# EUR-Lex - 52013PC0760 - EN

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# 52013PC0760

**Proposal for a COUNCIL IMPLEMENTING REGULATION imposing a definitive countervailing duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People's Republic of China /* COM/2013/0760 final - 2013/0370 (NLE) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Grounds for and objectives of the
proposal

This proposal concerns the application of
Article 10 of Council Regulation (EC) No 597/2009 of 11 June 2009 on protection
against subsidised imports from countries not members of the European
Community.

General context

This proposal is made in the context of the
implementation of the basic Regulation and is the result of an investigation
which was carried out in line with the substantive and procedural requirements
laid out in the basic Regulation.

Existing provisions in the area of the
proposal

Provisional anti-dumping measures were
imposed on the same product by Commission Regulation (EU) No 513/2013 (OJ L
152, 5.6.2013, p. 5).

Parallel proposal to impose definitive
anti-dumping measures.

Consistency with other policies and
objectives of the Union

Not applicable.

2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

Consultation of interested parties

Interested parties concerned by the proceeding
have had the possibility to defend their interests during the investigation, in
line with the provisions of the basic Regulation.

Collection and use of expertise

There was no need for external expertise.

Impact assessment

This proposal is the result of the
implementation of the basic Regulation.

The basic Regulation does not provide for a
general impact assessment but contains an exhaustive list of conditions that
have to be assessed.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

Summary of the proposed action

On 8 November
2012, the Commission initiated an anti-subsidy proceeding concerning imports of
crystalline silicon photovoltaic modules and key components (i.e. cells and
wafers) originating in the People's Republic of China.

The
investigation found subsidisation of the product concerned, which caused injury
to the Union industry. The investigation also found that it was not against the
Union interest to impose anti-subsidy measures.

Therefore, it
is proposed that the Council adopts the attached proposal for a Regulation in
order to impose definitive anti-subsidy measures on imports of crystalline
silicon photovoltaic modules and key components (i.e. cells) originating in the
People's Republic of China.

The product scope subject to measures does
not include wafers which were initially part of the investigation. This is
because wafers have specific characteristics different from the product
concerned.

Legal basis

Council Regulation (EC) No 597/2009 of 11
June 2009 on protection against subsidised imports from countries not members
of the European Community (‘the basic Regulation’).

Subsidiarity principle

The proposal falls under the exclusive
competence of the Union. The subsidiarity principle therefore does not apply.

Proportionality principle

The proposal complies with the
proportionality principle for the following reasons:

The form of action is described in the
above-mentioned basic Regulation and leaves no scope for national decision.

Indication of how financial and
administrative burden falling upon the Union, national governments, regional
and local authorities, economic operators and citizens is minimized and
proportionate to the objective of the proposal is not applicable.

Choice of instruments

Proposed instrument: Regulation.

Other means would not be adequate because
the basic Regulation does not provide for alternative options.

4.           BUDGETARY IMPLICATION

The proposal has no implication for the EU
budget.

2013/0370 (NLE)

Proposal for a

COUNCIL IMPLEMENTING REGULATION

imposing a definitive countervailing duty
on imports of crystalline silicon photovoltaic modules and key components (i.e.
cells) originating in or consigned from the People's Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to Council Regulation (EC) No
597/2009 on protection against subsidised imports from countries not members of
the European Community[1],
and in particular Article 17 thereof,

Having regard to the proposal submitted by the
European Commission, after consulting the Advisory Committee,

Whereas:

1.           PROCEDURE

1.1.        Initiation

(1)       On 8 November 2012, the
European Commission (the ‘Commission’) announced by a notice published in the Official
Journal of the European Union[2]
('Notice of Initiation'), the initiation of an anti-subsidy proceeding with
regard to imports into the Union of crystalline silicon photovoltaic modules
and key components (i.e. cells and wafers) originating in the People's Republic
of China ('PRC' or the 'country concerned').

(2)       The anti-subsidy
proceeding was initiated following a complaint lodged on 26 September
2012 by EU ProSun ('the complainant') on behalf of producers representing in this case more than 25 % of the total Union production of crystalline silicon
photovoltaic modules and key components. The complaint contained prima facie
evidence of subsidisation of the said product and of material injury resulting
therefrom, which was considered sufficient to justify the initiation of a
proceeding.

(3)       Prior
to the initiation of the proceeding and in accordance with Article 10(7) of Council
Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised
imports from countries not members of the European Community (‘the basic
Regulation’)[3], the Commission notified the Government of the PRC ('the GOC') that
it had received a properly documented complaint alleging that subsidised
imports of crystalline silicon photovoltaic modules and key components
originating in the PRC were causing material injury to the Union industry. The
GOC was invited for consultations with the aim of clarifying the situation as
regards the contents of the complaint and arriving at a mutually agreed
solution. The GOC accepted the offer of consultations which were subsequently
held. During the consultations, no mutually agreed solution could be arrived
at. However, due note was taken of comments made by the GOC regarding the non-countervailability
of the schemes listed in the complaint. Following the consultations,
submissions were received from the GOC.

1.2.        Parallel
anti-dumping proceeding

(4)       On 6 September 2012, the
Commission had announced by a notice published in the Official Journal of
the European Union[4], the initiation of an anti-dumping proceeding concerning imports
into the Union of crystalline silicon photovoltaic modules and key components
(i.e. cells and wafers) originating in the PRC.

(5)       On 6 June 2013, the
Commission, by Regulation (EU) No 513/2013[5],
imposed a provisional anti-dumping duty on imports of crystalline silicon
photovoltaic modules and key components (i.e. cells and wafers) originating in or
consigned from the PRC (“Provisional anti-dumping Regulation”).

(6)       The
injury analyses performed in the present anti-subsidy and the parallel
anti-dumping investigation are based on the same definition of the Union
industry, the representative Union producers and the investigation period and
led to identical conclusions unless otherwise specified. This was considered
appropriate in order to streamline the injury analysis and to reach consistent
findings in both proceedings. For this reason, comments on injury aspects put
forward in any of these proceedings were taken into account in both
proceedings.

1.3.        Registration

(7)       Following
a request by the complainant supported by the required evidence the Commission
adopted on 1 March 2013 Regulation No 182/2013 making imports of crystalline
silicon PV modules and key components (i.e. cells and wafers) originating in or
consigned from the PRC subject to registration as of 6 March 2013.

(8)       Some interested parties
claimed that the decision for registration of imports was unfounded, as the
conditions were not met pursuant to Article 24(5) of the basic Regulation.
However, these claims were not substantiated or based on factual evidence. At the time the decision was taken to register imports the
Commission had sufficient prima facie evidence justifying the need to
register imports, in particular a sharp increase both in terms of absolute
imports and in terms of market share. The claims in this regard had therefore
to be rejected.

1.4.        Parties concerned by the
proceeding

(9)       The Commission officially
advised the complainants, other known Union producers, the known exporting
producers in the PRC, the PRC authorities and known importers of the initiation
of the proceeding. Interested parties were given the opportunity to make their
views known in writing and to request a hearing within the time limit set in
the Notice of Initiation.

(10)     In view of the apparent
high number of exporting producers, Union producers and unrelated importers,
all known exporting producers and unrelated importers were asked to make
themselves known to the Commission and to provide, as specified in the Notice
of Initiation, basic information on their activities related to the product
concerned during the investigation period as defined in recital (38) below.
This information was requested under Article 27 of the basic Regulation in
order to enable the Commission to decide whether sampling would be necessary
and if so, to select samples. The authorities of the PRC were also consulted.

(a)
Sampling of exporting producers

(11)     Initially 121 Chinese
exporting producers/groups of producers provided the requested information and
agreed to be included in a sample. The cooperating companies represent more
than 80 % of the total Chinese export volume. On the basis of the information
received from the exporting producers and in accordance with Article 27 of the
basic Regulation the Commission initially proposed a sample of seven exporting
producers/groups of exporting producers.

(12)     The selected sample of
seven groups of companies consists of the three cooperating exporters with the
largest volume of exports of modules, the two cooperating exporters with the
largest volume of exports of cells and the two cooperating exporters with the
largest volume of exports of wafers. The sample of these seven groups of
exporting producers served as the basis to determine the level of subsidisation
for those groups as well as the level of subsidisation for all cooperating
exporting producers not included in the sample, as required by Articles 15(2)
and 15(3) of the basic Regulation. As explained in recital (46) below, the
Commission excluded wafers from the product scope in the definitive stage of
the investigation. Certain companies were selected into the sample on the basis
of their largest volumes of exports of wafers. However, taking into account the
fact that the Commission had already investigated these companies, verified the
data submitted by them and also the fact that all of these companies had
significant exports of modules and/or cells it was not deemed necessary to
amend the sample

(13)     The number of sampled
exporting producers was eventually deemed to be eight companies/groups. This is
because, although it was initially reported that the Jinko Solar Co. Ltd and Renesola
Jiangsu Ltd were related, it was subsequently established that they were not.

(b)
Sampling of Union producers

(14)     The
Commission announced in the Notice of Initiation that it had provisionally
selected a sample of Union producers. All known Union producers and known
producers' association were informed about the selection of the provisional
sample of Union producers. This provisional sample consisted of nine Union
producers out of the around 215 Union producers that were known prior to the
initiation of the investigation to produce the like product, selected on the
basis of the largest representative volume of production, taking into account
the sales volume and the geographical location that could reasonably be
investigated within the time available. It was ensured that the sample covers
both vertically integrated and non-integrated Union producers. Interested
parties were also invited to make their views known on the provisional sample.

(15)     Several
interested parties raised the following objections concerning the provisional
sample of Union producers:

(i)      Some parties submitted that the
limited information provided with regard to the provisionally selected sample
was insufficient and prevented them from making any meaningful comments on the
proposed sample. In particular, they criticised that the identity of the Union
producers was kept confidential and requested that the Member States where the
sampled Union producers were located should be disclosed, as well as the
selected Union producers’ share of production in the total production volume of
PV modules and cells and the percentage of production and sales represented by
the sampled companies individually and by the sample as a whole.

(ii) The method used for the selection of the
sample was contested on the grounds that it ‘confuses three different steps’,
namely the support for the initiation of the investigation, definition of the
Union industry and sampling. Therefore, it was claimed that it was unclear
whether the Union industry was already defined at the time of the selection of
the sample, and therefore whether the sample could be considered as
representative. Without defining the Union industry at sampling stage, interested
parties were prevented from verifying whether the provisional sample was
representative, and thus whether on the basis of the sample, the situation of
the Union industry during the investigation period as defined in recital (38)
below could be correctly assessed. Furthermore, it was claimed that it was
inappropriate to select the provisional sample on the basis of the replies of
the Union producers to the examination of the support for the initiation of the
investigation.

(iii)     It was also claimed that the
provisional sample was selected merely on the basis of companies which have
expressed their support to the present investigation.

(iv)    One party claimed that, since
vertically integrated companies are included in the provisional sample, the
production volume of cells may be double or triple counted which casts doubts
on the overall representativity of the sample. It was requested that for
vertically integrated producers only the production volume of modules should be
counted, but not the volume of cells.

(v)     The same party alleged that the data
on which the selection of the sample was based were at least partly unreliable
which could have an impact on the representativity of the provisional sample as
a whole.

(vi) One party provided a list containing
allegedly around 150 additional Union producers of the like product, claiming
that they should have been taken into consideration for the purposes of
selecting a sample of Union producers.

(16)     The arguments raised by the
parties were addressed as follows: The Union producers requested that their
names be kept confidential due to the risk of retaliation. There were indeed
real threats against Union producers to harm their business both in the Union and outside. The Commission considered that these requests were sufficiently
substantiated to be granted. The disclosure of the location or share in
production and sales of individual Union producers selected in the sample could
easily reveal the identity of the producer concerned and the requests in this
regard had to be rejected.

(17)     The Commission did not
‘confuse’ the determination of the support for the initiation of the
investigation, the determination of the Union industry and the selection of
provisional sample as these steps remained independent from each other and were
decided upon separately. It was not demonstrated to what extent the use of
production and sales data provided by the Union producers in the context of the
examination of the support for the initiation of the investigation had affected
the representativity of the sample. At initiation the Union industry had indeed
been provisionally defined. All available information concerning the Union
producers, including information provided in the complaint and data collected
from Union producers and other parties before the initiation of the
investigation, was used in order to provisionally establish the total Union
production for the investigation period, as defined in recital (38) below.

(18)     All Union producers that
replied to questions related to the support for the initiation of the
investigation were considered for the sample, regardless of whether they
supported, opposed or expressed no opinion on the investigation. This claim was
therefore rejected.

(19)     The question of
double/triple counting has been considered when the provisional sample was
selected. It appeared that excluding production and sales of cells of the
vertically integrated Union producers would not take into consideration the
part of the production of cells sold on the free market. It was therefore
considered that excluding sales of cells from the total production volume would
not necessarily lead to a more representative sample. Furthermore, the
representativity of the sample was established not only on the basis of the
production volume but also on the basis of the geographical spread and a
balanced representation of vertically integrated and non-integrated producers.
The relative representativeness of the production volume was calculated at the
level of each type of the like product. On this basis, it was considered that
the methodology to select the provisional sample was reasonable and the sample
is therefore considered representative for the Union industry of the product
under investigation as a whole. Therefore, this claim was rejected. As far as
the reliability of data is concerned, the sample was selected on the basis of
the information available at the time of the selection of the sample as
provided for in Article 27 of the basic Regulation. Concerning the reliability
of data used in the support of the initiation of the investigation, the
investigation found no evidence that the data collected prior to the initiation
was significantly deficient. Therefore, it can be reasonably assumed that the
basis on which the provisional sample was selected was sufficiently reliable.
Therefore, this claim was rejected.

(20)     Concerning the list of
around 150 additional Union producers, it should be noted that this information
was submitted far outside the deadline set for interested parties to comment on
the selection of the provisional sample and for Union producers to come forward
and to request to be selected in the sample. Moreover, about 30 of the Union
producers contained in this list were in fact known to the Commission at the
time of the selection of the sample. Furthermore, all Union producers that made
themselves known after the publication of the Notice of Initiation were
considered when selecting the sample. On this basis, the representativity of
the sample has not been affected. Therefore, this claim was rejected.

(21)     Following
receipt of comments, the composition of the sample was revised on the ground
that there were indications that one of the selected companies would not have
been in the position to fully cooperate. In order to maintain the level of
representativity of the sample an additional Union producer was selected. This
revised sample consisted thus of ten companies, selected on the basis of the
largest representative volume for each level of production, taking into account
sales volume on the Union market and geographical location that could
reasonably be investigated within the time available. Further to the exclusion
of wafers from the definition of the product concerned, and thus from the scope
of this investigation (see recitals (42) - (46) - and (349) below), the sample
consisted of eight companies. As a result, the revised sample of Union
producers accounted, expressed as a percentage of out of the total Union
production, between 18% and 21 % for modules and between 17% and 24 % for cells
and covered vertically integrated and non-integrated producers. Given that a
precise percentage would allow calculating the production volume of the above
mentioned additional Union producer and thus its identity could be determined,
no such precise percentages could be disclosed.

(22)     The
Union producers who supplied the Commission with information required for the
selection of a sample in the present anti-subsidy proceeding coincide with the
Union producers who supplied the relevant information in the parallel on-going
anti-dumping investigation. Furthermore, all Union producers selected in the
final sample in the anti-dumping investigation have supplied the relevant
information in the present anti-subsidy investigation which allowed the Commission
to select a sample. Therefore, it was considered appropriate that the final
samples of Union producers in both proceedings were identical.

(23)     The GOC reiterated its
claim that the use of confidentiality of the names of the Complainants and
sampled Union producers is not warranted. As already stated in recital (9) to
the provisional Regulation, the Union producers requested that their names be
kept confidential due to the risk of retaliation. The Commission considered
that these requests were sufficiently substantiated to be granted. The
information that has been provided to the Commission in order to substantiate
the risk of retaliation cannot be disclosed to third parties, as such
disclosure would defeat the purpose of the request for confidentiality.
Moreover, in a case, where, as reported by the GOC, a Union producer
re-evaluated its position and revealed its identity by filing an application
for a Court case against the provisional regulation, there is no longer ground
to disclose information on the basis of which anonymity was granted, as the
identity has been revealed.

(24)     Following the final disclosure,
the China Chamber of Commerce for Import and Export of Machinery and Electronic
Products (hereinafter CCCME) reiterated the arguments about the method used for
the selection of the provisional sample of the Union producers. It claims in
particular that the Institutions have not taken into account 120 producers. The
Commission already addressed this issue in recital (9) to the provisional Regulation.
Moreover, the Institutions have verified the activities of the companies
provided on that list. It turned out that that list mostly includes installers,
distributors, related importers and exporting producer in China, Taiwan, and India. It therefore was not apt to demonstrate that the Institutions had
overlooked a significant number of Union producers. Moreover, the CCCME has not
contested the total Union production by providing alternative figures, nor has
it put forward any evidence that the representativity of the sample could have
been affected, as none of the alleged additional Union producers would have
been selected into the sample, had it been known to the Commission.

(c)
Sampling of unrelated importers

(25)     Of the around 250 unrelated
importers put forward by the complainant, that the Commission contacted, twenty
parties replied to the sampling form attached to the Notice of Initiation,
twelve for modules, one for cells. In addition, seven other parties made
themselves known but reported no imports or resales of the product concerned.
The sample was selected in accordance with Article 27 of the basic Regulation
to cover the largest representative volume of imports which could reasonably be
investigated within the time available. On this basis a sample of unrelated
importers was selected consisting of two importers for modules and one importer
for cells, representing around 2 % - 5 % of the total imports from the country
concerned. After the receipt of the questionnaire reply, it became however apparent
that the core activity of one of the three importers was in fact solar
installations and not trading of the product concerned. As to the activity of a
second importer, this was that of an importer of modules and not of an importer
of cells. Nevertheless, the quality of the information provided in its reply to
the questionnaire was not sufficient to include it in the analysis of unrelated
importers. In addition, the investigation revealed
that a majority of imports of the product concerned entered the Union market
through companies related to the exporting producers in the PRC or through
installers or project developers.

(26)     Following
the imposition of provisional anti-dumping measures in the parallel
anti-dumping investigation, the Commission contacted additional importers that
had already cooperated in the investigation at the initiation stage by
providing basic information on their activities related to the product under
investigation during the investigation period, as specified in the Notice of Initiation.
The purpose was to determine whether the size of the sample of unrelated
importers could be increased. Six companies qualified as unrelated importers trading
the product concerned (i.e. purchasing and reselling it) came forward and were
willing to cooperate further in the investigation. Out of these six, five
replied within the deadline. Out of the five replies received, only three were
sufficiently complete and allowed for a meaningful assessment. On this basis,
the sample of the unrelated importers was enlarged and consisted of four
importers for modules, representing around 2 % - 5 % of the total imports from
the country concerned. Given the structure of the
unrelated importers, which were mostly small and medium-sized companies, it was
not possible to have a sample representing a larger share, given the limited
resources at the disposal of the Institutions.

(d)
Questionnaire replies and verifications

(27)     The Commission sent
questionnaires to the representatives of the PRC (including specific questionnaires
for the China Development Bank, Export Import Bank of China, Bank of China,
Bank of Shanghai, Sinosure, other relevant financial institutions and
state-owned producers of polysilicon, glass and aluminium which supplied these
raw materials to the industry concerned during the investigation period), the eight
sampled exporting producers in the PRC, other exporting producers in the PRC
that requested so, as well as to the sampled Union producers, the sampled
unrelated importers and upstream and downstream operators and their
associations that made themselves known within the time limits set out in the
Notice of Initiation. The Commission also contacted a representative consumer
association.

(28)     Replies
were received from the GOC, all the sampled exporting producers and their related
companies in the PRC, five exporting producers which requested individual
examination, from all the sampled Union producers, all the sampled unrelated
Union importers and 21 upstream and downstream operators and three of their
associations.

(29)     The
Commission sought and verified all information deemed necessary for the
determination of subsidisation, resulting injury and Union interest.
Verification visits were carried out at the premises of the following State
authorities and financial institutions, the sampled companies, one unrelated
importer, two upstream and four downstream operators, associations and
independent consultant:

(a)
Government of the People’s Republic of China

–
Chinese Ministry of Commerce, Beijing, China

–
Huaxia Bank, Beijing, China

–
China Development Bank, Beijing, China

–
Export Import Bank of China, Beijing, China

–
China Export & Credit Insurance Corporation
(SINOSURE), Beijing, China

(b)
Union producers

–
eight sampled Union producers

(c)
Groups of Exporting producers (and related
companies) in the PRC

–
Changzhou Trina Solar
Energy Co. Ltd, China

–
Delsolar (Wujiang) Ltd. (Wujiang) Co. Ltd., China

–
Jiangxi LDK Solar
Hi-tech Co. Ltd., China

–
JingAo Group, China

–
Wuxi Suntech Power Co. Ltd, PRC Power Co. Ltd, China

–
Yingli Green Energy Holding Company, China

–
Zhejiang Yuhui Solar
Energy Source Co. Ltd and Renesola Jiangsu Ltd, China

–
Jinko Solar Co Ltd, China

(d)
Unrelated importer in the Union

–
IBC SOLAR AG, Bad Staffelstein, Germany

(e)
Upstream operators

–
Roth & Rau AG, Hohenstein-Ernsthal, Germany

–
WACKER Chemie AG, Burghausen, Germany

(f)
Downstream operators

–
Juwi Solar GmbH, Worrstadt, Germany

–
ValSolar SL, Badajoz, Spain

–
Jayme de la Costa, Pedroso, Portugal

–
Sunedison, Spain Construction, Madrid, Spain

(g)
Associations

–
European Photovoltaic Industry Association (‘EPIA’), Brussels, Belgium

(h)
Independent consultant

–
Europressedienst, Bonn, Germany

(30)     The comments submitted by the
interested parties were considered and taken into account where appropriate.

(31)     The
Association for Affordable Solar Energy (‘AFASE’), representing importers,
downstream and upstream operators questioned the legal basis for the visit
carried out at the premises of Europressedienst, by claiming that an
independent consultant is not an interested party under Article 26 of the basic
Regulation. However, findings should be based on reliable and verifiable data
wherever possible. Europressedienst has provided information on macroeconomic
indicators on the basis of a contract. The Commission carried out an
on-the-spot verification at its premises for the
sake of the principle of good administration to verify the reliability and
correctness of data on which the Commission has based its findings.

(32)     The GOC claimed that its
rights of defence in relation to access to the files open for inspection by
interested parties were violated because (i) information was missing from the
non-confidential files without “good cause” being shown or providing
sufficiently detailed summaries, or exceptionally, the reasons for the failure
to provide the non-confidential summary, (ii) the non-confidential version of
an entire questionnaire response of a Union producer was missing and (iii) the
delays to make non-confidential versions of the Union producers’ questionnaire
responses available for interested parties were excessive.

