise " that the 
domestic industry had the right to grow in line with the expansion of the US  market.375 
7.168.   For its part, the United  States  contends that the USITC addressed these trends in its serious 
injury analysis and found that they did not detract from the con clusion that the totality of the 
evidence demonstrated "a significant overall impairment in the position of the domestic industry".376 
The United  States  further contends that, contrary to China's  assertion that the USITC relied upon an 
"implicit false premi se" that the domestic industry  had a right to grow as the market expanded, the 
USITC appropriately found that increased imports prevented the domestic industry from being able 
to meaningfully improve its performance.377  
 
368 USITC final report, (Exhibit  CHN-2), pp.  37-38. Relatedly, as part of its serious injury determination, 
the USITC found that, while the domestic industry increased capacity and production for b oth CSPV cells and 
CSPV modules during the POI, these increases did not approach the magnitude of the explosive growth in 
apparent US  consumption during this period. (USITC final report, (Exhibit  CHN-2), p.  33). 
369 USITC final report, (Exhibit  CHN-2), pp.  37-38. The USITC linked this dynamic to other aspects of 
the serious injury it found to exist, e.g. the closure of domestic production facilities, increased inventories at 
facilities that remained open, and the inability for a significant number of firms to  generate reasonable levels of 
profit.  
370 USITC final report, (Exhibit  CHN-2), p.  49. 
371 USITC final report, (Exhibit  CHN-2), p.  47. 
372 USITC final report, (Exhibit  CHN-2), p.  47. 
373 China's  first written submission, paras.  118-121; second written submission, paras.  58-66. 
374 China's  first written submission, paras.  120-121; second written submission, paras.  60, 63, and 66.  
375 China's  first written submission, paras.  120-121; second wr itten submission, paras. 60, 63, and 66 . 
376 United  States ' second written submission, para.  27. See also United  States ' first written submission, 
paras.  157-159. 
377 United  States ' first written submission, paras.  157 and 161 -163; second written submission, 
paras.  34-36; and comments on China's response to Panel question No. 2 of the first set, para.  33. WT/DS562/ R 
 
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  7.3.3.3.1.3   Evaluation  of the Panel  
7.169.   In our view, the United  States  correctly notes that China fails to situate its claim in the 
context of the USITC's  serious injury determination, which it does not challenge in these 
proceedings. As indicated above, the absence of such a challenge means tha t the USITC's serious  
injury determination is uncontested for the purposes of our evaluation . As part of its serious injury  
determination , the USITC found that the extent of the improvements in the domestic 
industry's  capacity, production, and shipments during the POI, when viewed in the context of the 
growth in the US  market, supported  its finding that the domestic industry was seriously injured.378 
Therefore, with respect to the USITC's  causation determination , the relevant issue is not whether 
the domestic industry's  performance improved, but rather whether the domestic industry's  inability 
to meaningfully  improve its performance occurred as a result of increased imports. By focu sing 
narrowly on the fact that certain of the domestic industry's  performance indicators improved over 
the POI, China's  arguments ignore the nature of the serious injury found  to exist, and thus are not 
calibrated to the relevant issue.  
7.170.   China also overloo ks the linkages drawn by the USITC between increased imports and the 
inability of the domestic industry to improve its performance in light of increasing demand in the 
US market. As noted above, the USITC found that, irrespective of the fact that the domes tic industry 
increased its shipments during the POI, it still lost sales to low -priced imports, which contributed to 
its declining market share.379 The USITC also found that the inability of the domestic industry to 
achieve economies of scale by increasing its capacity and production was linked to the "the hundreds 
of millions of dollars in net and operating losses throughout the POI", which the USITC attributed to 
increased imports.380 As we have already rejected China's  claims that these findings were not 
appropriately explained, we consider that the same findings demonstrate that the USITC properly 
accounted for seemingly favourable increases in the domestic industry's  capacity, production, and 
shipments in its causation analysis. These findings also demons trate that, contrary to China's  view, 
the USITC did not rely on an "implicit false premise" that the domestic industry had the right to grow 
commensurately with the expansion of the US  market.  
7.171.   Based on the foregoing, we reject China's  claim that the USITC  failed to appropriately explain 
why increased imports caused serious injury to the domestic industry, notwithstanding the domestic 
industry's  increases in its capacity, production, and shipments.  
7.3.3.3.2   Employment  
7.3.3.3.2.1   Factual  background  
7.172.   As part of its serious injur y determination, the USITC found that the substantial number of 
facility closures resulted in extensive layoffs and the award of US  Trade Adjustment Assistance Act 
benefits to many workers during the POI. In addition, workers at some facilities experienced  
temporary shutdowns or production slowdowns, which led to layoffs and underemployment.381 
Specifically, with respect to CSPV cell operations, the USITC noted that:  
[T]he overall number of production and related workers ("PRWs")  engaged in U.S. CSPV 
cell op erations declined from *** PRWs in 2012 to *** PRWs in 2013 and *** PRWs 
in 2014, and increased to *** PRWs in 2015 and *** PRWs in 2016, an overall increase 
of *** percent. Although the overall increase in employment over the POI appears 
consistent with t he *** percent increase in U.S. production of CSPV cells, the increase 
at the end of the POI is primarily explained by ***.382 
7.173.   Moreover, with respect to CSPV module operations:   
For U.S. CSPV module operations, overall employment declined from 1,293 PRWs 
in 2012 to 1,080 PRWs in 2013 and 956 PRWs in 2014, and increased to 1,038 PRWs 
in 2015 and 1,253 PRWs in 2016, an overall decrease of 3.1 percent despite dramatic 
 
378 USITC final report, (Exhibit  CHN-2), pp.  37-38. 
379 USITC final report, (Exhibit  CHN-2), p.  47. 
380 USITC final report, (Exhibit  CHN-2), pp. 47 and 60 -61. 
381 USITC final report, (Exhibit  CHN-2), p.  33. 
382 USITC final report, (Exhibit  CHN-2), p.  33. (fns omitted ; redacted original ) WT/DS562/ R 
 
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  growth in apparent U.S. consumption of CSPV products. These employment data do not 
reflect pos t-POI developments, such as Suniva's  April 2017 suspension of operations 
for its cell and module factories as part of its chapter 11 bankruptcy filing or 
SolarWorld's  June 2017 issuance of WARN Act notifications to ***, layoff 
of 360 employees in mid -July 2017, and ***.383 
7.174.   Returning to these findings in its causation analysis, the USITC found that the domestic 
industry's  poor operational and financial performance over the POI resulted in a substantial number 
of facility closures, which in turn resulted in "numerous layoffs and the need for tra de adjustment 
assistance for the highly trained, skilled workers affected by these closures".384 
7.3.3.3.2.2   Main  arguments  of the parties  
7.175.   China contends that the USITC failed to appropriately explain why the increased imports 
caused injury to the domestic industry, no twithstanding the improvements in the domestic 
industry's  employment indicators .385 In particular, China argues that the USITC downplayed the fact 
that employment of cell production related workers increased "year -on-year" throughout the POI, 
and that emplo yment for module production related work ers recovered towards the end of the POI 
when imports peaked.386 China further argues that the USITC erred in its consideration of data 
concerning employment from after the POI for its determination of causation withi n the POI.387  
7.176.   In response, the United  States  advances that China does not deny the USITC's  observation 
that dozens of domestic facilities closed over the POI, which logically resulted in layoffs.388 
In addition, contrary to China's  argument, the United  States argues that the USITC  appropriately 
relied upon  post-POI evidence concerning SolarWorld's  issuance of WARN Act notices and 
Suniva's  bankruptcy because that evidence  was highly relevant and interested parties had the 
opportunity to address it during the investigation.389 
7.3.3.3.2.3   Evaluation  of the Panel  
7.177.   The USITC found that, regardless of certain increases in the domestic industry's  cell and 
module employment during the POI, the overall employment data supported its finding of "significant 
unemployment and underemployment".390 As China does not challenge the serious injury 
determination in these proceedings, we accept these findings as uncontested. In our view, the same 
findings also diminish the significance of any improvements to the domestic industry's  employment 
indicators to the USITC's  causation analysis, as the causal link required under the  
Agreement  on Safeguards is between increased imports and the serious injury found to exist . Thus, 
the simple fact that certain of these factors improved over the PO I does not demonstrate the absence 
of a causal link between increased imports and serious injury.  
7.178.   In addition, we note that the USITC connected the movement in the domestic 
industry's  employment indicators to the domestic industry's  poor operational and 
financial  performance, which resulted in a substantial number of plant closures.391 
In sections  7.3.3.2.4.3  and 7.3.3.2.5  above, we have already rejected China's  arguments that the 
USITC failed to appropriately explain why the domestic industry's  financial deterioration and plant 
closures occurred as a result of increased imports. Thus, the USITC's findings with respect to these 
factors – which worsened at the end of the POI – disprove China's  contention that the USITC failed 
to appropriately address the relationship between increased imports and the m ovement in the 
domestic industry's employment indicators .392  
 
383 USITC final report, (Exhibit  CHN-2), pp.  33-34. (fns omitted ; redacted original ) 
384 USITC final report, (Exhibit  CHN-2), pp.  47-48. 
385 China's  first written submission, para.  122; second written submission, paras.  67-70. 
386 China's  second written submission, para.  68. 
387 China's  first written submission, para.  122; second written submission, para.  69. 
388 United  States ' first written submission, para.  165. 
389 United  States ' first written submission, para.  165.  
390 USITC final report, (Exhibit  CHN-2), pp.  33-34. 
391 USITC final report, (Exhibit  CHN-2), pp.  47-48. 
392 We note in particular that certain of the domestic industry's employment indicators worsened 
in 2017, which aligns temporally with the rise in the domestic industry's plant closures . (USITC final report, 
(Exhibit  CHN-2), pp.  33-34). WT/DS562/ R 
 
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  7.179.   In this connection , we reject China's  argument  that it was inappropriate for the USITC to 
consider evidence concerning the domestic industry's  employment indicators from after the POI. 
As noted i n section  7.3.3.2.5.3  above, the  Agreement on Safeguards does not discipline the 
temporal scope of the evidence that may be considered so long as that  evidence is on the competent 
authorities'  record, and provided that the procedural rights of interested parties are respected. Thus, 
we agree with the United  States  that it was appropriate for the USITC to consider record evidence 
concerning Suniva's  April 2017 suspension of operations and SolarWorld's  June 2017 issuance of 
WARN Act notifications and laying off 360 employees. In our view, this evidence shows that, contrary 
to China's  claims, it was not inappropriate for the USITC to find that the domestic 
industry's  employment indicators were adversely impacted by the increase in imports at the end of 
the POI.  
7.180.   Based on the foregoing, we reject  China's  claim that the USITC failed to appropriately explain 
why increased imports caused injury to the domestic i ndustry, notwithstanding the improvements 
in the domestic industry's  employment indicators during the POI.  
7.3.3.3.3   Capital  expenditures,  R&D expenses,  and value  of production  assets  
7.3.3.3.3.1   Factual  background  
7.181.   As part of its serious injury determination, the USITC found that:  
The domestic industry's capital expenditures increased overall between 2012 and 2016, 
reaching their highest level in 2015, but the largest share of these expenditures was 
related to expenditures by one firm (***)  on new CSPV cell operations th at have not 
yet become commercially operational. The domestic industry's research and 
development expenses generally declined between 2012 and 2015, but increased 
in 2016, largely due to ***. The value of the domestic industry's production assets 
increased  overall, again largely due to ***. Other domestic producers recognized asset 
impairments, reserved or wrote off production equipment, ***, ***, and otherwise 
slowed or shut down production.  
Domestic producers also identified a series of actual negative ef fects on their 
investment, growth, and development due to imports. These included tabling, 
postponing, and deferring projects; rejection of investment proposals; reduction in the 
size of capital investments; negative returns on investments; inability to ge nerate 
adequate capital to finance modernization of domestic plants and equipment; increased 
costs for debt financing; inability to maintain existing levels of research and 
development expenditures; rejection of bank loans; lowering of credit ratings; inab ility 
to issue stocks or bonds; inability to service debt; lowered bankability; and other such 
difficulties. Domestic producers also anticipated additional negative effects from 
imports. Based on this evidence, we find that a significant number of domestic  producers 
were unable to generate adequate capital to finance the modernization of their domestic 
plants and equipment, and a significant number of domestic producers were unable to 
maintain existing levels of expenditures for research and development, de spite 
explosive demand growth during the POI.393 
7.182.   When returning to these findings in its analysis of causation, the USITC observed:  
Consistent with the hundreds of millions of dollars in net and operating losses 
throughout the POI, a significant number of d omestic producers were unable to generate 
adequate capital to finance the modernization of their domestic plants and equipment, 
and a significant number of them were unable to maintain existing research and 
development expenditure levels. This inability to  generate adequate capital for 
investments and research and development impaired the domestic industry's ability to 
develop next -generation products in this highly capital -intensive and technologically 
sophisticated market.394 
 
393 USITC final report, (Exhibit  CHN-2), pp.  35-37. (fns omitted ; redacted o riginal ) 
394 USITC final report, (Exhibit  CHN-2), p.  47. (fns omitted ) WT/DS562/ R 
 
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  7.3.3.3.3.2   Main  arguments  of the parties  
7.183.   China contends that the USITC failed to appropriately explain why increased imports caused 
injury to the domestic industry, notwithstanding the increases in the domestic industry's  capital 
expenditures, R&D expenses, and value of its production assets.395 Regarding capital expenditures, 
China argues that it was inadequate for the USITC to recognize the existence of increased capital 
expenditures, but dismiss the significance of that increase on the basis that it was carried out by a 
single firm, particularly  when the non-confidential version of the USITC final report is so heavily 
redacted on this point  that the explanation is deficient and ambiguous .396 Regarding R&D expenses, 
China argues that it was inappropriate for the USITC to find a causal link between increased imports 
and serious injury when at least one domestic firm increased its R&D expenses in 2016, when 
imports were at their highest. According to China, the USITC's  finding that some firms "were unable 
to maintain existing research and development expenditure levels" did not sufficiently represent the 
state of the domestic industry as a whole.397 Finally, regarding the value of the domestic 
industry's  production assets, China argues that the USITC relied on conclusory statements and did 
not appropria tely address how improvements in the value of the domestic industry's  production 
assets were consistent with its finding of causality.398 
7.184.   For its part, the United  States  takes the position that the USITC appropriately explained that 
the largest share of cap ital expenditures was "related to expenditures by one firm on new CSPV cell 
operations that had not yet become operational by the end of the POI".399 The United  States  further 
advances that the USITC appropriately explained that the financial losses incurred by the domestic 
industry throughout the POI meant that "a significant number of domestic producers were unable to 
generate adequate capital to finance the moderniza tion of their domestic plants and equipment or 
maintain existing research and development expenditure levels", which in turn impaired the 
domestic industry's  ability to develop next -generation products.400 
7.3.3.3.3.3   Evaluation  of the Panel  
7.185.   As part of its serious injury determination, the USITC found that the improvements in the 
domestic industry's  capital expenditures, R&D expenses, and value of its production assets were not 
representative of the domestic industry as a whole.401 This finding  supported its conclusion that 
"a significant number  of domestic producers were unable to generate adequate capital to finance 
the modernization of their domestic plants and equipment, and a significant number  of domestic 
producers were unable to maintain existing levels of expenditures for research and development, 
despite explosive demand growth during the POI".402 
7.186.   Since China does not challenge the serious injury determination in these proceedings, we 
accept these findings as uncontested. In our view, the se findings also diminish the significance of 
any improvements to the domestic industry's  capital expenditures, R&D  expenses, and value of 
product ion assets to the USITC's  causation analysis. As explained above, the causal link required 
under the  Agreement  on Safeguards is between increased imports and the serious injury found to 
exist. The simple fact that the domestic industry's  capital expenditures, R&D  expenses, and value of 
production assets improved does not demonstrate the absence of a causal link be tween increased 
imports and serious injury. This is particularly the case because the USITC found in its serious injury 
determination that these improvements were not representative of the domestic industry as a whole.  
7.187.   Accordingly, by overlooking the conte xt of the USITC's  serious injury determination, 
China's  arguments fail to demonstrate that the USITC's  causation analysis inadequately accounted 
for the improvements to the domestic industry's  capital expenditures, R&D expenses, and value of 
product ion assets. In this regard, we note that several of China's  arguments improperly seek to 
challenge (either directly or indirectly)  various aspects of the underlying serious injury 
 
395 China's  first written submission, paras.  123-124; second written submission, paras.  71-79. 
396 China's  second written submission, paras.  73-76. 
397 China's  second written submission, paras.  76-78. 
398 China's  second written submission, para.  79. 
399 United  States ' first written submission, para.  166. 
400 United  States ' first written submission, para.  166. 
401 USITC final report, (Exhibit  CHN-2), pp.  35-36. 
402 USITC final report, (Exhibit  CHN-2), pp.  36-37. (emphasis  added)  WT/DS562/ R 
 
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  determination, which is not part of the matter under review in this dispute.403 We further note that 
China's  arguments do not address the USITC's  central finding that the "hundreds of millions of 
dollars in net and operating losses throughout the POI" adversely impacted the domestic 
industry's  ability to generate capital or maintain exist ing R&D expenditure levels, which in turn 
"impaired the domestic industry's ability to develop next -generation products in this highly 
capital -intensive and technologically sophisticated market".404  
7.188.   Based on these shortcomings, we reject China's  claim that  the USITC failed to appropriately 
explain why increased imports caused injury to the domestic industry, notwithstanding the increases 
in the domestic industry's  capital expenditures, R&D expenses, and value of its production assets.  
7.3.3.4   Overall  conclusion  regarding  the USITC's  determination  of a causal  link between  
increased  imports  of CSPV  products  and serious  injury  of the domestic  industry  
7.189.   In the foregoing sections  we have found that China has failed to establish that the USITC 
erred in respect of its analysis of the relationship between increased imports and the negative and 
seemingly positive factors of serious injury that existed during t he POI. Based on these findings, we 
reject China's  argument that the USITC failed to demonstrate an "overall coincidence" between 
increased imports and serious injury.405 Accordingly, we reject China's  overall claim that the 
United  States  failed to evaluate  whether increase d imports were a cause of serious injury in 
accordance with Articles  2.1, 3.1, and 4.2(b)  of the  Agreement on Safeguards.  
7.4  "Other " factors  allegedly  causing  injury  to the domestic  industry  
7.4.1   General  factual  background  
7.190.   US domestic law requires the USITC to find whether the product under investigation is being 
imported in such increased quantities as to be a "substantial cause" of serious injury or threat 
thereof, i.e.  "a cause which is important and not less than any oth er cause".406 This requirement 
directs the USITC to , inter alia , "examine factors other than imports" that may be a cause of serious 
injury or threat thereof and include the results of its examination in its report.407 
7.191.   In the safeguard investigation, respond ents argued that causes other than imports were 
more important and explain any injury to the domestic industry, identifying two such causes: 
(a) alleged missteps by the domestic industry and (b) factors other than imports that allegedly led 
to declines in domestic prices . More specifically, respondents referred to:  
a. Alleged missteps by the domestic industry:  
i. the alleged decision of the domestic industry to focus on the commercial and residential 
segments and to avoid competing  in the utility segment ; 
ii. allege d quality and product -type issues; and  
 
403 See, e.g. China's  second written submission, paras.  73-76 (challenging the USITC's  finding that 
increased capital expenditures were not representative of the domestic industry as a whole); para.  77 
(claiming that the USITC's  finding that a significant number of firms "were unable to maintain existing research 
and development expenditure levels" was inadequate); para.  78 (advancing that " [t]he inability for individual 
firms to maintain existing research and development expenditures is not indicative of injury , especially in light 
of the absence of coincidence between the increase in research and development expenditures and the 
increase in imports for the overall industry in 2016 " (emphasis  added )); and para.  79 (arguing  that "the USITC 
again failed to provide an explanation why it found causality even when the value of the domestic 
industry's  total assets 'increased overall ' by the end of the POI " (emphasis  added)).  
404 USITC final report, (Exhibit  CHN-2), p.  47. 
405 Relatedly, we also reject China's  argument that the USITC failed to examine the "combined weight" 
of positive and negative factors in its analysis of causality. In particular, we note that China's  argument is 
premised on its claim that the USITC failed to  provide a sufficient explanation with respect to serious injury 
factors that showed a positive trend. However, as we have found in section  7.3.3.3  above, we do not consider 
that China has demonstrated that the USITC's  report is deficient in this  regard. (China's  second written 
submission, paras.  125-131).  
406 USITC final report , (Exhibit  CHN-2), p. 23.  
407 USITC final report , (Exhibit  CHN-2), p. 23.  WT/DS562/ R 
 