(33)     (i) Regarding the claim
that information was missing from the open file, the interested party did not
specify to which information it was referring to. (ii) Its claim that the
non-confidential version of an entire questionnaire response has not been made
available was incorrect. (iii) As to the delays in making available the
non-confidential replies of the questionnaires of the sampled Union producers,
it had been explained to the party concerned that the questionnaires were only
added to the non-confidential file after having been checked as to their
completeness and reasonableness of the summaries. In order to ensure the Union
producers’ right to anonymity, it was also ascertained that the
non-confidential versions of the questionnaires did indeed not reveal the
identity of the Union producer concerned. In some cases, the non-confidential
versions needed therefore to be corrected accordingly by the party submitting
it before they could be made available for other interested parties.

(34)     In any event, it is
considered that this did in no way affect the interested parties’ rights of
defence. The Commission has given all the interested parties the opportunity to
respond to the information included in the file open for inspection in time so
that their comments could be taken into consideration, when substantiated and
warranted before any conclusions were made in the investigation. The interested
party had every opportunity to comment on the questionnaires from sampled Union
producers also following the provisional and the final disclosure. Therefore,
even if the disclosures and the access to the file open for inspection by
interested parties are based on different legal provisions, it should be noted
that there were ample opportunities for the interested parties to comment on
all information made available by any party to the investigation. Therefore,
this claim had to be rejected.

(35)     All interested parties were
informed of the essential facts and considerations on the basis of which it was
intended to recommend the imposition of countervailing duties on imports of
crystalline silicon photovoltaic modules and key components (i.e. cells)
originating in or consigned from the People's Republic of China (‘the final
disclosure’). All parties were granted a period within which they could make
comments on the final disclosure.

(36)     The comments submitted by
the interested parties were considered and taken into account where
appropriate.

1.5.        Acceptance of an
undertaking in view of definitive duties

(37)     Following final disclosure,
the Commission received an amended offer for an undertaking by exporting
producers together with the China Chamber of Commerce for Import and Export of
Machinery and Electronic Products, which covers also the parallel anti-dumping
investigation. By Commission Decision 2013/XXX/EU of XX November 2013, the
Commission has confirmed the acceptance of that undertaking.

1.6.        Investigation period and
period considered

(38)     The
investigation of subsidisation and injury covered the period from 1 July 2011
to 30 June 2012 (the ‘investigation period’ or ‘IP’). The examination of
trends relevant for the assessment of injury covered the period from 1 January
2009 to the end of the IP (‘the period considered’).

2.           PRODUCT CONCERNED AND LIKE
PRODUCT

2.1.        Product concerned

(39)     The product concerned was
defined at initiation stage as crystalline silicon PV modules or panels and
cells and wafers of the type used in crystalline silicon PV modules or panels,
originating in or consigned from the PRC. The cells and wafers have a thickness
not exceeding 400 micrometres. This product is currently falling within CN
codes ex 3818 00 10, ex 8501 31 00, ex 8501 32 00, ex 8501 33 00, ex 8501 34
00, ex 8501 61 20, ex 8501 61 80, ex 8501 62 00, ex 8501 63 00, ex 8501 64 00
and ex 8541 40 90.

(40)     The following product types are excluded from the definition of the
product concerned:

–
solar chargers that consist of less than six
cells, are portable and supply electricity to devices or charge batteries,

–
thin film photovoltaic products,

–
crystalline silicon photovoltaic products that
are permanently integrated into electrical goods, where the function of the
electrical goods is other than power generation, and where these electrical
goods consume the electricity generated by the integrated crystalline silicon
photovoltaic cell(s).

2.2.        Like product

(41)     The investigation has shown
that the product concerned as well as the product produced and sold in the Union by the Union industry have the same basic physical, chemical and technical
characteristics as well as the same basic end uses. They are therefore
considered as alike within the meaning of Article 2(c) of the basic Regulation.

2.3.        Claims regarding product
scope

2.3.1.     Exclusion of wafers

(42)     Interested
parties claimed that wafers should be removed from the product scope since
wafers do not share the same basic physical, chemical and technical
characteristics as cells and modules. In addition to the arguments brought
forward before the publication of the Provisional anti-dumping Regulation, two
additional arguments were brought forward in this respect thereafter.

(43)     Firstly, interested parties
claimed that wafers can be used for other purposes than for the production of
cells, notably the production of integrated circuits and other micro devices.
In this respect, it is noted that not all wafers are included in the product
scope of this investigation, which is limited to "wafers of the type
used in crystalline silicon PV modules or panels", and that those
wafers have "a thickness not exceeding 400 micrometres". While
wafers certainly do exist in other applications, the investigation never
covered wafers which are used in the production of other products such as
integrated circuits. In addition, no producers, importers or users involved in
the market for these different types of wafers came forwards alleging that
their wafers would be subject to registration or provisional anti-dumping
duties. It is therefore concluded that these other types of wafers are not
subject to the product scope of this investigation. At the same time, this
shows that wafers do not necessarily have the same end use as cells and
modules.

(44)     Secondly, it is claimed
that an unprocessed wafer possesses none of the essential electric properties
which distinguish solar cells and modules from other products. In particular,
wafers lack the ability to generate electricity from sunlight, which is the key
function of crystalline photovoltaic cells and modules.

(45)     Indeed, the investigation
showed that only once the wafer is transformed into a cell, the functionality
to generate electricity from sunlight arises. The conversion is operated by
cells which absorb light and convert it into electricity through crystalline
silicon. Cells have a positive-negative junction to collect and forward the
electricity that is generated by the cell. To assemble the modules, cells are
soldered together with flat wires or metal ribbons to produce a string of
cells. Those are laminated between sheets. Mostly glass is used on top and a
polymeric backing sheet to the bottom. Frames are usually created to allow the
mounting in the field (e.g. on rooftops). The module may or may not have an
inverter.

(46)     Due
to the different basic physical and technical characteristics, defined during
the investigation inter alia as the functionality to generate
electricity from sunlight, it was concluded on balance that wafers should be
excluded from the definition of the product concerned, and thus from the scope
of this investigation.

2.3.2.     Physical, chemical and technical characteristics and end uses

(47)     Several
interested parties claimed that the investigation cannot cover two products
with different physical, chemical and technical characteristics, and therefore
modules and cells should be subject to two separate investigations. Moreover,
they claimed that it is unclear whether the investigation covers one single
product or two separate products and therefore they have no full opportunity to
defend their interests.

(48)     The cell-module production
is one single production process with different production steps. Cells
determine the characteristics of the finished product (i.e. modules). The
investigation showed that the cells production is directly and exclusively
dedicated to produce modules; modules and cells share the same physical,
chemical and technical characteristics (determined by the raw material used)
and have the same basic end uses, i.e. are sold for integration into PV solar
systems. The modules performance is directly linked to the performance of the
cells.

(49)     The
Notice of Initiation clearly expressed that modules and cells constitute the
product under investigation. Interested parties had therefore full opportunity
to defend their interests on the basis of the product concerned as defined. On
these grounds, the arguments were rejected.

2.3.3.     Different nomenclature

(50)     It was further claimed that
modules and cells could not be considered as a single product as they have
several different eight-digit CN codes, six-digit subheading and four-digit HS
heading. In this respect it is noted that both cells and modules can be
declared under customs heading 8541 40 90, while the customs headings under
heading 8501 are for electric generators in general and not in particular for
solar products. On these grounds, the argument was rejected.

2.3.4.     Value added of cells

(51)     Several parties claimed
that the value added in the cell conversion process accounts for the largest
part of the value of a module and therefore cells must be considered as a
separate product.

(52)     The investigation revealed
that the cells production is the most technologically sophisticated part in the
production process. However, it also showed that the two processing steps are
linked to each other and the value added is not concentrated in a particular
stage of the production process but is spread over the whole production
process. On these grounds, the claim was rejected.

2.3.5.     Separate merchant markets

(53)     Some interested parties
claimed that modules and cells have separate merchant markets and therefore
they should be treated as different products which would also be demonstrated
by the fact that a large number of producers are not vertically integrated.

(54)     Modules and cells cannot be
considered as separate products whose prices fluctuate only depending on market
factors. As a matter of fact their prices are strictly interconnected and
affected by the polysilicon price. Likewise, as it has been explained above in
recitals (49) above, the product concerned is produced in one single production
process with different steps. The fact that some producers are not vertically
integrated is due only to business decision and economies of scale and does not
reverse this conclusion. On these grounds, this argument had to be rejected.

2.3.6.     End use and
interchangeability

(55)     Several interested parties
claimed that modules and cells must be treated as different products given that
they have different end uses and they were not interchangeable.

(56)     As mentioned above the
investigation showed that the cell-module production process is one single
production process and therefore the question of interchangeability between
different steps of a single production process is not applicable. Moreover,
modules and cells have the same end use, converting sunlight into electricity
and therefore cannot be used in other applications.

2.3.7.     Distribution channels

(57)     One interested party
claimed that modules and cells do not share the same distribution channels and
should therefore not be considered as one single product. The investigation
showed that modules and cells can be distributed within different or similar
distribution channels. However, the main criteria to define a single product
are the same physical, chemical and technical characteristics and end uses.
Considering recitals (47) to (49) above, it is concluded that therefore
different distribution channels are not considered as a determining element.
The argument should therefore be rejected.

2.3.8.     Consumer perception

(58)     It was claimed that modules
and cells differ substantially in terms of consumer perception and therefore
they should not be considered as one single product.

(59)     Likewise as above the main
criteria to define a single product are the same physical, chemical and
technical characteristics and end uses. Considering recitals (47) to (49) above
it is concluded that therefore different consumer perception is not considered
as a determining element. The argument should therefore be rejected.

2.3.9.     Separate
investigations for cells and modules

(60)     Interested
parties reiterated that cells and modules are not a single product, and should
therefore be assessed separately. Unlike wafers, however, cells and modules do
share the same basic property, i.e. the ability to generate electricity from
sunlight. These arguments were therefore rejected.

(61)     Following final disclosure,
one exporter argued that cells by themselves cannot produce electricity.
Allegedly, they need to be integrated into modules to do so. However, each cell
by itself has a capacity to generate electricity from sunlight of typically
around 4W. While this power may be insufficient for most applications which
require an assembly of multiple cells into modules, this does not mean that a
cell by itself does not already have the capacity to generate electricity.

(62)     Following final disclosure,
one exporter further argued that cells are not just another type of module, but
an entirely different product. In effect, a cell is the key component of a module.
As a key component, a cell is clearly not "an entirely different
product", as modules and cells share the same basic characteristics of
generating electricity from sunlight, as indicated in recital (60) above.

(63)     The same party argued in
addition that when the samples for Union producers and Chinese exporters were
selected, the difference between cells and modules was taken into account.
Therefore, different duty rates for modules and cells should have been
established. In this respect, it is confirmed that the difference between
modules and cells was indeed taken into account when sampling Union producers
and Chinese exporters, as indicated in recitals (10) and (14) to the
provisional anti-dumping Regulation. This, however, was only done to ensure that
the sample is representative and does as such not mean that cells and modules
should not be considered a single product concerned, or that separate duty
rates should be established for cells and modules. Indeed, in order to ensure
that the sample was representative for all product types, it was important to
distinguish between cells and modules when selecting the sample. Furthermore,
as there was a certain degree of uncertainty with regards to the question as to
whether cells and modules were to be regarded as one product or as two separate
products, it was necessary to ensure representativity for both possible
outcomes.

(64)     Exporting producers claimed
that the fact that the undertaking imposes different minimum import prices and
volumes for cells and modules allegedly confirms that modules and cells are
distinct products requiring two distinct investigations. The different minimum
import prices, however, are merely an indication that cells and modules are
different groups of product types which are sold at different prices.
Therefore, it is necessary to define different prices to make the minimum import
prices meaningful.

(65)     Also, the fact that cells
and modules are distinct groups of product types is not as such relevant for
the definition of the product concerned. For the definition of the product
concerned, it is sufficient that the products share the same basic
characteristics and end uses, which is the case for modules and cells as
described in recitals (46) and (71) respectively.

(66)     The GOC argued that the
assessment whether cells and modules are a single product concerned does not
address a number of criteria defined by the Appellate Body in EC – Asbestos[6]. These criteria are used for
the definition of the "like product", not the product concerned. In
other words, these criteria have to be used to define the like product, for
example the like product produced by Union Industry, which is then compared
with the product concerned exported by the Chinese exporting producers. These
criteria are therefore not pertinent when defining the product concerned. In
any event, the Institutions observe that the application of the criteria used
in EC – Asbestos to the definition of the product concerned in the
present case would not lead to a different outcome. The first and the second
criteria (properties, nature and quality respectively end-uses) are identical
to the criteria physical, chemical and technical properties and end-uses used
in the preceding recitals. The third criterion (consumers taste and habits) is
not really useful for the present case, as cells are the key component of
modules; as regards the fourth criterion, tariff classification, it is noted
that both cells and modules can be declared under customs heading 8541 40 90,
while the customs headings under heading 8501 are for electric generators in
general and not in particular for solar products.

(67)     Other interested parties
argued that an objective application of the criteria developed by the Court of
Justice in previous cases[7]
allegedly leads to the conclusion that modules and cells are different
products. In this respect, it is noted that the court only indicated a number
of criteria which may be taken into account ‐ there is no obligation to use all
criteria in all cases, since not all of them may be relevant. These criteria
were assessed in recitals (27) to (39) to the provisional anti-dumping
Regulation, where it was found that a number of criteria are not relevant in
the present case. In the Brosmann case the assessment whether different
types of shoes belong to the "product concerned" was also made on the
basis of only three criteria which were found to be relevant. As the interested
parties did not provide any reasoning why an objective application of the
criteria leads one to conclude that modules and cells are distinct products,
the argument cannot be accepted.

(68)     In addition, it is recalled
that cells and modules have the same basic end uses, i.e. they are sold for
integration into PV solar systems. The modules performance is directly linked
to the performance of the cells, as indicated in recital (28) to the
provisional anti-dumping Regulation.

(69)     One interested party argued
that with the exclusion of wafers from the product scope, and due to the
significant processing involved to make modules from cells, the argument that
cells and modules have the same end uses also stands refuted. It is also argued
that the assessment that modules and cells have the same end uses is based on
the assumption that wafers, modules and cells have the same production process.

(70)     Firstly, the conclusion
that the assessment that modules and cells have the same end uses is based on
the production process is wrong. While both statements are indeed in the same
recital (36) to the provisional anti-dumping Regulation, this does not mean
that one conclusion is based on the other assumption. The word
"moreover" separating the two statements makes it clear that the
second statement is not based on the first. In addition, the two statements are
made to address separate issues under the heading "End use and
interchangeability". The first statement concerning the production process
addresses interchangeability, while the second statement addresses end use. The
underlying assumption that the assessment that modules and cells have the same
end uses is based on the assumption that wafers, modules and cells have the
same production process is therefore incorrect.

(71)     As
to the actual end use of cells and modules, it is not disputed by interested
parties that modules and cells are sold for integration into PV solar systems.
The conclusion that modules and cells have the same end use is therefore
confirmed.

2.3.10.   Thin film products

(72)     One interested party
claimed that thin film PV products should be included in the definition of
product concerned, arguing that they share the same basic physical, chemical
and technical characteristics and the same basic end uses.

(73)     Thin film PV products are
clearly excluded from the product definition (see recital (40) above). Indeed, thin
film PV products have different physical, chemical and technical
characteristics compared to the product concerned. They are produced via a
different production process and not from crystalline silicon which is the main
raw material to produce modules and cells. They have lower conversion
efficiency and a lower wattage output and therefore they are not suitable for
the same types of applications than those of the product concerned. On these
grounds, the arguments had to be rejected.

2.3.11.   Semi-finished products

(74)     Furthermore it was claimed
that cells should be considered as semi-finished feeder products while modules
are end products, therefore they should not be considered as one single
product.

(75)     As mentioned above, the
main criteria to define a single product are the same physical, chemical and
technical characteristics and end uses. Considering recitals (47) to (49) above
it is concluded that therefore the difference between semi-finished or finished
products is not considered as a determining element. The argument should
therefore be rejected.

2.3.12.   Solar chargers

(76)     One interested party
requested the exclusion of solar panels dedicated solely to 12V battery
charging on the basis that they have a different end use than the modules for
grid connection due to the fact that they generate much lower voltage and
therefore are not suitable for grid connection.

(77)     According to the Notice of
Initiation solar chargers that consist of less than six cells, are portable and
supply electricity to devices or charge batteries are excluded from the product
under investigation. Modules of more than six cells dedicated only to battery
charging have the same basic characteristics and performance as the modules for
grid connection. They use an open voltage circuit which has a lower voltage
than the circuit used in modules for grid connection. Despite this difference
the investigation has revealed that this type of modules can be connected to
the grid. The lower voltage can be easily compensated by an increase in
dimension and/or number of cells. Therefore modules dedicated to battery
charging, and consisting of more than six cells, fall within the definition of
the product concerned.

(78)     Interested parties also claimed
that the definition of "solar chargers that consist of less than six
cells" is too narrow, and should be extended to products with a similar
function which are not covered by this definition such as products with a
similar size using a larger number of smaller cells.

(79)     In addition, interested
parties claimed that the definition of "silicon PV products that are
permanently integrated into electrical goods" is too narrow, as only the
complete electrical good is excluded, while solar components for integration
into the electrical goods are not necessarily excluded.

(80)     Indeed, an analysis of the
arguments brought forward by the various interested parties showed that it is
more appropriate to define the exclusion of such products on the basis of
technical standards rather than the number of cells. In particular, it was
established that the definitions of standard "IEC 61730-1 Application
Class C" more appropriately define the products which should be excluded
from the scope of the measures.

(81)     Following definitive
disclosure, comments were received concerning the exclusion based on the
international standard mentioned above. It was argued that rather than
referring to the standard, it would be more appropriate to define the exclusion
on the basis of the output voltage and the power output as "modules or
panels with a output voltage not exceeding 50 V DC and a power output not
exceeding 50 W solely for direct use as battery chargers in systems with the
same voltage and power characteristics". This claim could be accepted, and
the exclusion is finally determined according to this definition.

2.3.13.   Roof-integrated solar modules

(82)     Another interested party claimed
that roof-integrated solar modules should be excluded from the product scope of
the investigation, since they combine the functionality of a solar module with
that of a roof tile or slate. As such, they are not directly interchangeable
with a standard solar module.

(83)     The
investigation has, however, shown that both standard modules and the
roof-integrated solar module have to comply with the same electrical standards.
And while the roof-integrated solar module cannot be simply replaced with a
standard module, it can be replaced by a standard module plus roof tiles or
slate. These products therefore have the same basic technical property of
generating electricity from sunlight. The added functionality (which is
otherwise provided by roofing material) is not considered substantial and does
not warrant an exclusion of roof-integrated solar modules from the product
scope.

(84)     Following definitive
disclosure, the same interested party argued that the absence of
dual-interchangeability between roof-integrated solar modules and standard
solar modules is an indication that roof-integrated solar modules should be
excluded from the scope of the measures, referring to the footware[8] case in
general and special technology athletics footwear 'STAF' in particular.
However, the reasons for the exclusion of STAF were numerous, and the absence
of dual interchangeability by itself was not considered a sufficient ground by
the General Court in the Brosmann[9]
case, which confirmed that very different product such as city trotters and
hiking boots can indeed be considered product concerned in a single
anti-dumping investigation despite their differences.

(85)     In addition, the interested
party argued that due to the absence of production in the EU and the fact that
the interested party holds intellectual property rights is allegedly a
confirmation that roof-integrated solar modules are innovative and different
from any other product. However, referring again to the footwear case
mentioned by the interested party, the General Court held in Brosmann that
"the absence of Community production of that type of footwear and the
existence of a patent are not conclusive."[10]. As a result, patented
technology footwear was considered product concerned in that case.

(86)     The interested party also
argued that roof-integrated solar modules should be excluded from the
definition of the product concerned, since they are sold at substantially
higher prices than standard modules. Also, in the footwear case STAF
above a certain price were excluded from the definition of the product
concerned. In this respect, it is noted that a roof-integrated solar module
does combine the functionality of a solar module and roof tile or slate, as
indicated in recital (83). A direct comparison of prices is therefore not
meaningful, as the added functionality naturally leads to higher prices.

(87)     In response to this
argument, the interested party argued that on the basis of this argumentation,
it would be impossible to ever invoke price differences as an additional
indicator warranting the exclusion from the product scope. However, this
interpretation is too far-reaching. What is said in the previous recital is
merely that in this particular case where the roof-integrated modules combine
the functionality of the product concerned plus another product (in this case
roof tile or slate), the price is naturally not meaningful. This in no way
means that in other cases the price difference cannot be a useful indicator to
establish whether a product should be excluded from the definition of the
product concerned.

(88)     Lastly, the interested
party argued that its supplier of roof-integrated solar modules should be granted
access to the minimum price undertaking. However, it appears that the Chinese
exporter did not co-operate in the investigation, and as a non-cooperating
party is not eligible to participate in the undertaking. These requests can
therefore not be accepted.

2.3.14.   Mono and
multi-crystalline cells

(89)     One interested party
claimed that there was no production of mono crystalline cells in the Union,
and that its exports of mono crystalline cells were not competing with the EU
industry. Investigation showed however that there was indeed production of mono
crystalline cells in the Union. This argument is therefore rejected. In any
event, the General Court held in Brosmann that the absence of Community
production of a particular product type is not decisive.

2.3.15.   "Consigned from"
clause

(90)     Some interested parties
argued that the extension of the scope of the investigation to products
"consigned from" the PRC, while the case was initiated only against
products originating in the PRC was unjustified.

(91)     However,
goods consigned from the PRC were already covered at the initiation stage. In
point 5 of the Notice of Initiation it is stated that "companies which
ship the product concerned from the People's Republic of China but consider
that part or even all of those exports do not have their customs origin in the
People's Republic of China are invited to come forward in the investigation and
to furnish all relevant information". It is therefore clear that all
companies consigning goods from the PRC had the opportunity to co-operate in
this investigation. Furthermore, since the product under investigation
frequently incorporates components and parts from different countries, it was
also announced in point 5 of the Notice of Initiation that "special
provisions may be adopted" to address this issue.

(92)     It is therefore considered
that all affected economic operators were duly informed of the possibility that
special provisions in respect of goods consigned from the PRC may be adopted,
if appropriate, and were invited to co-operate in the investigation. Thus the
scope of the investigation was not extended to products "consigned from
the PRC", since these were covered from the outset.

(93)     Following disclosure,
interested parties argued that irrespective of the provisions in the Notice of
Initiation referred to in recital (91), the investigation was limited to goods
originating in the PRC and did not assess the impact of goods consigned from
the PRC.

(94)     In this respect, it is
noted that the following steps were taken to ensure that all goods consigned
from the PRC were assessed during the investigation, and not only goods
originating in the PRC:

·
All companies which ship the product concerned
from the PRC were invited to come forward in the investigation irrespective of
the origin of the goods.

·
In Annex A of the Notice of initiation,
exporters were asked to report information for all products manufactured by the
company. This information was not limited to goods originating in the PRC.

·
On the basis of this information, which
contained all exports to the EU irrespective of the origin of the goods, a
representative sample was selected.

·
The sampled producers received a questionnaire
for "producers exporting to the European Union", and the PRC was
referred to as "country concerned", not country of origin. It was
therefore clear that all goods irrespective of the origin of the goods were
investigated.

(95)     On this basis, it is
concluded that the investigation covered all goods originating in or consigned
from the PRC, and that the findings of the investigation, including subsidization
and injury, cover all goods originating in or consigned from the PRC.

(96)     Following final disclosure,
interested parties argued that the complaint contained only prima facie
evidence concerning imports of solar panels originating in the PRC, not goods
consigned from the PRC. In this respect, it needs to be clarified that the
complaint indeed covered goods "from the PRC", which can be seen from
the cover page submitted by the applicant bearing the stamp. Before this page,
there is another page on the file which indeed uses the wording
"originating in the People's Republic of China". But this case was
not part of the document submitted by the complainant, but added as a cover
page by the Commission Services, using the name of the investigation rather
than repeating the title of the complaint. It is therefore considered that the
complaint covered all goods from the PRC, whether originating in the PRC or
not.

(97)     Chinese exporting producers
further argued that exporting producers in third countries cannot reasonably be
expected to have known that their products could also be targeted by the
investigation. In this respect it is noted that the measures do not apply to
goods which are in transit in the sense of Article V GATT. Therefore, exporting
producers which have no operations in the PRC are not affected by the measures.
Furthermore, no exporting producers in third countries came forward raising the
issue that the products they export are subject to the measures.

(98)     The same exporting
producers argued that exporting producers in third countries were not asked to
come forward, and not given the opportunity to show that their products are not
subsidised. The Institutions consider that those exporting producers without
any operations in the PRC are not affected by the measures, as their goods, if
consigned from the PRC, will have been in transit. All other exporting
producers were informed by the Notice of Initiation that their operations are
part of the investigation.

2.3.16.   Conclusion

(99)     In
view of the above, the product scope is definitively defined as crystalline
silicon PV modules or panels and cells of the type used in crystalline silicon
PV modules or panels, originating in or consigned from the People’s Republic of
China, unless they are in transit in the sense of Article V GATT. The cells
have a thickness not exceeding 400 micrometers. This product is currently
falling within CN codes ex 8501 31 00, ex 8501 32 00, ex 8501 33 00, ex 8501 34
00, ex 8501 61 20, ex 8501 61 80, ex 8501 62 00, ex 8501 63 00, ex 8501 64 00
and ex 8541 40 90.

(100)   The
following product types are excluded from the definition of the product
concerned:

–
solar chargers that consist of less than six
cells, are portable and supply electricity to devices or charge batteries,

–
thin film photovoltaic products,

–
crystalline silicon photovoltaic products that
are permanently integrated into electrical goods, where the function of the
electrical goods is other than power generation, and where these electrical
goods consume the electricity generated by the integrated crystalline silicon
photovoltaic cell(s).

–
modules or panels with a output voltage not
exceeding 50 V DC and a power output not exceeding 50 W solely for direct use
as battery chargers in systems with the same voltage and power characteristics.

3.           SUBSIDISATION

(101)   The
complainant alleged that the PRC is heavily subsidising its photovoltaic
industry (“PV industry”) and referred to a number of policy and planning
documents as well as legislation which are the basis for the state support in
the sector. The Commission reviewed and analysed the documents mentioned in the
complaint as well as additional documents submitted by the GOC and sampled
exporting producers in the course of the investigation and found that many of
them indeed show that the PV industry in the PRC receives preferential
treatment in many areas.

(102)   GOC
included the PV industry amongst “strategic” industries in the 12th
Five-year Plan[11]. The GOC has also issued a specific plan for the solar photovoltaic
industry (subordinate to the main 12th Five-year Plan), i.e. The 12th
Five-year Plan for the Solar Photovoltaic Industry. In this plan the GOC
expressed its support for “superior enterprises”[12] and “key
enterprises”[13], committed itself to “promote the implementation of various
photovoltaic support policies”[14], and “formulate
overall preparation of supporting policies on industry, finance, taxation ...”[15]. The Decision No 40 of the State Council suggests that the GOC will
actively support the development of new energy industry and expedite the
development of solar energy[16], instructs all financial institutions to provide credit support only
to encouraged projects (the category in which the PV projects belong) and
promises the implementation of “other preferential policies on the
encouraged projects”[17]. Another State Council Decision of 10 October 2010 talks about
expansion of the “intensity of fiscal and financial policy support”,
encourages the financial institutions to “expand the credit support” and
promises to “make use of the fiscal preferential policies such as risk
compensation”[18] for new strategic industries, a category where the solar PV
industry belongs. The National Outline for the Medium and Long-term Science and
Technology Development (2006 – 2020) promises to “give the first
place to policy finance”, “encourage financial institutions to grant
preferential credit support to major national scientific and technological
industrialisation projects”, to “Encourage financial institutions to
improve and strengthen financial services to high-tech enterprises” and to “implement
the preferential tax policies to promote the development of high-tech
enterprises” [19]. Also the Law of the PRC on Scientific and
Technological Progress lists a number of measures for the support of strategic
industries including the solar PV industry. Inter alia, it shows
that the state shall encourage and give guidance to financial institutions in
supporting the development of high and new technology industries by granting
loans[20], instructs the policy oriented financial institutions to give
priority to the development of high and new technology industries in offering
financial services[21], provides for “discount interest and guaranty to the loans”
received by certain enterprises and “special aid” by the policy oriented
financial institutions to projects encouraged by state[22]. The
practical applications of these measures are detailed below.

3.1.        Preliminary remarks

(103)   Both the GOC and the sampled
Chinese exporting producers submitted questionnaire replies and accepted
on-spot visits[23]
in order to verify the replies.

(104)   With respect to the GOC, following the analysis of the
questionnaire reply, the Commission sent a deficiency letter and a pre-verification
letter, followed up with subsequent correspondence concerning the agenda of the
verification visit. The Commission provided to the GOC ample time for the
preparation and submission of its representations whenever this was requested
and justified. Indeed, a substantial deadline extension was granted to the GOC,
i.e. 30 days extension for the reply to the questionnaire which resulted in an
eventual deadline of 69 days for the submission of the questionnaire reply and the
Commission gave the GOC 25 days for the reply to the deficiency letter. Therefore, overall, the GOC has had more than three months to
provide the requested information requested by the Commission.

(105)   During
the on-spot verification visit to the Chinese Ministry of Commerce in Beijing
and four financial institutions (China Development Bank, Export Import Bank of
China, Huaxia Bank and SINOSURE) the Commission endeavoured to verify
information provided on the basis of the supporting documents that were used to
prepare the GOC's response, in line with the provisions of Articles 11 and 26
of the basic Regulation. In doing so, the Commission came preliminarily to the
conclusion that the lack of information and supporting documents available from
the GOC did not allow a proper verification of the reply to the questionnaire.
Moreover, certain information was not submitted at all although it was
specifically requested and certain questions were simply not replied to.
Consequently, the GOC was made aware of the consequences of non-cooperation in
accordance with Article 28(1) and (6) of the basic Regulation.

(106)   The
GOC also submitted that the Commission was imposing an unreasonable burden on
the GOC and that it had requested irrelevant and unnecessary information in the
questionnaire and subsequent deficiency letter.

(107)   With
respect to the requested information it is noted that the Commission requested
only information concerning allegations in the complaint that is deemed
necessary for the purposes of arriving at a representative finding and remained
consistent in its requests by asking for the same data and information during
the investigating process and requesting the GOC to explain the submitted
information and its implication for the investigated schemes. In other words,
the Commission only requested information that was necessary to assess the
existence and level of subsidisation available to the product concerned
pursuant to the subsidy schemes alleged in the complaint.

3.2.        Non-cooperation

(108)   As already referred to in
recital (106) above, following the on spot verification visits, on 23 May 2013,
the Commission notified the GOC that it was considering the application of
facts available in accordance with Article 28 of the basic Regulation. The
Commission sent this letter, since it had come to the preliminary conclusion
that the lack of information and supporting evidence available from the GOC did
not allow for a proper verification of the reply to the anti-subsidy
questionnaire, deficiency letter and other submissions made by the GOC in the
course of the proceeding at hand. Moreover, it was found on spot that certain
information was also withheld in the questionnaire reply and subsequent
submissions by the GOC, although it had been specifically requested by the
Commission. In addition certain questions were simply not replied to. The
potential application of facts available concerned the government plans,
projects, various legislation and other documents; Preferential policy loans,
other financing, guarantees and insurance; PBOC circulars; verifications at
banks; Export credit insurance and Sinosure verification; the Golden Sun
Demonstration programme; direct tax exemption and reduction programmes; indirect
tax and import tariff programmes; provision of inputs at less than adequate remuneration:
polysilicon, aluminium extrusions and glass; and the provision of Land Use
Rights.

(109)   In its letter of 3 June 2013
the GOC objected the Commission’s preliminary intention to apply the provisions
of Article 28 of the basic Regulation, reasoning that the conditions required to
disregard the information submitted or even to “fill in information gaps” had not
been met in this case.

(110)   GOC claimed
that “doubts” as to the accuracy of information, which arise solely from the
fact that information submitted could not be verified to the Commission’s “utmost”
satisfaction, should not lead to that information being disregarded. The Commission
disagrees with this claim as it does not represent the reality. Indeed, the Commission
did not “disregard” any of the information solely on the basis that it could
not verify it during the on-the-spot verification visit. However, if the
information and explanation provided by the GOC was found to be either
contradictory and/or incomplete when compared to the other information
available to the Commission and, at the same time it was not possible to verify
it during the on spot verification visit, the Commission could not take such
information at its face value. Due weight is attached to each piece of
information depending on the degree of non-cooperation from the GOC. It is also
noted that the Commission did not take an issue with the format in which the
information was provided, as the GOC alleged, but rather with its inaccuracy
and/or incompleteness.

(111)   The GOC also claimed that
some of the information requested by the Commission involved such a burden that
the GOC did not have the practical ability to provide it. In this respect it is
noted that the Commission requested only information which was necessary to verify
the allegations made by the complainant (and supported by prima facie evidence)
and gave the GOC ample time and opportunity to submit such information. In
addition, the Commission is fully aware that the significant number of detailed
allegations of the complainant in this case obliged it to request a substantial
amount of information from the GOC. However, as explained above (recitals (104)
to (107)), the information sought was not excessive and due time was allowed
for it to be provided.

(112)   Further the GOC pointed to
the distinction between disregarding the submitted information and
supplementing the information received with facts actually on records. While
the Commission is fully aware of this distinction and acts in line with the
relevant provisions of Article 28 of the basic Regulation it must point out
that when the submitted information is in contradiction with other information
available on the same matter to the Commission it is not possible to supplement
this information. On such occasions (e.g. submitted information on the
ownership of banks) the Commission had to decide which information is more
reliable. In doing so the Commission ensured that the use of facts available is
not punitive and is based on facts actually available.

(113)   The GOC claimed that the
Commission had no grounds on which to consider the GOC as being non-cooperative
in this case as it either ignored or misunderstood its obligation to consider
the “practical ability” of the GOC to respond to its demand. According to the GOC,
the investigation as a whole has been unduly burdensome such that cooperation
in general has been rendered impossible, and the Commission as an investigating
authority has continually refused to work with the GOC so as to mitigate such
burdens. This claim is a clear misinterpretation of facts. The Commission, to
meet its legal obligations following the receipt of properly documented
complaint and at the same time to respect relevant WTO jurisprudence, requested
from the GOC only the information necessary to verify and assess the
allegations in the complaint supported by sufficient evidence. The Commission
offered assistance to the GOC in the cover letter to the questionnaire as well
as in the questionnaire itself. Also in the deficiency letter, the GOC was
invited to contact the Commission should it have any questions concerning the
requested information. The Commission also granted exceptionally long deadline
extensions for the information to be submitted (see recital (104) above).
Furthermore, in this investigation, the Commission requested
transaction-specific information from GOC only with regard to the sampled
exporters, not to all solar panel producers in China, thus narrowing down the
potential volume of required information to a major extent. The Commission
notes that the GOC appears to conflate arguments concerning its practical
ability to provide data with other issues. For example, when discussing the
Commission’s allegedly excessive request for information on banks and financial
institutions, it bases it argument mainly on the alleged insufficiency of the
complaint, claiming that it is based on “illegal determinations” in the Coated
Fine Paper case. Therefore, the GOC’s complaint seems to relate to the
quality of evidence for initiation, not its practical ability to provide
information. Indeed, in its letter of 3 June 2013 the GOC repeated its claim
from the previous submissions that initiation of many of the programmes did not
meet the evidentiary threshold of the Article 11.2 of the WTO SCM Agreement and
that by initiating on these programme the Commission violated Article 11.3 of
the WTO SCM Agreement. The Commission already replied to these claims in a
letter and Memorandum to the GOC and since no new claims were raised in the
letter of 3 June 2013 there is no need to re-address the same claims for second
time in this regulation.

(114)   The GOC also claimed that
the Commission did not provide the GOC enough time to complete the
questionnaire. This is simply incorrect. As explained in recital (104) above
the Commission granted to the GOC substantial extensions of deadlines,
providing the GOC maximum possible time without this having a substantial
negative impact on the timely completion of the case. The time allowed for the
completion of the questionnaire and reply to the deficiency letter was
substantially more than the time required by Article 11(2) of the basic
Regulation.

(115)   The GOC claimed that the
Commission ignored its request for aid in determining the relative necessity of
the questionnaire responses for the purposes of avoiding facts available
determinations. In its submission it referred to its request to the Commission
to explain the purpose of particular requested information and to which factual
determinations it would lead, in order to “ensure that it could cooperate to
the best of its practical ability while at the same time providing the most
essential information”. Naturally, the Commission could not know before the
actual information is provided to what conclusions it will lead. The GOC also
claims that the Commission structured the questionnaire so as to make it
“functionally impossible” to complete and the Commission engaged in “fishing
expeditions.” The Commission categorically rejects these allegations. As
explained above, the questionnaire only requested the information which was
necessary to make its determination.

(116)   It was also claimed by the
GOC that the Commission insisted on the provision of documents which the GOC
could not by law produce or compel to be produced and in this context referred
to relevant EU and WTO law which make it clear that only false or misleading
information should be disregarded and that it had no “practical ability”
to provide certain information of which, as state secret or otherwise, its internal
laws strictly prohibit dissemination. It further claimed that the relevant
provisions of WTO ADA and ASCM which envisage ways in which confidential
information can be provided to investigating authorities and granted
“confidential treatment” do not always apply in the case where the information
is to be provided by the authority of third country, in this case the GOC. The
GOC also claimed that the Commission will fall foul of the ASCM if it refuses
to recognise the legal distinction between a government’s practical ability to
provide information which it is legally prohibited from releasing, on one hand,
and other sorts of confidential information for which it may request
confidential treatment in the normal course of an investigation.

(117)   The
Commission did not disregard any information which the GOC did not produce,
whatever the reason, because it is simply not possible to disregard something
that was not provided. On the other hand in a situation where the GOC did not
provide, or make available for inspection, certain information, and information
of a similar nature was available to the Commission from other sources (mostly
publicly available, but also from cooperating exporting producers or submitted
by certain banks during on-spot investigations); the Commission included this
information in the case file and used it in its determination. The Commission
does not agree with the claim that the WTO ADA and ASCM provisions which
envisage ways in which confidential information can be provided to investigating
authorities and granted “confidential treatment” do not apply to the GOC. In
this regard, the GOC is claiming that governments should be held to a different
standard of cooperation than that of exporters and that situation of
governments warrants a “modicum of comity” to which exporters are not entitled.
With regard to the conduct of countervailing duty investigations, the
Commission does not agree. GOC is one of the interested parties in the
proceeding for the purpose of the basic Regulation and at the same time, as an
“interested Member”, the PRC is bound by the WTO provisions and jurisprudence.
Article 28(1) of the basic Regulation states: “In
cases in which any interested party refuses access to, or otherwise does not
provide necessary information within the time limits provided in this
Regulation, or significantly impedes the investigation, provisional or final
findings, affirmative or negative, may be made on the basis of the facts
available.“ Article 12.7 of the WTO SCM
Agreement, explicitly refers to the consequences of non-cooperation by
governments ("Interested Member): “In cases in which any interested
Member or interested party refuses access to, or otherwise does not provide,
necessary information within a reasonable period or significantly impedes the
investigation, preliminary and final determinations, affirmative or negative,
may be made on the basis of the facts available.” Therefore when the
investigating country, in this case, the EU, exercises its WTO rights in a
countervailing duty investigation and requests information deemed necessary for
the purpose of the investigation, governments and exporters are under the same
obligation to cooperate. In the course of the investigation the GOC often
referred to rules on confidentiality as a reason for not providing requested
information, for example, the PBOC circulars, for verification purposes It is
noted that even if the GOC was, as it claims, “legally prohibited from
releasing such information” it is still bound by its WTO obligations to provide
information deemed necessary for the investigation. In this regard, provisions
of the municipal law or internal rules of a WTO Member cannot absolve it from
its WTO obligations to cooperate with investigations; in such cases of
conflict, it is incumbent upon the GOC to suggest ways in which access can be
afforded to information so that it can be adequately verified. Notwithstanding
the above, the GOC never actually explained this claim and never provided any
evidence (e.g. the legal provision by which it is “legally prohibited” from
releasing such information) in this regard.

(118)   Furthermore
the GOC claimed that the pre-verification letter of 25 March 2013 was not
sufficiently detailed and it did not contain specific questions which will be
addressed during the on-the-spot verification visit. In this respect it must be
noted that while there is no requirement for the Commission to send a list of
all questions which will be asked during the on spot verification (and the
Commission does not consider this appropriate), the pre-verification letter of 25
March 2013 contained a very specific and detailed list of issues and documents
which would be addressed in line with Article 26(3) of the basic Regulation and
WTO requirements. However, the letter made it clear that the list was
non-exhaustive and that other issues and evidence may be addressed if
appropriate. In this respect it should also be noted that the GOC did not
object the contents of this letter prior to the verification, although on the
other hand it refused to discuss some points not explicitly raised in the
letter, such as information on biggest banks in the PRC, involvement of China Communist
Party (“CCP”) in the management of certain banks or access of some banks to the
foreign currency reserves of State Administration of Foreign Reserves, claiming
not to be ready to reply to questions on these issues.

(119)   The GOC also argued that the
Commission was not flexible during the on-spot verification visit and in fact “fixed
a peremptory time-limit in regard to any requests for changes by the GOC”. In
the same vein it claimed that the Commission did not accept any of the
“workable” solutions proposed by the GOC concerning the verification at
National Bureau of Statistics (NBS) and refused to extend the verification
until Monday 22 April 2013 to verify NBS. Furthermore, the Commission officials
started the verifications with a delay virtually each working day because,
according to the GOC, of their late arrival.

(120)   In
respect of the above claims, the Commission underlines that the degree of
flexibility shown by its officials on the spot has been full and unconditional.
The Commission officials have exceptionally offered to verify documents and
evidence the GOC sought to introduce well after the close of a certain subject,
well beyond the regular working hours on a number of occasions. This was done
several times, even if it meant having to move at a very late hour to other
verifications sites and/or return to sites where the Commission officials had already
been and had already provided an opportunity to verify documents. Unfortunately,
however, the GOC did not take up these offers in the cases in question, which
strongly suggest that the failure to submit the documents requested by the
Commission during the regular hours had not been due to their time constraints
or to the unwillingness of the Commission to verify them. As regards the delay
on the start of the verification visit, the Commission notes that the officials
were present on time every day but that, unfortunately, some delays were caused
by the daily registration procedures to access the different verification sites
required by the GOC or simply by the lack of GOC representatives to accompany
the officials when they arrived at verification sites which forced them to wait
long time before the start. The Commission also notes that the verification
visits lasted every day well beyond the normal working hours, and that it was
the GOC that cancelled the afternoon session of the verification visit the
first day as the representatives of the Ministry of Technology decided not to
participate in the visit (see recital (122)). In fact, if the GOC had accepted all
the repeated offers by the Commission officials to verify documents beyond the
working hours, the visits would have lasted longer and it was because of the
GOC failure to fully cooperate that this was not the case.

(121)   The
GOC further contested the Commission’s practice not to accept new documents and
evidence which require verification after the end of the verification session
to which they belong. In this respect it must be clarified that it is not and
never was the intention of the Commission to disregard information provided in
this way outright. The Commission took account of all the information
submitted, analysed its quality (e.g. the extract of audited financial
statements is treated in different way from a simple excel table or word
document with figures not supported by any official source) and attributed it
the appropriate weight given the fact that it was unable to verify this
information during the on-the-spot verification visit.

(122)   Concerning
the six documents[24] submitted by the GOC in the course of the investigation and the
content of which the GOC refused to discuss during the on-the-spot verification
visit, the GOC claimed that the Commission has no basis to apply facts
available in line with Article 28 of the basic Regulation. It also claimed that
the Commission failed to assist the GOC in understanding the requirement to
provide these documents and to demonstrate that all the documents concerned
were relevant despite that the GOC “had specifically invited the Commission
before the start of the verification to assist the GOC in understanding the
requirement to provide these documents and to demonstrate that that all the
documents concerned were relevant”. In this respect, firstly, it is noted
that all the documents directly pertain the industry concerned[25] and therefore their inclusion within the scope of verification was
highly relevant. Secondly, the wording the GOC used in its letter to the Commission
of 11 April 2013 was different than the one referred to in its letter of 3 June
2013. In fact the GOC stated, in its letter of 11 April 2013, that the
verification of said documents “is suspended unless the Commission can
convincingly demonstrate to what extent these documents are considered relevant
to the current investigation, in particular the alleged subsidies”. Since
all these documents directly concern the industry concerned and even particular
subsidy schemes such as preferential lending or preferential tax schemes, as is
obvious from their wording the Commission did not understand what could be
added to demonstrate their relevance even more. It was surprising for the
Commission that the GOC did not appear to have a problem with the relevance of
these documents when they were submitted, but only when the Commission
requested explanations.

(123)   In its letter of 23 May 2013
the Commission stated that it was prevented from verifying most of the
submitted information to original documentation and cross-checking it with the
source data which were used to prepare the replies of the GOC in respect to the
information on the financial market and financial institutions in the PRC. The
GOC objected that given the “very general and unspecific quote” the Commission
has not provided the GOC an opportunity to meaningfully comment and therefore
does not enable the GOC to exercise its right of defence in proper way. This
claim does not represent reality. In the questionnaire the Commission asked
very specific questions and, in line with normal practice of many investigating
authorities it attempted to verify the GOC answers during the on spot
verification visit.