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  iii. alleged service and delivery issues.408 
b. Factors other than imports that allegedly led to declines in domestic prices:  
i. declin ing government incentive programmes;  
ii. declining raw material costs; and  
iii. the need to attain "grid parity" with other sources of electricity.409 
7.192.   In its final report, the USITC examined these factors but found that respondents'  arguments 
were not supported by the facts.410  
7.4.2   Applicable  legal  requirements  concerning  the assessment  of "other " factors  
allegedly  causing  injury  to the domestic  industry  under  Article  4.2(b)  of the 
Agreement  on Safeguards  
7.193.   Article  4.2(b), second sentence, of the  Agreement on Safeguards reads as follows:   
When factors other than increased imports are causing injury to the domestic industry 
at the same time, such injury shall not be attributed to increased imports.  
7.194.   As such, the second sentence of Article  4.2(b)  envisages that the competent authorities of 
a Member are required to conduct a non -attribution analysis when factors other than increased 
imports are found to be causing injury to the domestic industry simultaneously with increased 
imports . Conversely, if the competent authorities determine that the "other " factors are not causing 
injury at the same time as increased imports, there is no requirement to conduct a non -attribution  
analysis. However, because s uch a determination is subject to review, it should be supported by an 
explanation that is reasone d and adequate.411  
7.4.3   Whether  the USITC  failed  to ensure  that the injurious  effects  of "other " factors  were  
not attributed  to increased  imports  
7.4.3.1   Introduction  
7.195.   The parties disagree on whether the USITC's  assessment of the allegedl y injurious effects of 
factors other than increased imports complied with Article  4.2(b), second sentence, of 
the Agreement on Safeguards. China claims that the USITC (i)  improperly dism issed the alleged 
missteps by the domestic industry412; and (ii)  improperly dismissed non -import factors that allegedly 
caused prices of CSPV products to decline, and failed to satisfy the non -attribution requirement in 
respect of the injurious effects of t hose factors.413 The United  States  asks us to reject China's  claims. 
The United  States  submits that the USITC properly found that the alleged missteps by the domestic 
industry were not a cause of injury. The United  States  also denies that the USITC found th at 
non-import factors that allegedly caused prices of CSPV products to decline were a cause of injury 
to the domestic industry.414  
7.196.   In their arguments concerning the USITC's  compliance with Article  4.2(b), second sentence, 
the parties also disagree on  (i) the degree of discretion the competent authorities enjoy in 
discharging their non -attribution obligation under Article  4.2(b)415; (ii)  whether the 
 
408 USITC final report , (Exhibit  CHN-2), pp. 50-61. 
409 USITC final report , (Exhibit  CHN-2), pp. 50 and 61 -65. 
410 USITC final report , (Exhibit  CHN-2), p. 50. 
411 We agree in this regard with the approach taken by the panel in  Ukraine  – Passenger  Cars. 
(Panel Report,  Ukraine  – Passenger  Cars, para. 7.334 ). 
412 China 's first written submission, para. 182.  
413 China 's first written submission, heading of section  III(B)(2)(b)  and para. 197. 
414 Unites States ' first written submission, paras.  107 and 170-171. 
415 While Ch ina recognizes that Article  4.2(b ) does not dictate a specific methodology for conducting a 
non-attribution analysis, it also refers to previous DSB reports that, according to China, clarify what the 
competent authorities are required to do to comply with this obligation. ( China 's first written submission, 
 WT/DS562/ R 
 
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  USITC's  application of the "substantial cause" test sufficiently discharged the 
United  States ' obligations under Article  4.2(b)416; and (iii)  whether the USITC was required to 
conduct a cumulative assessment of factors other than the increased imports that allegedly caused 
injury to the domestic industry.417 
7.197.   We begin by considering China's  claim s against the USITC's  analysis of the alleged missteps 
by the domestic industry ( section  7.4.3.2 ). We then consider China's  claims against the 
USITC's  analysis of the non -import factors that allegedly caused prices of CSPV products to decline  
(section  7.4.3.3 ). Finally, we address any outstanding issues and conclude whether China has 
established that the USITC's  assessment of "other" factors allegedly causing injury to the domestic 
industry did not comply with t he requirements of Article  4.2(b)  of the  Agreement on Safeguards 
(section  7.4.3.4 ). 
7.4.3.2   Alleged  missteps  by the domestic  industry  
7.198.   During the safeguard investigation, respondents argued that missteps by the domestic 
industry were a cause other than imports that explained any inj ury to the domestic industry.418 As 
noted above, r espondents identified three alleged missteps:  (a) the alleged decision of the domestic 
industry to focus on the commercial and residential segments and to avoid competing  in the utility 
segment; (b)  alleged quality and product -type issues; and (c)  alleged service and delivery issues.419 
The USITC examined respondents'  allegations and found that they were not supported by the facts 
on the record.420 
7.199.   China claims that the USITC failed to adequately assess the nature and the extent of the 
injurious effects of the alleged missteps by the domestic industry, and improperly dismissed these 
factors.421 The United  States  disagrees.422  
7.200.   At the outset, we note that several of China's  arguments criticize the manner in which the 
USITC weighed evidence that conflicted with its findings concerning  the alleged missteps by the 
domestic industry. In a number of instances, China claims that the US ITC erred by not analysing 
 
paras.  163-166 and 174). For  its part, the United  States  submits that Article  4.2(b ) does not specify how the 
competent authorities may comply with this non-attribution obligation. ( United  States'  first written submission, 
para. 100; see also ibid.  paras.  101-105; and comments on China' s response to Panel question No. 10 of the 
first set , para. 85). Nevertheless, the United  States  maintains that the USITC fully complied with its 
non-attribution obligation  in the present case, because the USITC correctly found that "other" factors did not 
cause injury to the domestic industry , such that the non-attribution requirement under Article 4.2(b) did not 
come into play . (United  States'  first written submission, para. 107; comments on China' s response to Panel 
question No. 10 of the first set , para. 85). 
416 China argues that the USITC 's "substantial ca use" test, as applied in this case, fails to comply with 
the requirement of "separating and distinguishing" the injurious effects of all "other" factors. (China 's first 
written submission, para. 178; see also ibid. para. 177). In response, the United  States  submits that "[e]ven 
setting aside China 's erroneous understanding of Article  4.2(b), China 's argument fails because the 
Commission looked individually at each of the alleged 'other factors, ' and determined that it did not cause 
injury to the domestic industry. Article  4.2(b ) [of the Agreement on Safeguards]  does not require anything 
more". ( United  States'  first written submission, para. 169 (fn omitted) ). 
417 China argues that the USITC was required to cumulatively assess  the non -import factors that 
allegedly caused prices of CSPV products to decline considering the complex interrelation between those 
factors, but failed to do so. ( China 's first written submission, paras.  218-226; second  written submission, 
paras.  218-222). For its part, the United  States  argues that the USITC was not required to conduct a 
cumulative analysis since it found that "other" factors did not cause injury to the domestic industry. 
(United  States'  response to Panel question No. 22 of the first set , para. 62; closing statement at the 
first meeting of the Panel , para. 18). 
418 USITC final report , (Exhibit  CHN-2), p. 50. 
419 USITC final report , (Exhibit  CHN-2), p. 50. 
420 USITC final report , (Exhibit  CHN-2), p. 61. 
421 China 's first written submission, para. 181.  
422 Unites States ' first written submission, paras.  176 and 196.  WT/DS562/ R 
 
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  allegedly contrary evidence.423 In other instances, China claims that the USITC erred by not affording 
more probative weight to allegedly contrary evidence.424 
7.201.   As noted in section 7.1.2 above, the Panel's  role in these proceedings is to objectively assess 
whether China has established that the USITC failed to provide reasoned and adequate explanations 
that demonstrated complian ce with the relevant obligations under the  Agreement on Safeguards. 
Our role is not to conduct a de novo review of the evidence, or to substitute our judgment for that 
of the USITC .425 Therefore, with respect to China's  claim under Article  4.2(b), second se ntence, the 
relevant question is whether China has established that the USITC failed to provide reasoned and 
adequate explanations demonstrating that alleged missteps by the domestic industry did not cause 
injury to the domestic industry .  
7.202.   In this context , the simple fact that the USITC did not explicitly address certain evidence or 
afford more probative weight to certain evidence does not mean that it acted inconsistently with 
these principles, as any such omissions would  not dispositively establish that the USITC's  findings 
and conclusions were unreason ed or inadequate. This is particularly the case because, when 
conducting safeguard inves tigations, the competent authorities are expected to accumulate an 
extensive record comprising arguments, data, and evidence from different sources, including from 
parties with conflicting interests in the outcome of the investigation.426 Accordingly, to de monstrate 
that the USITC's  treatment of certain evidence was improper, China must explain why the treatment 
of such evidence, when viewed in the context of the overall evidentiary record, demonstrates that 
the USITC's  findings and conclusions were unreason ed or inadequate.  
7.203.   We now turn to China's  claims concerning the alleged missteps committed by the domestic 
industry.  
7.4.3.2.1   The a lleged  decision  of the domestic  industry  to focus  on the commercial  and 
residential  segments  and to avoid  competing  in the utility  segm ent  
7.4.3.2.1.1   Factual  background   
7.204.   During the safeguard investigation , respondents argued that domestic producers focused on 
the residential and commercial segments and did not seek to compete for utility sales until late in 
the POI, even though the utility segment was the largest and fastest -growing segment.427 
Respondents a lso reported being unaware of any domestic producer that was able "to provide the 
required combination of product type and demonstrated product performance" demanded by the 
utility segment.428 Respondents further alleged that the domestic industry was eithe r unable to 
produce or lacked sufficient capacity to produce 72 -cell modules, which became the standard for 
utility installations by 2013 -2014.429 
7.205.   In response, the USITC observed that since 2009 there has been a shift in the distribution 
of sales among the three market segments.430 In 2009, the commercial segment accounted for the 
largest share of the market, followed by the residential and utility segments, whereas throughout 
the POI, utilities were the largest market segment, followed by the residential and  commercial 
 
423 See, e.g. China 's second written submission, paras.  161-162; response to Panel question No. 15 of 
the first set, para.  122; comments on the United  States ' response to Panel question No. 14 of the first set , 
paras.  82 and 87 -89; and response to Panel question No. 13 of the second set , para.  149. 
424 See, e.g. China 's second written submission, paras.  163 and 173;  comments on the 
United  States'  response to Panel question No. 14 of the first set , para.  86; and response to Panel question 
No. 13 of the second set , para.  145. 
425 Our approach is consistent with that taken in previous dispute settlement proceedings. (See, e.g. 
Appellate  Body Report, US – Steel Safeguards , para. 299). 
426 Indeed, Article  3.1 of the  Agreement  on Safeguards envisages that the investigation "shall include 
reasonable public notice to all interested parties and public hearings or other appropriate means in which 
importers, exporters and other interested parties could present evidence and their vie ws, including the 
opportunity to respond to the presentations of other parties and to submit their views, inter alia , as to whether 
or not the application of a safeguard measure would be in the public interest".   
427 USITC final report , (Exhibit  CHN-2), p. 56. 
428 USITC final report , (Exhibit  CHN-2), pp. 56-57. 
429 USITC final report , (Exhibit  CHN-2), p. 60. 
430 USITC final report , (Exhibit  CHN-2), p. 57. WT/DS562/ R 
 
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  segments.431 The USITC also noted that all three market segments experienced considerable growth 
during the POI.432 
7.206.   In this context, the USITC rejected respondents'  arguments  and found that:   
[T]he domestic industry sold or tried to sell CSPV products to utilities throughout the 
POI in addition to the residential and commercial segments, but was frequently unable 
to win large bids in this segment.  Moreover, the domestic industry lost market sha re to 
imports regardless of the segment.433 
[T]he evidence indicates that the domestic industry clearly sought to compete in the 
large, concentrated, and price -sensitive utility market, but the large volume of imports 
at low and declining prices adversely i mpacted the domestic industry's  financial 
performance, making it difficult for the domestic industry to increase capacity to a scale 
that made it more competitive in this segment, even if it managed to develop and even 
pioneer innovative products that util ities and others sought.434 
7.207.   As support for its finding, the USITC relied on evidence demonstrating that the domestic 
industry and importers each sold CSPV products to all three market segments during the POI.435 The 
USITC further explained that, although most of the domestic industry's  shipments went to residential 
and commercial segments, SolarWorld and Suniva demonstrated that they competed for and shipped 
to the utility segment.436 In addition, the USITC noted that the record showed that the domestic 
industry sold both 60 -cell and 72 -cell modules throughout the POI and lost market share to imports 
for both types of modules.437 It observed that SolarWorld added a 72 -cell module assembly line to 
its facilities in 2 016 due to increasing demand in the utility market and that Suniva devoted 45% of 
its cell manufacturing capacity to 72 -cell modules to serve the commercial and "small utility " 
market.438 
7.4.3.2.1.2   Main  arguments  of the parties  
7.208.   China submits that the USITC failed to address the effect of the domestic industry's  decision 
to focus on the commercial and residential segments, rather than the utility segment.439 According 
to China, this "deliberate business choice"440 "influenced the limited participation of the do mestic 
industry in the utility segment"  where demand was booming .441 China acknowledges that the 
domestic industry had some capacity to supply small -scale projects in the utility segment, but states 
that, as a result of its "deliberate business choice", it had no capacity to compete for the large -scale 
projects, which accounted for the bulk of that segment.442 China further argues that the lack of 
competitiveness of the domestic industry in the utility segment is evidenced by the domestic 
industry's importati on of CSPV products to meet demand , its late investment in 72 -cell module lines 
(in the case of SolarWorld) , and its decision not to produce cost -competitive 72 -cell modules (in the 
case of Suniva).443 
7.209.   The United  States  responds by arguing that the factual premise for China's  claim is flawed, 
since there was no decision by the domestic industry not to compete in the utility segment.444 To the 
contrary, the United  States  argues that the USITC considered this possibility bu t found, based on 
record evidence, that the domestic industry did in fact compete in the utility segment.445 In addition, 
 
431 USITC final report , (Exhibit  CHN-2), pp. 57-58. 
432 USITC final report , (Exhibit  CHN-2), p. 58. 
433 USITC final report , (Exhibit  CHN-2), p. 59. 
434 USITC final report , (Exhibit  CHN-2), pp. 60-61. 
435 USITC final report , (Exhibit  CHN-2), p. 58. 
436 USITC final report, (Exhibit  CHN-2), p.  59. 
437 USITC final report, (Exhibit  CHN-2), p.  60.  
438 USITC final report , (Exhibit  CHN-2), p. 60. 
439 China 's first written submission, para. 184. 
440 China 's second written submission, para. 158. 
441 China 's second written submission, para. 158.  
442 China 's first written submission, para. 186; second written submission, paras.  150-151. 
443 China 's second written submission, paras. 152  and 156. 
444 United  States'  first written submission, para. 178. 
445 United  States'  first written submission, paras.  177-179; response to Panel question No. 12 of the 
first set , paras.  26-30.  WT/DS562/ R 
 
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  the United  States  claims that China's  argument that the domestic industry did not have capacity for 
the large -scale projects fails to p roperly account for the USITC's  finding that the domestic 
industry's  lack of capacity was a result of increased imports, rather than an independent cause of 
injury.446  
7.4.3.2.1.3   Evaluation  of the Panel  
7.210.   For the reasons explained below, we are not persuaded by China's  arguments.  
7.211.   The USITC found that the domestic industry " clearly sought to compete in the  large, 
concentrated, and price -sensitive utility market"  based on record evidence indicating that:  (a) "the 
domestic industry and importers each sold CSPV products in  the U.S. market to distributors , 
residential and commercial installers, and the utility segment "447; (b) the domestic industry 
participated in bids in the utility segment448; and (c) the domestic producers produced 72 -cell 
modules, which became  the standard for the utility installations by 2013 -2014.449 As noted above, 
the USITC also situated its finding in the context of the distribution of sales among the three market 
segments that had changed since 2009.450 As we have already found in section  7.3.3.2.1.1  above, 
China has not established that it was inappropriate for the USITC to rely on any of this evidence as 
support for its finding that t he domestic industry competed in the  utility segment.  
7.212.   Since record evidence supported the USITC's  finding that the domestic industry was present 
in the utility segment, we see no reason why the USITC was required to conclude that the domestic 
industry made a "deliberate business choice" to avoid  compet ing in that segment. Accordingly, the 
USITC was not obligated to consider that the domestic industry's  "deliberate business choice" 
constituted an "other" factor of injury.  
7.213.   Further, although China asserts that , due to its focus on the residential and commercial 
segments,  the domestic industry was not able to meaningfully compete in the utility segment, we 
recall that in section  7.3.3.2.1.1  we have rejected Chi na's argument that it was inappropriate  for 
the USITC to find that the domestic industry competed more generally in the utility segment based 
on the capacity that it had . In these circumstances,  we are also not persuaded by China's  argument 
that the reason the domestic industry did not have sufficient capacity to compete for large -scale 
projects in the utility segment was because of its business decision not to focus on that segment. In 
this rega rd, we recall our finding in section  7.3.3.2.3.3  above that China has not demonstrated that 
it was inappropriate  for the USITC to find that increased  imports prevented the domestic industry 
from increasing capacity at a scale that would have made it more competitive in the utility segment . 
Moreover, we do not consider that China has demonstrated why we should arrive at a different 
conclusion in respect  of its non -attribution claim on the same point.451  
 
446 United  States'  first written submission, para. 181; comments on China's  response to Panel question 
No. 13 of the first set , para. 101.  
447 USITC final report , (Exhibit  CHN-2), p. 58. (fns omitted)  
448 USITC final report , (Exhibit  CHN-2), p. 59. In this contex t, we note that China has not substantiated 
its argument that the USITC did not explore whether the domestic industry had submitted  realistic bids. 
(China 's response to Panel question No. 13 of the first set , para. 100).  
449 USITC final report , (Exhibit  CHN-2), p. 60. 
450 USITC final report , (Exhibit  CHN-2), pp. 57-58. 
451 We are unpersuaded by China 's arguments that challenge the appropriateness of the USITC 's finding 
that increased imports impeded the expansion of the domestic industry in the utili ty segment. In particular, 
contrary to China 's argument, we fail to see how the fact that the domestic industry was not a major 
participant of the utility segment before the POI would demonstrate that imports did not impede its expansion 
in this segment, e specially considering that the utility segment only grew to be the largest market segment 
during the POI . (See, e.g. China 's response to Panel question No. 13 of the first set , paras.  101 and 107 ; 
and second written submission, para. 155). Relatedly, we fail to see why the fact that, at the beginning of the 
POI, "the domestic industry could supply only a small fraction of total U.S. demand" would demonstrate that 
the increased imports did not contribute to the domestic industry 's insufficien t capacity and its inability to 
serve the "booming demand in the utility segment". (China 's response to Panel question No. 11 of the second 
set, para. 126; see also second written submission, para. 154).  In addition, c ontrary to China 's argument, we 
do not  consider that the USITC was required to find that imports impeded expansion planned by the domestic 
industry in order to reasonably demonstrate that imports impeded the domestic industry 's ability to increase its 
capacity to a scale that would have made i t more competitive in the utility segment. (China 's response to Panel 
question No. 11 of the second set , paras.  127-128). Finally , we are unpersuaded by China's contention  that the 
 WT/DS562/ R 
 
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  7.214.   Based on the foregoing, we reject China's  claim that the USITC did not appropriately address 
the effect of the alleged decision of the domestic industry to focus on the commercial and residential 
segments , rather than the utility segment.  
7.4.3.2.2   The a lleged  quality  and product -type issues  
7.4.3.2.2.1   Factual  background   
7.215.   During the safeguard investigation, respondents advanced that the domestically produced 
CSPV products suffered from various quality and product -type issues that amounted to a separate 
cause of injury.452 In response, the USITC examined evidence concerning these issues, and 
ultimately concluded that the record did not support respondents'  contentions.453 The USITC made 
the following subsidiary findings in  this regard:  
a. Regarding the range of CSPV products available from domestic sources, the USITC found 
that d omestic producers pioneered certain CSPV technologies and continued to 
manufacture leading -edge products.454 While certain foreign producers may have 
produced CSPV products that were unavailable from domestic sources455, these products 
accounted for only a small share of the US  market and there was more overlap between 
domestic and imported specialized CSPV products than acknowledged by respondents.456 
The domestic industry supplied a wide variety of monocrystalline and multicrystalline CSPV 
products that overlapped with imports.457 Moreover, despite the existence of some 
variations in product offerings, all CSPV products converted sunlight into electricity,  and 
CSPV products made from different technologies competed based on electrical output and 
cost.458  
b. Regarding the quality of domestic CSPV products, the USITC found that  (a) SolarWorld 
reported that it was the first to offer a 25 -year warranty, a 30-year warranty, and a 
20-year workmanship warranty, which it was able to do because of its low warranty claim 
rate459; (b) most interested parties reported that domestic CSPV products were 
interchangeable with imports; ( c) independent research firm EuPD Rese arch ranked 
SolarWorld as the most purchased brand by US  installers; and ( d) most purchasers 
 
USITC should have assessed the domestic industry 's "sudden decision to incr ease capacity in the utility 
segment in light of increased demand at the end of the POI " and whether this decision was "commensurate 
and adequate in light of the start -up costs, and different technology involved ". While China claims that its 
argument "is b ased on the facts set forth in the USITC Final Staff Report showing that the financial 
performance of the domestic industry decreased at the same time it decided to expand its capacities", it does 
not cite that report in this context. As a result, we do no t consider China's argument to be sufficiently 
substantiated. (China 's response to Panel question No. 11 of the second set , para. 128; request for interim 
review, para. 50 ).  
452 USITC final report , (Exhibit  CHN-2), p. 50.  
453 USITC final report , (Exhibit  CHN-2), p. 61. 
454 USITC final report , (Exhibit  CHN-2), pp. 51-52 and fns 290-291. 
455 In particular, the USITC noted that (a)  several purchasers stated that the higher efficiency modules 
are manufactured primarily in Asia and are not available from a ny US  producers; (b)  six purchasers reported 
that multicrystalline PERC CSPV products are primarily only available in Chinese Taipei, Korea, Japan, China, 
and Malaysia; (c)  two purchasers stated that n -type monocrystalline CSPV products are only available from LG 
Electronics in Korea; and (d)  three importers and one purchaser reported that interdigitated back contact solar 
CSPV products are not manufactured in the United  States and are not interchangeable with front -contact CSPV 
products. ( USITC final repor t, (Exhibit  CHN-2), fn 295).  
456 USITC final report , (Exhibit  CHN-2), p. 52. For example,  the USITC indicated that as of 2016, n -type 
monocrystalline cells accounted for less than 5 % of the global CSPV cell production and there was a relatively 
small number of manufacturers of these products, including LG, Panasonic, SunPower, and Yingli . (USITC final 
report , (Exhibit  CHN-2), pp. 52-53). In addition, the USITC noted that, c ontrary to  respondents ' assertion, 
there was domestic production of n -type monoc rystalline CSPV products in the United  States  during the POI. 
(USITC final report , (Exhibit  CHN-2), p. 53). 
457 USITC final report , (Exhibit  CHN-2), pp. 53-54. 
458 USITC final report , (Exhibit  CHN-2), pp. 54-55. 
459 The USITC also found that Suniva reported that its warranty claim rate was below 0.05 %. (USITC 
final report , (Exhibit  CHN-2), fn 308).  WT/DS562/ R 
 
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  reported that no domestic or foreign supplier had failed in its attempt to qualify product 
or lost its approved status since 2012.460 
c. Regarding the "bankability" of  domestic producers461, the USITC found that ( a) purchasers 
of CSPV products did not attach great importance to bankability462; and 
(b) petitioners'  bankability problems further confirmed that the serious injury was 
substantially caused by increased imports.463 
7.4.3.2.2.2   Main  arguments  of the parties  
7.216.   China submits that the USITC failed to adequately assess the domestic industry's  quality and 
product -type issues and their effect on the domestic industry.  
7.217.   First, China claims that, despite the arguments, facts, and data p resented by respondents, 
the USITC failed to adequately explain whether the domestic industry's  lack of prioritization of 
technological development and scale adversely impacted its financial performance.464 In this context, 
China contends that the USITC uncritically " cited information provided and arguments made by the 
domestic producers" .465 China also argues that, although the availability of innovative products 
offered only by foreign suppliers was an important factor in purchasing decisions, the USITC did not 
specify which products were unavailable from domestic sources and did not assess the impact of the 
lack of availability of those products.466  
7.218.   Second, China submits that the USITC failed to appropriately analyse product quality. As 
support  for its argument , China refers to documented complaints that allegedly show that domestic  
CSPV products had quality issues.467 China further contends that, while the USITC acknowledged 
that "19 US  purchasers reported that a domestic supplier had failed in its attempt to provide a quality 
product or had lost its approved status", it failed to analyse this issue in sufficient detail.468 China 
claims that  the USITC provided no analysis of the relative size of the 19 purchasers that reported 
domestic products having quality issues.469 China posits that these 19 purchasers may have 
accounted "for the majority of purchased CSPV products during the POI".470 In addition, China refer s 
to record  evidence that , in its view,  shows that certain domestic producers failed to qualify some of 
their products , and  that one domestic producer was disqualified by one purchaser . China stresses 
 
460 USITC final report , (Exhibit  CHN-2), p. 55 and fns 308-311. In addition, the USITC found that 19 of 
the 95 responding purchasers reported that a domestic or foreign supplier had failed in its attempt to qualify 
product or had lost its approved status since 2012 for reasons such as customer service, financial strength, 
broken commitments, cell cracks, use of thinner frame,  quality control, bankability, failed audit, efficiency, 
delivery rates , and prefer a local manufacturer. Three purchasers stated that both SolarWorld and Yingli had 
lost their approved status due to financial distress. ( USITC final report , (Exhibit  CHN-2), p. 55 and fn 311).  
461 The USITC noted that the industry does not have a standard definition of bankability but "[a]t a 
minimum, bankability encompasses both the financial viability of a supplier and the product 's performance 
reliability, especially in the  CSPV industry where manufacturers provide warranties of 25 years or longer on 
their products; bankability also allows installing firms to apply for non -recourse loans for their solar 
development projects". ( USITC final report , (Exhibit  CHN-2), p. 55 and fn 313).  
462 The USITC explained that ( a) purchasers did not identify "bankability" as one of their "top three" 
purchasing factors (bankability was rather a "distant fourth" factor in purchasing decisions); ( b) only three of 
56 responding importers indi cated that purchasers chose module suppliers with high bankability that are listed 
as Tier 1 suppliers; and ( c) Bloomberg cautioned banks and module producers against relying heavily on its 
list. (USITC final report , (Exhibit  CHN-2), pp. 55-56 and fn 315).  
463 The USITC explained that ( a) SolarWorld qualified as a Bloomberg Tier 1 supplier in 2014 -2016, and 
through February 2017; its  subsequent loss of bankability was a result of serious injury caused by increased 
imports; ( b) Suniva reported that "the unrele nting pressure of low -priced imports " forced it out of the utility 
segment and necessitated that the firm shift its focus to projects that did not rely on non -recourse loan 
funding, which implicated the firm 's ability to achieve Tier 1 status. ( USITC final  report , (Exhibit  CHN-2), p. 56 
and fn 319). 
464 China 's first written submission, paras.  189-190. See also China 's second written submission, 
para. 164. 
465 China 's first written submission, paras.  189-190. 
466 China 's response to Panel question No. 15 of the first set , paras.  116-117. 
467 China's first written submission, para 192; response to Panel question No. 15 of the first set, 
para. 125. 
468 China 's first written submission, para. 193; second written submission, paras.  162-163. 
469 China 's first written su bmission, para. 193. 
470 China 's first written submission,  para. 193. WT/DS562/ R 
 
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  that these facts were not sufficiently accounted for by the USITC .471 More generally, China argues 
that the USITC's analysis of product quality was deficient because questionnaire  responses reported 
that this factor was important in purchasing decisions.472 
7.219.   Third, China submits that the USITC's  analysis of bankability was insufficient because it 
ignored petitioners'  issues with bankability and unreasonably characterized "bankability " as a 
"distant fourth" factor in purchasing decisions.473 China stresse s the importance of bankability in 
obtaining funding for large -scale projects, since some of the purchasers would not work with vendors 
that were not categorized as Tier 1 suppliers. Ch ina further contend s that the poor bankability of 
domestic producers negatively impacted their competitiveness in the utility segment.474 
7.220.   In response to these claims, the United  States  submits that the USITC reasonably found that 
record evidence does not su pport respondents'  allegations.  
7.221.   First, the United  States  argues that the USITC evaluated respondents'  arguments concerning 
the alleged failure of the domestic industry to adopt technological improvements and innovations,  
and found that record evidence did  not support these allegations.475 Relatedly, the United  States  
submits that the USITC explained that the types of products only available from non -US sources 
accounted for only a small share of the US  market and that, in any event, there was more overlap 
between domestic and imported specialized CSPV products than acknowledged by respondents.476  
7.222.   Second, regarding China's  reliance on the fact that 19 responding purchasers referred to 
producers having quality issues, the United  States  notes that the USITC found that those purchasers 
actually reported that a "domestic or foreign" supplier had failed in its attempt to qualify product or 
had lost its approved status.477 In its view, since this finding  concerns both foreign and domestic 
producers of CSPV p roducts, it does not support China's  assertion that domestic CSPV products were 
inferior.478 Further, the United  States  argues that the domestic industry's ability to provide quality 
products is corroborated by (a)  the USITC's  finding concerning interchange ability between domestic 
and imported CSPV products479; and (b)  the evidence indicating that SolarWorld was ranked by EuPD 
Research  as the most purchased brand by US  installers and that petitioners'  warranty claims were 
low.480 
7.223.   Third, contrary to China's  claims, the United  States  argues that the USITC adequately  
rejected respondents'  argument concerning bankability, on the basis that bankability was a "distant" 
fourth factor in purchasing decisions, and that SolarWorld's  loss of bankability resulted from seri ous 
injury caused by increased imports.481 
7.4.3.2.2.3   Evaluation  of the Panel   
7.224.   For the reasons explained below, we do not consider that China has established that the 
USITC inappropriately rejected respondents'  arguments that domestically produced CSPV products 
suffer ed from quality and product -type issues that amounted to a separate cause of injury . 
7.225.   First, we  do not consider that China has demonstrated that the USITC failed to adequately 
analyse the alleged effect of the domestic industry's  failure to prioritize technological development 
and scale .482 To the contrary, the USITC considered respondents'  arguments on this point and, based 
 
471 China's second written submission, para. 163.  
472 China's second written submission, para 160.  
473 China's  response to Panel question No. 15 of the first set, paras.  125-126; second written 
submission, paras.  165-166. 
474 China's second written submission, para. 165.  
475 United  States'  first written submission, paras.  183-187. 
476 United  States'  first written submission, paras.  183-186; comments on China's  response to Panel 
question No. 15 of the first set , paras.  109 and 111-112. 
477 United  States'  first written submission, para. 195. 
478 United  States'  first written submission, para. 195. 
479 United  States'  first written submission, para. 192. 
480 United  States'  first written submission, para. 193; comments on China's  response to Panel question 
No. 15 of the first set , para. 117. 
481 United  States'  comments on China's  response to Panel question No. 15 of the first set , 
paras.  127-130 and fn 236 . 
482 China's  first writ ten submission, paras.  189-190. WT/DS562/ R 
 
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  on record evidence, found that the range of products that the domestic industry could manufacture 
did not constitute an "other" factor of injury.483 Moreover, even if China were correct that the 
respondents submitted evidence to the USITC suggesting that certain domestic CSPV producers did 
not ad opt particular technological innovations484, we do not consider that this would d emonstrate 
that the USITC was precluded from relying on evidence submitted by domestic producers to find 
that the domestic industry " continued to innovate, develop, and manufacture leading -edge 
products".485  
7.226.   Relatedly, contrary to China's  position, the USI TC explicitly recognized that certain types of 
products were only available from foreign sources.486 However, it also found that these products 
accounted only for a small share of all product offerings487, and that there was more overlap between 
domestic and imported specialized products than acknowledged by respondents.488 The USITC 
further explained that, notwithstanding the existence of some variations in domestic and imported 
product types, all CSPV products converted sunlight into electricity,  and CSPV products made from 
different technologies competed with each other on the basis of electrical output and cost.489 
In addition, as we have already observed, only a few purchasers reported that they did not purchase 
US-origin CSPV products because o f reasons that included "limited availability".490 Moreover, we 
recall that the USITC found domestic and imported products were "highly substitutable", and we 
have rejected China's  claim against this finding.491 Based on this evidence, we do not consider that 
China has demonstrated that it was inappropriate  for the USITC to find that any limitation in the 
range of products offered by the domestic industry was not an "other" cause of injury.  
7.227.   Second, on quality, Ch ina asserts that the USITC's  finding was flawed because it failed to 
properly analyse the fact that 19 (out of 95)  US purchasers reported that a domestic supplier  failed 
"to provide a quality product" or lost their approved status.492 China's  characterizati on of the record 
is inaccurate. As observed by the United  States , the USITC actually found that 19 of 95 responding 
purchasers reported that "a domestic or foreign  supplier had failed in its attempt to qualify product 
or had lost its approved status since 2012".493 Thus, this statement does not demonstrate that 
qualification issues were limited to domestic producers, or that domestic products were of an inferior 
quality to imported products. In these circumstances, we see no need for the USITC to have analys ed 
this issue in greater detail.  Similarly, contrary to China's argument, we do not consider evidence 
demonstrating the general importance of product quality to purchasers of CSPV products establishes 
that the USITC was required to conduct a more detailed assessment of whether domestic CSPV 
products were inferior in terms of their quality.  
7.228.   China also argues that the USITC failed to test the statements concerning (a)  the low 
warranty claim rates of petitioners, and (b)  the ranking of SolarWorld by the indepe ndent research 
firm EuPD Research against contrary record evidence.494 In our view, however, the contrary evidence 
to which China refers does not undermine the probative weight of the evidence that supported the 
 
483 USITC final report, (Exhibit  CHN-2), pp.  50-55. 
484 In particular, China refers to the affidavit of Craig Cornelius  of NRG  (one of the largest power 
producers in the United  States) , which claim ed that Suniva failed to adopt certain technological innovations  
(improvement in mono wafer pulling, the transition to diamond wire saws, and the change to PERC cell 
architectures ). According to Mr Cornelius, these  innovations were relevant for achieving com petitiveness in the 
utility segment , which was particularly cost -sensitive.  (Affidavit of Craig Cornelius, NRG , (Exhibit  CHN-157), 
para. 12). 
485 USITC final report , (Exhibit  CHN-2), fns 290-291. 
486 USITC final report , (Exhibit  CHN-2), pp. 52-53 and fn 295. According to the USITC, only one -third of 
purchasers (29 of 97 ) reported that certain types of products were only available from a single source. For 
example, several purchasers stated that the higher efficiency modules are manufactured primarily in A sia and 
are not available from any US producers. Six purchasers reported that multicrystalline PERC cells are primarily 
only available in Chinese Taipei, Korea, Japan, China, and Malaysia. Two purchasers stated that N -type 
monocrystalline cells are only av ailable from LG in Korea. (USITC final staff report , (Exhibit  CHN-3), p. V-14). 
487 USITC final report , (Exhibit  CHN-2), p. 52. 
488 USITC final report, (Exhibit  CHN-2), p.  52. 
489 USITC final report, (Exhibit  CHN-2), pp.  54-55. 
490 See section 7.3.3.2.1.2  above.  
491 See section 7.3.3.2.1.2  above.  
492 China's  first written submission , para.  193. 
493 USITC final report , (Exhibit  CHN-2), fn 311; USITC final staff report , (Exhibit  CHN-3), p. V-15. 
(emphasis  added)  
494 China 's comments on the United  States'  response to Panel question No. 14 of the first set , 
paras.  88-89. WT/DS562/ R 
 
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  USITC's  finding.495 Furthermore, even if certa in record evidence were to indicate that the domestic 
industry did not have a perfect track record in terms of quality, we are not persuaded that any 
limited evidence to this effect would undermine the evidence relied upon by the USITC to find that 
the dom estic industry was able to supply quality products . We recall again that the USITC found that 
domestic and imported products were "highly substitutable" and have rejected China's  claim against 
this finding.496 The fact that any quality issues were not suffi cient to prevent domestic and imported 
products from being substitutable  supports  the USITC's  view that such quality issues were not a 
separate cause of injury.  
7.229.   As a final point on quality, we are unpersuaded by China's argument that evidence 
demonstrating  instances where domestic producers relied on imported products to fulfil orders show s 
that the domestic industry's  products, overall, had "technical and quality shortcomings".497 In our 
view, s uch evidence does not demonstrate that it was inappropriate  for the USITC to reject 
respondents'  argument that the domestic industry was unable to provide quality products – a finding 
that it based on extensive record evidence, as noted above.498  
7.230.   Third, with r espect to bankability, we are not persuaded by China's  claim that the USITC 
failed to sufficiently assess respondents'  claims. As an initial matter, we agree with the United  States  
that it was not inappropriate  for the USITC to find that bankability was no t a significant feature in 
the competition between domestic and imported CSPV products. The record indicates that  
purchasers did not report bankability to be of significant importance in their purchasing decisions499 
and only a few importers reported the im portance of this factor.500 In any event, the USITC 
accounted for bankability in determining that domestic and imported CSPV products were 
interchangeable501, which supported its finding that domestic and imported products were "highly 
substitutable".502 The USITC also considered bankability problems experienced by the domestic 
 
495 Specifically, China 's argument that the USITC failed to test the evidence concerning the ranking of 
SolarWorld  against contrary evidence is mainly based on evidence that Suniva's  products performed poorly. 
(China's comments on the United  States ' response to Panel question No. 14 of the first set, para. 88  (referring 
to SEIA prehearing brief, (Exhibit  CHN-20), pp. 88 and 90; Affidavit of Richard Matsui, kWh Analytics, 
(Exhibit  CHN-101); and Affidavit of Laura E. Stern, Nautilus Solar, (Exhibit  CHN-99))). In this regard, we are 
not persuaded that this evidence necessarily vitiates  the USITC 's finding that SolarWorld  was ranked by the 
independent research firm EuPD Research as the most purchased brand by US installers. In addition, China 
argues that since "[i]nstallers are not active in the utility segment, which is served instead by developers", 
EuPD Research "does no t provide any information about the perception of the domestic CSPV products in the 
wider market" . (China 's opening statement at the second meeting of the Panel , para. 44). We disagree. 
Considering that installers represented one of the channels of distrib ution for CSPV products, we do not 
consider that it was inappropriate for the USITC to rely on the ranking of SolarWorld by the independent 
research firm EuPD Research  (which ranked SolarWorld as the brand most purchased by US installers ) as 
further support for its finding that quality was not an "other" factor of injury . (USITC final staff report, 
(Exhibit  CHN-3), pp.  I-28-I-30).  
China also submits that the USITC 's reference to the warranties offered by the petitioners was not 
tested ag ainst contrary evidence demonstrating that : (a) Suniva 's warranties had multiple constraints; 
(b) purchasers reported "warranty backstop protection" as a non-price reason for purchasing imported 
products; ( c) one purchaser reported that the petitioners wer e unable to meet its criteria (one of which was 
warranty); and ( d) since some purchasers in the utility segment did not buy the domestic products, there was 
no need to enforce warranty for domestic products . (China 's comments on the United  States ' response  to Panel 
question No. 14 of the first set , para. 89). In our view, this evidence does not conflict with the USITC 's finding 
that petitioners ' warranty claim rates were low and that SolarWorld was first to offer long -term warranties. 
Moreover, we do not co nsider that the record evidence suggesting that the domestic industry did not have a 
perfect track record in terms of product quality dispositively establish es that the domestic industry had quality 
problems that the USITC was required to treat as an "othe r" cause of injury.  
496 See section 7.3.3.2.1.2  above.  
497 China's  second written submission, para.  161. 
498 See section 7.4.3.2.2.1  above. See also USITC final report, (Exhibit  CHN-2), p.  55. 
499 According to the USITC final staff report, only 15 purchasers reported that bankability was an 
important factor in purchasing decisions, while 81 purchasers identified price as an important factor, 
77 purchasers – quality/performance, and 42 purchasers – availability. (USITC final staff report, 
(Exhibit  CHN-3), table  V-4).  
500 According to the USITC final staff report, only  three importers stated that (a)  developers, installers, 
and project owners chose module suppliers with high bankability that are listed  as Tier 1 by Bloomberg and 
that funding for projects using low Tier modules are often rejected by financiers; and (b)  performance data and 
bankability of the CSPV products can limit the degree of interchangeability. ( USITC final staff report, 
(Exhibit  CHN-3), pp.  V-16-V-17).  
501 See section 7.3.3.2.1.2  above.  
502 See section 7.3.3.2.1.2  above.  WT/DS562/ R 
 