(124)   In particular, the GOC in its
reply to the questionnaire stated that “the loans to the industry concerned
account for very small portion of the total loans granted. For example, some
banks have described in their appendix questionnaire that the loans granted to
the industry concerned accounted for less than 1 % of total loans”. During the
verification the GOC was not able to support this statement with any evidence
at all and simply referred the Commission to the banks.

(125)   The Commission also
requested statistics on the loans to the industry concerned. The GOC claimed
that it does not keep such records. When the Commission inquired whether the
GOC attempted to compile such statistics and requested this information from
the banks the CBRC (Banking regulatory authority in the PRC) official present
during the verification replied that he did not know about this as another
department in the CBRC would be responsible for statistics. No statistics as
requested in the questionnaire and repeatedly in the deficiency process were
submitted by the GOC. The Commission indicated again in its pre-verification
letter that this topic would be covered.

(126)   With regard to banks, the Commission
also inquired during the verification visit about the risk and creditworthiness
assessment, overall operating situation, management situation, credit level,
financial usage, repayment ability, guarantee pattern and business cooperation
between the banks and the borrowers, as the GOC made claims concerning these
issues in its reply to the questionnaire. Again, despite the fact that these
topics were indicated in the pre-verification letter the GOC was not able to
provide any evidence supporting its own claims and referred the Commission to
the banks.

(127)   In its reply to the deficiency letter the GOC submitted some
information concerning the percentage of government ownership in some banks. It
is noted that initially the GOC in the questionnaire reply stated that it does
not possess such information and that it only submitted information in this
respect after the Commission pointed out that Article 24 of the Commercial Bank
Law actually requires banks to report this information to the CBRC. When the
Commission inquired during the verification visit what was the source of this
information, the CBRC official present stated that he did not know as another
department of the CBRC is responsible for the collection of such data.
According to Article 2 of the Interim Regulations on the Boards of
Supervisors in Key State-owned Financial Institutions (submitted by EXIM
Bank in its reply to the deficiency letter) “the list of state-owned
financial institutions to which the State Council dispatches boards of
supervisors shall be recommended by the administrative organ for boards of
supervisors in state-owned financial institutions”. Since this legal
provision refers to the administrative organ for boards of supervisors in
state-owned financial institutions, it seems that the GOC is aware of which
financial institutions it owns. Nevertheless, the Commission was not able to
verify this information or even to identify the source of the information
because of the non-cooperation from the GOC. The publicly available information
suggests that there are also other state-owned banks (which provided loans to
the sampled exporting producers) in addition to those reported by the GOC in
its reply to the deficiency letter[26].

(128)   In its letter of 3 June 2013
the GOC claimed that the Commission did not either in its questionnaire or in
the deficiency letter, “ask for the “supporting evidence or data source” and
“now suddenly alleges lack of supporting evidence or data source”. To set the record
straight the Commission, like any other investigating authority, verifies the
data submitted by all parties in the proceeding and the GOC was aware of this
as Commission pointed out already in its questionnaire and in the cover letter
to the questionnaire that the replies could be subject to verification.
Moreover, in its pre-verification letter the Commission included also this
particular topic among the issues to be covered during the verification[27]. Therefore the fact that the
Commission is asking for supporting evidence of the statements made by the GOC
was certainly not a surprise for the GOC but the standard procedure followed but
the Commission in each and every case.

(129)   When,
during the verification, the Commission asked the GOC to submit a list of 10
biggest banks in the PRC and the share of the market they represent, the CBRC
replied that it is able to submit such information but that it could not answer
the question before it was submitted in a written format. The Commission
explained that a question asked during the verification visit orally has the
same validity as any questions submitted in writing and pointed to the fact
that for the other oral questions the GOC did not request their submission in
writing before replying. In spite of this clarification, the GOC still did not provide
the information.

(130)   In the questionnaire the
Commission requested documents which were the basis for the establishment of
the CBRC and provided it with the mandate. The GOC submitted a document from
the National People’s Congress simply stating that the CBRC shall be created.
When the Commission inquired whether there are any other documents specifying
the mandate and purpose of the CBRC, the CBRC official present stated that
there are many other laws concerning the CBRC but that, if the Commission
wanted to obtain these documents it should have requested them before the
verification. It is noted that in the questionnaire the Commission requested
the GOC to “provide documents which were the basis for the establishment of
this authority and provided it with the mandate” and therefore, it had
requested these documents before the verification.

(131)   When the Commission
requested statistics and reports from the banks which provided loans to the
sampled exporters for the IP it pointed to Article 33 of the Law of the PRC
on Regulation of and Supervision over the Banking Industry[28] which suggests
that the CBRC collects such statistics. The CBRC official present stated that
he had to seek permission from the legal department first but he did not
provide any information in this respect before the end of the verification.
Again it must be noted that the Commission requested this information in the
questionnaire and deficiency letter and it had indicated in its
pre-verification letter that statistics would be a topic for the verification.

(132)   The GOC further claimed that
the allegations in the complaint concerning Chinese banks being public bodies
are based merely on simple assertions of state shareholding which in turn are
based on “illegal” determinations in the Coated Fine Paper case. This
claim is a misinterpretation of facts in the complaint. In the complaint, the complainant,
in addition to the state ownership, refers, inter alia, to the loans
provided by banks based on political directives, to the government agencies
directing financial institutions to increase credit and lending to enterprises
for promoting new technologies and products (including the PV industry). The Coated
Fine Paper findings on Chinese banks being public bodies were based on more
elements than merely ownership (e.g. government intervention and guidance of
banks to direct preferential lending to the paper industry via Government plans)
and these findings are fully in line with EU and WTO law. In addition, the
findings on the status of state-owned banks as public bodies were confirmed in Organic
Coated Steel as well.

(133)   The GOC also continued to claim
that it was not in its practical ability to provide information on 3,800 banks
and financial institutions which exist in the PRC and that, in any event the
CBRC does not retain records concerning the percentage of government ownership
in banks. The Commission does not understand why the GOC is referring
repeatedly to all banks in the PRC in connection with the GOC ownership in them
when the information requested was explicitly limited to those banks “where the
GOC has direct or indirect shareholdership”[29].
As explained in recital (127) above the claim of the GOC that the CBRC (or any
other government authority) does not retain records on its ownership share of
the banks seems to be in contradiction with several Chinese legal provisions.

(134)   In its letter of 3 June 2013
the GOC repeated its claim that it does not have the authority to require
“independent banks” to produce confidential information and pointed to the
letter that had allegedly been sent to the banks on this matter. It is true
that during the verification the GOC showed the original of the letter intended
for the banks, but when the Commission requested the GOC to submit evidence to
show to which banks and financial institutions this letter was sent the GOC was
not able to provide such evidence. The GOC also alleged that some of the
institutions indicated in Annex 7 to the deficiency letter were not banks. In
this regard the Commission notes that these institutions had been notified to
the Commission by the sampled exporting producers as institutions which
extended loans to them.

(135)   The
GOC claimed that the Commission never addressed the issue of the PBOC Circulars
YinFa [2003] and [2004] in its questionnaire or in the deficiency letters. It
is noted that in the pre-verification letter the Commission included “PBOC
regulations/circulars/internal documentation concerning interest rates
regulation in the PRC” amongst the topics to be covered during the verification.
It is obvious that both circulars fall into this category. In its reply to the
deficiency letter the GOC even referred to an article on the PBOC website which
referred to one of the circulars. However the GOC did not provide any circulars
from PBOC at all and only submitted information from the PBOC website which was
incomplete in respect of the governance of interest rates on loans and deposits
in China when compared to Circulars YinFa [2003] and [2004] which are both available
on the web. It is also noted that the GOC did not refuse to submit these documents
on the basis that it was not prepared for such question but rather because of
the alleged confidentiality of the circulars. In this regard it must be noted
that the GOC’s claim concerning the confidentiality of the PBOC circulars is
inconsistent with its own practice in this proceeding. In its comments to
definitive disclosure the GOC submitted full version of another PBOC Circular
to support its claim that the special loans provided by SOCBs were repealed and
the confidentiality alleged elsewhere did not seem to be an obstacle. In respect
to the extracts from the PBOC website, the Commission took note of them and,
did not disregard their content. However to have the complete information on
the matter also required the information in the two circulars which complemented
the information submitted by the GOC.

3.3.        Individual
Examination ('IE')

(136)   Claims for IE were submitted
by 6 cooperating exporting producers pursuant to Article 27(3) of the basic
Regulation, i.e. companies CNPV Dongying Solar Power Co. Ltd., Jiangsu Runda PV
Co., Ltd., Kinve Solar Power Co., Ltd (Maanshan), Phono Solar Technology Co.
Ltd., Shandong Linuo Photovoltaic Hi-Tech Co. Ltd., and Shandong Linuo Solar
Power Holdings Co. Ltd. It was not possible to grant these companies individual
examinations as, due to the high number of alleged subsidy schemes and time
consuming nature of the investigation, it would be unduly burdensome and could
prevent completion of the investigation in good time.

3.4.        Specific Schemes

(137)   On the basis of the
information contained in the complaint the Commission sought information
related to the following schemes, which allegedly involved the granting of
subsidies by the Governmental authority:

(i)      Preferential policy loans, other
financing, guarantees and insurance

–
Preferential policy loans

–
Provision of credit lines

–
Export credit subsidy programmes

–
Export Guarantees and Insurances for Green
Technologies

–
Benefits provided through granting of access to
offshore holding companies and loan repayments by the government

(ii)     Grant Programmes

–
Export product research development fund

–
Subsidies for development of “Famous Brands” and
China World Top Brands Programme

–
Funds for outward expansion of industries in
Guandong Province

–
The Golden Sun demonstration programme

(iii)     Direct Tax Exemption ad Reduction
programmes

–
The two free/three half programme for foreign
invested enterprises (FIEs)

–
Income tax reduction for export-oriented FIEs

–
Income tax benefit for FIEs based on
geographical location

–
Tax reduction for FIEs purchasing Chinese-made
equipment

–
Tax offset for research and development by FIEs

–
Tax refunds for reinvestment of FIE profits in
export oriented enterprises

–
Preferential tax programmes for FIEs recognised
as high or new technology enterprises

–
Tax reduction for high and new-technology enterprises
involved in designated projects

–
Preferential income tax policy for enterprises
in the northeast region

–
Guandong province tax programmes

(iv)    Indirect Tax and Import Tariff
Programmes

–
VAT exemptions and import tariff rebates for the
use of imported equipment

–
VAT rebates on FIE purchases of Chinese-made
equipment

–
VAT ad tariff exemptions for purchases of fixed
assets under the foreign trade development funds programme

(v)     Government provision of goods and
services for less than adequate remuneration

–
Government provision of polysilicon for less
than adequate remuneration

–
Government provision of aluminium extrusions for
less than adequate remuneration

–
Government provision of glass for less than
adequate remuneration

–
Government provision of power

–
Government provision of land and land-use rights
for less than adequate remuneration

3.4.1.     Preferential
policy loans, other financing, guarantees and insurance

(a)
Non-cooperation and the use of facts available

–
Financial market and institutions in China

(138)   The Commission requested from the GOC information concerning
the proportion of loans provided by the banks where the GOC is the largest or
sole shareholder, banks where the GOC has a shareholding stake but is not the
largest shareholder, banks where the GOC is not a shareholder and banks which
are foreign owned, to both industry as a whole and to the industry concerned by
this proceeding. The GOC replied that it does not retain records of the amounts
and percentages of the loans provided by the state-owned banks and that the GOC
also does not retain the records of loans for the PV industry. The GOC did not
suggest any alternative source for this information.

(139)   The Commission
attached a specific questionnaire (Appendix A) intended for the banks/financial
institutions to the initial anti-subsidy questionnaire and asked the GOC to
forward it to the banks/financial institutions which provided loans to the
industry concerned. The purpose of Appendix A was to verify allegations in the
complaint that Chinese state-owned banks are public bodies. Inter alia,
the Commission sought information concerning the structure of government
control in those Chinese banks and the pursuit of government policies or
interests with respect to the photovoltaic industry (i.e. board of directors
and board of shareholders, minutes of shareholders/directors meetings,
nationality of shareholders/directors, lending policies and assessment of risk
with respect to loans provided to the cooperating exporting producers). In the
reply to the questionnaire, the GOC submitted a reply to Appendix A only for five
banks (the China Development Bank (CDB), the EXIM Bank, the Bank of Shanghai, the
Bank of China[30] and the Huaxia Bank). In the deficiency letter, the Commission
repeated its initial request for information. To facilitate the cooperation of
the GOC, it provided a list of banks/financial institutions which provided
loans to sampled companies and asked again the GOC to forward Appendix A to
these entities. No additional replies to Appendix A were submitted with the
reply to the deficiency letter.

(140)   The
Commission also sought information about the state ownership of the banks and
financial institutions. In its questionnaire reply, the GOC stated that it does
not retain any records concerning the ownership shares and it did not provide
any suggestion on how to obtain this information. When the Commission, in its
deficiency letter, pointed out that it is mandatory to include this information
in the Articles of Association of the banks and these are accessible by the GOC
as a shareholder, the GOC submitted shareholding information of 16 banks.
However, except for five banks, for which the GOC referred to the annual
reports as a source, it did not provide any supporting evidence for this
information and neither did it disclose what the source data for this
information was. Concerning the other banks which provided loans to the
industry concerned, the GOC did not provide any information at all concerning its
ownership stake. Consequently, the Commission was unable to verify the accuracy
and correctness of the reported data concerning the state’s ownership stakes in
the banks and other financial institutions.

(141)   The GOC claimed that the BB
rating applied to the sampled exporting producers (for the purpose of the loan
benchmark) is “extremely unfavourable” and that the Commission “in light
of the actual facts of the case did not explain how did it come to the
conclusion that this is the accurate or most reasonable conclusion. The GOC
further claimed that this methodology amounts to “an impermissible adverse
inference”. Although this claim was made in relation to the one of the
previous cases (i.e. Coated Fine Paper) and before the disclosure of the
information concerning the rating applied to the sample exporting producers in
this proceeding, it should be noted that the Commission did not apply “adverse
facts available” in this case or in any other cases to which the GOC referred
in its submission. The Commission had only drawn appropriate conclusions from
the facts on the record, which showed a lack of proper credit risk assessment,
see recitals (175) to (178). It should be pointed out that during the IP the
Chinese PV industry was making heavy losses and it was clear that its financial
status was extremely difficult. Several credit risk assessments supplied by
sampled companies demonstrated that a BB assessment for the IP as a whole was
not unreasonable. In fact some credit risk assessments clearly demonstrate that
several Groups were in fact more or less insolvent.

–
Verification at banks

(142)   In its pre-verification
letter the Commission envisaged the verification of the banks which submitted
replies to the Appendix A to the questionnaire and provided a large proportion
of loans to the sampled exporting producers, i.e. the China Development Bank,
the Export-Import Bank of China, the Bank of Shanghai and the Huaxia Bank and
it included a detailed list of subjects that would be covered during the
verification. In the initial questionnaire intended for the GOC, the Commission
had already made it clear that the information provided in the questionnaire
replies might be subject to an on-the-spot verification. In the
pre-verification letter the Commission had also stated that the GOC was “requested
to make all supporting documents available that were used to prepare your
substantive response, including original source documents and applications”.
Two other major providers of preferential financing to the sampled exporting
producers either did not submit requested information at all (Agricultural Bank
of China) or the information was submitted on their behalf without a
possibility to verify it (Bank of China).

–
Bank of Shanghai

(143)   In
its pre-verification letter of 25 March 2013 the Commission notified the GOC of
its intention to verify the Bank of Shanghai (“BoS”) and offered in order to
facilitate the verification visit for the GOC, should it be necessary, to
extend the verification visit until 22 April 2013[31]. In
its initial reply to the pre-verification letter of 5 April, the GOC did not
confirm whether the verification of BoS would take place but enquired whether
the Commission would be willing to verify the Bank of Shanghai in another
location to the rest of the verification (i.e. Shanghai instead of Beijing). To
facilitate the verification visit, the Commission exceptionally agreed to this;
however, it urged the GOC to confirm the verification in Shanghai by 9 April at
the latest (i.e. three working days before the start of the verification in
Beijing) in order for the team to be able to arrange the practicalities related
to such a change in the verification planning. Only on 11 April (one working
day before the start of verification) did the GOC confirm that the BoS was
available for verification on 23 or 24 April 2013. On the same day the
Commission communicated to the GOC that because of such late confirmation it
was not possible to arrange for the changes in the schedule. Moreover, the
dates proposed by the GOC (23 or 24 of April) were beyond the period agreed between
the GOC and the Commission in which the verification was due to be carried out
and even beyond the extension offered by the Commission. As a result the
Commission was unable to verify the reply to the Appendix A submitted by the
BoS and information concerning loans provided by this bank to the sampled
exporting producers. Consequently the Commission in its letter of 23 May 2013
informed the GOC that it is considering the application of Article 28 of
Regulation (EC) No 597/2009 in respect to the unverified information submitted
by the BoS.

(144)   In
its letter of 3 June 2013 the GOC claimed that the verification of BoS did not
take place because of the inflexibility on the Commission side, that the
Commission did not propose any alternative dates for the verification and
simply “declined to consider the verification of Bank of Shanghai”.
These claims are simply incorrect. The Commission stated clearly in its
pre-verification letter that it was initially proposed to verify the banks on
17 and 18 April 2013 with a possibility of additional day on 22 April, leaving
it to the GOC to propose appropriate times to visit the banks throughout the
whole period of verification (i.e. full working week plus additional day). Yet
the GOC proposed dates for verification of BoS outside this window and did so
only one working day before the start of verification visit. In the
Commission’s view, the flexibility offered was more than sufficient and
altogether six alternative days were offered for the verification of BoS,
contrary to the GOC’s claim.

–
Hua Xia Bank

(145)   In its letter of 23 May 2013
the Commission explained to the GOC that it was unable to verify certain parts
of Huaixia Bank’s (“Huaxia”) reply to Appendix A, namely the ownership
structure, the creditworthiness assessment of the sampled exporting producers
and the risk premiums charged to different industries and in particular to the
industry concerned.

(146)   In its reply of 3 June 2013
the GOC claimed that Huaxia explained the ownership structure and provided
further details and explanations to the Commission concerning its shareholders,
that the creditworthiness assessment of clients is covered by bank secrecy laws
and contractual agreements between the banks and its clients.

(147)   In
respect to the ownership structure it is noted that in its reply to the
Appendix A Huaxia claimed that it was incorporated “without any government
shares” and did not disclose any information on the government ownership
even though this was specifically requested by the Commission in the Appendix
A. The Commission pointed out that this is in contradiction to the other
information provided by the GOC and that Huaxia admitted that some of the
shareholders are state-owned and provided a paper with information in Chinese
on some of them. It is still not clear from the information submitted by Huaxia
what is the proportion of state ownership of the bank.

(148)   As
for the creditworthiness assessment, the Commission notes that the bank was
able to provide such document for one of the companies (after protecting the
identity of the company with some modifications in the document) while for the
other requested documents it claimed that they are covered by secrecy laws and
contractual agreements between the banks and its clients. This discrepancy of
treatments difficult to understand.

–
Export Import Bank of China

(149)   In its letter of 23 May 2013
the Commission informed the GOC that the replies of the Export-Import Bank of
China (“EXIM”) to the Appendix A and to the deficiency letters were incomplete
and that EXIM failed to submit certain documents which were specifically
requested, i.e. Articles of Association, the Notice of Establishing
Export-Import bank of China Issued by the State Council or Measures for the
management of Export Sellers’s Credit for Hi-Tech products of the Export
–Import Bank of China. Concerning the Articles of Association, the GOC
claimed in its letter of 3 June 2013 that EXIM, because of its internal policy,
could not submit Articles of Association (which is an internal management
document) but referred to the on-line version which was allegedly offered to be
consulted on the laptop provided by EXIM during the verification. The
Commission is puzzled by this explanation which makes no sense. If the document
was available on-line during the verification the Commission see no reason why
it could not have been submitted as repeatedly requested already in the
questionnaire, deficiency letter and again during the verification. In fact,
the claim that EXIM made this document available on the laptop during the
verification is incorrect. EXIM stated that the Commission should review the
document online but the Commission official explained that they do not have
internet access on the verification premises. In addition, EXIM did not even provide
a link to the online version of Articles of Association.

(150)   As for the other two
documents, EXIM reasoned that they could not be provided because of their
confidential nature and internal rules. It was the EXIM itself which stated in
its reply to the deficiency letter that the “EXIM bank was
formed and operates in accordance with The
Notice of Establishing Export-Import Bank of China Issued by the State Council and
The Articles of Association of Export-Import Bank of China “. Therefore this was deemed an essential document for verification
of the allegations in the complaint that EXIM is public body, but the
Commission was denied access to this document. In this context it is noted that
another policy bank, i.e. CDB provided a similar document concerning its
establishment and also several other State Council notices were submitted in
this investigation. Also EXIM did not support its claims on the confidentiality
by any evidence whatsoever. In addition, as explained in recital (117),
governments cannot simply invoke internal rules in order to avoid obligations
under the SCM Agreement and basic Regulation. The same applies for the Measures
for the management of Export Sellers’s Credit for Hi-Tech products of the
Export–Import Bank of China where EXIM claimed also confidentiality without
any supporting evidence and even refused to discuss the purpose of this
document.

(151)   EXIM
also failed to provide information on the composition of the Board of Directors
and Board of Supervisors, which was repeatedly requested, with the explanation
that “the composition of the Board of Directors is changing” and that
the Commission’s questions concerning the CCP affiliations of the members of
the Board’s “are invasive and inappropriate questions in the context of an
anti-subsidy investigation.” The fact that the composition of the Board of
Directors is changing is not relevant for the purpose of this investigation.
What is relevant is how the state is represented in the Boards of EXIM;
however, the GOC and EXIM refused to provide this information. The Commission
also considers the CCP membership of senior management of the EXIM (and all
banks in this matter) essential for the purpose of establishing the extent of
state influence on the banks’ management. According to the CCP Constitution “The
Party must uphold and improve the basic economic system, with public ownership
playing a dominant role and different economic sectors developing side by
side...”[32], therefore the examination of influence
of the CCP in EXIM was deemed to be necessary for the purpose of this
investigation and in particular to assess the level of state control in the
banks.

(152)   Concerning the statistics on
the export of different categories of products already requested in the
questionnaire and which EXIM is legally obliged to report to the CBRC, the GOC
claimed in its letter of 3 June 2013 that it needed more time to prepare such
information. In this respect it is noted that, since the Commission requested
this information already in the initial questionnaire, the GOC had more than
three and a half months to prepare this information but failed to do so. EXIM
alleged that “this type of information can be found in annual reports”;
however, this is incorrect. The information in the annual reports the GOC referred
to covers different periods than the information requested by the Commission in
the questionnaire and during the verification visit.