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  industry and linked those problems to the injurious effects of increased imports, particularly the 
negative financial consequences of the adverse price conditions that the domestic indu stry 
experienced over the POI.503  
7.231.   For the above reasons, we reject China's  claim that the USITC failed to properly assess the 
alleged quality and product -type issues of the domestic industry.  
7.4.3.2.3   The a lleged  service  and delivery  issues  of the domestic  industry  
7.4.3.2.3.1   Factual  background   
7.232.   During the safeguard investigation, respondents argued that "the domestic industry had 
delivery and service issues or failed to compete for certain sales".504 Rejecting this claim, the USITC 
noted that "[p]etitioners responded t o these allegations, often with detailed explanations", and found 
that "[t]he evidence simply does not support the sort of widespread problems alleged by 
respondents".505 As support  for its finding , the USITC referred to arguments of both respondents 
and pe titioners and also described certain purchaser complaints and petitioner responses.506 
7.4.3.2.3.2   Main  arguments  of the parties  
7.233.   China argues that the USITC dismissed serious service and delivery problems of the domestic 
industry on the basis of the petitioners'  rebuttals, without considering conflicting arguments.507 
In this regard, China contends that the USITC did not discuss multiple arguments made by 
purchasers and only addressed a handful of them in a dismissive manner .508 In its view, the USITC  
had to do more than to merely acknowledge certain arguments and cite counterarguments made by 
the parties .509 China also contends that the USITC's  reliance on the petitioners'  rebuttals was 
inadequate because  (a) they contain signifi cant portions of redacted information, and do not permit 
a review of whether the USITC considered all the evidence  presented and whether petitioners 
rebutted each purchaser  complaint510; and (b)  they do not address the conflicting record evidence 
demonstrat ing the widespread nature of the purchaser complaints against the domestic industry.511 
Finally, China claims that the USITC's  analysis is deficient because the references to the record in 
the USITC  final report are incomplete and they omit multiple complai nts and 
petitioners'  counterarguments.512 
7.234.   For its part, the United  States  submits that the USITC appropriately  found that  record 
evidence does not support respondents'  allegations  that the domestic industry suffered from 
widespread delivery and service prob lems.513 In particular, the United  States  argues that the 
USITC  (a) considered respondent arguments and petitioner counterarguments; (b)  found that 
petitioners provided credible documentation refuting respondents'  allegations; and (c)  by way of 
 
503 The USITC noted that  SolarWorld 's "subsequent loss of bankability provides added confirmation of 
the serious injury substantially caused by increased imports" and that "Suniva reported that 'the unrelenting 
pressure of low -priced imports ' forced it out of the utility segment and necessitated that the firm shift its focus 
to projects that did not rely on such non -recourse loan funding, which implicated the firm 's ability to achieve 
Tier 1 status" . (USITC final report , (Exhibit  CHN-2), p. 56 and fn 319). In addition, in the context of its serious 
injury determination, the USITC indicated that the domestic industry reported a rejection of bank loans, 
lowering of credit ratings, inability to service debt, and lowered bankability due to imports. (USITC final report , 
(Exhibit  CHN-2), p. 36).  
504 USITC final report , (Exhibit  CHN-2), p. 61. 
505 USITC final report , (Exhibit  CHN-2), p. 61. 
506 USITC final report , (Exhibit  CHN-2), fns 354-356.  
507 China's  second written su bmission, heading to section  III(B)(3), and para.  167. 
508 China's response to Panel question No. 12 of the second set , para. 139. 
509 China 's first written su bmission, para. 191; comments on the United  States'  response to Panel 
question No. 14 of the first set , para. 79. 
510 China 's second written submission, paras.  169-170; response to Panel question No. 12 of the second 
set, para. 139.  
511 China 's second written submission, paras.  170-172 (referring to Supporting footnotes regarding 
purchasers complaints on service and delivery  issues , (Exhibit  CHN-170)); response to Panel question No. 13 
of the second set , paras.  145-149 and 165. See also China 's second written  submission, para. 173. 
512 China's comments on the United  States'  response to Panel question No. 14 of the first set , para.  80. 
513 United  States'  first written submission, paras.  188-191; comments on China's  response to Panel 
question No. 15 of the first set , paras.  121-126; and response to Panel question No. 13 of the second set , 
paras.  24-28. WT/DS562/ R 
 
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  example, addressed the testimony of certain purchasers.514 Further , the United  States  maintains 
that, against the backdrop of other evidence on the record, respondents'  allegations consisted of 
criticisms from only a handful of purchasers.515 Relatedly, the United  States  submits that 
the Agreement on Safeguards does not r equire the competent authorities to address every assertion 
made by every party516, and that the mere presence of redacted information does not establish a 
failure to provide findings and reasoned conclusions, as required under Article  3.1 of the  Agreement 
on Safeguards.517 
7.4.3.2.3.3   Evaluation  of the Panel   
7.235.   Overall, we do not consider that China has demonstrated that it was inappropriate for the 
USITC  to find that the domestic industry did not suffer from widespread service and delivery issues. 
China has therefore fai led to establish that the USITC was required to treat this factor as an "other" 
cause of injury.  
7.236.   As an initial matter, we note , in line with the United  States ' argument , that the  Agreement 
on Safeguards does not obligate the competent authorities of a Mem ber to explicitly address in their 
report every assertion made by interested parties during the investigation.518 We also agree with 
the United  States  that the redaction of confidential information does not necessarily establish a 
failure of the competent a uthorities to provide findings and reasoned conclusions within the meaning 
of Article  3.1 of the  Agreement on Safeguards.519 In this context, the relevant question for our 
purposes is whether China has established that the USITC failed to appropriately demo nstrate that 
the domestic industry did not suffer from "widespread" service and delivery issues.  
7.237.   In its  final report, when rejecting respondents'  claim concerning the alleged service and 
delivery issues of the domestic industry, the USITC noted that the petitioners responded to 
respondents'  allegations, "often with detailed explanations"520, and concluded that "[t]he evide nce 
simply does not support the sort of widespread  problems alleged by respondents".521 As such, we 
do not consider that China is correct to argue that the USITC simply accepted petitioner arguments 
without considering conflicting evidence. To the contrary,  it appears implicit in its finding that the 
USITC weighed evidence and arguments of both respondents and petitioners and ultimately 
determined petitioners'  submissions to convincingly demonstrate that the domestic industry did not 
suffer from "widespread"  service and delivery issues.  
7.238.   We further observe that, although the petitioners addressed a significant number of 
respondents'  allegations concerning service and delivery issues522, they did not address every 
allegation.523 Moreover, in our view, at least o ne petitioner response does not persuasively address 
 
514 United  States'  first written submission, paras.  188-191; response to Panel question No. 14 of the 
first set , paras.  31-35.  
515 United  States'  response to Panel question No. 13 of the s econd set , paras.  27-28; second written 
submission, paras.  122-123. In particular, the United  States refers to record evidence that (a)  domestic and 
imported products were substitutable; (b)  the vast majority of purchasers reported that no domestic supplie r 
had failed in its attempt to qualify product or had lost its approved status in 2012 ; and (c)  the sheer number of 
purchasers did not report having delivery or service issues with domestic producers.  
516 United  States'  second written submission, paras.  103-104 and 106 -107. 
517 United  States'  second written submission, para. 105. 
518 See, e.g.  United  States'  second written submission, para. 103.  
In this context,  we do not agree with China that it was inappropriate  for the USITC to summarize the 
parties ' arguments in its report and provide certain complains and rebuttals thereto as examples. 
(China 's comments on the United  States'  response to Panel question No. 14 of the first set , para. 80). 
519 United  States'  second  written submission, para. 105.  
520 USITC final report, (Exhibit  CHN-2), p.  61. 
521 USITC final report, (Exhibit  CHN-2), p.  61.  
522 Although certain explanations and underlying evidence submitted by the petitioners are redacted, 
certain  of the petitioners ' responses to purchasers ' complaints are available in non -confidential versions of their 
posthearing briefs . (SolarWorld 's posthearing injury brief (Exhibit USA -16), exhibit 1, pp. 5-21; Suniva 's 
posthearing injury brief, (Exhibit USA -17), exhibit 9, pp. 4-8). As such, we do not agree with China 's argument 
that the confidentiality of this information demonstrate s that the USITC 's determination concerning alleged 
service and delivery issues of the domestic industry is not reasoned and adequat e. (China 's second written 
submission, para. 169). 
523 For example, we agree with China that petitioners did not respond to purchaser complaints contained 
in the following affidavits:  Affidavit of Jay Miles, Russell Pacific, (Exhibit  CHN-69); Affidavit of Ke nny Hughes, 
Radiance Solar, (Exhibit  CHN-98); Affidavit of Laura E. Stern, Nautilus Solar, (Exhibit  CHN-99); Affidavit of 
 WT/DS562/ R 
 
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  the conflicting evidence submitted by respondents.524 Nonetheless, regardless of these 
shortcomings, we consider that petitioners'  responses overall provided a n appropriate  basis for the 
USITC to conclude  that the domestic industry did not suffer from "widespread" service and delivery 
issues.  
7.239.   In this regard, we agree with the United  States  that the number of purchasers that submitted 
questionnaire responses without reporting service and delivery issues fa r exceeded the handful of 
complaints to which China refers.525 Moreover, while China advances a number of arguments 
purporting to demonstrate that the complaints submitted were significant, we do not consider that 
these arguments contradict the USITC's  finding that service and delivery issues were not 
"widespread".526 As such, even if the purchasers to which China refers had credible service and 
delivery issues with domestic products, China has not demonstrated that the USITC was precluded 
from relying on other record evidence to find that the domestic industry did not  have widespread 
service and delivery issues.527 The mere presence of conflicting evidence on the record does not 
demonstrate that the USITC's  finding was unreasoned and inadequate , or that it should have treated 
service and delivery issues as an "other" fa ctor of injury.  
7.240.   Based on the foregoing, we reject China's  claim that the USITC improperly dismissed 
respondents'  arguments concerning the alleged service and delivery issues of the domestic industry.  
7.4.3.3   Non-import  factors  that allegedly  caused  prices  of CSPV  products  to decline  
7.241.   During the safeguard investigation, respondents argued that factors other than imports, 
namely declin ing government incentive programmes, declining raw material costs, and the need to 
 
Zaid Ashai, Nexamp, (Exhibit  CHN-100); and Affidavit of George W. Hershman, Swinerton Renewable Energy, 
(Exhibit  CHN-104).  
524 In particular, we observe that Suniva 's response to the complaint of California Solar Systems does 
not appear convincing in light of the conflicting evidence on the record.  While Suniva indicated that it " can find 
no record of any of its distributors in South ern California issuing a warranty claim, or even a comment, on any 
transaction with California Solar Systems", testimony from California Solar Systems suggests otherwise.  
(Supporting footnotes regarding purchasers complaints on service and delivery  issues , (Exhibit  CHN-170)). 
525 Specifically,  we note that the USITC received questionnaire responses from 106 purchasers, most of 
which did not report any service and delivery issues of the domestic industry  during the safeguard 
investigation . In addition , SolarWo rld testified that it works with nearly 5,000 solar installers. Of those 349 are 
authorized installers and 36 have been designated as platinum installers. (Transcript of the USITC injury 
hearing , (Exhibit  CHN-9), p. 107). Moreover, Suniva testified that it  "had approximately 340 distinct customers 
who placed thousands of purchase orders". (Suniva's  posthearing injury brief, (Exhibit  USA-17), exhibit  9, 
p. 8). 
526 In particular, we do not agree with China 's arguments that the fact that complaining purchasers were 
"some of the largest " and that the complaints addressed " different competitiveness aspects" suggests that the 
domestic industry had "widespread" service and delivery issues . (China 's response to Pane l question No. 13 of 
the second set , paras.  145-148). Moreover, we note that petitioners appear to have responded to the 
complaints of the purchasers that China defines to be "some of the largest" (i.e . NEXTracker, DEPCOM, 
California Solar Systems, Borrego , NRG Energy, and Sunrun).  (SolarWorld 's posthearing injury brief, 
(Exhibit  USA-16), exhibit 1, pp. 5-21; Suniva 's posthearing injury brief, (Exhibit USA -17), exhibit 9, pp. 4-8). 
Relatedly, we agree with the United  States  that China speculates by submitting that "the fact that 7 purchasers 
explicitly complained during the course of the public hearing or in an affidavit serving as evidence to a written 
submission, does not mean that other purchasers did not have similar con cerns regarding quality and service 
issues". (China 's response to Panel question No. 13 of the second set , para. 148). China also argues that "the 
fact that 42 out of these 106 purchasers reported availability concerns, 9 cited delivery time, 6 cited 
relationship with supplier/contract, and 5 cited customer supports , was representative that over half of the 
purchasers from different market segments expressed concerns on service and delivery issues". 
(China 's response to Panel question No. 13 of the second s et, para. 165). We agree with the United  States  that 
China 's argument is misleading. In line with the United  States'  observation, we note that, while China did not 
provide any support for this assertion, it appears to be referring to table V -4 of the USITC  final staff report . 
However, that table represents only purchasers ' ranking of factors used in their purchasing decisions, and has 
nothing to do with the alleged service and delivery issues of the domestic industry .  
527 In addition, China refers to record evidence demonstrating that ( a) four domestic producers reported 
"labor problems or shortages" as a factor causing injury ; and ( b) two domestic producers reported "production 
problems" as a factor causing injury as support to its argument that service and delivery issues was a factor of 
injury . (China 's second written submission, para. 173 (referring to USITC final staff report , (Exhibit  CHN-3), 
table F-2)). However, we do not think that this record evidence demonstrates that the domestic industry 
suffered from service and delivery issues .  WT/DS562/ R 
 
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  attain "grid parity"  with other sources of electricity , "explain any declines in prices of CSPV products 
and the condition of the domestic industry".528 The USITC rejected these  arguments.529  
7.242.   In its first written submission, China asserts that the USITC acknowledged that these factors 
had some injurious effect on the domestic industry, by causing price declines or negatively impacting 
demand for CSPV products. China claims that th e USITC failed to ensure that the injurious effects 
of those factors were not attributed to increased imports.530 The United  States  responds by arguing 
that, contrary to China's  characterization, the USITC found that these factors did not cause injury to 
the domestic industry, and, therefore, there was no injury that the USITC might have erroneously 
attributed to increased imports.531 In its subsequent submissions, China clarifies that the USITC 
improperly dismissed these factors, and maintains its position t hat the USITC failed to evaluate the 
nature and extent of the injurious effect that the USITC accepted these factors to have.532 
7.243.   In this context, China's  claims raise two primary issues:  (a) whether the USITC improperly 
dismissed the non -import factors that  allegedly caused prices of CSPV products to decline; and 
(b) whether the USITC failed to satisfy the non -attribution requirement in respect of any injurious 
effect of these factors. For the reasons explained below, we do not consider that the USITC accept ed 
that these factors caused injury to the domestic industry. Nor do we consider that China has 
demonstrated that the USITC improperly dismissed these factors. On this basis, we also disagree 
with China that the USITC failed to ensure that the injurious ef fect of these factors was not attributed 
to increased imports.  
7.4.3.3.1   Changes in availability of government incentive programmes  
7.4.3.3.1.1   Factual  background   
7.244.   In the safeguard investigation, respondents argued that declin ing government incentive 
programmes was one of the factors other than imports that explained "any declines in prices of CSPV 
products and the condition of the domestic industry".533  
7.245.   In response, the USITC acknowledged that changes in the availability and the scope of 
government incentives continued to affect the price of and demand for CSPV products, but found 
that changes in government incentive programmes did not explain the condition of the domestic 
industry.534 The USITC made the following subsidiary findings in this regard:   
a. Government incentive pro grammes influence the price of renewable energy, thereby 
stimulating its demand and assisting developers of renewable energy to achieve sufficient 
economies of scale to become more competitive with conventional energy sources. These 
programmes benefit syst ems owners, and are typically not directed at producers of CSPV 
products. These incentives and their benefits were designed to decline over time, with the 
expectation that the cost to generate solar electricity would also fall.535  
b. Over the POI, some govern ment incentives expired, while others continued.536  
c. Most firms reported that the availability of these incentives led to a decrease in the price 
of solar electricity. The existence of these incentive programmes made CSPV products 
more cost -competitive with  other sources of electricity.537  
 
528 USITC final report , (Exhibit  CHN-2), p. 61. 
529 USITC final report , (Exhibit  CHN-2), pp. 61-65. 
530 China 's first written submission,  paras.  196-198. 
531 Unites States ' first written submission, paras.  171 and 174 -175. 
532 China's  second written submission, para.  176. See also ibid. para.  143.  
533 USITC final report , (Exhibit  CHN-2), p. 61. 
534 USITC final report , (Exhibit  CHN-2), pp. 61-62. 
535 USITC final report , (Exhibit  CHN-2), p. 62. 
536 USITC final report , (Exhibit  CHN-2), p. 62. The USITC referred in its final report to the extension of 
the Federal Investment Tax Credit ( FITC), expirations of t he Advanced Energy Manufacturing Tax credit, the 
US Department of Energy 's Section  1705 Loan Guarantee programme , the US Treasury Department 's cash 
grant programme  under Section  1603 of the Recovery  and Reinvestment Tax Act and continuation of the 
US Department of Energy 's SunShot Initiative. (USITC final report , (Exhibit  CHN-2), fn 259 and pp. 62-63). 
537 USITC final report , (Exhibit  CHN-2), p. 63.  WT/DS562/ R 
 
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  d. Any decline in government incentives did not result in a decline in US  consumption  of CSPV 
products .538  
i. According to most questionnaire respondents, changes to Federal incentive 
programmes did not change the demand for CSPV products ; those that reported an 
increase in demand for CSPV products identified the level of Federal incentives as the 
reason for the increase, noting the extension of the Federal Investment Tax Credit  
(FITC). A plurality  of firms reported that the d emand for CSPV products increased due 
to the availability of state and local incentives.539  
ii. Between 2015 and 2016, US  installation of on -grid photovoltaic systems (which 
included thin film)  increased 97%. This growth, primarily in the utility segment, was 
driven by the anticipated expiration of the FITC at the end of 2016.540  
iii. Demand for CSPV products continued to experience robust growth throughout the POI, 
including in states most affected by changes in incentive programmes, such as 
California. Indeed, in  2016, solar power was the largest source of new electric 
generating capacity, accounting for 39% of all new electric generating capacity 
installed in the United  States .541 
7.4.3.3.1.2   Main  arguments  of the parties  
7.246.   China argues that the USITC improperly dismissed the decline in government incentive 
programmes and failed to satisfy the non -attribution requirement in respect of the injury caused by  
this factor.542 In particular, China argues that the USITC failed to conduct a detailed analysis of the 
governm ent incentive programmes that were terminated  or reduced , and the impact of such 
terminations or decline on the domestic industry, and particularly, on prices of CSPV products.543 In 
its view, the USITC's  failure to conduct such analysis was problematic, si nce any decline in incentives 
would affect the cost -sensitiveness of system users and would, as a result, force CSPV producers to 
offer lower prices to remain competitive.544 In addition, China submits that the USITC's  focus on the 
growing demand for CSPV p roducts to dismiss the impact of declines in government incentive 
programmes on the domestic industry was inadequate.545 Specifically , China argues that the USITC 
failed to consider that (a)  the major incentive programme (i.e . the FITC)  contributed to growt h in 
demand primarily in the utility segment (where the domestic industry did not focus) , while other 
incentives  that were directed to the residential and commercial segments (where the domestic 
industry focused ) or target ed the domestic industry itself  had expired ; and (b)  the USITC failed to 
distinguish how much of this growth was for in -scope CSPV products compared with out-of-scope 
thin film.546  
7.247.   The United  States  submits that the USITC properly found that changes in the a vailability of 
government incentive programmes did not cause injury to the domestic industry.547 In its view, the  
USITC considered respondents'  argument that the alleged "decline" in such programmes explained 
price declines of CSPV products, but found that "some programs expired while others continued", 
and, more significantly, that any change in the overall mix of government incentive programmes did 
not lead to any decrease in demand.548 In this regard , the United  States  argues that 
China's  argument concerni ng the FITC (a)  is based on the incorrect premise that the domestic 
industry decided not to compete in the utility segment549; and (b)  fails to demonstrate that 
 
538 USITC final report , (Exhibit  CHN-2), p. 63. 
539 USITC final report , (Exhibit  CHN-2), p. 63.  
540 USITC final report , (Exhibit  CHN-2), p. 62. 
541 USITC final report , (Exhibit  CHN-2), p. 63. 
542 China 's first written submission , paras. 202 and 204; second written submission, heading to 
section  III(C)(1).  
543 China 's first written submission, para. 200; second written submission, paras.  179 and 186. In this 
context, China claims the USITC admitted that incentives were de signed to decline as the cost of generating 
solar electricity  was expected to decrease over time . (China's second written submission, para. 187).  
544 China 's first written submission, para. 202; second written submission, paras.  187 and 190. 
545 China's  first written submission, para.  201; second written submission, para.  181. 
546 China's  first written submission, para.  201; second written submission, paras.  182, 185, and 188.  
547 United  States'  first written submission,  heading to  section  II(E)(3)(a).  
548 United  States'  first written submission, para. 199. 
549 United  States'  first written submission, para. 203. WT/DS562/ R 
 
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  fluctuations in demand for in -scope CSPV products as compared with out-of-scope thin film moved 
independently, or that the incentive programmes affected demand for them differently.550 Finally, 
the United  States  submits that China has failed to substantiate its argument that any decline in 
incentives would result in decline of CSPV product prices.551  
7.4.3.3.1.3   Evaluation  of the Panel   
7.248.   For the reasons explain ed below, we are not persuaded by China's  claim.  
7.249.   As an initial matter, we observe that the USITC found that "some" incentive programmes 
had expired and "others continue"552 and referred to specific governmen t incentive programmes that 
either remained in force, changed, or expired.553 The USITC also took into account questionnaire 
respondents'  views on whether the overall level or availability of Federal and state and local 
incentives had changed since 2012.554 As noted in the USITC's  final staff report, "most U.S. 
producers, importers, and purchasers indicated that the level or availability of Federal incentive 
programs has not changed since January  1, 2012"555, while "[f]irms'  responses varied regarding how 
the level or availability of state and local incentives has changed since 2012".556 Moreover, the USITC 
assessed how such changes in government incentive programmes affected the demand for CSPV 
products and the prices for solar electricity during the POI.557  
7.250.   In our view, China fails to demonstrate why the constellation of facts before the USITC 
necessitated a more detailed analysis concerning the impact of the expiry of specific government 
incentive programmes on the domestic industry. China reasons that more d etailed analysis was 
necessary because any decline in incentives would affect the cost -sensitiveness of system users and 
would, as a result, force CSPV producers to offer lower prices to remain competitive.558 However, 
the facts before the USITC do not indi cate that this dynamic occurred over the POI.  
7.251.   In particular, the USITC found that the aim of the government incentive programmes was 
to offset the cost of generating solar energy559 and that m ost questionnaire respondents reported 
that overall changes in t he availability of government incentives led to a decrease  in the price of 
solar electricity during the POI.560 This dynamic indicates that solar producers continued to benefit 
 
550 United  States'  first written submission, para. 202.  
551 United  States'  first written submission, para. 204; second written submission, para. 140; and 
comments on China's  response to Panel question No. 18 of the first set , para. 141. In its view, the USITC, by 
finding that changes in government incentive programme s did not have negative impact on the demand for 
CSPV products and prices of solar electricity, reasonably concluded that any changes in government incentive 
programme s did not cause prices of CSPV products to decline . (United  States'  second written submission, 
paras.  134 and 137). In particul ar, the United  States  argues that incentives sought to increase demand of solar 
electricity, and this goal was achieved during the POI. According to the United  States , any effect on prices for 
solar generators ' inputs would be secondary, resulting from inc reased demand for solar energy.  
(United  States'  response to Panel question No. 15 of the second set , para. 33; response to Panel question 
No. 17 of the first set , paras.  42-43). Moreover, the United  States  submits that, since the changes in 
government ince ntives caused prices of solar electricity to decrease over the POI, solar producers continued to 
benefit from the incentive programmes and this development did not translate automatically into declining 
prices of CSPV products.  (United  States'  second writt en submission, para. 141; comments on China's  response 
to Panel question No. 18 of the first set , para. 143).  
552 USITC final report , (Exhibit  CHN-2), p. 62. 
553 For example, the USITC explicitly  noted the extension of the FITC and the expiration of the 
US Treasury Department's  cash grant programme under Section  1603 of the Recovery and Reinvestment Tax 
Act, the Advanced Energy Manufacturing Tax credit and the US Department of Energy's  section  1705 Loan 
Guarantee programme. In addition, according to the USITC final staff report, 29 states plus the District of 
Columbia had renewable portfolio standards policies in place in 2016 and the Public Utility Regulatory Policies 
Act of 1978 emerged as a sign ificant driver of utility -scale solar installations in certain states. (USITC final 
report, (Exhibit  CHN-2), pp.  62-63 and fn  359); USITC final staff report, (Exhibit  CHN-3), pp.  V-32-V-36). 
554 USITC final report , (Exhibit  CHN-2), p. 63; USITC final staff r eport, (Exhibit  CHN-3), table V-22. 
555 USITC final staff report , (Exhibit  CHN-3), p. V-35. 
556 USITC final staff report , (Exhibit  CHN-3), p. V-36. 
557 USITC final report, (Exhibit  CHN-2), pp.  62-63. 
558 China 's first written submission, para. 202; second written submission, paras.  187 and 190. 
559 USITC final report , (Exhibit  CHN-2), p. 62. 
560 USITC final report , (Exhibit  CHN-2), p. 63; USITC final staff report , (Exhibit  CHN-3), p. V-37 and 
table V-24.  
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  from the availability of government incentive programmes during the POI and cast s doubt on 
China's  assertion that " any decline in incentives would affect the cost -sensitiveness of system 
users".561  
7.252.   In addition, the USITC found  that "any decline in incentives has not led to declines in 
apparent U.S. consumption"  and "demand continued to experience robust growth throughout the 
POI, including in states most affected by changes in incentive programs, such as California".562 In 
our v iew, these findings demonstrat e that changes in the availability of government incentive 
programmes did not negatively impact demand for CSPV products and further serve to disprove 
China's  argument .563 Since increased demand for CSPV products would ordinari ly be expected to 
result in a price increase, it is unclear on what basis China suggests that declines in government 
incentive programmes, in light of this positive dynamic, contributed to a decline in CSPV prices.564 
7.253.   In this connection, we are also unconvi nced by China's  arguments that the USITC's  focus on 
demand to dismiss the impact of declines in government incentive programmes was inadequate.  
7.254.   China argues that the USITC failed to distinguish how much of the growth in demand that 
resulted from the contin uation of the FITC was for in -scope CSPV products compared with 
out-of-scope thin film .565 However, this argument ignores that, while the USITC found that 
"[b]etween 2015 and 2016, U.S. installations of on -grid photovoltaic systems (which include thin 
film) increased 97  percent", it also found that  interested parties reported that the continuation of 
the FITC led to increase in demand specifically for CSPV products .566  
7.255.   China further argues that the USITC ignored that the domestic industry did not benefi t from 
the continuation of the FITC because it primarily supported the growth in demand for CSPV products 
in the utility segment.567 However, this argument is based on the incorrect premise that the domestic 
industry did not participate in the utility segme nt, which we have already rejected.568 Moreover, 
China ignores that the FITC applied to all market segments.569 As such, the domestic industry would 
have benefitted from the extension of this programme, as well as other programmes targeting the 
utility segme nt, regardless of its varying degrees of participation in the different segments of the 
US market.570 
7.256.   We are also unpersuaded by China's  argument that the USITC's  assessment of the impact 
of declining incentive programmes on demand for CSPV products did not  account for the termination 
of incentive programmes directly linked with the residential and commercial segments (where the 
 
China  argues that table  V-24 of the USITC final s taff report demonstrates that "when incentive 
programs were available during the period, these incentives lowered the price of solar generated energy" but 
"this dynamic does not negate the fact that, as subsidies declined, domestic producers had to increme ntally 
introduce price reductions" . (China 's response to Panel question No. 15 of the second set , para. 193).  Contrary 
to China's  understanding, table  V-24 of the USITC final staff report depicts firms'  questionnaire responses 
regarding how changes in the availability  of government incentive programmes affected the price of solar 
electricity since 2012 . 
561 See, e.g. China's  first written submission, para.  202. (emphasis added). Moreover, questionnaire 
respondents indicate that "most U.S. producers (7 of 10), importers (24 of 44), and purchasers (53 of 
95) reported that changes in the price of solar generated electricity did not affect the prices of CSPV products". 
(USITC final staff report , (Exhibit  CHN-3), p. V-37).  
562 USITC final report , (Exhibit  CHN-2), p. 63. The USITC  also found that the increased demand for 
CSPV products resulted from , inter alia , the existence of federal, state , and local incentive programme s. 
(USITC final report , (Exhibit  CHN-2), p. 26). 
563 Even the Solar Energy Industries Association  (SEIA) – one of the respondents in the safeguard 
investigation  – acknowledged that there is normally a direct relationship between demand and prices, stating 
that "it is only logical that these incentives drive demand, and therefore prices , to such a significant degree". 
(SEIA prehearing brief, (Exhibit  CHN-20), p. 107 (emphasis  added) ).  
564 China 's comments on the United  States ' response to Panel question No. 17 of the first set , 
para. 110; response to Panel question No. 15 of the second set , paras.  182 and 184 ; and second written 
submission, para. 190. 
565 China's  first written submission, para.  201. 
566 USITC final report, (Exhibit  CHN-2), p. 63; USITC final staff report , (Exhibit  CHN-3), p. V-36. 
567 See, e.g. China's  first written submission, par a. 201; and second written submission, para.  183. 
568 See sections 7.3.3.2.1.1  and 7.4.3.2.1.3  above.   
569 USITC final report, (Exhibit  CHN-2), fn  361; USITC final sta ff report, (Exhibit  CHN-3), p.  V-32. 
570 Moreover , China itself submitted evidence suggesting that the FITC led to increased demand in 
residential and commercial segments. (China 's response to Panel question No. 43 of the third set , 
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  domestic industry focused).571 In this regard, we observe that  China is correct  to note  that certain 
of these programmes (such as the US Treasury Department's  cash grant programme under 
section  1603 of the Recovery and Reinvestment Tax Act572, and various state -level net metering 
programmes573) expired during the POI . However, China overlooks that  the USITC based its finding 
that "any decline in incentives has not led to declines in apparent U.S. consumption" on the 
overwhelming majority of questionnaire respondents reporting that any changes in government 
incentives did not have a negative impact on the demand for CSPV products.574 As such, the specific 
evidence to which China refers does not undermine the evidence supporting the USITC's  conclusion 
that overall demand for CSPV products did not decline as a result of those changes.  
7.257.   Accordingly, because record evidence indicates that overall changes in the availability of 
government incentive programmes (a)  caused solar electricity prices to decline, and (b)  did not lead 
to decline in demand for CSPV products, it does not appear that those changes would have reduced 
the cost -competitiveness of solar energy. As a result, we do not consider that the USITC was required 
to conduct a more detailed analysis of whether the expiry of specific incentive programmes  would 
have increased the burde n associated with maintaining the cost -competitiveness of solar energy and 
thus resulted in downward price pressure on CSPV products (as an input in producing solar energy). 
Therefore, we disagree with China's  claim that the USITC erred by not explicitly a ddressing whether 
any decline in government incentive programmes would have forced CSPV producers to offer lower 
prices to remain competitive. Indeed, China's  claim seems to be premised on a hypothetical scenario 
for which China has provided no valid suppo rt, and which is not borne out by the evidence on the 
USITC's  record.575 In these circumstances, we do not consider that it was necessary for the USITC 
 
571 China's  second written submission, para.  182. 
572 USITC final staff report , (Exhibit  CHN-3), p. V-35. 
573 The USITC final staff report , (Exhibit  CHN-3), p. V-35. Of the firms that had indicated a decline in 
state and local incentives, most attributed the decrease to changes in net metering policies. (USITC final staff 
report , (Exhibit  CHN-3), p. V-36). 
574 USITC final staff report , (Exhibit CHN -3), p. V-36. With respe ct to China 's argument that the USITC 
overlooked termination of incentive programme s directly benefitting producers of CSPV products, we observe 
that the USITC 's finding that "any decline in incentives has not led to declines in apparent U.S. consumption" 
would also cover incentive programme s directly benefitting producers of CS PV products during the POI (such 
as the Advanced Energy Manufacturing Tax credit and the US Department of Energy 's section  1705 Loan 
Guarantee programme ). In any event, China has not  explained why termination of these incentive programme s 
would have negatively affected demand for CSPV products. (China 's response to Panel question No. 18 of the 
first set , para. 133; opening statement at the first meeting of the Panel , para. 53). 
575 For example, China relies on the USITC 's general  finding that incentives were designed to decline as 
the cost of generating solar was expected to decrease over time. According to China, this evidence suggests 
that domestic producers were under the pressur e "to escalate their technological innovation" to compensate for 
the decline in incentives . (China 's second written submission, para. 187). Contrary to China 's argument, the 
USITC recognized the interconnection between declines in incentive programme s and declines in the cost of 
generating solar energy . While we recognize that this dynamic might also suggest  a general connection 
between declines in incentive programme s and cost reductions and efficiency enhancements  of CSPV products 
(as an input in producin g solar energy), we do not consider that this demonstrates that the domestic industry 
was pressured to lower prices of CSPV products  in response  to any decline in incentive programme s. Similarly, 
we fail to see how China 's reliance on the USITC 's finding t hat "existence of these incentive programs has 
made CSPV products more cost -competitive with other sources of electricity " would support its assumption that 
any decline in incentive programs necessarily had a negative impact on prices of CSPV products . (USITC final 
report, (Exhibit  CHN-2), p. 63. See, e.g. China 's first written submission, para. 202). 
We also do not agree with China that the econometric report submitted by respondents to the USITC 
showed that changes in government incentive programme s "was a way more important factor in explaining the 
evolution of prices over the period" . (See, e.g. China 's response to Panel question No. 15 of the second set , 
para. 195; response to Panel question No. 14 of the second set, para.  181; and response  to Panel question 
No. 18 of the first set , para. 143). The econometric report more generally described incentive programme s, 
their impact on demand for CSPV products , and their interrelation with "grid parity" and CSPV costs . 
(Econometric report, (Exhibit  CHN-19), pp. 14-16, 18 , and 23). While the econometric report accounted in its 
assessment for the impact of state -level subsidies on CSPV demand, it did not directly  assess  the impact of 
changes in government incentive programme s on prices of CSPV products . (Econometric report, 
(Exhibit  CHN-19), pp. i and 3).  
In addition, China argues that domestic producers admitted themselves that declining government 
support had a "negativ e" impact in prices . (China 's second written submission, para. 189 (referring to USITC 
final staff report, (Exhibit  CHN-3), table  F-2)). In this context, we observe that o ut of 16 domestic producers 
that provided questionnaire responses to the USITC,  only seven producers reported " changes in government 
incentive programs" as a factor causing injury ; three of them ranked the importance of this factor as one out of 
five (the lowest degree of importance), one producer ranked it as two out of five, one producer  ranked it as 
three out of five, and two producers ranked it as  five out of five ("an extremely important cause of injury"). We 
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  to explicitly consider such a scenario to reasonably conclude that changes in the availability of 
governm ent incentive programmes did not cause injury to the domestic industry.576 
7.258.   For these reasons, we reject China's claim that the USITC improperly dismissed  declin e in 
government incentive program mes as an "other" cause of injury. As a consequence, we also rej ect 
China's claim that the USITC failed to ensure that the injury caused by this factor was not attributed 
to increased imports.  
7.4.3.3.2   Declining  raw material  costs  and increased  production  efficiencies  
7.4.3.3.2.1   Factual  background   
7.259.   In the safeguard investigation, respondents argued that declining raw material costs, rather 
than increased  imports, explained "any declines in prices of CSPV products and the condition of the 
domestic industry".577 
7.260.   In response, the USITC noted that polysilicon is a key raw  material used in the production 
of the wafers that are used to manufacture CSPV cells, and that raw material costs account for the 
largest component of the total cost of goods sold for CSPV products. During the POI, the price of 
polysilicon ingots and waf ers (key inputs in the production of CSPV products)  fluctuated, but declined 
overall.578 Based on this, the USITC found:   
Despite declining polysilicon costs, which would help make CSPV products more cost 
competitive with other sources of electricity, decli nes in the domestic industry's  net 
sales values kept pace with declines in its costs, leading to substantial losses throughout 
the POI.579 
7.4.3.3.2.2   Main  arguments  of the parties  
7.261.   China submits that the USITC improperly dismissed decreasing raw material costs and 
increased production efficiencies and failed to satisfy the non -attribution requirement in respect of 
these factor s.580 In particular, China argues that, although the USITC acknowledged that it had 
considered the role of raw material costs in the decline of CSP V prices581, it failed to clarify to what 
extent declines in CSPV prices were attributed to declining raw material costs , as opposed to price 
competition from imports.582 Moreover, China contends that the USITC failed to address the evidence 
 
do not consider that the fact that only a few domestic producers reported "changes in government incentive 
programs" as " an extremely important cause of injury" demonstrates that the USITC was required to treat this 
factor as an "other" cause of injury  (which pertains to the domestic industry overall) . At any rate, the USITC 
analysed whether the changes in government incentive programme s caused injury to the domestic industry 
and found  that this factor  did not explain the condition of the domestic industry . In our view, the fact that 
certain interested parties expressed contrary views does not render the USITC 's determination unreas oned and 
inadequate . 
576 Relatedly, we note that China also refers to the expiry of government incentive programme s that 
directly benefitted domestic producers of CSPV products when arguing that the USITC failed to properly 
analyse whether changes in governm ent incentive programme s adversely impacted prices of CSPV products . 
(China 's second written submission, para. 188). However, China fails to explain why the expiry of such 
programmes  would have resulted in the decline of domestic prices or otherwise amounted to a separate cause 
of injury to the domestic industry. As a result, we do not consider that China has established that the USITC 
was required to assess these programme s in greate r detail.  
577 USITC final report , (Exhibit  CHN-2), p. 61. 
578 USITC final report , (Exhibit  CHN-2), p. 64. 
579 USITC final report , (Exhibit  CHN-2), p. 64.  
580 China 's first written submission, paras. 206 -207; second written submission, heading to 
section  III(C)(2 ). 
581 China 's first written submission, para. 205. 
582 China 's first written submission, para. 206. In this context , China argues that the USITC disregarded 
record evidence demonstrating  that ( a) the high level of transparency in the market for solar energy impeded 
the domestic producers from increasing their profit; ( b) the whole market worked under the assumption that 
declines in raw material costs and enhanced efficiencies would allow for greate r price competitiveness of solar 
energy; ( c) seven domestic producers reported the decrease in raw material costs as a factor of injury, with 
two of them ranking this factor as "being an extremely important cause of injury"; and ( d) price declines for 
CSPV  products and raw material followed the same trends with very similar magnitudes . China also argues that 
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  regarding the in creased production efficiencies that also contributed to decreases in CSPV prices.583  
7.262.   For its part, the United  States  submits that China neither provides support for its 
presumption that declining raw material prices cause  the price of a finished product to decrease, nor 
points to anything to detract from the USITC's  determination.584 For the United  States , even if 
declining costs resulted in the domestic industry's  ability to lower prices, that still would not show 
that this factor caused injury to  the domestic industry.585 According to the United  States , this is 
because declining input costs would normally allow a firm to (a) increase profit margins, or (b) lower 
prices and sell more product.586 In the present case, according to the United  States , the domestic 
industry was not able to benefit from declining costs in either way because of the increased 
low-priced imports.587 
7.4.3.3.2.3   Evaluation  of the Panel   
7.263.   As described above, China advances a series of arguments contending that the USITC failed 
to appropriatel y analyse the impact of declining raw material costs and increased production 
efficiencies on prices for CSPV products.588 China further contends that the USITC disregarded record 
evidence demonstrating that declining raw material costs and increased produc tion efficiencies 
should have led to declines in prices for domestic CSPV products.589 Yet, in our view, these 
arguments ultimately fail to explain why declining raw material costs and increased production 
efficiencies would have caused injury to the domestic industry, even if they did contribute to 
declining prices of CSPV products.590 Indeed, China itself concedes that it is not arguing "that falling 
 