(153)   The GOC rightly claimed that
in the questionnaire reply it submitted, inter alia, the amounts of
export credits for exports of mechanical and electrical products and new
high-tech products. It is noted the Commission never contested the submission
of these figures. The Commission contested the fact that, when it attempted to
verify these figures during the verification visit, EXIM was not able to
provide any supporting evidence or even explain where are these figures come
from. Similarly, the Commission was not allowed to verify the data concerning
the proportion of export credits to the PV industry which the GOC submitted in
the questionnaire reply. Interestingly enough, EXIM did not consider any of
these figures confidential but when the Commission asked for the source data to
verify them, EXIM refused the access to it, citing confidentiality reasons.
EXIM applied the same reasoning concerning the amounts of export credits given
to the sampled producers and cooperating producers. It reported figures in the
reply to the deficiency letter but did not allow the Commission to verify it on
the basis of the confidentiality. Effectively, it was not possible to verify
the vast majority of the statistics submitted by EXIM.

(154)   The EXIM also refused to
explain and support with relevant evidence the credit ratings of the sampled
exporting producers and the analyses which led to these ratings.

–
China Development Bank (“CDB”)

(155)   In its letter of 3 June 2013
the GOC was concerned that the Commission asked “personal questions
concerning the political party affiliations of members of the Boards and senior
management”. This is not correct. The questions concerning the links of the
Board members and senior management to the CCP were purely of technical
character and, as explained in the recital (151) above, the reason for asking
them was to help determine the role of the CCP in Chinese economy.

(156)   During the verification the
Commission attempted to verify the creditworthiness assessment of the sampled
exporting producers. CDB provided some general information but refused to
disclose any information in relation to creditworthiness assessment of the
sampled exporting producers or even the risk evaluation and assessment report
of the PV industry.

(157)   In the reply to the
deficiency letter the CDB submitted a figure concerning the risk premium
charged for the industry concerned. During the verification the CDB corrected
its reply in this respect but did not provide any supporting evidence for this
figure or explanation of what was the basis for this figure, despite repeated
requests from the Commission during the verification visit.

(b)
Chinese state-owned banks are public bodies

(158)   The complainant claims that SOCBs in the PRC are public
bodies within the meaning of Article 2(b) of the basic Regulation.

(159)   The
WTO Appellate Body (AB), in its report in United States – Definitive Anti-Dumping
and Countervailing Duties on Certain Products from China[33] (the AB report) defined a public body as an entity that
"possesses, exercises or is vested with governmental authority". According
to the AB, evidence that government exercises meaningful control over an entity
and its conduct may serve as evidence that the relevant entity possesses
governmental authority and exercises such authority in the performance of
governmental functions. Where the evidence shows that the formal indicia of
government control are manifold, and there is also evidence that such control
has been exercised in a meaningful way, then such evidence may permit an
inference that the entity concerned is exercising governmental authority[34]. The AB also considered that public bodies are also characterised
by the "performance of governmental functions"[35] which
would "ordinarily be considered part of governmental practice in the legal
order of the relevant Member"[36].

(160)   The following
analysis focuses on whether the SOCBs in question perform functions which are
ordinarily considered part of governmental practice in China and, if so, whether
they exercise government authority when doing so. The investigation has
established that the Chinese financial market is characterised by government intervention
because most of the major banks are state-owned. The Chinese authorities have
provided only very limited information concerning shareholding/ownership of
banks in the PRC. However, as further outlined below, the Commission compiled
available information in order to arrive at a representative finding. In
performing its analysis whether banks are entities possessing, vested with or
exercising government authority (public bodies) the Commission also sought
information concerning not only the government ownership of the banks but also
other characteristics such as the government presence on the board of
directors, the government control over their activities, the pursuit of
government policies or interests and whether entities were created by statute.

(161)   From
the available information it is concluded that the state-owned banks in the PRC
hold the highest market share and are the predominant players in the Chinese
financial market. According to the 2006 Deutsche Bank Research on the PRC's
banking sector[37], the state-owned banks' share may amount to more than 2/3 of the
Chinese market. For the same matter the WTO Trade Policy Review of China noted
that “The high degree of state ownership is another notable feature of the
financial sector in China”[38] and "there has been little change in the market structure
of China's banking sector, which is dominated by state-owned banks"[39]. It is pertinent to note that the five largest state-owned
commercial banks (the Agricultural Bank, the Bank of China, the Construction
Bank of China, the Bank of Communications and the Industrial and Commercial
Bank) appear to represent more than half of the Chinese banking sector[40]. The government ownership of the five-largest state-owned banks was
also confirmed by the GOC in its reply to the deficiency letter.

(162)   The
Commission also requested information concerning the structure of government
control in those Chinese banks and the pursuit of government policies or
interests with respect to the photovoltaic industry (i.e. board of directors
and board of shareholders, minutes of shareholders/directors meetings,
nationality of shareholders/directors, lending policies and assessment of risk
with respect to loans provided to the cooperating exporting producers).
Nevertheless, as noted in recital (139) above, the GOC provided only very
limited information in this respect and did not allow the verification of much
of the submitted information. Consequently, the Commission had to use the facts
available. It concluded on the basis of the available data that those banks are
controlled by the government by means of ownership, administrative control of
their “commercial” behaviour including the limits set on the deposits and loans
interest rates (see recitals (164) - (167) below) and in some cases even by the
statutory documents[41]. The relevant data used in order to arrive at the aforesaid
findings is derived from information submitted by the GOC, the annual reports
of Chinese banks that were either submitted from GOC or publicly available,
information retrieved from the 2006 Deutsche Bank Research on China's banking
sector[42], WTO Policy review on China (2012)[43], China
2030 World Bank Report[44] or 2010 OECD Economic survey on China[45],
information submitted by the co-operating exporting producers and information
existing in the complaint. As for foreign banks, independent sources estimate
that they represent a minor part of the Chinese banking sector and consequently
play an insignificant role in policy lending; with relevant information
suggesting that this may represent as little as 2 % of the Chinese market[46]. Relevant publicly available information also confirms that Chinese
banks, particularly the large commercial banks, still rely on state-owned
shareholders and the government for replenishment of capital when there is a
lack of capital adequacy as result of credit expansion[47].

(163)   With
respect to the banks that provided loans to the cooperating exporting
producers, the majority of them are state-owned banks. Indeed, on the basis of
the available information[48] it was found that the state-owned banks and other state-owned
entities provided the great majority of loans to the cooperating exporting
producers. These included the major commercial and policy banks in the PRC like
the China Development Bank, the EXIM Bank, the Agricultural Bank of China, the
Bank of China, the China Construction Bank and the Industrial and Commercial
Bank of China. With respect to the remaining state-owned banks concerned, again
the Commission requested the same information mentioned above concerning the
government control and the pursuit of government policies or interests with
respect to the photovoltaic industry. No such detailed information was
provided. It is therefore concluded that the banks are controlled by the
government. Such a meaningful control is evidenced inter alia by the
governmental policy of support to the industry in question, which directs banks
to act in a particular supportive manner (see recital (102) above). For these
reasons the state-owned commercial and policy banks in the PRC should be
considered public bodies.

(164)   Another sign of GOC involvement
in the Chinese financial market is the role played by the PBOC in setting the
specific limits on the way interest rates are set and fluctuate. Indeed, the investigation
established that the PBOC has specific rules regulating the way interest rates
float in the PRC. According to the information available, these rules are set
out in the PBOC's Circular on the Issues about the Adjusting Interest Rates on
Deposits and Loans-Yinfa (2004) No 251 ("Circular 251"). Financial
institutions are requested to provide loan rates within a certain range of the
benchmark loan interest rate of the PBOC. For commercial bank loans and policy
bank loans managed commercially there is no upper limit range but only a lower
limit range. For urban credit cooperatives and rural credit cooperatives there
are both upper and lower limit ranges. For preferential loans and loans for
which the State Council has specific regulations the interest rates are not
allowed to float upwards. The Commission sought clarifications from the GOC on
the definition and wording stated in the Circular 251 as well as to its
preceding legislation (Circular of the PBOC concerning expansion of Financial
Institution's Loan Interest Rate Float Range – YinFa [2003] No. 250). However,
as described in the recital (135) above, the GOC refused to provide these
Circulars which prevented the Commission from verifying their content and seeking
explanations. Since the GOC did not provide any relevant information in this
respect which would suggest the situation changed since March 2013 when the
Commission concluded its anti-subsidy investigations concerning Organic Coated
Steel[49] it is established that the PBOC is involved in and influences the setting
of interest rates by state-owned commercial banks. The GOC did not provide any evidence that the situation as
established in the Coated Fine Paper and Organic Coated Steel investigations
has changed. Therefore, on the basis of facts available and the other evidence
cited above, it was concluded that the situation concerning the methodology for
determining interest rates was the same during the entire IP.

(165)   Limits
on the loans interest rates together with the ceilings imposed on deposit rates
create a situation in which the banks have guaranteed access to cheap capital
(because of the deposit rates regulation) and are able to lend to the selected
industries at favourable rates.

(166)   Banks
are also subject to legal rules which require them, inter alia, to carry
out their loan business according to the needs of the national economy[50], provide credit support to encouraged projects[51] or give priority to the development of high and new technology
industries[52]. Banks are under an obligation to follow these rules. The sampled
exporting producers belong to the categories of encouraged projects as well as
to the high and new technology industries category.

(167)   Various
independent information sources suggest that the state involvement in the
Chinese financial sector is substantial and on-going. For example the finding
of the (i) IMF 2006 Working Paper suggested that the bank liberalisation in the
PRC is incomplete and credit risk is not properly reflected[53]; (ii) the IMF 2009 report highlighted the lack of interest rate
liberalisation in China[54]; (iii) the IMF 2010 Country Report stated that cost of capital in
China is relatively low, credit allocation is sometimes determined by non-price
means and high corporate saving is partly linked to low cost of various factor
inputs (including capital and land)[55]; (iv)
the OECD 2010 Economic Survey of China[56] and
OECD Economic Department Working Paper No. 747 on China's Financial Sector
Reforms[57] stated that ownership of financial institutions remains dominated
by the State, raising issues as the extent to which banks' lending decisions
are based purely on commercial considerations while banks' traditional role
appears to be that of government agencies with ties to the government.

(168)   On
the basis of the above evidence, it is concluded that state-owned commercial
and policy banks perform government functions on behalf of the GOC, namely mandatory promotion of certain sectors of the economy in line with
state planning and policy documents. The extensive
government ownership in the state-owned banks and other information on links
between the state-owned banks and the government (including the non-cooperation
of the GOC in this regard) confirms that the banks are controlled by the
government in the exercise of their public functions. The GOC exercises
meaningful control over state-owned commercial and policy banks through the
government’s pervasive involvement in the financial sector and the requirement
for state-owned banks to follow government policies. State-owned commercial and
Policy banks are therefore considered to be public bodies because they possess,
are vested with, and exercise, governmental authority.

(c)
Private banks in the PRC are entrusted and
directed by the GOC

(169)   The
Commission also analysed whether the privately owned commercial banks in the
PRC are entrusted or directed by the GOC to provide preferential (subsidised)
loans to the photovoltaic producers, within the meaning of Article 3(1)(a)(iv)
of the basic Regulation.

–
Existence of a GOC policy

(170)   From
the section above concerning state involvement in the photovoltaic sector
(recital (101)) and from the findings described below it is clear that the GOC
has a policy to provide preferential lending to the photovoltaic sector,
because public bodies (state-owned commercial banks)[58] are
engaged in such provision and hold a predominant place in the market, which
enables them to offer below-market interest rates.

–
Extension of policy to private banks

(171)   The Commercial banking law
[2003] applies in the same way to state-owned commercial banks and privately
owned commercial banks. For example Article 38 of this law instructs all
Commercial banks (i.e. also those which are privately owned) to "determine
the loan rate in accordance with the upper and lower limit of the loan rate set
by the PBOC", Article 34 of the Commercial Banking Law instructs the
commercial banks to "carry out their loan business upon the needs of
national economy and the social development and with the spirit of state
industrial policies".

(172)   Several
government planning documents policy papers and laws refer to the preferential
lending to the PV industry. For example, the State Council Decision of 10
October 2010 to encourage development of 7 new strategic industries
promises the expansion of the intensity of fiscal and financial policy support
to the strategic industries[59] (PV
industry is listed amongst them), encourages financial institutions to “to
expand the credit support” to these industries and to “make use of the
fiscal preferential policies such as risk compensation”. Also the National
Outline for Medium and Long-term Science and Technology Development (2006-2020)
which identifies the Solar energy and photovoltaic cells under the Key fields
and themes of priority[60] promises to “encourage financial institutions to grant
preferential credit support to major national scientific and technological
industrialisation projects” and instructs the government to “guide
various financial institutions and private capitals to participate in science
and technology development”. The Law of the PRC on Scientific and
Technological Progress (Order N.82 of the President of the PRC) defines
that the state shall encourage and give guidance to financial
institutions to support the development of high and new technology industries
by granting loans and that the policy-oriented financial institutions shall
give priority to the development of high and new technology industries[61]. According to the same law the policy-oriented financial
institutions shall, within the scope of their business, offer special aid to
enterprises’ projects of independent innovation encouraged by state[62].

(173)   Further
the above-mentioned limitation on the setting of interest rates by the PBOC
(recitals (164) and (165)) is also binding for privately –owned commercial
banks.

(174)   The above citations from
laws and regulations relevant for the banking sector show that the GOC policy
to provide preferential lending to the photovoltaic industry extends also to
privately-owned commercial banks and in fact the GOC instructs them to "carry
out their loan business upon the needs of national economy and the social
development and with the spirit of state industrial policies"[63].

–
Credit risk assessment

(175)   The
Commission requested relevant information from the GOC in order to assess how
the banks in the PRC are performing credit risk assessment of the PV companies
before deciding whether to grant them loans or not and deciding on the
conditions of the loans which are granted. In the Appendix A to the
questionnaire the Commission requested information on how the banks take
account of risk when granting loans, how the creditworthiness of the borrower is
assessed, what are the risk premiums charged for different companies/industries
in the PRC by the bank, which are the factors the bank takes into account when
assessing the loan application, the description of the loan application and
approval process etc. However, neither the GOC nor the individual banks
identified in the questionnaire provided any evidence in this respect (with one
exception referred to in recital (176) below. The GOC provided only replies of
general nature not supported by any evidence whatsoever that any kind of credit
risk assessment actually takes place.

(176)   During the verifications of one of the banks the Commission
was able to review one risk assessment. Part of that credit risk assessment
referred to government support for the solar companies and state plans to
promote the photovoltaic industry in general and this fact was reflected
positively in the credit rating awarded to this company. This is an example of how
the government policy (and subsidies directed to a certain sector) influences
the decision-making of the banks when deciding on the terms of financing to
solar companies.

(177)   The Commission also
requested similar information from the cooperating exporting producers and
attempted to verify it during the on-spot verification visits of sampled
exporting producers. Most of the exporting producers replied that banks request
certain documents and perform some kind of credit risk analysis before the
loans are granted. However, they could not support their claims with any
evidence. During the on-spot verification, the Commission asked for the
evidence that the banks requested such documents or that these documents were
provided to the banks by the companies, or any kind of report issued by the
banks proving that such credit risk analysis was performed. But the sampled
groups of exporting producers were not able to provide such evidence, neither
were they able to provide any other evidence supporting their claims.

(178)   The information concerning credit risk assessment was
repeatedly requested from interested parties as it is considered crucial inter
alia account taken of the information referred to in recital (167) above.

(179)   In view of the above, the findings
concerning the credit risk assessment in the PRC apply to state-owned
commercial banks, privately owned commercial banks as well as to the policy
banks. Indeed the above evidence leads to the conclusion that private banks in the
PRC are required to follow government policies with regard to lending, in
particular to the PV sector and to act in the same way as state-owned banks,
which have been found in recital (168) to be public bodies. It is therefore
concluded that private banks are entrusted and directed by the GOC to carry out
functions normally vested in the government, within the meaning of Article 3(1)(a)(iv)
of the basic Regulation.

(180)   In
addition, the above evidence demonstrates that even if the state-owned banks
were not considered to be public bodies, they would also be considered as
entrusted and directed by the GOC to carry out functions normally vested in the
government, within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

(d)
Distortions of Chinese financial market

(181)   From
information collected throughout this investigation it can be concluded that
the state-owned banks' share amounts to more than 2/3 of the Chinese market.
The five largest state-owned commercial banks (the Agricultural Bank, the Bank
of China, the Construction Bank of China, the Bank of Communications and the Industrial
and Commercial Bank ) represent more
than half of the Chinese banking sector[64]. In
addition, the China Development Bank and the China Export-Import Banks are
fully state-owned. These seven banks provided the big majority of loans to the eight
sampled exporting producers in the Solar panel case. This pervasive state-ownership
combined with the distortions of the Chinese financial market and with the
Chinese Government’s policy to direct cheap money towards selected industries,
undermines the level playing field in international trade and provides an
unfair advantage to Chinese producers.

(182)   Banks in the PRC are not
entirely free to decide the conditions of the loans. In respect of interest
rates they are bound to stay within the limits set by the People’s Bank of
China (PBOC). These limits together with the ceilings imposed on deposit rates
create a situation in which the banks have guaranteed access to cheap capital
(because of the deposit rates regulation) and are able to lend this on at
favourable rates to selected industries.

(183)   Banks
are also subject to legal rules which require them, inter alia, to carry
out their loan business according to the needs of national economy[65], provide credit support to encouraged projects[66] or give priority to the development of high and new technology
industries[67]. Banks are under obligation to follow these rules.

(184)   According
to recent findings some big commercial banks in the PRC were granted access to
state foreign exchange reserves[68]. This
significantly decreases their cost of capital and this “cheap money” is used
for USD and EUR loans for selected companies and projects in line with the
“going out” policy. Thus, they are able to offer conditions which normal
commercial banks cannot match.

(185)   Another
major distortion in the financing of the photovoltaic industry is the special
privileged position of the China Development Bank (‘CDB’) which is the major
lender to this industry and provided big bulk of loans and credit lines to the
sampled exporting producers. The CDB is financed almost completely by bond
sales rather than by deposits and it is, after the Ministry of Finance, the
second biggest bond issuer in the country. Through this special mechanism the
CDB is able to finance itself cheaply and subsequently is able to offer loans
at preferential conditions to selected industries[69].

3.4.1.1.  Preferential loans

(a)
Introduction

(186)   The complainant alleged that
the GOC subsidizes its PV industry through preferential loans and directed
credit.

(b)
Legal basis

(187)   The following legal
provisions provide for preferential lending in China: Law of the PRC on
Commercial Banks, General Rules on Loans (implemented by the People’s Bank of
China), Decision No 40 of the of the State Council on Promulgating and
Implementing the Temporary Provisions on Promoting the Industrial Structure
Adjustment.

(c)
Findings of the investigation

(188)   Having regard to the totality of the evidence, it is
concluded that the vast majority of loans to the sampled groups of exporting
producers are provided by state-owned banks which have been found to be public
bodies in recital (168) above, because they are vested with government
authority and exercise government functions. There is further evidence that
these banks effectively exercise government authority since, as it is explained
in recital (164), there is a clear intervention by the State (i.e. the PBOC) in
the way commercial banks take decisions on interest rates for loans granted to
Chinese companies. In these circumstances, the lending practices of these
entities are directly attributable to the government. The fact that banks
exercise government authority is also confirmed by the way Articles 7 and 15 of
the General Rules on Loans (implemented by the PBOC), Decision 40
and Article 34 of the Law on Commercial Banks act with respect to the
fulfilment of the government industrial policies. There is also a great deal of
circumstantial evidence, supported by objective studies and reports, that a
large amount of government intervention is still present in the Chinese
financial system as already explained in recitals (172) and (178) above.
Finally, the GOC failed to provide information which would have enabled a
greater understanding of the state-owned banks' relationship with government as
explained in recitals (139) and (140). Thus, in the case of loans provided by
state-owned commercial banks in the PRC, the Commission concludes that there is
a financial contribution to the PV producers in the form of a direct transfer
of funds from the government within the meaning of Article 3(1)(a)(i) of the
basic Regulation. In addition, the same evidence
shows that SOCBs (as well as privately owned banks) are entrusted or directed
by the government and this consequently means that a financial contribution
exists within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

(189)   In view of the analysis in recitals
(169) to (178) above, it is also determined that privately-owned banks are
entrusted and directed by the GOC to provide loans to the PV producers and that
a financial contribution exists under Articles 3(1)(a)(i) and 3(1)(a)(iv) of
the basic Regulation.

(190)   A
benefit within the meaning of Articles 3(2) and 6(b) of the basic Regulation
exists to the extent that the government loans, or loans from private bodies
entrusted or directed by the government, are granted on terms more favourable
than the recipient could actually obtain on the market. Non-government loans in
the PRC do not provide an appropriate market benchmark, since it has been
established that privately-owned banks are entrusted and directed by the GOC
and therefore be presumed to follow the lending practices of the state-owned banks.
Therefore, benchmarks have been constructed using the method described in
recitals (198) - (200) below. Use of this benchmark demonstrates that loans are
granted to the PV sector at below-market terms and conditions.

(191)   The
PV industry belongs to the encouraged category according to Decision No. 40.
Decision No 40, is an Order from the State Council, which is the highest
administrative body in the PRC and in that regard the decision is legally
binding for other public bodies and the economic operators. It classifies the
industrial sectors into 'Encouraged, Restrictive and Eliminated Projects'. This
Act represents an industrial policy guideline that along with the Directory
Catalogue shows how the GOC maintains a policy of encouraging and supporting
groups of enterprises or industries, such as the PV/New Energy industry,
classified by the Directory Catalogue as an 'Encouraged industry'. With respect
to the number of industries listed as 'Encouraged' it is noted that these represent
only a portion of the Chinese economy. Furthermore, only certain activities
within these encouraged sectors are given "encouraged" status.
Decision No 40 also stipulates under Article 17 that the 'Encouraged investment
projects' shall benefit from specific privileges and incentives, inter alia,
from financial support. On the other hand, with reference to the 'Restrictive
and Eliminated Projects', Decision No 40 empowers the state authorities to
intervene directly to regulate the market. In fact, Articles 18 and 19 provide
that the relevant authority prevents financial institutions from supplying
loans to such 'Restrictive and Eliminated Projects'. It is clear from the above
that Decision No 40 provides binding rules to all the economic institutions in
the form of directives on the promotion and support of encouraged industries,
one of which is the PV industry.

(192)   As explained in recital (172) above the GOC directs
preferential lending to the limited number of industries and the PV industry is
one of them. Taking all the above into
consideration it becomes clear that the authorities only allow the financial
institutions to provide preferential loans to a limited number of
industries/companies which comply with the relevant policies of the GOC. On the
basis of the evidence on the file and in the absence of the cooperation from
the GOC on this matter it is concluded that the subsidies in form of
preferential lending are not generally available and are therefore specific in
the meaning of Article 4(2)(a) of the basic Regulation. Moreover, there was no
evidence submitted by any of the interested parties suggesting that the subsidy
is based on objective criteria or conditions under Article 4(2)(b) of the basic
Regulation.

(d)
Conclusion

(193)   The investigation showed
that all sampled exporting producers benefited from the preferential lending in
the investigation period.

(194)   Accordingly, the financing
of the PV industry should be considered a subsidy.

(195)   In view of the existence of
a financial contribution, a benefit to the exporting producers and specificity,
this subsidy should be considered countervailable.

(e)
Calculation of the subsidy amount

(196)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. According to Article 6(b) of
the basic Regulation the benefit conferred on the recipients is considered to
be the difference between the amount that the company pays on the government
loan and the amount that the company would pay for a comparable commercial loan
obtainable on the market.

(197)   As explained above (recital (190)),
since the loans provided by Chinese banks reflect substantial government
intervention in the banking sector and do not reflect rates that would be found
in a functioning market, an appropriate market benchmark has been constructed
using the method described below. Furthermore, due to the lack of cooperation
by the GOC, the Commission has also resorted to facts available in order to
establish an appropriate benchmark interest rate.

(198)   When
constructing an appropriate benchmark for RMB denominated loans, it is
considered reasonable to apply Chinese interest rates, adjusted to reflect
normal market risk. Indeed, in a context where the exporters' current financial
state has been established in a distorted market and there is no reliable
information from the Chinese banks on the measurement of risk and the
establishment of credit ratings, it is considered necessary not to take the
creditworthiness of the Chinese exporters at face value, but to apply a mark-up
to reflect the potential impact of the Chinese distorted market on their
financial situation.

(199)   The same situation applies
for the loans denominated in foreign currencies. The BB rated corporate bonds
with relevant denominations issued during the IP were used as a benchmark.

(200)   With
respect to the above as explained in recitals (138) to (140), both the GOC and
the cooperating exporting producers were requested to provide information on
the lending policies of the Chinese banks and the way loans were attributed to
the exporting producers. Although repeatedly requested, such information was
not obtained. Accordingly in view of this lack of cooperation and the totality
of facts available, and in line with the provisions of Article 28(6) of the
basic Regulation, it is deemed appropriate to consider that all firms in China
would be accorded the highest grade of "Non-investment grade" bonds
only (BB at Bloomberg) and apply the appropriate premium expected on bonds
issued by firms with this rating to the standard lending rate of the People's
Bank of China. The benefit to the exporting producers has been calculated by
taking the interest rate differential, expressed as a percentage, multiplied by
the outstanding amount of the loan, i.e. the interest not paid during the IP.
This amount was then allocated over the total turnover of the co-operating
exporting producers.

(201)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Preferential policy loans

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, PRC and related companies ||             1,14 %

Yingli Green Energy Holding Company and related companies ||             0,61 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,25 %

JingAo Group and related companies ||             0,92 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             1,80 %

Delsolar (Wujiang) Ltd. and related companies ||             0,02 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,84 %

Jinko Solar Co Ltd and related companies ||             0,85 %

3.4.1.2.  Provision of credit lines

(a)
Introduction

(202)   The complainant had alleged
that the Chinese banks extended disproportionate credit lines to the Chinese
exporters of product concerned. The investigation confirmed that indeed all
investigated companies received huge credit lines from Chinese banks which were
in most cases provided free of charge or subject to very small fees. In normal
market circumstances such credit lines are subject to substantial commitment
and administration fees which allow the banks to compensate for the costs and
risks.

(b)
Findings
of the investigation

Credit lines are a potential transfer of funds

(203)   The EC-Aircraft
panel report confirmed that such credit lines, over and above the effects
of the individual loans, can be potential direct transfers of funds under
Article 3(1)(a) (i) of the basic Regulation and thus financial contributions.
The panel found that the benefit of a potential transfer of funds arises from
the mere existence of an obligation to make a direct transfer of funds.
The panel also found that a credit line could, in and of itself, confer
a benefit to the recipient firm and was thus a potential transfer of funds
separate from any direct transfers of funds in the form of individual loans[70].

The banks providing the credit lines are public
bodies or are entrusted by the government

(204)   The credit lines were
provided to the sampled exporting producers by the same banks as the
preferential loans described above. As established above these banks are public
bodies (recitals (158) to (166)) or are entrusted and directed by the GOC to
provide preferential financing to the PV industry (recitals (169) to (178)).

(205)   As explained above (recitals
(158) to (185)) the Chinese market is distorted by laws and practices of the
state-owned banks and it was found that in most cases the credit lines were
provided free of charge or subject to very small fees. In normal market
circumstances such credit lines are subject to substantial commitment and
administration fees which allow the banks to compensate for the costs and
risks.

(206)   The amount of benefit is
represented by the fees normally applicable to commercial credit lines extended
to the companies from which the sampled exporting producers were relieved in
most cases. The Commission used the fees applied to the credit line extended to
one of the sampled exporting producers by a foreign commercial bank.

(207)   The
PV industry belongs to the encouraged category according to the Decision No.
40. Decision No 40 is an Order from the State Council, which is the highest
administrative body in the PRC and in that regard the decision is legally
binding for other public bodies and the economic operators. It classifies the
industrial sectors into 'Encouraged, Restrictive and Eliminated Projects'. This
Act represents an industrial policy guideline that along with the Directory
Catalogue shows how the GOC maintains a policy of encouraging and supporting
groups of enterprises or industries, such as the PV/New Energy industry,
classified by the Directory Catalogue as an 'Encouraged industry'. With respect
to the number of industries listed as 'Encouraged' it is noted that these
represent only a portion of the Chinese economy. Furthermore, only certain
activities within these encouraged sectors are given "encouraged"
status. Decision No 40 also stipulates under Article 17 that the 'Encouraged
investment projects' shall benefit from specific privileges and incentives,
inter alia, from financial support. On the other hand, with reference to the
'Restrictive and Eliminated Projects', Decision No 40 empowers the state
authorities to intervene directly to regulate the market. In fact, Articles 18
and 19 provide that the relevant authority prevents financial institutions from
supplying loans to such 'Restrictive and Eliminated Projects'. It is clear from
the above that Decision No 40 provides binding rules to all the economic
institutions in the form of directives on the promotion and support of
encouraged industries, one of which is the PV industry.

(208)   As
explained in recitals (172) and (192) above the GOC directs the preferential
lending of which the provision of credit lines is essential part to the limited
number of industries. The PV industry belongs to this group of industries and
benefits from discriminatory preferential lending.

(209)   Taking
all the above into consideration it becomes clear that the authorities only
allow the financial institutions to provide preferential credit lines to a limited
number of industries/companies which comply with the relevant policies of the
GOC. On the basis of the evidence on the file and in the absence of the
cooperation from the GOC on this matter it is concluded that the subsidies in
form of disproportionate credit lines are not generally available and are
therefore specific in the meaning of Article 4(2)(a) of the basic Regulation.
Moreover there was no evidence submitted by any of the interested parties
suggesting that the subsidy is based on objective criteria or conditions under
Article 4(2)(b) of the basic Regulation.

(c)
Conclusion

(210)   The investigation showed
that all groups of sampled exporting producers benefited from credit lines
provided free of charge or at below-market rates in the investigation period.

(211)   Accordingly, the extension
of such credit lines to the PV industry should be considered a subsidy.

(212)   In view of the existence of
a financial contribution, a benefit to the exporting producers and specificity,
this subsidy should be considered countervailable.

(d)
Calculation of subsidy amount

(213)   The provision of credit
lines free of charge or for below-market fees is considered a provision of
financial services (Article 3(1)(a)(iii) of the basic Regulation) for less than
adequate remuneration. The amount of countervailable subsidy is calculated in
terms of the benefit conferred on the recipients, which is found to exist
during the IP. Because of the market distortions described in recitals (158) to
(185) above the adequacy of the remuneration for the financial services (in
this case provision of credit lines) could not be determined in relation to
prevailing market conditions in the PRC. Therefore in accordance with Article
6(d)(ii) of the basic Regulation the benefit conferred on the recipients is considered
to be the difference between the amount that the company pays for the provision
of credit lines by Chinese banks and the amount that the company would pay for
a comparable commercial credit line obtainable on the market. Credit lines
could also be considered as a potential transfer of funds under Article under
Article 3(1)(a)(i) of the basic Regulation.

(214)   One of the sampled exporting
producers obtained a credit line from the bank whose headquarters is established
in a financial jurisdiction other than the PRC and this credit line was subject
to commitment and arrangement fees as is the usual practice on world financial
markets. Although the credit line was extended by the Chinese subsidiary of the
bank in question, it is considered to be a reasonable proxy for a benchmark. It
was considered appropriate to use the fees applied to this credit line as a
benchmark in accordance with the Article 6(d)(ii) of the basic Regulation.

(215)   The level of the fees used a
benchmark was applied pro-rata to the amount of each credit line in question to
obtain the amount of subsidy (minus any fees actually paid). In cases where the
duration of the credit line was more than one year, the total amount of subsidy
was allocated over the duration of the credit line and an appropriate amount
attributed to the IP.

(216)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Provision of credit lines

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             1,97 %

Yingli Green Energy Holding Company and related companies ||             2,14 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             1,09 %

JingAo Group and related companies ||             1,28 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,92 %

Delsolar (Wujiang) Ltd. and related companies ||             0,24 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,50 %

Jinko Solar Co Ltd and related companies ||             2,59 %

3.4.1.3.  Export credit subsidy
programmes

(217)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.1.4.  Export
Guarantees and Insurances for Green Technologies

(a)
Introduction

(218)   The complaint alleged that
the China Export & Credit Insurance Corporation (“Sinosure”) provides
export credit insurance on preferential terms to producers of the product
concerned inter alia through a programme termed ‘Green Express’.
According to the complaint, Sinosure’s export credit insurance is not even
adequate to cover the long-term operating costs and losses of this programme.

(b)
Non-cooperation and use of facts
available

(219)   As
mentioned in recitals (104) and (105) above, the Commission requested
information in the questionnaire, in the deficiency letter and during the on-spot
verification visit to the GOC and Sinosure that was not provided by the GOC
and/or Sinosure.

(220)   The
Commission requested the institutional framework and the relevant documents
governing the operations of Sinosure as the State official export credit
insurer. The GOC submitted only a Notice issued jointly by the Ministry of
Commerce (“MOFCOM”) and Sinosure in 2004, but failed to submit a number of
other relevant documents including for instance the so-called 840 Plan included
in the Notice by the State Council of 27 May 2009[71].

(221)   As
regards the verification of the questionnaire reply and Annex 1 concerning
Sinosure, the Commission was unable to obtain a number of documents and to
verify a number of elements requested on spot. In particular, Sinosure did not
submit the following information and evidence requested by the Commission: (a)
the 2012 financial statements, which, reportedly, would not yet be available
yet on Sinosure's website; (b) the relevant documentation concerning the export
credit insurance with two of the sampled cooperating exporters, including
contracts, risk assessment, correspondence and proof of payments of premia; (c)
specific information on the senior managers appointed by the State Council; (d)
evidence concerning the elements and advantages listed in the 2004 Notice
jointly issued by MOFCOM and Sinosure, including on the limitation approval, on
the rate flexibility and the discount within the premium floating range; (e)
evidence concerning the long-term operating costs and profits of the export
credit insurance activity; (f) evidence concerning the assessment of the market
situation in the photovoltaic sector.

(222)   The
Commission was also unable to verify a number of elements included in the
questionnaire reply concerning Sinosure operations, including in particular its
answers concerning the risk assessment, the actual setting of the premium and
the application and approval process, given the refusal by Sinosure to discuss
the specific contracts with the sampled cooperating exporters. Sinosure was
also unable to clarify or submit supporting documents for some inconsistencies
in the figures or other elements contained in its questionnaire and deficiency
letter replies identified by the Commission.

(223)   The
GOC and Sinosure sought to justify this lack of cooperation on the basis of
confidentiality concerns during the verification visit and in the GOC letter of
3 June 2013. In this regard, the pre-verification letter and subsequent email
correspondence made it very clear that the Commission required the verification
to be meaningful and would obviously take all necessary precautions to protect
the confidential information submitted or simply just provided for inspection,
in accordance with its legal obligation to protect this information ensured by
the relevant strict EU rules. With regard to the documents Sinosure tried to
submit well after termination of the verification visit and for which it failed
to allow proper verification by the Commission, they cannot be taken into account
as they were specially prepared for the investigation and the Commission could
not verify the source documents.

(224)   Given this lack of
cooperation by the GOC and Sinosure, the Commission was unable to verify a
number of elements concerning the provision of export credit insurance cover by
Sinosure to the sampled cooperating exporting producers of the product
concerned. Therefore, some of the Commission’s findings are based on the
information available on the record in accordance with Article 28 of the basic
Regulation.

(c)
Sinosure is a public body

(225)   The investigation has
established that Sinosure is a public body within the meaning of Article 2(b)
of the basic Regulation and of the relevant WTO jurisprudence[72] as it possesses exercises or is vested with governmental authority.
In particular, the GOC exercises meaningful control over Sinosure[73] and Sinosure exercises governmental authority in its performance of
governmental functions.

(226)   The Commission notes that
the activity of export credit insurance performed by Sinosure is integral part
of the broader financial sector where it is established that the government
intervention directly interferes and distorts the normal functioning of the
financial market in the PRC (see recitals (185) and following above).

(227)   Sinosure performs
governmental functions in its role as the sole official institution for export
credit insurance in the PRC. It is therefore in a monopolistic position in the
export credit insurance market. The company confirmed that this market is not
open, although there are some international competitors conducting business
indirectly in the PRC.

(228)   The government exercises
full ownership and financial control over Sinosure. Sinosure is a State sole
proprietorship owned 100 % from the State Council. The registered capital of
RMB 4 billion comes from the venture fund of export credit insurance in line
with the state finance budget. Furthermore, the State injected in 2011 RMB 20
billion through the China Investment Corporation, the sovereign wealth fund of
China.[74] The Articles of Association (“AoA”) state that the business
competent department of the company is the Ministry of Finance, and also
requires the company to submit financial and accounting reports and the fiscal
budget report to the Ministry of Finance for examination and approval.

(229)   With regard to government
control, as a state sole proprietorship Sinosure does not have a Board of
Directors. As for the Board of Supervisors, all of the supervisors are
appointed by the State Council and execute their duties according to the
“Interim Regulation on the Board of Supervisors of Important State-owned
Financial Institution.” The senior management of Sinosure is also appointed by
the government. The company’s Annual Report 2011 (“AR 2011”) shows that the
Chairman of Sinosure is the Secretary of the Party Committee, and the majority
of the Senior Management are also Members of the Party Committee. Given the
refusal by Sinosure to submit further information on the Senior Management, it
can be concluded that the management is direct expression of the government
that directly appoints the members of the Board of Supervisors as well as of
the Senior Management. On this basis, Sinosure is meaningfully controlled by
the GOC.

(230)   The performance of
government functions and policies by Sinosure emerges so clearly and explicitly
that it can be concluded that the company is a direct expression of the
government itself. Sinosure’s Annual Report 2011 contains several statements in
this respect, namely: Sinosure “proactively carried out the policy function of
an ECA ... and achieved a good start in the first year of the 12th “Five-Year
Plan” period” (p. 4 AR 2011); “the furtherance of corporate reform reinforced
the policy function of Sinosure as an ECA. The CCCPC Conference on Economy has
laid emphasis on such function and made clear requirements on credit insurance,
which lined out our growth path” (p. 5 AR 2011); “In the year of 2011, Sinosure
implemented CPC Central Committee’s and State Council’s strategies, decisions
and arrangements as well as state policies on diplomacy, foreign trade,
industry and finance, gave full play to its policy function and achieved a fast
growth” (p. 11 AR 2011); “Sinosure fully executed the state policy of “Special
Arrangement for Export Financing Insurance for Large Complete-set Equipment”
and fulfilled its obligations laid out by the State” (p. 11 AR 2011).

(231)   The
institutional framework and other documents issued by the GOC under which
Sinosure operates further prove its function as a public body and that it is
vested with the authority to carry out governmental policies. The Notice on
the Implementation of the Strategy of Promoting Trade through Science and
Technology by Utilising Export Credit Insurance (Shang Ji Fa[2004] No. 368 of
26 July 2004) was issued jointly by MOFCOM and Sinosure in 2004
and still governs Sinosure’s activities. Among the objectives of this Notice is
the promotion of the export of high and new technology and of high value-added
products through the further use of export credit insurance. The Notice
explicitly mandates Sinosure to support the key export industries specified in
the Directory of Chinese High and New Technology Products of 2006. This
Directory includes ‘Solar Power Cells and Modules’ among the eligible products
and therefore they can be considered to be directly supported by Sinosure. The
following advantages are laid down in the Notice: a “green channel”, that is a
specific support for products covered in the catalogue, which should receive
approval within five days if the underwriting conditions are met and the
limitation approval for insurance with priority; claim speed, to be completed
within three months of receipt of the claim documents; rate flexibility,
consisting of the highest discount to the premium rate within the floating
range of Sinosure. The Notice also foresees that regional and local commerce
authorities shall take further measures to support the products covered in the
Directory. The Notice requires Sinosure to tailor the underwriting model based
on the national industrial policy and the characteristics of high and new
technology product exports and to provide support to the innovation and R&D
industries especially supported by the state.

(232)   The
Commission is aware of other documents proving that Sinosure directly carries
out governmental policies benefiting inter alia the exporting producers. The
so-called 840 plan is detailed in the Notice by the State Council of 27
May 2009[75]. This name refers to the use of USD 84 Billion as export insurance
and it is one of the six measures launched by the State Council in year 2009 to
stabilize export demand further to the global crisis and the consequent
increased demand for export credit insurance. The six measures include notably
an improved coverage of export credit insurance, the provision of short-term
export credit insurance on a scale of USD 84 billion in 2009 and a reduction of
the premium rate. As the only policy institution underwriting export credit
insurance, Sinosure is indicated as the executor of the plan. As for the
reduction of the insurance premium, Sinosure was required to ensure that the
average rate of short-term export credit insurance would be reduced by 30 % on
the basis of the overall average rate in 2008.

(233)   The
so-called 421 plan was included in the Notice on the issues to implement
special arrangements for financing of insurance on the export of large complete
sets of equipment issued jointly by the Ministry of Commerce and the Ministry
of Finance on 22 June 2009. This was also an important policy supporting
China’s "going out" policy in response to the 2009 global financial
crisis and provided USD 42.1 billion of financing insurance to support the
export of large complete sets of equipment. Sinosure and some other financial
institutions would manage and provide the funding. Enterprises covered by this
document could enjoy the preferential financial measures, including
export-credit insurance. Due to the non-cooperation of the Government of China,
the Commission was unable to request additional details on the application of
this notice. In the absence of evidence to the contrary, the Commission has
reason to believe that the PV equipment and the PV sector are also covered by
this document.

(234)   Other
documents showing government support to the provision of short-term export
credit insurance include two documents concerning increased financial support
to Strategic Emerging Industries (“SEIs”). The Notice by the State Council on
Cultivation and development of the State Council on Accelerating Emerging
industries of strategic decision, Guo Fa [2010] No. 32 of 18/10/2010, at Para
7(C) encourages financial institutions to increase financial support. The
Implementation guidelines for the development of SEIs issued jointly by all
ministries responsible (i.e. National Development and Reform Commission,
Ministry of Commerce, Ministry of Science, and Ministry of Industry and
Information Technology, Ministry of Environmental Protection, Ministry of
Finance, State Administration of Taxation, General Administration of Customs,
General Administration of Quality Supervision, Inspection Intellectual Property
Office) Guo Fa [2011] No. 310 of 21 October 2011, also specifically refers at
Para (Xxvii) to the active support by way of inter alia export credit insurance
to strategic emerging industries. These strategic emerging industries focus on
products, technologies and services to develop the international market,
aerospace, high-end equipment manufacturing, a large amount or stimulate
domestic patented technology and standard export strategic emerging industrial
products. Therefore, in the absence of evidence to the contrary there is reason
to believe that also the product concerned and the sampled exporters qualify as
‘strategic emerging industries’ and are entitled to the ensuing benefits.

(235)   On the basis of the above
elements, the Commission concludes that Sinosure is a public body as it is
vested with government authority to carry out government policies, is
meaningfully controlled by the government and exercises government functions.

(d)
Legal Basis

(236)   The
legal bases for this programme are the following: the Notice on the
Implementation of the Strategy of Promoting Trade through Science and
Technology by Utilising Export Credit Insurance (Shang Ji Fa[2004] No. 368),
issued jointly by MOFCOM and Sinosure; the Export Directory of Chinese High and
New Technology Products of 2006; the so-called 840 plan included in the Notice
by the State Council of 27 May 2009; the so-called the so-called 421 plan
included in the Notice on the issues to implement special arrangements for
financing of insurance on the export of large complete sets of equipment,
issued jointly by the Ministry of Commerce and the Ministry of Finance on 22
June 2009; Notice on Cultivation and development of the State Council on
Accelerating Emerging industries of strategic decision (Guo Fa [2010] No. 32 of
18 October 2010), issued by the State Council and its Implementing Guidelines
(Guo Fa [2011] No. 310 of 21 October 2011).

(e)
Findings of the investigation

(237)   As
Sinosure is a public body vested with government authority and executing
governmental laws and plans, the provision of export credit insurance to
producers of the product concerned constitutes a financial contribution in the
form of potential direct transfer of funds from the government within the
meaning of Article 3(1)(a)(i) of the basic Regulation.

(238)   With regard to the rebate of
part of the premium paid by the exporting producers by the local authorities,
this also constitutes a direct transfer of funds in the form of a grant
according to Article 3(1)(a)(i) of the basic Regulation.

(239)   A
benefit within the meaning of Articles 3(2) and 6(c) of the basic Regulation
exists to the extent that Sinosure provides export credit insurance cover on
terms more favourable than the recipient could normally obtain on the market,
or that it provides insurance cover that would otherwise not be available at
all on the market. An additional benefit within the meaning of Article 3(2)
received by the exporting producer is the cash rebate of part of the insurance premium
paid to Sinosure by some of the local authorities where some exporting
producers were established.

(240)   The
2004 Notice listed all the range of benefits conferred by Sinosure and/or by
the local authorities for enterprises falling in the 2006 Directory and
complying with the national policies. The investigation has shown that the
insurance agreements concluded between Sinosure and the sampled exporting producers,
and the rebates of part of the premia granted by the local authorities fully
reflect these benefits. The “Green Express” treatment consists of the
simplification and the speed in dealing with the process of providing cover and
settling the claims with a rapid assessment of the loss and subsequent
accelerated payment to the client.