the econometric report submitted by respondents during the investigation demonstrates that declines in raw 
material costs contributed to price decline of CSPV products . (China 's response to Panel question No. 19 of the 
first set , paras.  150-151; comments on the United  States ' response to Panel question No. 20 of the first set,  
paras.  121-122 and 126;  response to Panel question No. 18 of the second set , paras. 212-213; and second 
written submission, paras.  195-199).  
In addition to these arguments, China contends that the USITC attributed  the high costs of goods sold  
to net sales value ratio to increased imports, without prior consideration of  alternative p lausible explanations: 
(a) domestic producers were obliged to pass on any decrease of raw material costs to purchasers in order to 
remain competitive with foreign producers that enjoyed greater economies of scale ; and (b) domestic 
producers were facing hig h factory costs at the beginning of the POI, and therefore could not enjoy higher 
profitability margins caused by any decrease raw material costs.  (China's response to Panel question No. 47 of 
the third set, paras. 112 -118). 
583 China 's first written submission, para. 208; second written submission, para. 199; and comments on 
the United  States'  response to Panel question No. 20 of the first set , paras.  125-127. In particular, China 
claims that the USITC should have assessed the possibilit y that "[d]ifferent  producers might have exploited 
increased efficiencies to a different extent, depending on their market focus and production system, resulting 
in competitive disadvantages ". (China's second written submission, para. 199).  
584 United  States ' first written submission, para. 206. 
585 United  States'  first written submission, para. 207. 
586 United  States'  first written submission, para. 207. 
587 United  States'  first written submission, para. 207; second written submission, para.  151. 
588 See section 7.4.3.3.2.2  above.  
589 See section 7.4.3.3.2.2  above.  
590 Even if China were correct that, because of the underlying market dynamic  the domestic industry 
reduced its prices in line with declines in raw material costs and increased production  efficiencies, such price 
decline should have helped the domestic industry to increase cost -competitiveness of domestic CSPV products.  
China has not demonstrated that this type of price decline would have caused injury to the domestic industry. 
(China 's comments on the United  States'  response to Panel question No. 20 of the first set , paras.  121 and 
126; response to Panel question No. 18 of the second set , para. 212; and second written submission, 
paras.  196-197 and 199).  
In a similar vein, the econometric study to which China refers does not demonstrate that the domestic 
industry was injured as a result of declining raw material costs and increased production efficiencies. 
(China's  response to Panel question No. 19 of the first set, para.  151; response to P anel question No. 18 of the 
second set, para.  213).  
With respect to China 's argument that seven domestic producers reported the decrease in raw material 
costs was a factor of injury, we note that, contrary to China 's submission, seven domestic producers re ported 
"[c]hange  in raw material costs" was a factor of injury, rather than "decrease in raw material costs". 
(China 's comments on the United  States ' response to Panel question No. 20 of the first set , para. 122; second 
written submission, para. 197 (referring to USITC final staff report , (Exhibit  CHN-3), table F-2) (emphasis 
added) ). In our view, " [c]hange in raw material costs" is ambiguous as it would encompass both increases and 
decreases in raw material costs.  In addition, only two domestic producers reported " [c]hange in raw material 
costs" as " being an extremely important cause of injury ". (USITC final staff report , (Exhibit  CHN-3), table F-2). 
As such, we do not consider that this evidence demonstrates that declining raw material costs caused injury to 
the domestic industry.  WT/DS562/ R 
 
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  costs per se are injurious, but rather that falling costs explain the declining prices that the USITC 
sought to blame on increasing imports".591  
7.264.   In this context, we recall that the non -attribut ion obligation in Article  4.2(b)  of 
the Agreement on Safeguards pertains to "other" factors that are causing injury  to the domestic 
industry at the same time as increased imports.592 Since China does not argue, let alone establish, 
that declining raw material costs and increased production efficiencies were themselves "other" 
causes of injury to the domestic industry, China has failed to prima  facie establish that the USITC 
was requir ed to treat declining raw material costs and increased production efficiencies as "other " 
factors causing injury. As a consequence, we reject China's claims that the USITC improperly 
dismissed these factors, and that the USITC failed to ensure that the inj ury caused by these factors 
was not attributed to increased imports.593 
7.265.   In making this finding, we further observe that the USITC found that "[d]espite declining 
polysilicon costs, which would help make CSPV products more cost -competitive with other sources  
of electricity, declines in the domestic industry's  net sales values kept pace with declines in its costs, 
leading to substantial losses throughout the POI".594 As such, we agree with the 
United  States ' observation that the USITC effectively treated declin ing costs as a positive factor that 
should have improved the situation of the domestic industry  (which ultimately did not occur because 
of declining net sales values) .595 In our view, this approach was not inappropriate , as declining costs 
would ordinarily be expected to help an industry either to increase cost -competitiveness of its 
 
591 China 's response to Panel question No. 47 of the third set , para. 108. Moreover, in response to the 
Panel 's question concerning whether record evidence directly demonstrated that the d omestic industry was 
injured as a result of declining raw material costs and increased production efficiencies, China fails to refer to 
any record evidence demonstrating that declining costs caused injury  to the domestic industry. 
(China 's response to Pane l question No. 47 of the third set , paras.  110-118). In addition, we note that China 
acknowledges that "[t]he increasing cost competitiveness depends on the net effect of falling costs in light of 
those other factors affecting price" and that "there is no general rule that decreases in raw material costs are 
themselves necessarily a benefit or a 'positive factor '. The key issue is the relationship of costs and prices, and 
how they translate into increased or decreased profit margins ". (China 's response to Panel question No. 18 of 
the second set , paras.  210-211 (emphasis  added)).  
In this context, we are  not persuaded by China's argument that the USITC attributed  the high cost of 
goods sold to net sales value ratio to increased imports , without  considering other factors. While China  claims 
that "producers with larger capacities enjoyed greater economies of scale and could leverage from raw material 
reductions to a greater extent"  and that " the domestic industry faced very elevated factory costs which it 
needed to reduce ", we do not consider that these arguments  establish that the declining raw material costs 
themselves were a cause of injury to the domestic industry. (China's response to Panel question No. 47 of the 
third set, paras. 110 -114). We further recall that the USITC found that increased imports prevented the 
domestic industry from increasing its capacity to achieve economies of scale, which it linked to "the hundreds 
of millions of dollars in net and operating losses throughout the POI" . Consistent with these losses, the USITC 
found that "a significant number of domestic producers were unable to generate adequate capital to finance 
the modernization of their domestic plants and equipment, and a significant number of them were unable to 
maintain existing research and development expenditure levels".  (USITC final report, (Exhibit  CHN-2), p.  47). 
In light of these findings (which China has not established were inappropriate), we do not consider that the 
USITC was required to assess, as "other " causes of injury, the domestic industry's lack of scale or higher cost 
structure. For the same reasons, we are not persuaded by China's claim that the USITC erred by not assessing 
the possibility that "[d]ifferent producers might have exploited increased  efficiencies to a different extent, 
depending on their market focus and production system, resulting in competitive disadvantages". 
(China's  second written submission, para. 199).  
592 As a result, we disagree with China that, under Article  4.2(b), second se ntence, the USITC was 
required to "quantitatively or qualitatively address and distinguish price changes associated with changing raw 
material cost and price changes occurring for other reasons". (China 's first written submission, para. 206. See 
also China 's second written submission, para. 194).  
593 In this respect, we recall that China, in the context of its causation claim, similarly advances that 
price declines occurred because of decreasing costs, increasing efficiency, and technological innovation, which 
benefitted the CSPV industry as a whole . (China 's first written submission, paras.  151-153; second written 
submission, para. 104). While we reco gnize  that China 's argument is conceptually relevant in the context of its 
causation claim, we fail to see the relevance of such argument in the context of the non -attribution claim 
considering that Article  4.2(b), second sentence, only requires determinin g whether "other " factors are causing 
injury  to the domestic industry .  
594 USITC final report , (Exhibit  CHN-2), p. 64. 
595 See, e.g. United  States'  first written submission, para. 207; second written submission, 
para. 151; response to Panel question No. 20 of the first set , para. 52; response to Panel question No. 18 of 
the second set , para. 42; and comments on China's response to Panel question No. 47 of the third set , 
para. 63.  WT/DS562/ R 
 
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  product (by allowing to lower the price of the finished product, while maintaining the same level of 
profit margin)  or to increase its profit margin, rather than impair its posi tion. 
7.4.3.3.3   The need  to attain  "grid parity " with other  sources  of electricity   
7.4.3.3.3.1   Factual  background   
7.266.   During the safeguard investigation, respondents argued that the need to attain "grid parity" 
with other sources of electricity – i.e. the point at which the cost of energy generated from renewable 
sources equals the cost from conventional energy sources on  the grid – also explained "any declines 
in prices of CSPV products and the condition of the domestic industry" .596 
7.267.   The USITC rejected respondents'  argument based on the following explanation:  
A plurality of importers and purchasers reported that changes in  the price of 
conventional energy have decreased the price of solar -generated electricity. In addition, 
firms reporting that changes in the price of U.S. conventional energy have increased 
demand cited a positive relationship between electricity rates and the demand for 
[photovoltaic ] systems and modules. While conventional energy prices may account for 
some of the decrease in the prices of CSPV products in some years, they do not explain 
the consistent observed price declines over the 2012 -2016 period. The  price of natural 
gas for electricity generation increased in the latter half of 2012 and 2013, peaked in 
February 2014, and declined to its lowest level in March 2016 after which it rose and is 
projected to increase. The domestic prices of CSPV products, on the other hand, 
decreased throughout the POI.597 
7.4.3.3.3.2   Main  arguments  of the parties  
7.268.   China argues that the USITC improperly dismissed  the need to achieve price competitiveness 
on the electrical grid (i.e . "grid parity")  and failed to satisfy the non -attributio n requirement in 
respect of the injury caused by this factor.598 First, China argues that the USITC's  statement that 
conventional energy prices "may account for some of the decrease" "does not sufficiently explain 
the nature and extent of the harm caused by  competing energy sources".599 China argues that the 
USITC should have conducted a deeper analysis on the impact of any desire of electricity providers 
to achieve grid parity on prices for solar energy .600 Second, China claims that the USITC considered 
price trends of natural gas only, without addressing respondents'  argument that other energy 
sources also exerted downward pressure on solar energy prices.601 Third, China submits that the 
USITC's  conclusion concerning the lack of correlation bet ween natural gas and CSPV product prices 
"is grossly inadequate considering the data presented to the USITC during its investigation"602 and 
fails to account for other evidence concerning the historical relationship between price trends .603 
Fourth, China sub mits that the USITC failed to address the econometric report that respondents 
presented, which provided a quantitative analysis of the impact of the need for solar energy to attain 
"grid parity" on the domestic industry.604 Finally, China contends that the USITC did not address the 
 
596 USITC final report , (Exhibit  CHN-2), pp. 61 and 64.  
597 USITC final report , (Exhibit  CHN-2), pp. 64-65. (fns omitted ) 
598 China 's first written submission, heading to section  III(B)(2)(b)(iii ); second written submission, 
heading to section  III(C)(3).  
599 China 's first written submission, para. 211. See also China 's second written submis sion, para. 200. 
600 China’s response to Panel question No. 51 of the third set, paras. 129 -130. 
601 China 's first written submission, para. 212; second written submission, para. 206. 
602 China 's first written submission, para. 213. 
603 China 's first written submission, paras.  213-214; second written submission, 
paras.  201-204; comments on the United  States'  response to Panel question No. 21 of the first set , 
paras.  150-153. In particular, China submits that the USITC ignored (a) the constant gap  between prices of 
natural gas and solar energy, which created " enormous pressure on CSPV products to become more efficient, 
less costly to produce, and less expensive for the consumer to buy"; ( b) its own admissions that conventional 
energy prices acted a s a target price for renewable energy to become competitive; and ( c) that the price of 
natural gas fell significantly over the POI regardless of fluctuations in certain years.  
604 China 's first written submission, para. 215. See also China 's second written s ubmission, 
paras.  209-217. WT/DS562/ R 
 
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  contrasting evidence showing that multiple domestic producers reported "grid parity with natural 
gas" as a key factor of injury.605  
7.269.   For its part, the United  States  submits that the USITC properly demonstrated that the need 
to atta in "grid parity" was not responsible for the decrease in CSPV prices, and did not cause injury 
to the domestic industry.606 First, the United  States  argues that, contrary to China's  contention , the 
use of word "may" in the USITC's  statement that conventional energy prices "may account for some 
of the decrease" signals that the USITC was address ing a hypothetical possibility . However,  upon 
evaluation, the USITC definitively found that convention al energy prices did not explain the 
consistent price declines.607 Second, the United  States  contends that the USITC did not err in  
focusing on the prices of natural gas, because those prices generally set the target price that CSPV 
and other renewable ener gy systems sought to meet.608 Third, the United  States  submits that 
China's  arguments fail to demonstrate any inadequacy with the USITC's  finding concerning the lack 
of correlation between natural gas prices and domestic CSPV prices.609 Fourth, the United  States  
maintains that the USITC addressed the relevant points made by the econometric report, but rather 
than relying on respondents'  theoretical approach, it based its determination on the actual facts 
gathered in the extensive record.610 Finally, the United  States  submits that the objective of attaining 
"grid parity" would not explain producers'  acceptance of continual losses during the POI.611 
7.4.3.3.3.3   Evaluation  of the Panel   
7.270.   Our analysis proceeds by first considering the USITC's  factual findin gs concerning the 
conceptual nature of "grid parity". We then turn to China's  specific claim that the USITC's  rejection 
of the respondents'  arguments concerning the need to attain "grid parity" was inconsistent with the 
non-attribution requirement in Article 4.2(b), second sentence, of the  Agreement on Safeguards. 
We proceed in this manner to facilitate our analysis of the parties'  disagreement concerning this 
issue.  
7.271.   As the USITC explained, electricity providers using renewable energy sources seek to achiev e 
"grid parity" with other sources of electricity.612 Although "grid parity" is a relevant condition of 
competition in the market affecting demand for CSPV products613, we agree with the United  States  
that it is not a monolithic concept.614 
7.272.   In this regard, we  note that record evidence relied upon by the USITC  suggests that the 
average prices of conventional energy sources did not determine a single absolute target price for 
CSPV products. As the USITC found , "grid parity" prices varied by region, time of day, and availability 
of other electricity sources; and even varied widely for a given energy source.615 The same 
 
605 China 's comments on the United  States'  response to Panel question No. 21 of the first set , 
para. 137; second written submission, para. 205. 
606 United  States'  first written submission, para. 208. 
607 United  States'  first written submission, para. 209. 
608 United  States'  first written submission, para. 210.  
609 United  States'  first written submission, para. 211. In its view, the purported "gap" between price 
trends of solar energy and natural gas relied upon by China is based upon the false premise that there is one 
single levelized cost of energy that solar generators seek to meet. The United  States  further submits that the 
USITC, however, explained that "grid parity" was not a monolithic concept, as prices of convention al energy 
varied by region, time of the day, and availability of other electricity sources. Thus, according to the 
United  States , it is not the case that the average prices of other energy sources determine the price for CSPV 
products.  
610 United  States'  first written submission, paras.  213-215. According to the United  States , 
the Agreement  on Safeguards does not require quantification to analyse causation.  
611 United  States'  first written submission, para. 212. 
612 USITC final report , (Exhibit  CHN-2), p. 25; USITC final staff report , (Exhibit  CHN-3), p. V-37. "Grid 
parity" is based on the levelized cost of electricity (LCOE ) which during peak periods of demand is set by 
natural gas generated electricity. ( USITC final report , (Exhibit  CHN-2), fn 378; USITC final staff report , 
(Exhibit  CHN-3), pp. V-37-V-38). LCOE represents the per -kilowatt hour cost of building and operating a 
generating plant over an assumed financial life. ( USITC final staff report , (Exhibit  CHN-3), p. V-37). 
613 USITC final report , (Exhibi t CHN-2), pp. 25-26. 
614 See, e.g. United  States'  first written submission, para. 211; and response to Panel question No. 21 of 
the first set , para. 57. 
615 USITC final report , (Exhibit  CHN-2), pp. 25-26; USITC final staff report , (Exhibit  CHN-3), p. V-38. In 
the safeguard investigation, one of the respondents ( Solar Energy Industries Association ) also submitted 
evidence suggesting that the "grid parity" was not a monolithic imperative. ( Econometric report , 
(Exhibit  CHN-19), pp. 12-13). WT/DS562/ R 
 
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  understanding can be discerned in the USITC's  finding that "during periods of peak electricity 
demand, even generators with somewhat higher costs ma y be able to sell electricity into the 
transmission or distribution grid".616  
7.273.   In addition, record evidence indicates that the need to attain "grid parity" affected individual 
CSPV market segments (i.e . the commercial, residential, and utility segments)  differently. As 
indicated above, "grid parity" concerns the competition between energy sources on the grid . 
However, it is only the utility segment that competes directly with other types of electricity b eing 
sold to the grid617; the residential and commercial segments generate electricity for use in individual 
homes and commercial, and industrial, government buildings and sites, respectively, and only feed 
energy back into the grid when it is not consumed onsite.618 In this context, solar electricity from 
the utility segment appears to compete more directly against conventional electricity sold to the 
grid. This understanding is generally consistent with the USITC's  factual findings that (a)  "[f]or peak 
periods, natural -gas generated electricity generally sets the [levelized cost of electricity  (LCOE) ] that 
CSPV and other renewable energy systems seek to meet, especially for utility sales "619; and 
(b) "[t]he LCOE for a new combined -cycle natural gas -fired powe r plant … has set the benchmark 
for low -cost energy within the utility segment  of the market".620 
7.274.   Record evidence also suggests that "[s]olar energy is … essentially cost -competitive with 
other forms of electricity generation, which has supported robust gro wth in utility installations".621 
In particular, while the LCOE for a new combined -cycle natural gas -fired power plant was at about 
4-5 cents per kW/hour, the LCOE for solar photovoltaic systems (incorporating tax credits)  was just 
over 5 cents per kW/hour, and was lower in many locations.622 By contrast, because the residential 
and commercial segments do not benefit from the same efficiencies and economies of scale as in 
the utility segment, they have higher LCOE.623 
7.275.   Finally, we observe that record evidence indicates that "grid parity" functions in combination 
with, or through, various market trends and instruments. For example,  record evidence 
demonstrates that government incentive programmes were aimed at offsetting the cost of 
generating solar energ y, thereby stimulating demand for renewable energy and assisting developers 
of solar power to become more competitive with conventional energy sources.624 
7.276.   With these facts in mind, we now turn to China's  specific claim against the USITC's  rejection 
of respo ndents'  arguments concerning the impact on CSPV prices of the need for solar energy to 
attain "grid parity" with conventional energy sources.  
7.277.   We begin by noting that the USITC focused its determination concerning the need to attain 
"grid parity" with conv entional energy sources on natural gas price trends. It did so based on  record 
evidence demonstrating that, for peak demand periods, natural gas generated electricity generally 
sets the LCOE  that CSPV systems must seek to meet.625 Since China does not dispute the 
USITC's  use of natural gas prices as a proxy for assessing "grid parity" as an alleged "other" factor 
 
616 USITC final report , (Exhibit  CHN-2), p. 26. 
617 USITC final staff report , (Exhibit  CHN-3), p. I-27. 
618 According to the USITC final staff report , residential systems are installed at individual homes, and 
the electricity generated by the system is used for power therein. Homeowners use grid energy when solar 
electricity generation is not sufficient to meet demand and often feed energy back into the grid when solar 
electricity generation exceeds home use. Non -residential systems are installed at commercial, industr ial, 
government, and similar buildings and sites. They function similar to residential installations, providing 
electricity to meet onsite need, pulling additional electricity from the grid when needed, and feeding excess 
electricity back into the grid whe n it is not needed. ( USITC final staff report , (Exhibit  CHN-3), pp. I-25-I-26). 
619 USITC final report , (Exhibit  CHN-2), p. 26; USITC final staff report , (Exhibit  CHN-3), p. V-38. 
(emphasis  added)  
620 USITC final report , (Exhibit  CHN-2), p. 109. (emphasis  added) 
621 USITC final report , (Exhibit  CHN-2), p. 110.  
622 USITC final report , (Exhibit  CHN-2), pp. 109-110. 
623 USITC final report , (Exhibit  CHN-2), p. 110. 
624 USITC final report , (Exhibit  CHN-2), p. 62. The USITC also found that incentive programme s made 
solar CSPV products more cost -competitive with other sources of electricity. ( USITC final report , 
(Exhibit  CHN-2), p. 63).  
625 USITC final report , (Exhibit  CHN-2), fn 378; USITC final staff report , (Exhibit  CHN-3), p. V-38. WT/DS562/ R 
 
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  of injury626, our analysis focuses on whether China has established that the USITC's  assessment of 
the impact of natural gas pri ces on CSPV products was inappropriate .627  
7.278.   As we see it, the USITC rejected the need to attain "grid parity" as an "other" factor of injury 
primarily because prices of natural gas did not correlate with prices of CSPV products during the 
POI.628 In this regard, we note that prices of natural gas increased in the latter half of 2012 and 
throughout 2013, peaked in February 2014, and then declined to their lowest level in March 2016, 
after which they rose and were projected to increase.629 By contras t, prices for CSPV products 
declined steeply in 2012, then began to increase through the fourth quarter of 2013, and continued 
to increase through 2014. By the first quarter of 2016 prices of CSPV products began to fall.630 In our 
view and in line with the United  States ' position, the lack of correlation between price trends of 
natural gas and CSPV products casts reasonable doubt as to whether the prices of natural gas directly 
exerted downward price pressure on CSPV products during the POI. Based on this ev idence, we do 
not consider that it was inappropriate  for the USITC to find that the need for solar energy to attain 
"grid parity" with conventional energy prices did not explain the consistent observed price declines 
during the POI, and, on this basis, rej ect such need to attain "grid parity" as an "other" factor of 
injury.  
7.279.   While China advances that the USITC's  analysis of need to attain "grid parity" was 
inadequate, we do not consider that China's  arguments withstand scrutiny.  
7.280.   In particular, China argues  that, although the USITC acknowledged that "conventional 
energy prices may account for some of the decrease in the prices of CSPV products in some years", 
it failed to "sufficiently explain the nature and extent of the harm caused by competing energy 
sources".631 While China views specific language used by the USITC in isolation, we consider that 
the remainder of the relevant paragraph  in the USITC's  final report  provides meaningful clarification 
of its finding :  
While conventional energy prices may account  for some of the decrease in the prices of 
CSPV products in some years, they do not explain the consistent observed price declines 
over the 2012 -2016 period. The price of natural gas for electricity generation increased 
in the latter half of 2012 and 2013,  peaked in February 2014, and declined to its lowest 
level in March 2016 after which it rose and is projected to increase. The domestic prices 
of CSPV products, on the other hand, decreased throughout the POI.632 
7.281.   Viewed in this context, we are not persuaded  by China's  argument that the 
USITC's  observation that "conventional energy prices may account for some of the decrease in the 
prices of CSPV products in some years" amounts to an acknowledg ement  of the injurious effect on 
the domestic industry of the need  for solar energy to attain "grid parity" with conventional energy 
sources. To the contrary , the USITC found that the need to attain "grid parity" was not a cause of 
injury because conventional energy prices – specifically for natural gas – did "not explain the 
consistent observed price declines over the 2012 -2016 period".633  
7.282.   Further, we disagree with China that the USITC's  finding  of a lack of correlation between 
price trends of natural gas and CSPV products (a)  conflicted with its own admissions tha t 
 
626 "China does not dispute the finding of using gas natural prices to assess the grid parity factor". 
(China 's response to Panel question No. 51 of the third set , para. 129).  
627 Contrary to China 's arguments, we do not cons ider that the fact that the USITC did not explicitly 
address respondents ' arguments that other energy sources also exerted downward pressure on solar energy 
prices demonstrates that the USITC 's determination was inappropriate . (China 's first written submis sion, 
para. 212; second written submission, para. 206). Because record evidence demonstrates that natural gas 
generated electricity generally sets the LCOE during peak periods of demand, we do not consider that it was 
inappropriate for the USITC to focus i ts analysis on natural gas prices.  
628 "[Conventional energy prices] do not explain the consistent observed price declines over the 
2012-2016 period". ( USITC final report , (Exhibit  CHN-2), p. 64). 
629 USITC final report , (Exhibit  CHN-2), pp. 64-65. 
630 USITC final report , (Exhibit  CHN-2), p. 46. 
631 China 's first written submission, para. 211. See also China 's second written submission, para. 200.  
632 USITC final report , (Exhibit  CHN-2), pp. 64-65. (fn omitted)  
633 USITC final report , (Exhibit  CHN-2), p. 64. The USITC further referred in support of this finding to 
the lack of correlation between price trends of natural gas and CSPV products. ( USITC final report , 
(Exhibit  CHN-2), pp. 64-65). WT/DS562/ R 
 
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  conventional energy prices acted as a target price for renewable energy to become competitive; 
(b) ignored the constant gap between prices of solar energy and natural gas;  and (c)  ignored that 
prices of natural gas significantly fell during the POI , regardless of fluctuations in certain years.634 
In this regard, we agree with the United  States  that China's  arguments are based on an incorrect 
factual premise that the need to attain "grid parity" with conventional energy sources was a 
monolithic concept. As described above, record evidence  suggests that there was no one single 
absolute target price set by natural gas that CSPV producers sought to meet. As such, we do not 
consider that the mere existence of a price gap between natural gas and solar energy nece ssarily 
demonstrates that natural gas exerted downward price pressure on CSPV products. Moreover, the 
fact that prices of CSPV products stabilized between 2013 -2015, irrespective of the price gap with 
natural gas during the same period, casts reasonable do ubt as to whether natural gas exerted 
downward price pressure on prices of CSPV products. Furthermore, contrary to China's  argument, 
we consider that , in finding a lack of correlation between price trends of natural gas and 
CSPV  products, the USITC's  analy sis also accounted for the fact that natural gas prices fell during 
the POI.  
7.283.   Relatedly, we do not agree with China that the USITC was required to assess the constant 
price gap between natural gas and solar energy that existed prior to the POI. The non -attribution 
requirement in Article  4.2(b)  of the  Agreement on Safeguards calls for an examination of whether 
"factors other than increased imports are causing injury to the domestic industry at the same 
time".635 Since the USITC made its serious injury and cau sation determinations based on 
developments that generally occurred during the 2012 -2016 POI, we do not agree with China that 
it was inappropriate  for the USITC to focus its analysis on the relationship between prices of natural 
gas and CSPV products over the same period, rather than on the historical price gap.   
7.284.   China also contends that the USITC failed to address the econometric report submitted by 
respondents, which allegedly provided quantitative analysis of, among other things, the impact of 
"grid pari ty" on prices of CSPV products.636 As an initial matter, we note that the Agreement on 
Safeguards does not require that the competent authorities of a Member  address explicitly in their 
report every argument and element of evidence raised by interested part ies, so long as their 
conclusions on the relevant issues are supported by reasoned and adequate explanation s. The USITC 
explicitly recognized and addressed respondents'  claim that the need to attain "grid parity" led to 
price decline of CSPV products. This  is precisely the point that was made in the econometric report.637 
Having addressed the issue raised by respondents on the basis of the record evidence noted above, 
we do not consider that the USITC was required to explicitly address the quantitative "esti mation 
approach" set forth in the respondents'  econometric report.  
7.285.   Finally, China argues that the USITC failed to address the questionnaire evidence indicating 
that multiple domestic producers reported "grid parity with natural gas" as a factor causing in jury.638 
In this regard, we note that out of the 16 domestic producers that provided questionnaire responses 
to the USITC639, only 5 domestic producers reported "grid parity with natural gas" as a factor causing 
injury:  4 of them ranked the importance of this factor as 1 out of 5 (the lowest degree of 
importance);  and 1 domestic producer ranked it 4 out of  5 (the second highest degree of 
importance).640 We do not consider that the fact that only one domestic producer reporte d "grid 
parity with natural gas" as a relatively important factor causing injury demonstrates that the USITC 
was required to treat the need to attain "grid parity" as an "other" cause of injury (which pertains 
to the domestic industry overall). Moreover, C hina has not explained why the USITC should have 
preferred this evidence over other record evidence that supported its finding that conventional 
energy prices did not " explain the consistent observed price declines over the 2012 -2016 period".  
 
634 See section 7.4.3.3.3.2  above.  
635 Emphasis added . 
636 China 's first written submission, para. 215. See also China 's second written submission, 
paras.  209-217. 
637 Econometric report, (Exhibit  CHN-19), p. 31. 
638 China 's second written submission, para. 205; comments on the United  States'  response to Panel 
question No. 21 of the first set , para.  137; and comments on the United  States' response to Panel question 
No. 50 of the third set , para.  74. 
639 The USITC received questionnaire responses from 16 firms that are estimated to have accounted for 
all known US production of CSPV cells and 63.9 % of US production of CSPV modules in 2015. (USITC final 
report , (Exhibit  CHN-2), p. 9). 
640 USITC final staff report , (Exhibit  CHN-3), table F-2.  WT/DS562/ R 
 
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  7.286.   For the abov e reasons, we reject China's  claim that the USITC improperly dismissed  the 
need to attain "grid parity" as an "other" cause of injury. As a consequence, we also reject 
China's  claim that the USITC failed to ensure that the injury caused by this factor was not attributed 
to increased imports.  
7.4.3.4   Overall  conclusion  regarding  the USITC's  assessment  of "other " factors  allegedly  
causing  injury  to the domestic  industry   
7.287.   For all of  the above reasons, we reject China's  claims that the USITC acted inconsistently 
with Article  4.2(b), second sentence, of the Agreement on Safeguards  by (i) improperly dismissing 
alleged missteps by the domestic industry, and ( ii) improperly dismissing non -import factors that 
allegedly caused prices of CSPV products to decline and failing to satisfy the non -attribution 
requirement in respect of the injury caused by these factors .  
7.288.   Since we reject China's  claim that the USITC improperly dismissed non -import factors that 
allegedly caused prices of CSPV products to decline as "other" factors causing injury to the domestic 
industry,  we also reject China's  claim that the USITC was required  to conduct a cumulative 
assessment of these factors.  
7.289.   Relatedly, since Chin a has not demonstrated that the USITC improperly dismissed "other" 
factors allegedly causing injury to the domestic industry, we do not consider it necessary to resolve 
the disagreements between the parties as to (i) the degree of discretion the competent authorities 
enjoy in discharging their non -attribution obligation under Article  4.2(b), second sentence, of 
the Agreement on Safeguards; and ( ii) whether the USITC's  application of the "substantial cause" 
test sufficiently discharged the United  States ' obligations under Article  4.2(b), second sentence, of 
the Agreement on Safeguards.  
7.5  The USITC's  treatment  of confidential  information   
7.5.1   Applicable  legal  requirements  of Article  3 of the Agreement  on Safeguards   
7.290.   Article  3 of the  Agreement on Safeguards ("Investigation")  provides for the following:   
1. A Member may apply a safeguard measure only following an investigation by the 
competent authorities of that Member pursuant to procedures previously established 
and made public in consonance with Article  X of GATT  1994. This investigation shall 
include reasonable public notice to all interested parties and public hearings or other 
appropriate means in which importers, exporters and other interested parties could 
present evidence and their views, including th e opportunity to respond to the 
presentations of other parties and to submit their views, inter alia , as to whether or not 
the application of a safeguard measure would be in the public interest. The competent 
authorities shall publish a report setting fort h their findings and reasoned conclusions 
reached on all pertinent issues of fact and law.  
2. Any information which is by nature confidential or which is provided on a confidential 
basis shall, upon cause being shown, be treated as such by the competent a uthorities. 
Such information shall not be disclosed without permission of the party submitting it. 
Parties providing confidential information may be requested to furnish non -confidential 
summaries thereof or, if such parties indicate that such information cannot be 
summarized, the reasons why a summary cannot be provided. However, if the 
competent authorities find that a request for confidentiality is not warranted and if the 
party concerned is either unwilling to make the information public or to authorize  its 
disclosure in generalized or summary form, the authorities may disregard such 
information unless it can be demonstrated to their satisfaction from appropriate sources 
that the information is correct.  
7.291.   Accordingly, Article  3 establishes certain procedur al rules that must be followed before 
applying a safeguard measure. Specifically, Article  3.1, first sentence,  establishes that a Member 
may only apply a safeguard measure  following an investigation conducted by the competent 
authorities  of that Member. Th at investigation must include , according to Article  3.1, second 
sentence,  "reasonable public notice to all interested parties and public hearings or other appropriate WT/DS562/ R 
 
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  means in which importers, exporters and other interested parties could present evidence a nd their 
views".  Moreover , Article  3.1, third sentence,  requires the competent authorities to publish a report 
that sets forth "findings and reasoned conclusions reached on all pertinent issues of fact and law".  
7.292.   Article  3.2 mandates the protection of confidential information received by the competent 
authorities during the investigation. Article  3.2, third sentence,  also permits the  competent 
authorities  to request non -confidential summaries from the parties providing con fidential 
information.  
7.5.2   Whether  the USITC  failed  to provide  sufficient  non-confidential  summaries  of 
confidential  information  to allow  for interested  parties  to present  a meaningful  defence   
7.5.2.1   Introduction  
7.293.   China contends that the USITC  failed to provide sufficient non -confidential summar ies of 
confidential information to allow for interested parties to present a meaningful defence , and 
therefore acted inconsistently with Article  3 of the  Agreement on Safeguards . In this regard, China 
argues that both the procedure followed by the USITC in providing non -confidential summaries of 
confidential information to interested parties , and the actual content of the non -confidential 
summaries in the USITC final report and U SITC final staff report were inconsistent with Article  3 of 
the Agreement on Safeguards.641  
7.294.   For its part, the United  States  argues that China bases its claim on an incorrect 
understanding of relevant obligations under Article  3 of the  Agreement on Safeguar ds.642 In addition, 
the United  States  submits that the USITC went beyond the obligations under Articles  3.1 and 3.2 
and provided interested parties with ample opportunity to present their evidence and views .643  
7.295.   Our analysis in the sections  below first addre sses whether China has demonstrated that the 
procedure followed by the USITC in providing non -confidential summaries of confidential information 
to interested parties was inconsistent with Article  3 of the  Agreement on Safeguards 
(section  7.5.2.2 ). We then address whether China has demonstrated that the USITC, in violation of 
Article  3 of the  Agreement on Safeguards, failed to provide sufficient non -confidential summaries of 
confidential information in its final report and final staff report  (section  7.5.2.3 ).  
7.5.2.2   The procedure  followe d by the USITC  in providing  non-confidential  summaries  of 
confidential  information  to interested  parties  
7.5.2.2.1   Factual  background  
7.296.   As envisaged under US law, the USITC made available all confidential information contained 
in the USITC prehearing and final report s and in written submissions of interested parties  to 
authorized counsel under an administrative protective order (APO). Access to the APO is limit ed to 
attorneys who do not participate in competitive decision -making and who agree to be bound by the 
USITC 's rules, forbidding disclosure of such information outside of the proceeding in which it is 
submitted.644 When requested by the USITC, counsel recei ving confidential information under an 
APO are required to "return or destroy all copies of materials released to authorized applicants 
pursuant to this section  and all other materials containing confidential business information 
[(CBI)]".645 
7.297.   During the saf eguard investigation, the USITC issued prehearing injury and remedy reports 
in both confidential and non -confidential versions. The confidential versions were issued to counsel 
under the APO. Thereafter, the non -confidential version of the prehearing injur y report was publicly 
issued one business day  before the deadline for submitting pre hearing briefs to the USITC. The 
 
641 China's  first written submission, para.  302, heading to section  III(D)(2)(a), and heading to 
section  III(D)(2)(b).  
642 See, e.g.  United  States'  first written submission, para. 297. 
643 United  States'  first written submission, para.  303. 
644 Application for disclosure of CBI under administrative protective order, (Exhibit  USA-7).  
645 19 C.F.R. § 206.17 , (Exhibit  USA-1), p. 4 . WT/DS562/ R 
 
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  non-confidential version of the prehearing remedy report was publicly issued two business days 
before the deadline for submitting pre hearin g briefs to the USITC.646  
7.298.   At the conclusion of its investigation, the USITC issued confidential version s of its final report 
and final staff report on 13  November  2017, and transmitted them to the President on the same 
day. The next day ( 14 November  2017), the USITC issued a notification indicating that 
"[a]ll authorized applicants shall return or destroy all copies of all CBI disclosed under protective 
order within 14 days after the completi on of this investigation ( e.g. after publication in the Federal  
Register  of the Commission 's determination ) and all other materials containing such CBI such as 
charts or notes based on such CBI ".647 The USITC issued the non -confidential version s of its final 
report and final staff report on 20  November  2017.648 This was also the deadline for parties to submit 
their comments on the USITC  final report and final staff report  to the Trade Policy Staff Committee  
(TPSC), which advises the President on whether to im pose any safeguard measure . 
7.5.2.2.2   Main  arguments  of the parties   
7.299.   China argues  that the USITC failed to comply with the requirements of Article  3 of 
the Agreement on Safeguards because it " provided non -confidential summaries to interested parties 
with such delay that the parties were not provided with an adequate opportunity to exercise their 
right to present a defence ".649  
7.300.   First, China submits that the USITC  provided non -confidential summaries  of its prehearing 
reports  to the interested parties with such de lay650 that they were deprived of an adequate 
opportunity to present a defence.651  
7.301.   Second , China submits that t he timing of the publication of the non -confidential version s of 
the USITC final report  and final staff  report652 effectively negated the interested parties'  right to 
present evidence and  views  before the TPSC.653 In China's view , the sequence of events surrounding 
the issuance of the confidential and non -confidential versions of the USITC final report  and final staff 
report , and the deadline for submitting comments to the TPSC, effectively resulted in the interested 
 