(241)   The investigation also
showed that the measures taken further to the 2009 financial crisis and
detailed in the 840 plan and in the 421 plan, and later on in the 2011 measures
in favour of strategic emerging industries, provided substantial benefits to
the exporting producers. These measures increased the availability of insurance
cover and further reduced the premium charged by Sinosure, despite the
difficult economic situation and the substantially increased risks for Sinosure
in providing insurance cover, and they are fully reflected in the insurance
cover provided by Sinosure to the exporting producers. In particular, the
investigation showed that the conditions and the premium charged in the
relevant years covering the IP have remained substantially the same or have
improved, despite the increase in the claims for default paid out by Sinosure
and the substantially deteriorating situation of the PV sector.

(242)   With
regard to the existence of a benefit, the Commission first examined to what
extent Sinosure’s premiums covered the cost of short-term export credit
insurance. Sinosure made the argument based on Item (j) of the WTO Agreement on
Subsidies and Countervailing Measures (“SCM”), which considers as a
‘prohibited’ export subsidy under Article 3(1)(a) of that agreement the
provision of export credit insurance programmes at premium rates which are
inadequate to cover the long-term operating costs and losses of the programmes.
In its questionnaire reply, Sinosure simply referred to the profits and losses
realised over the last five years and concluded that since overall it made a
profit during this period, the provision of short-term export credit insurance
to the exporting producers did not constitute a subsidy under the WTO SCM
Agreement. As explained above (see recitals (221) and (222)), the Commission
asked Sinosure to provide specific information and evidence concerning the
long-term profitability of its export credit insurance activities, including
premium income and operating costs and losses of the programme in accordance
with the WTO SCM Agreement. However, Sinosure failed to submit the documents
and evidence requested during the verification visit, insisting on the overall
profitability data as shown in its audited Annual Reports.

(243)   The Commission notes that,
even if it would simply rely on Sinosure’s Annual Reports without being able to
verify the figures and the elements contained in these Reports, it would not be
able to conclude that Sinosure has achieved long-term profits on its export
credit insurance division, which corresponds to the “programme” referred to in
Item (j). Sinosure carries out a number of activities in addition to export
credit insurance, and the figures and data reported in
the Annual Report are consolidated data for all these activities and there is
no precise breakdown of each of these activities. From some of the Annual
Reports (but not the recent one) it appears that the short-term export credit
insurance is by far the most important activity for Sinosure, but no precise
percentages are available. As Sinosure refused to provide the requested
information and evidence with regard to this latter activity only, which is
required to carry out the analysis of the “programme” under Item (j) of Annex
1of the WTO SCM Agreement, the Commission has to base its findings on the
evidence available on record.

(244)   The
Commission notes at the outset that according to Article 11 of Sinosure’s Articles
of Association the company operates at breakeven. In other words, by statute
Sinosure does not aim to maximize its profits, but has to aim merely to
breakeven in accordance to its function as the sole official export credit
insurer in the PRC. As explained above, the records on file have shown that the
legal and policy environment in which Sinosure operates requires the company to
execute the government policies and plans in fulfillment of its public policy
mandate. Among the selected industries and enterprises specifically supported
by the State, the exporting producers have had full access to export credit
insurance provided by Sinosure at preferential rates even in the aftermath of
the global crisis of 2009 and even when the photovoltaic sector has experienced
an unprecedented crisis including during the IP. Therefore, Sinosure provides
unlimited availability of insurance cover for the PV sector and the extremely
low insurance premium it offers do not reflect the actual risks incurred in
insuring the exports in this sector. Based on all these elements on the record,
it could already be concluded that it cannot be excluded that the premium rates
charged by Sinosure are likely to be inadequate to cover its long-term
operations, and in fact this would appear likely.

(245)   In the absence of cooperation by Sinosure, the Commission considered
even additional elements further supporting this conclusion. The evidence
publicly available explicitly already shows that in fact Sinosure operates in a
situation of long-term operating losses[76]. The
Commission also analyzed the relevant figures in the income statement of
Sinosure’s Annual Reports covering the years 2006 through 2011 submitted by
Sinosure to justify the profitability figures reported in its questionnaire reply.
These figures show that Sinosure included a significant long-term operating
loss from its combined insurance activities that exclude investment income and
other income. More specifically, in each single year between 2006 and 2011
(with the sole exception of 2010) the claims paid out are already (almost)
equal or (far) exceed the net premiums earned by Sinosure. If the operating
expenses and the commission expenses are also subtracted from the net premiums,
the result is an even more substantial loss. The figures show that despite the
modest gain in 2010, in the overall period the operating loss on the insurance
operations is significant. It emerges from the Annual Reports that the
significant contributors to Sinosure’s overall income are investment income and
other income, which are not relevant for assessing the viability of its export
credit insurance programme. As short-term export-credit insurance constitutes
the bulk of Sinosure’s business activity, in the absence of evidence to the
contrary it is concluded that Sinosure has sustained a significant long-term
loss from its export credit insurance programme. Given that Sinosure makes
losses on its export credit insurance programme, the existence of a benefit is
determined by comparing the premiums paid by the exporting producers to those
available on the market. Sinosure is the sole official export credit insurer and
therefore fully controls the domestic market In the absence of any commercial
benchmark in the PRC for such instruments and given that the financial market
in the PRC is distorted by government intervention, it is reasonable to use a
benchmark outside the PRC i.e. premiums charged in a normal market situation.
On this basis, as described in the section below on calculation of the subsidy
amount, the premiums are at below-market rates and a benefit is conferred.

(246)   The above subsidies are
contingent upon export performance within the meaning of Article 4(4)(a) of the
basic Regulation because they cannot be obtained without exporting. In addition,
they are also specific under Article 4(2)(a) of the basic Regulation because
access is limited to certain enterprises. The solar cells and modules are
explicitly listed in the 2006 Directory of High and New Technology Products,
which is the condition to enjoy the preferential treatment laid down in the
2004 Notice. Furthermore, one of Sinosure’s main objectives is to implement the
national policies and plans, including the 12th five-year plan on the PV
sector. The 840 plan and the 421 plans also benefit the PV sector among a few
other sectors singled out in those plans (see recitals (232) and (233)). The PV
sector is also considered as one of the encouraged industries according to
Decision No. 40 and other planning documents and laws (see recital (207) and (208)).
This industry also falls in the category of the ‘Strategic and Emerging
industries’ enjoying a number of benefits according to governmental policies
(see recital (102)). Most of the exporting producers also have the formal status of
High and New Technology enterprises, which confers them a number of advantages
because of the advantageous governmental policies.

(247)   It
is therefore evident that the benefits granted by Sinosure or by the local
authorities reimbursing part of the insurance premium are not available for all
of the industrial sectors and for all of enterprises, but they are restricted
only to those sectors and enterprises that specifically comply with the
relevant government support policies and their underlying documents. The Commission
concludes that the benefits granted by Sinosure and/or by the local authorities
to the producers of the product concerned are specific in the meaning of
Article 4(2)(a) of the basic Regulation. Furthermore, as there was no evidence
suggesting that the subsidy is based on objective criteria or conditions under
Article 4(2)(b) of the basic Regulation, the benefit is specific also in this
respect.

(f)
Conclusion

(248)   The investigation showed
that six groups of sampled exporting producers benefited from the export credit
insurance provided by Sinosure in the investigation period.

(249)   The provision of export
credit insurance by Sinosure to the PV industry is to be considered a subsidy,
to the extent that premiums are at below-market rates.

(250)   In view of the existence of
a financial contribution, a benefit to the exporting producers and specificity,
this subsidy should be considered countervailable.

(g)
Calculation of the subsidy amount

(251)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The calculation of the
benefit is akin to the situation involving loan guarantees. According to
Article 6(c) of the basic Regulation the benefit conferred on the recipients is
considered to be the difference between the amount of the premium that the
company pays on the short-term insurance provided by Sinosure and the amount of
the premium that the company would pay for comparable export-credit insurance
obtainable on the market.

(252)   As short-term export credit
insurance provided by Sinosure is the result of governmental policy objectives
and as Sinosure is in a monopolistic situation in the domestic market in its
function as the sole official export credit agency, an appropriate market
benchmark has been constructed using the method described below. Furthermore,
due to the lack of cooperation by the GOC and Sinosure, the Commission has also
resorted to facts available in order to establish an appropriate market premium
for the insurance provided to the PV producers.

(253)   The
Commission believes that the most appropriate benchmark for which information
is readily available are the premium rates applied by the Export-Import Bank
(“Ex-Im Bank”) of the United States of America. According to publicly available
information,[77] the Ex-Im Bank is the official export credit agency of the US
federal government and is self-sustaining. The activities of Ex-Im Bank include
export credit insurance and other activities, such as working capital guarantees
and loan guarantees (buyer financing). Its mission is to create and support
U.S. jobs by supporting U.S. exports to international buyers. The Ex-Im bank
acts as a government corporation by the Congress of the United States. There
are therefore a number of similarities with Sinosure and the bank is considered
to be an appropriate benchmark institution.

(254)   The benchmark premium has
been calculated by reference to the actual fees charged for exports to OECD
countries for whole turnover policies with a 90 % coverage of the amount
insured and a duration of 120 days. The actual premium is the median average
for the five different categories of foreign buyers depending on their solvency
and risk of default. This represents the closest available benchmark to
calculate the premium that the producers of the product concerned would need to
pay on the market.

(255)   The amount of benefit was
calculated using the information supplied by the GOC and relates to Sinosure amounts
covered by export credit insurance and the fees paid in the IP for such
insurance. The information supplied by the co-operating companies for Sinosure was
not used because it was clear that the GOC was more complete (for example not
all companies reported their Sinosure policy in the questionnaire reply or
declared it during the on spot verification).

(256)   With regard to the payment
of part of the insurance premium by the local authorities, the benefit is
calculated as being the level of rebates and grants made to the sampled
companies covering the IP period.

(257)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Export Guarantees and Insurances

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,58 %

Yingli Green Energy Holding Company and related companies ||             0,95 %

Changzhou Trina Solar Energy Co. Ltd Solar Group and related companies ||             0,71 %

JingAo Group and related companies ||             0,50 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,39 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,63 %

Jinko Solar Co. Ltd and related companies ||             0,00 %

3.4.1.5.  Benefits provided through
granting of access to offshore holding companies and loan repayments by the
government

(258)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.2.     Grant programmes

3.4.2.1.  Export product research
development fund

(259)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.2.2.  Subsidies for development of
“Famous Brands” and China World Top Brands Programme

(260)   The Commission found that
some sampled exporting producers benefited from these schemes in the IP.
However, because of the small amounts of benefits received and their negligible
impact on the subsidy margin, the Commission did not consider it necessary to
analyse the countervailability of the schemes.

3.4.2.3.  Funds for outward expansion
of industries in Guandong Province

(261)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.2.4.  The Golden Sun demonstration
programme

(a)
Introduction

(262)   The complaint alleged that
the producers of the product concerned received subsidies under the Golden
Sun Demonstration Programme (“Golden Sun”) implemented by the government of
China in July 2009. It contained prima facie evidence that four among
the sampled exporters had received direct subsidies for the product concerned
under this programme. Further, it showed that one of the sampled exporters had
been selected as the supplier of the product concerned with respect to 70% of
the total capacity installed by project operators (i.e. companies producing and
selling electricity produced from PV systems) in 2011. The complaint also
contained information suggesting that Golden Sun funding was not allocated in a
transparent and competitive manner to project operators.

(b)
Non-cooperation and use of facts
available

(263)   The Commission requested
information on the Golden Sun programme in the questionnaire, in the deficiency
letter and during the on-spot verification visit to the GOC which the GOC
failed to provide, as specified in more details in recitals (104) and (105)
above.

(264)   As
for the information requested in the questionnaire and in the deficiency
letter, the GOC has persistently maintained that this grant programme is not
intended for the producers of the product concerned. As a consequence, the GOC
has failed to provide replies to a number of questions concerning the programme
and the benefits for the producers of the product concerned by answering 'not
applicable'. The GOC also failed to submit all the relevant laws, regulations,
administrative guidelines and other acts as requested in the questionnaire,
limiting itself to the submission of the main legal basis only.

(265)   At the beginning of the
verification session on the Golden Sun programme, the Commission asked the GOC
to submit all the annexes to the main legal basis already submitted and whether
it intended to submit additional official documents concerning the programme.
The GOC submitted the requested annexes but replied that it did not intend to
submit any additional document. The Commission then showed to the GOC a budget
document concerning the actual projects financed and corresponding amounts
awarded under this programme issued by the Ministry of Finance (“MOF”) that had
been submitted by cooperating exporters (MOF Document No. 965 [2010] of 2
December 2010). The appendices to this document show that one of the sampled
exporters received substantial Golden Sun funding for its own projects and also
as supplier of the eligible equipment for several projects funded by the Golden
Sun programme. The representatives of MOF present at verification were aware of
the document shown, and the Commission requested them to submit all similar
budget documents issued by the MOF for the years of implementation of the
Golden Sun programme. While the MOF representatives agreed in principle to
submit these documents, they never submitted them to the Commission.

(266)   The Commission also showed
MOFCOM the budget documents concerning the Golden Sun Programme, issued by the
local Department of Finance of a province and a municipality, submitted by one
of the cooperating exporters, and asked the GOC to submit the relevant similar
documents (i.e. issued by provinces or municipalities) concerning the
programme. The GOC replied that it did not have these documents since they
concerned provinces and/or municipalities and thus it could not submit them.

(267)   In its letter of 3 June
2013, the GOC restated its position that the Golden Sun programme is not intended
for the producers of the product concerned and clarified that while these
producers may have benefitted from this programme, they did so as project
operators of power plants and not as producers of solar panels, since only projects
operators can receive subsidies under this programme. This letter also claims
that the Commission only asked for three specifically named documents that were
submitted by the GOC. This is incorrect as the Commission asked at verification
for specific budget documents issued by MOF (also expressly mentioned in the
Commission letter of 23 May 2013) and by local departments where the exporting
producers were located (referring to specific documents submitted by the
exporting producers), which the GOC decided not to provide.

(268)   The Commission also
requested specific information on Golden Sun disbursements received by one
sampled cooperating exporter where this exporter had supplied the product
concerned and received directly the proceeds from the government. The GOC again
was not in a position to explain the situation and provide any details during
the verification visit and simply contacted the legal counsel of the company, who
had purportedly explained that the situation had been clarified with the
Commission officials during the verification visit, which was not entirely the
case. Additional details on the situation are explained below in recitals (276)-(278).
As further specified in recitals (275)-(278) below, the investigation has established that the sampled
cooperating producers have indeed benefited from grants under the Golden Sun
programme including specifically for the supply of the product concerned. The
GOC position that this programme does not benefit the production of the product
concerned has been indisputably contradicted by the evidence and facts verified
in the investigation.

(269)   Given
this lack of cooperation by the GOC, the Commission was unable to verify
several crucial aspects of the Golden Sun programme and of the actual benefits
conferred to the producers of the product concerned. This was in addition to
the failure by the GOC to submit all the relevant documents requested, notably
the budgetary documents on the Golden Sun appropriations issued by the MOF for
the years of implementation of the programme. Therefore, certain findings of
the investigation are based on the best facts available on record in accordance
with Article 28 of the basic Regulation.

(c)
Legal Basis

(270)   The main legal basis is the
Notice concerning the Implementation of the Golden Sun Demonstration Programme
of 16 July 2009 and the annexed Golden Sun Demonstration programme Interim
Measures for Financial Assistance Fund Management, File CaiJian No. 397 [2009]
issued by the Ministry of Finance, the Ministry of Science, and the National Energy
Board; Circular regarding the Successful implementation to Assignments to The
Golden Sun Demonstration Programme, File No. 718 [2009]; Circular regarding the
Successful Fulfilment of the Golden Sun Demonstration Programme 2010, File No.
622 [2010]; Circular on Instructions on Finance Subsidy Budget Indexes for
Construction Costs to The Golden Sun Demonstration Programmes 2010, File No.
965 [2010] of 2 December 2010 issued by of the Ministry of Finance; Circular
with respect to Distribution of the Budgetary Target for the Fiscal Subsidy
Appropriated for The Golden Sun Programmes 2011, JCJ File No. 336 of 1
September 2011 issued by the Hebei Department of Finance; the Circular with
respect to Distribution of the Budgetary Target for the Fiscal Subsidy Appropriated
for The Golden Sun Programmes 2011, HCJ File No. 135 of 8 November 2011 issued
by the Hengshui Municipal Finance Bureau.

(d)
Findings of the investigation

(271)   The Golden Sun programme was
established in 2009 for promoting the technological progress and scaled
development of the distributed solar PV system industry. The authorities
responsible for the programme at central level are the Ministry of Finance, the
Ministry of Science and the National Energy Board. The Notice on Implementation
of the Golden Sun Programme lists a number of criteria to be eligible for funds
under this programme, including: a) that enterprises be included in the local
Golden Sun demonstration project implementation plan; b) have an installed
capacity of not less than 300 kWh; c) have a construction period of no more
than one year and an operation period of no less than twenty years; d) owners
of the PV projects must have total assets of at least RMB 100 million and
capital of at least 30 % of the investment costs; e) the producers of
integrated system and key equipment used for the PV generation projects should
be selected via bidding procedures. Eligible projects can receive up to 50
percent of the total investment costs from the government, whereas this ceiling
is increased to 70 percent for project owners located in remote areas without
an established electrical grid.

(272)   As for the procedure,
enterprises willing to receive funding under the programme must submit their
applications and supporting documents to the relevant government authority. The
finance, technology and energy departments at the provincial level responsible
for the organisation of the programme submit a joint summary report to the
Ministry of Finance, Ministry of Science and the National Energy Board which
are responsible for reviewing the provincial projects with regards to, the
technical programs, the building conditions, the financing and all other
aspects. Following final approval by the government, the Ministry of Finance
allocates the funds directly to the project owner and will keep the relevant
approval and disbursement documents.

(273)   In
practice, project operators submit funding applications to the government after
entering into a contract with supplier(s) of the eligible PV equipment (i.e.
namely the product concerned). According to the relevant legislation those
suppliers of the eligible PV equipment are selected via bidding procedures.
However, the GOC has not clarified how it exercises its discretion in selecting
project operators for the local Golden Sun demonstration project implementation
plans, and how these project operators select in turn the supplier of the
eligible PV equipment. The GOC and interested parties have not shown that the
selection process is open, transparent and non-discriminatory, as they have
failed to provide the relevant documentation. There is no indication that any
foreign PV equipment has been purchased. A substantial part of the eligible PV
equipment has been provided by one single sampled cooperating producer. On the
basis of facts available, the Institutions conclude therefore that the Golden
Sun Programme has been used as a means to create artificial demand for the
products of selected Chinese producers of the product concerned. . If the
government considers the project eligible it is supposed to grant the funds.

(274)   The Golden Sun programme
confers a subsidy within the meaning of Article 3(1)(a)(i) and Article 3(2) of
the basic Regulation in the form of a transfer of funds from the GOC in the
form of grants to the producers of the product concerned.

(275)   In
particular, the investigation has established that several sampled cooperating
producers have directly received grants under the Golden Sun programme for the
installations of solar-generated power equipment at their premises. These
grants paid out to the sampled cooperating producers offset part of the costs
that otherwise they would incur are therefore directly linked to the product
concerned..

(276)   Moreover,
the investigation has established that sampled cooperating producers have also
benefited from funding under this programme for the purpose of supplying the
product concerned to unrelated project operators. In particular, during the
on-the-spot investigation it was found that one sampled cooperating exporting exporter
had received directly from the GOC a substantial lump-sum payment for all of
the 40 projects funded under the Golden Sun programme for which it had supplied
the product concerned. Such an amount had not been reported by the sampled
cooperating exporting producer in its questionnaire response. The 2010 Circular
from the Ministry of Finance showed that this cooperating exporter was chosen
to supply the product concerned to several unrelated project operators
belonging to both the private and the public sector. The Commission tried to
seek information from the GOC with regard to this direct payment to the sampled
cooperating exporter, as Article 13 of the Interim Measures on the Golden Sun
programme in the 2009 Notice specifically requires that the grants be paid
directly to the project operator (i.e. not to the supplier of the PV equipment)
and the GOC explicitly confirmed this element at verification. As explained
above, the GOC was unable to provide any explanation during the verification
visit as to why a sampled exporter had received direct funding. In its letter
of 3 June 2013, the GOC limits its comments to one of the 40 project only,
simply stating that there had been a financial arrangement between the project
operator and the sampled cooperating exporting producer because the operator
did not have sufficient money to pay the sampled exporting producer and
therefore they agreed that the subsidy would be paid directly to the sampled
cooperating exporting producer. As this unsubstantiated and very concise
explanation concerned only one project involving the sampled cooperating
exporter out of the 40 projects listed in the MOF document is completely
insufficient for the Commission to clarify the situation.

(277)   The sampled cooperating
exporter sought to justify in its letter of 24 June 2013 that the direct payment
for 40 projects concerned was not reported as it constituted a ‘user’ subsidy
for the project operator and not for the supplier. This exporter did confirm
that it had received the direct lump-sum payment linked to the supplies in the
40 projects listed in the MOF circular, adding that it is possible for the
government to transfer funds directly to the supplier and that the reason for
this is to ensure that these grants are used only for the authorised PV systems
and to facilitate control. However, the exporter focused its reply on one
project for which documents have been collected on spot and ignored all the
other 39 projects for which it directly received Golden Sun funding. Although
the exporter proved that the funds for this particular project had been booked
as an account receivable and not as a prepayment of government grant, no other
evidence has been submitted on the actual completion of this or any of the
other projects, including on the actual supply of the product concerned for
which funds had been received. Its explanation also did not shed light on the
inconsistency of the government direct payments with the relevant implementing
rules cited above, which provide that proceeds are normally transferred by the
GOC to the project operator and not to the equipment supplier.

(278)   The
Commission considers the GOC explanation concerning the financial arrangement
between the sampled cooperating exporter and the project operator to be unconvincing,
because it seems odd that two private parties may decide autonomously to enter
into an arrangement involving the action of a government (i.e. a direct payment
from the government to the supplier in derogation to Article 13 of the 2009
Notice) without the government also having been involved or perhaps even being
aware of it. The GOC has failed to provide more substantial evidence and
comments on this aspect of direct payments to suppliers and has decided to
limit its reply to only 1 unnamed project out of the 40 projects carried out by
the sampled cooperating exporters. The explanations provided by this exporter
are also silent on this comment by the GOC on the difficult financial situation
of the operator concerning a project that the GOC has not specified.
Furthermore, the statements by the exporter concerning the possibility for a
direct payment and the underlying rationale do not find any confirmation from
other sources and from the GOC.