646 China 's first written submission, paras.  305-306; United  States'  first written submission, 
paras.  306-307. The USITC issued a confidential version of its prehearing injury report on 1 August 2017 and 
the non-confidential version on 4  August  2017; prehearing briefs  for the USITC injury hearing were due on 
8 August 2017. The USITC issued a confidential version of its prehearing remedy report on 11 September 2017 
and the non-confidential version on 22 September 2017; prehearing briefs for the USITC remedy hearing were  
due on 27 September 2017.  
647 Notification of final date for compliance with APO CBI requirements , (Exhibit  USA-9). 
648 China's first written submission, para. 307; United  States' first written submission, para. 308. 
649 China's  first written submission, para.  302.  
650 China submits that the non-confidential version s of the USITC prehearing injury and remedy reports 
were issued 3-10 days later than the confidential version , and only 1 -2 business day s prior to the deadline for 
prehearing briefs . (China's  first written submission, paras.  305-306).  
651 China's  second written submission, paras.  321 and 323;  response to Panel question No. 29 of the 
first set , para. 184; and response to Panel question No. 29 of the second set , para. 298. In this regard, China 
submits that the obligation to publish a non -confidential summary of the competent authorities ' report logically 
entails that the competent authorities are also required to publish non -confidential versio ns of intermediate 
documents , to the extent that they form part of their final report or are themselves documents in respect of 
which the interested parties have a right to present evidence and their views. (China 's second written 
submission, paras.  310, 3 13, and 316. See also China 's response to Panel question No. 30 of the first set , 
para. 188).  
652 China submits that the non -confidential version of the USITC final report and final staff report  was 
published (a ) a week later than the confidential version; a nd (b ) on the same date when the interested parties 
were required to submit their comments on these reports  to the TPSC. (China 's first written submission, 
paras.  307-308).  
653 China 's first written submission, paras.  307-308; second written submission, paras.  314, 321, and 
323; response to Panel question No. 29 of the first set, para.  185; and response to Panel question No. 29 of 
the second set, para.  298. In this regard, China submits that, if sufficient time is not provided to comment on 
the competent authorities'  report, interested parties'  right to "present evidence and their views" under 
Article  3.1 of the  Agreement on Safeguards would be rendered meaningless. China contends that its 
interpretation is further supported by Article  4.2(c), which requires that the competent authorities publish their 
report "promptly". (China's  response to Panel question No. 31 of the first set, paras.  192-193; comments on 
the United  States ' response to Panel question No. 31 of the first set, para.  217). WT/DS562/ R 
 
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  parties not being able to reliably refer to the USITC final report and final staff report  given the risk 
of referring to confidential information.654 
7.302.   Third,  China submits that "[t] he USITC exacerbated its unfairness" by requiring counsel for 
interested parties to destroy confidential information received  under the APO, including the 
confidential version s of the USITC final report  and final staff  report , befor e making  arguments  or 
comments  to the TPSC.655 For China, this requirement to destroy confidential information "effectively 
negated the ability of the interested parties to rely on information that could support their arguments 
that no measure was needed".656 
7.303.   In response, the United  States  submits that China's  claims are legally and factually incorrect.  
7.304.    According to the United  States , Article  3.1 of the  Agreement on Safeguards does not require 
the competent authorities to prepare prehearing reports. Therefore, there can be no obligation for 
the competent authorities to publish a non -confidential version of such documents, let alone to do 
so within a specific timeframe.657 For the United  States , the USITC went beyond the requirements 
prescribed in Article 3 by providing interested parties with prehearing injury and remedy reports .658 
7.305.   The United  States  further contends that, contrary to China's  view, Article  3 of the  Agreement 
on Safeguards does not require that the competent authorities provide interested  parties with an 
opportunity to comment on their report .659 As a result, the United  States  takes the view that  the 
publication of the USITC final report and final staff report  marked the end of the investigation, and  
that commenting on these reports  for the  purposes of the TPSC's  evaluation was a separate process 
not subject to the requirements of Article  3.1.660 In any event, the United  States  maintains that 
China has failed to demonstrate why and how the timing of the publication of the USITC final report 
and final staff report  interfered with the right of interested parties to properly present their "evidence 
and … views ".661 
7.306.   Finally, with respect to China 's argument concerning the termination of access to confidential 
information, the United  States  submits that Article  3 neither obligates the competent authorities to 
provide confidential information to interested parties, nor dictates when the competent authorities 
 
654 China's first written submission, para. 308.  
655 See, e.g. China's  first written submission, paras.  309-310; second written submission, 
para. 319; and response to Panel question No. 29 of the first set, para.  187. 
656 China's  first written submission, para.  310. 
657 United  States'  first written submission, paras.  309 and 311 ; response to Panel question No. 30 of the 
first set , para.  83; comments on China's response to Panel question No. 29 of the first set , para.  169; 
comments on China's response to Panel question N o. 30 of the first set, paras.  177-178; and second written 
submission, para.  191. More generally, the United  States submits that the  Agreement on Safeguards is not 
concerned with how the competent authorities reach their determinations in applying safeguar d measure. 
(United  States'  response to Panel question No. 30 of the first set , para. 84 (referring to Appellate  Body Report, 
US – Line Pipe, para.  158)).  
658 United  States ' first written submission, paras.  305-307 and 313;  response to Panel question No. 30 
of the first set, para.  85. 
659 United  States'  response to Panel question No. 31 of the first set, paras.  86-87; comments on 
China's  response to Panel question No. 31 of the first set, para.  182; and second written submission, 
para. 197. According to the United States , Article  3.1, second sentence, only requires that interested parties 
are afforded the right "to present evidence and their views" (a) prior to the publication of the final report , and 
(b) in response to the evidence and arguments provided by the parties  (rather that the competent authorities) . 
(United  States'  response to Panel question No. 31 of the first set , para. 87; comments on China's  response to 
Panel question No. 31 of the first set , para. 182).  Moreover, the United  States  argues the oblig ation under 
Article  4.2(c) to publish the final report "promptly" only concerns the right of interested parties to receive a 
detailed analysis from the competent authorities. ( United  States'  comments on China's  response to Panel 
question No. 31 of the firs t set, para. 183). 
660 United  States'  first written submission, para.  315; comments on China's response to Panel question 
No. 29 of the first set, para.  171. 
661 United  States'  first written submission, para.  317. In this regard, the United  States further submits 
that while the U SITC published the non -confidential versions of its final report and final staff report on the date 
for initial submissions to the TPSC, interested persons also had an opportunity to make rebuttal submissions 
and raise issues at the TPSC hearing. In additi on, the United  States notes that Members had the option of 
referring to the non -confidential version of the USITC report during consultations under Article  12.3 of 
the Agreement on Safeguards. (Ibid. para. 317).  WT/DS562/ R 
 
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  should grant or terminate such access.662 The United  States  further argues that China h as not 
demonstrated that the termination of access to confidential information negated the ability of the 
interested parties to defend their interests .663  
7.5.2.2.3   Evaluation  of the Panel  
7.307.   We agree with the United  States  that China's  claims concerning the procedure followed by 
the USITC in providing non -confidential summaries of confidential information to interested parties  
are premised on an incorrect interpretation of Article  3 of the  Agreement on Safeguards.  
7.308.   First, C hina's  claim concerning the timing of publication of the non -confidential versions of 
USITC prehearing injury and remedy reports is premised on an obligation for the competent 
authorities to provide such intermediate decisional documents to interested part ies. However, the  
Agreement on Safeguards does not contain any such obligation. While the third sentence of 
Article  3.1 envisages the publication of a report, that report need only contain " findings and reasoned 
conclusions reached  on all pertinent issues of fact and law ".664 There is no requirement to publish a 
report containing intermediate findings or conclusions. Nor does any other part of Article  3 address 
this issue. Because Article  3 does not require publication of intermediate decisional documents, w e 
reject China's claim  that the timing of the publication of the non -confidential versions of the 
USITC's  prehearing injury and remedy reports was inconsistent with  Article  3.665  
7.309.   Second, China's  claim concerning the timing of the publication of the non -confidential 
version s of USITC final  report  and final staff  report is premised on an obligation that the competent 
authorities provide interested parties with an opportunity to comment on their published report . 
Again, we do not consider that any such obligation exists. As China clarified, its claim is based on 
the second sentence of Article  3.1, which  provides that interested parties should have an opportunity 
to present "evidence" and "views".666 As an initial matter, we note that the structure of Article  3.1 
suggests that interested parties should be afforded these procedural rights before publication of the 
report envisaged in the third sentence of Article  3.1. However, even if this were not the ca se, 
Article  3.1, second sentence, requires that the competent authorities  hold public hearings " or" 
provide other appropriate means for interested parties to present evidence and views . The use of 
the disjunctive conjunction "or" signifies that when public hearings are held, as was the case in the 
USITC's safeguard investigation, there is no obligation to provide "other appropriate means" for 
interested parties to provide further  input.667 Accordingly, we reject China's  claim that the timing of 
the publication of the non -confidential version s of the USITC final report and final staff report  was 
inconsistent with Article  3. 
7.310.   Third, China's  claim concerning the  termination of access to confidential information  is 
similarly flawed a s it is premised on the existence of a requirement that the competent authorities 
must provide interested parties with a right to comment on the final report. However, as we have 
 
662 United  States'  first written submission, para. 316; second written submission, para.  203; and 
comments on China's response to Panel question No. 29 of the first set , para. 172. 
663 United  States'  first written submission, para. 317; comments on China's response to Panel question 
No. 29 of the first set, para. 173. In this context, the United  States submits that the USITC released the 
confidential versions of its final report and final staff report to the parties'  counsel one week before comments 
to the TPSC were due and thereafter requested to return  or destroy confidential information no later than 
14 days after the completion of this investigation. According to the United  States, interested parties who 
received confidential information under the APO had an opportunity to review the final report and final staff 
report and direct the TPSC to certain confidential information that they considered relevant. 
(United  States'  first written submission, paras.  317-318; comments on China's  response to Panel question 
No. 29 of the first set , paras.  173-174). The United  States  notes that SEIA in fact did so.  (United  States'  first 
written submission, fn  421 (referring to  SEIA's posthearing remedy brief, Appendix A, (Exhibit  USA-10), p. 17 
and fn 14)). 
664 Emphasis  added.  
665 We note  that our finding on this issue generally aligns with how previous panels have addressed 
similar claims. For example, in Ukraine  – Passenger  Cars, the panel found that the  Agreement  on Safeguards 
does not require the competent authorities to provide substantive  information to the interested parties in 
advance of a public hearing . (Panel Report, Ukraine  – Passenger  Cars, para. 7.423). Moreover, in US – Steel 
Safeguards , the panel found that Article  3 does not require the competent authorities to send to intereste d 
parties "draft findings" of their determination for comments prior to the publication of their report . (Panel 
Reports, US – Steel Safeguards , paras.  10.64 -10.65).  
666 China's response to Panel question No. 29 of the first  set, para. 185.  
667 We agree in thi s regard with the Panel Report, Ukraine – Passenger Cars , para. 7.422.  WT/DS562/ R 
 
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  just explained, no such obligation exists. We therefore reject China's  argume nt that the USITC acted 
inconsistently with Article  3 by requiring APO -authorized counsel to destroy or return confidential 
information.  
7.311.   Based on the above, we reject China's  claim that the procedure followed by the USITC in 
providing non -confidential summ aries of confidential information to interested parties was 
inconsistent with Article  3 of the  Agreement on Safeguards.  
7.5.2.3   The substance  of non-confidential  summar ies of confidential  information  in the 
USITC  final report  and final staff report  
7.5.2.3.1   Factual  background   
7.312.    The USITC issued both confidential and non -confidential versions of its final report  and final 
staff report . In the non-confidential  version s of its final report  and final staff report , the USITC 
redacted  or mod ified information that it considered "would reveal confidential operations of individual 
concerns" .668 
7.5.2.3.2   Main  arguments  of the parties  
7.313.   Relying on previous DSB reports, China argues that a harmonious interpretation of 
Articles  3.1 and 3.2 of the  Agreement  on Safeguards requires that the competent authorities publish 
non-confidential summar ies of the confidential data relied upon in their report so that interested 
parties can exercise their right to present a defence.669 China also submits that, when relying on 
confidential information in their findings, the competent authorities are required to "characterize[] 
the confidential information as much as possible without compromising the confidential nature of 
the information , ideally being as creative as possible in trying to provide the essence of the 
confidential information".670 Based on this standard, China argues that the actual non-confidential 
summaries produced by the USITC did not satisfy the requirements o f Article  3 because they did not 
permit the interested parties to reasonably present a defence.671 As support for its position, China 
refers to certain pages in the USITC final staff report672 and the USITC's  serious injury determination  
in its final report673, as examp les of the substantive deficiencies of the non -confidential version s of 
these report s.674 
7.314.   The United  States  advances that China's  arguments fail for several reasons. As a matter of 
law, the United  States  contends that (a)  Article  3 does not require the comp etent authorities to 
provide non -confidential summaries of confidential information relied upon in their final report675; 
and (b)  the alleged "harmonious interpretation" of Articles  3.1 and 3.2 does not establish any such 
obligation.676 In the United  States ' view, "the relevant obligation is for the competent 
authorities'  report to 'set[] forth their findings and reasoned conclusions reached on all pertinent 
 
668 USITC final report , (Exhibit  CHN-2), p. i; USITC final staff report , (Exhibit  CHN-3), para. iv.  
669 China 's first written submission, paras.  297-301 (referring to Panel Reports, US – Steel Safeguards , 
paras.  10.274 -10.276;  and US – Wheat  Gluten , para. 8.23);  second written submission, para.  308; and 
response to Panel question No. 31 of the second set , para. 304. China also argues that a harmonious 
interpretation of Articles  3.1, 3.2, and 4.2(c ) of the  Agreement on Safeguards require d the USITC to publish a 
non-confidential summary of the USITC final report. (China 's second written submission, para. 315; response 
to Panel que stion No. 32 of the first set, para.  194, comments on the United  States' response to Panel question 
No. 33 of the first set, para.  222; and response to Panel question No. 31 of the second set, para.  307). In 
addition, China argues that (i) Article  3.1 and (ii) Article  3.2 of the  Agreement  on Safeguards  contain such an 
obligation. (China's  first written submission, paras.  294 and 312).  
670 China 's second written submission, para. 317; first written submission, paras.  297-300; and opening 
statement at the first meeting of the Panel, para.  99. 
671 China 's first written submission, para. 302; second written submission, paras.  318 and 320 . 
672 China 's first written submission, para. 314; opening statement at the first meeting of the Panel, 
para. 100. 
673 China 's first written submission, para. 315. 
674 China 's first written submission, para. 316; response to Panel question No. 59 of the third set, 
para. 168. 
675 United  States'  first written submission, paras.  297 and 319;  second written submission, 
para. 201; response  to Panel question No. 33 of the first set , para. 88; and comments on China's response to 
Panel question No. 59 of the third set, para.  94. 
676 United  States'  comments on China's response to Panel question No. 32 of the first set , para. 184. WT/DS562/ R 
 
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  issues of fact and law'".677 As a matter of fact, the United  States  argues that the non -confidential 
version s of the USITC final report and final staff report  contain the USITC's findings and reasoned 
conclusions.678 It further submits that China 's examples of redacted or  omitted  confidential 
information d o not demonstrate that the USITC final report and final staff report  fail to "set[] forth 
their findings and reasoned conclusions reached on all pertinent issues of fact and law" .679 
7.5.2.3.3   Evaluation  of the Panel  
7.315.   As a preliminary matter, we note that a measure of ambiguity exists concerning the legal 
basis of China's  claim. As support for its claim, China has inconsistently referred to Article  3.1680, 
Article  3.2681, a harmonious reading of Articles  3.1 and 3.2682, and a harmonious reading of 
Articles  3.1, 3.2, and 4.2(c).683 Regardless  of this ambiguity, we do not agree with China that the 
USITC was required  to provide "non -confidential summaries" of the confidential information relied 
upon in its final report  and final staff report . 
7.316.   In this regard, we recall that Article  3.1 of the  Agreement on Safeguards requires that the 
competent authorities "publish a report setting fort h their findings and reasoned conclusions reached 
on all pertinent issues of fact and law". Moreover, Article  3.2 prohibits the competent authorities 
from disclosing confidential information submitted by the interested parties without their permission. 
Article 3.2 also allows – but does not require – the competent authorities to request that the 
interested parties furnish "non -confidential summaries" of confidential information. In cases where 
the competent authorities are required to redact certain confide ntial information from the 
non-confidential version of their report to meet their obligations under Article  3.2, they may elect to 
include "non -confidential summaries" of the confidential information when presenting their "findings 
and reasoned conclusions ". However, the text of Article  3 does not require them to do so . Nor does 
the mere absence of "non -confidential summaries" in the report mean  that the competent authorities 
failed to publish a report "setting forth their findings and reasoned conclusions reached on all 
pertinent issues of fact and law".684  
7.317.   In this context, we agree with the United  States  that China 's claim is premised on an 
incorrect interpretation of Article  3 of the  Agreement on Safeguards . We also agree with the 
United  States  that China  has not demonstrated that the non -confidential version s of the USITC final 
report and final staff report suffer from any inadequacy resulting from the redaction of confidential 
information. While China complains that certain of the USITC 's redactions were  overbroad or 
 
677 United  States'  first written submission, paras.  297 and 319.  According to the United  States , the 
presence or absence of summarized confidential information is not dispositive, as the competent 
authorities ' compliance with the obligation to provide "findings and reasoned  conclusions" is a substantive 
question. ( United  States'  comments on China's response to Panel question No. 32 of the first set , para. 184).  
678 United  States'  first written submission, para. 319. 
679 United  States'  first written submission, paras.  297 and 319. 
680 See, e.g. China 's first written submission, para. 294. 
681 See, e.g. China 's first written submission, para. 312; and response to Panel question No. 29 of the 
first set , para. 183. 
682 See, e.g. China 's first written submission, paras.  297-300; second w ritten submission, 
para. 308; and response to Panel question No. 31 of the second set , para. 304. 
683 See, e.g. China 's second written submission, para. 315; response to Panel question No. 32 of the 
first set , para.  194; comments on the United  States' respon se to Panel question No. 33 of the first set , 
para. 222; and response to Panel question No. 31 of the second set , para. 307.  
684 In this context, we do not find China 's references to the panel reports in US – Steel Safeguards  
persuasive to the extent they promulgate a general rule that the competent authorities must, to the fullest 
extent possible, provide non -confidential summaries of all confidential information referenced in their final 
report. (Panel Reports, US – Steel Safeguards , paras.  10.274 -10.275). In particular, we do not consider that 
the text of Article  3.1 supports an affirmative requirement for the competent authorities to explain their 
findings "to the fullest extent possible without disclosing confidential infor mation" or an affirmative requirement 
to present confidential data in a modified form ( e.g. aggregation or indexing ) that protects confidentiality. We 
similarly do not consider that, in order to withhold (and not summarize or index ) confidential data, Article 3.1 
affirmatively requires the competent authorities to explain "why there was no possibility of presenting any facts 
in a manner consistent with the obligation of protecting confidential information".  (Ibid. para. 10.275 
(emphasis original)).  
In addit ion, we do not agree with China to the extent it argues that the panel in US – Wheat  Gluten  
interpreted Article  3.1, third sentence, to require that the competent authorities provide a non -confidential 
summary of confidential information in their report. (China 's first written submission, paras.  300-301; second 
written submission, para. 317; and comments on the United  States' response to Panel question No. 30 of the 
first set , para. 213 (referring to Panel Report, US – Wheat  Gluten , para. 8.23) ). WT/DS562/ R 
 
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  inadequately summarized with non -confidential information685, it does not explain how these 
redactions meant that the USITC final report and final staff report  failed to set forth "findings and 
reasoned conclusions reached on all pertinent issues of fact and law".  
7.318.   Based on the above, we reject China's  claim that the USITC, in violation of Article  3 of 
the Agreement on Safeguards, failed to provide sufficient non -confidential summaries of confidential 
information in its final report  and final staff report . 
8  CONCLUSIONS AND RECOMMENDATION  
8.1.  For the reasons set forth in this Report, the Panel finds that China has failed to demonstrate 
that the United  States  acted inconsistently with:  
a. Article  XIX:1(a) of the GATT 1994 and Article  3.1 of th e Agreement on Safeguards by 
failing  to establish, prior to the application of the measures, that the increases in imports 
were the result of "unforeseen development s" and were the "effect of obligations incurred" 
under the GATT 1994 by the United  States ; 
b. Articles  2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing  to establish the 
required "causal link " between the increased imports and the serious injury found to exist;  
c. Articles  2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing to  ensure  that 
injury caused by other factors was not attributed to increased imports;  and 
d. Articles  3.1 and 3.2 of the Agreement on Safeguards by providing non -confidential 
summaries to interested parties with such delay that the parties were not provided wi th 
an adequate opportunity to exercise their right to present a defence , and because the 
actual public summaries were not sufficient so as to permit an interested party to 
reasonably present a defence.  
8.2.  In light of these findings, the Panel makes no recomme ndation to the DSB pursuant to 
Article  19.1 of the DSU.  
__________  
 
685 China 's first written submission, paras.  313-316; second written submission, para. 318; and 
response to Panel question No. 59 of the third set , para. 168.