(279)   In light of the above limited
and contradictory comments submitted by the GOC and by the sampled cooperating
exporter, the only point in common and the conclusion that can be drawn is that
the direct payment of the lump-sum from the GOC to the sampled cooperating
exporter was necessary to make sure that this exporter would receive the
proceeds because there would be a risk of non-payment linked to the financial
difficulty of the project operator. The fact remains that the sampled
cooperating exporter was not able to explain how it had used the lump-sum payment
from the government, whether the PV equipment was finally provided to the
project operators and what price, if any, had been paid by the project
operators. Given the absence of other evidence available on file or otherwise
reasonably available to the Commission, it is therefore concluded on the basis
of Article 28 of the basic Regulation that the lump-sum payment to the
cooperating exporter constitutes a direct grant within the meaning of Article
3(1)(a)(i) of the basic Regulation..

(280)   The Commission further
concludes that the grants provided to the suppliers of the product concerned,
either as project operators or when allegedly supplying PV equipment to
unrelated project operators, confer a benefit to them in accordance with Article
3(2) of the basic Regulation. As project operators, the funding under the
Golden Sun programme allows producers of the product concerned to save
installation costs of solar-generated power equipment at their premises. As
suppliers of PV equipment to unrelated project operators, the funding under the
Golden Sun programme is directly kept by the producers of the product concerned
without the need to effectively provide the equipment and/or shields them from
the risk of non-payment of unrelated project operators. In the latter case,
producers of the product concerned obtain a payment that otherwise they would
not have obtained from the unrelated project operator.

(281)   This
subsidy scheme is also specific within the meaning of Article 4(2)(a) of the
basic Regulation given that the legislation itself, pursuant to which the
granting authority operates, limits access to this scheme only to the specific project
operators meeting the several criteria listed in the legislation and more
broadly only to project operators involved in the solar power sector.
Furthermore, as neither the selection of the supplier of PV equipment nor the
selection of the project operators are based on an open, transparent and
non-discriminatory competitive process and that direct payments from the GOC to
the suppliers of PV equipment take place, the scheme is also specific because
only certain suppliers of PV equipment can de facto benefit from it. This
programme does not meet the non-specificity requirements of Article 4(2)(b) of
the basic Regulation, given that the eligibility conditions and the actual
selection criteria for enterprises to be included in the local project
implementation plans and for the final projects to be selected on the basis of
the different technical and financial aspects are not objective and do not
apply automatically.

(e)
Conclusion

(282)   The Golden Sun programme is
a specific subsidy in the form of grant. The investigation has established that
some of the sampled cooperating exporters have benefited from this subsidy.

(f)
Calculation of the subsidy amount

(283)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Golden Sun Demonstration Programme

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,00 %

Yingli Green Energy Holding Company and related companies ||             0,24 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,09 %

JA Group ||             0,00 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,00 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,02 %

Jinko Solar Co. Ltd and related companies ||             0,05 %

3.4.3.     Direct Tax Exemption and
Reduction programmes

3.4.3.1.  The two free/three half
programme for foreign invested enterprises (FIEs)

(a)
Introduction

(284)   The complaint alleged the
existence of specific legislation dating back to 1991 to encourage foreign
investment in China through the Foreign Invested Enterprise and Foreign
Enterprise Income Tax Law (“FIE Tax Law”). Among the benefits for so-called
Foreign Invested Enterprises (“FIEs”) there is a subsidy programme referred to
as ‘Two Free / Three Half”, which provides for a complete direct tax exemption
for the first two years of profitability of FIEs and for half of the applicable
income tax rate for the following three years.

(285)   The two free/three half
programme also exists in a different variant for companies recognised as New
and High Technology Enterprises and that are located in certain designated
areas. The benefits under this variant of the programme can also apply beyond
the year 2013. The investigation found that one of the cooperating exporters
[Yingli Hainan] enjoy benefits under this programme starting in 2011 with full
tax exemption for the years 2011 and 2012 and 50 % reduction of the tax rate in
the following three years.

(286)   The
Commission sought to verify this programme during the verification visit with
the GOC. However, the GOC failed to provide information on this different
variant of the two free/three half programme. In its letter of 3 June 2013, the
GOC argued that this programme was not alleged in the complaint and is not a
replacement programme of the variant of the two free three half programme for
FIEs alleged in the complaint, which applies without geographic limitations.
The Commission takes note of these explanations given by the GOC and
understands that this tax programme is formally a separate programme than the
two free three half programme for FIEs. However, given that its benefits continue
after the alleged expiry of the FIE scheme, the mechanics, the nature and the
effects of its benefits are the same as the ones under the programme for FIEs
and that it has been reported by one of the sampled cooperating exporters, it
considers that it has a close nexus with the two free/three half FIE programme,
as a continuation of the same programme, and that it should be countervailed.
In this regard, the Commission notes that Article 10(1) of the basic Regulation
permits investigation of any “alleged subsidy” identified by the complainant
and does not refer to any “alleged subsidy programme”. Since in this case both
programmes involve the same subsidy i.e. corporate tax revenue foregone, the
Commission is entitled to investigate them as a single subsidy.

(b)
Legal basis

(287)   The legal basis of this
programme is Article 8 of the FIE Tax Law and Article 72 of the Implementation
Rules of the Income tax Law of the People’s Republic of China of
Foreign-Invested Enterprises and Foreign Enterprises. According to the GOC,
this programme has been terminated with the adoption on 16 March 2007 of the
Enterprise Income Tax Law (“EIT Law”) of 2008 at the 5th Session of the 10th
National People's Congress of the People's Republic of China, namely Article 57
of the EIT Law, with a phase-out of its benefits until the end of the year
2012.

(288)   The legal basis of the
special two free three half program is Decree No. 40 [2007] i.e. Notice of the State Council on the Implementation of Transitional
Preferential Policies on Income Tax for High-tech Enterprise Set up in Special
Economic Zone and Shanghai Pudong New District, based on Article 57 (3) of the
PRC Enterprise Income Tax Law, along with the
Administrative Measures for the determination of High and New Technology Enterprises.

(c)
Findings of the investigation

(289)   Only productive enterprises
with foreign investment scheduled to operate for a period of not less than ten
years are exempted from income tax. The exemption starts from the year in which
the enterprise begins to make a profit for the first two years, followed by a
reduction of fifty per cent of the applicable tax rates for the following three
years.

(290)   For the special variant
scheme, eligible enterprises must also have the recognised status of New and
High Technology enterprises with the specific administrative certification,
that is enterprises with core intellectual property and that can also satisfy
the conditions set out in Article 93 of the Implementation Regulations of the
PRC EIT Law.

(291)   Any company that intends to
apply for this scheme has to file the Annual Corporation Income Tax Return Form
and the Appendices and financial statements with the State Administration of
Taxation. These practices also apply to the special variant scheme.

(292)   The GOC argued that this
programme has been progressively phased out since the entry into force of the
EIT Law in 2008 and its benefits are available until the end of the year 2012.
The GOC has also stated that there is no replacement programme for FIEs and the
tax treatment of FIEs is now the same as for other corporate taxpayers. The
Commission notes that this tax programme has conferred benefits during the IP
as several PV producers have benefited from it during the IP. Furthermore, it
cannot be ruled out that benefits are still available under this programme or
that a similar replacement programme is available or will be enacted in the
future. Indeed, as explained above, the investigation showed that there are
also other variants of the “two free/three half” programme which continue to
benefit solar panel manufacturers. Therefore, this programme is found to be
still countervailable.

(293)   The special variant scheme
was used by one cooperating exporter, i.e. Yingli Green Energy.

(d)
Conclusion

(294)   This programme constitutes a
subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic
Regulation in the form of foregone government revenue which confers a benefit
upon the recipient companies.

(295)   This subsidy scheme is
specific within the meaning of Article 4(2)(a) of the basic Regulation given
that the legislation pursuant to which the granting authority operates, limits
the access to this scheme only to certain enterprises that qualify as FIEs and
that comply with the specific criteria laid down in the relevant legislation.

(296)   Accordingly, this subsidy
should be considered countervailable.

(297)   For the variant scheme it
should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and
Article 3(2) of the basic Regulation in the form of foregone government revenue
which confers a benefit upon the recipient companies.

(298)   This subsidy scheme is
specific within the meaning of Article 4(2)(a) of the basic Regulation given
that the legislation itself, pursuant to which the granting authority operates,
limited the access to this scheme only to certain enterprises and industries
classified as encouraged, such as the PV industry. The scheme is also specific
under Article 4(3) because eligibility is limited to certain regions.

(299)   Accordingly, this variant
should be considered countervailable.

(e)
Calculation of the subsidy amount

(300)   The
amount of countervailable subsidy is calculated in terms of the benefit
conferred on the recipients which is found to exist during the IP. The benefit
conferred on the recipients is considered to be the amount of total tax payable
according to the normal tax rate, after the deduction of what was paid with the
reduced preferential tax rate. The amounts countervailed are based on the
figures in the companies’ tax return for the year 2011. As the audited tax
return for the tax year 2012 was not available at any of the sampled
cooperating exporters, the figures for the whole of the year taxable 2011 were
taken into account.

(301)   In accordance with Article
7(2) of the basic Regulation this subsidy amount (numerator) has been allocated
over the total sales turnover of the cooperating exporting producers during the
IP, because the subsidy is not contingent upon export performance and was not
granted by reference to the quantities manufactured, produced, exported or
transported.

(302)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

The two free/three half programme

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,31 %

Yingli Green Energy Holding Company and related companies ||             0,35 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,00 %

JingAo Group and related companies ||             0,47 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,00 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,00 %

Jinko Solar Co. Ltd and related companies ||             1,03 %

3.4.3.2.  Income tax reduction for
export-oriented FIEs

(303)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.3.3.  Income tax benefit for FIEs
based on geographical location

(304)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.3.4.  Tax reduction for FIEs
purchasing Chinese-made equipment

(305)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.3.5.  Tax offset for research and
development by FIEs

(a)
Introduction

(306)   The complaint alleged that
FIEs are entitled to preferential tax policies for their R&D activities by
way of a 150 percent tax offset of their expenses if these were increased by 10
percent or more as compared to the previous year.

(307)   The GOC claimed that this
scheme has been terminated with the enactment of the EIT law in 2008 and that
no phase-out period was available. However, several sampled cooperating
exporters reported that they have benefitted from a similar programme under the
2008 EIT law, showing that the preferential R&D cost offset programme for
FIEs has been replaced by a specific programme in 2008. The GOC has not
provided further information on the 150 % tax offset in its questionnaire reply
or in the reply to the deficiency letter.

(b)
Legal basis

(308)   This scheme is provided by
Article 30(1) of the EIT Law and from Article 95 of the Regulations
on the Implementation of Enterprise Income Tax Law of the PRC (“EIT
Implementing Regulations”), and Administrative Measures for the
Determination of High and New Technology Enterprises (Guo Ke Fa Huo [2008]
No. 172), and Article 93 of the EIT Implementing Regulation, along with
the Notice of the State Administration of Taxation on the issues concerning Enterprises
Income Tax Payment of High and New Technology Enterprises (Guo Shui Han
[2008] No. 985).

(309)   Article 95 states that an
additional 50 % deduction of R&D expenditures mentioned in Item 1 of Article
30 shall be granted for such expenditures for high and new technology products
so that they are subject to an amortization based on 150 % of the intangible
assets costs.

(c)
Findings of the investigation

(310)   As
noted above the GOC did not provide any relevant information for this scheme in
the replies to the questionnaire and deficiency letter. This scheme was already
countervailed in the Coated Fine Paper investigation[78] and in the Organic Coated Steel investigation[79]. The relevant legal provisions indeed show that this scheme
provides a benefit limited to companies which are formally recognised as High
and New Technology Enterprises. These companies also have to incur R&D
expenses for the purpose of developing new technologies, new products and new
crafts. Eligible enterprises can offset an additional 50 % of their R&D
expenses against their income tax liability. Also expenses from intangible
R&D assets entitle eligible companies to a 150 % deduction of the actual
costs borne by these companies.

(311)   The investigation
established that companies benefiting from this scheme shall file their Income
Tax Return and relevant Annexes. The actual amount of the benefit is included
in both the tax return and Annex V. Only companies that have obtained the
formal certificate recognising them as High and New Technology enterprises are entitled to this scheme.

(d)
Conclusion

(312)   This scheme constitutes a
subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic
Regulation in the form of revenue foregone by the government which confers a
benefit upon the recipient companies.

(313)   This
subsidy is specific within the meaning of Article 4(2)(a) of the basic
Regulation as the legislation itself limits the application of this scheme only
to certain enterprises formally recognised as High and New Technology
enterprises and that incur R&D expenses to develop new technologies, new
products and new crafts.

(314)   Accordingly,
this subsidy should be considered countervailable.

(e)
Calculation of the subsidy amount

(315)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The benefit conferred on the
recipients is considered to be the amount of total tax payable according to the
normal tax rate, after the subtraction of what was paid with the additional 50 %
deduction of the actual expenses on R&D for the approved projects. The
amounts countervailed are based on the figures in the companies’ tax return for
the year 2011. As the audited tax return for the tax year 2012 was not
available at any of the sampled cooperating exporters, the figures for the
whole of the year taxable 2011 were taken into account.

(316)   In accordance with Article
7(2) of the basic Regulation, this subsidy amount (numerator) has been
allocated over the total sales turnover of the cooperating exporting producers
during the IP, because the subsidy is not contingent upon export performance
and was not granted by reference to the quantities manufactured, produced, exported
or transported.

(317)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Tax offset for research and development

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,10 %

Yingli Green Energy Holding Company and related companies ||             0,49 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,00 %

JingAo Group and related companies ||             0,02 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,00 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,29 %

Jinko Solar Co. Ltd and related companies ||             0,33 %

3.4.3.6.  Tax refunds for reinvestment
of FIE profits in export oriented enterprises

(318)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.3.7.  Preferential tax programmes
for FIEs recognised as high or new technology enterprises

(319)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP as the companies benefited from the new programme which replaced
this preferential treatment. The details are discussed under point 3.4.4.8.
below.

3.4.3.8.  Tax reduction for high and
new-technology enterprises involved in designated projects

(a)
Introduction

(320)   This programme allows an
enterprise recognised as High and New Technology Enterprise to benefit from a
reduced income tax rate of 15 % as compared to the ordinary rate of 25 %. This
programme has been found countervailable by the EU in the Coated Fine Paper
investigation and in the Organic Coated Steel investigation ; it has
also been found countervailable by the US authorities.

(b)
Legal basis

(321)   The
legal basis of this programme are Article 28 (2) of the EIT Law along
with the Administrative Measures for the Determination of High and New
Technology Enterprises (Guo Ke Fa Huo [2008] No. 172), and Article 93 of
the EIT Implementing Regulation, along with the Notice of the State
Administration of Taxation on the issues concerning Enterprises Income Tax
Payment of High and New Technology Enterprises (Guo Shui Han [2008] No.
985).

(c)
Findings of the investigation

(322)   This scheme applies to
recognised High and New Technology Enterprises that need key support from the
State. These enterprises shall have core independent intellectual property
rights and must meet a number of requirements: (i) their producers are included
in the scope of the products in the High-Tech Fields with Key State Support;
(ii) the total expenses for R&D shall account for certain proportion of
total sales income; (iii) income from high and new technology products shall
account for certain proportion of the total sales income; (iv) the personnel
engaged in R&D shall account for a certain proportion of the total staff;
(v) the other requirements set by the 2008 Administrative Measures for High and
New Tech Enterprises are met.

(323)   Companies benefiting from
this scheme must file their Income Tax Return and relevant Annexes. The actual
amount of the benefit is included in both the tax return and Annex V.

(d)
Conclusion

(324)   Accordingly, the scheme
should be considered a subsidy within the meaning of Article 3(1)(a)(ii) and
Article 3(2) of the basic Regulation because there is a financial contribution in
the form of foregone government revenue which confers a benefit upon the
recipient companies. The benefit for the recipient is equal to the tax saving
enjoyed through this programme according to Article 3(2) of the basic
Regulation.

(325)   This
subsidy is specific within the meaning of Article 4(2)(a) of the basic
Regulation since it is limited to the enterprises receiving the certification
of High and New Tech Enterprises and complying with all the requirements of the
2008 administrative measures. Furthermore, there are no objective criteria
established by the legislation or the granting authority on the eligibility of
the scheme and this is not automatic pursuant to Article 4(2)(b) of the basic
Regulation.

(326)   Accordingly, this subsidy
should be considered countervailable.

(e)
Calculation of the subsidy amount

(327)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The benefit conferred on the
recipients is considered to be the amount of total tax payable according to the
normal tax rate, after the deduction of what was paid with the reduced
preferential tax rate. The amounts countervailed are based on the figures in
the companies’ tax return for the year 2011. As the audited tax return for the
tax year 2012 was not available at any of the sampled cooperating exporters,
the figures for the whole of the year taxable 2011 were taken into account.

(328)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Tax reduction for high and new-technology enterprises involved in designated projects

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,31 %

Yingli Green Energy Holding Company and related companies ||             0,42 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,35 %

JingAo Group and related companies ||             0,13 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,86 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,00 %

Jinko Solar Co. Ltd and related companies ||             0,00 %

3.4.3.9.  Preferential income tax
policy for enterprises in the northeast region

(329)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.3.10.          Guangdong province
tax programmes

(330)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.4.     Indirect Tax and Import
Tariff Programmes

3.4.4.1.  VAT exemptions and import
tariff rebates for the use of imported equipment

(a)
Introduction

(331)   This programme provides an
exemption from VAT and import tariffs in favour of FIEs or domestic enterprises
for imports of capital equipment used in their production. To benefit from the
exemption, the equipment must not fall in a list of non-eligible equipment and
the claiming enterprise has to obtain a Certificate of State-Encouraged project
issued by the Chinese authorities or by the NDRC in accordance with the
relevant investment, tax and customs legislation. This programme was
countervailed in the anti- subsidy proceedings concerning Coated Fine Paper and
Organic Coated Steel.

(b)
Legal basis

(332)   The legal bases of this
programme are Circular of the State Council on Adjusting Tax Policies on
Imported Equipment, Guo Fa No. 37/1997, Notice of the
Ministry of Finance, the General Administration of Customs and the State
Administration of Taxation on the Adjustment of Certain Preferential Import
Duty Policies, Announcement of the Ministry of Finance,
the General Administration of Customs and the State Administration of Taxation
[2008] No. 43, Notice of the NDRC on the relevant issues concerning the
Handling of Confirmation letter on Domestic or Foreign-funded Projects
encouraged to develop by the State, No. 316 2006 of 22 February 2006 and
Catalogue on Non-duty-exemptible Articles of importation for either FIEs or
domestic enterprises, 2008.

(c)
Findings of the investigation

(333)   This programme is considered
to provide a financial contribution in the form of revenue forgone by the GOC
within the meaning of Article 3(1)(a)(ii) as FIEs and other eligible domestic
enterprises are relieved from payment of VAT and/or tariffs which would be otherwise
due. It therefore confers a benefit on the recipient companies in the sense of
Article 3(2) of the basic Regulation. The programme is specific within the
meaning of Article 4(2)(a) of the basic Regulation since the legislation
pursuant to which the granting authority operates limits its access to
enterprises that invest under specific business categories defined exhaustively
by law and belonging either to the encouraged category or the restricted
category B under the Catalogue for the guidance of industries for foreign
investment and technology transfer or those which are in line with the Catalogue
of key industries, products and technologies the development of which is
encouraged by the State. In addition, there are no objective criteria to
limit eligibility for this programme and no conclusive evidence to conclude
that eligibility is automatic under Article 4(2)(b) of the basic Regulation.

(d)
Calculation of the subsidy amount

(334)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The benefit conferred on the
recipients is considered to be the amount of VAT and duties exempted on
imported equipment. In order to ensure that the countervailable amount only
covered the IP period the benefit received was amortized over the life of the
equipment according the company's normal accounting procedures.

(335)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

VAT exemptions and import tariff rebates for the use of imported equipment

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,24 %

Yingli Green Energy Holding Company and related companies ||             0,44 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,38 %

JingAo Group and related companies ||             0,35 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,78 %

Delsolar (Wujiang) Ltd. and related companies ||             0,07 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,63 %

Jinko Solar Co. Ltd and related companies ||             0,00 %

3.4.4.2.  VAT rebates on FIE purchases
of Chinese-made equipment

(a)
Introduction

(336)   This programme provides for an
exemption from VAT for the purchase of domestically-produced equipment by FIEs.
To benefit from the exemption, the equipment must not fall in a list of
non-eligible equipment and the value of the equipment must not exceed a certain
threshold. This programme was in the anti- subsidy proceedings concerning Coated
Fine Paper and Organic Coated Steel.

(b)
Legal basis

(337)   The legal bases are
Provisional Measures for the Administration of Tax Refunds for Purchases of
Domestically-manufactured Equipment by FIEs, the Trial Measures for
Administration of Tax Rebate from the Purchase of Chinese-made Equipment for
Foreign-invested Projects and the Notice of the Ministry of Finance and the
State Administration of Taxation on the Cancellation of the Rebate Policy for
Domestic Equipment Purchased by Foreign-invested Enterprises.

(c)
Findings of the investigation

(338)   The GOC in its reply to the
anti-subsidy questionnaire claimed that this program had been discontinued
starting 1 January 2009 and referred to the Circular of the Ministry of
Finance and the State Administration of Taxation on the Discontinuation of the
Rebate Policy on the Purchase of Domestically Manufactured Equipment by Foreign
Investment Enterprises (CAISHUI{2008} No. 176). However the investigation
had shown that several sampled exporting producers benefited from this scheme
during the investigation period. The sampled exporters concerned submitted
detailed information concerning this scheme, including the amount of benefit
received. Taking this into account it was concluded that the GOC did not
provide accurate information concerning this programme and as the situation of
some exporting producers shows this programme still continues.

(339)   Since none of the requested
information was provided by the GOC, the Commission relied on the information submitted
by the sampled exporting producers.

(340)   This programme is considered
to provide a financial contribution in the form of revenue forgone by the GOC
within the meaning of Article 3(1)(a)(ii) as FIEs are relieved from payment of
VAT which would be otherwise due if they were not exempted. It therefore
confers a benefit on the recipient companies in the sense of Article 3(2) of
the basic Regulation. The programme is specific within the meaning of Article
4(2)(a) of the basic Regulation since the legislation pursuant to which the
granting authority operates limits its access to foreign invested enterprises
that purchase domestically-manufactured equipment and fall under the encouraged
category and the restricted B Category of the Catalogue of Foreign-funded
Industries and equipment purchased in the domestic market listed in the Catalogue
of key industries, products and technologies the development of which is
encouraged by the State. Further, the Trial Measures for Administration
of Tax Rebate from the Purchase of Chinese-made Equipment for Foreign-invested
Projects and the Notice of the Ministry of Finance limit the benefit to the
FIEs that belong to the encouraged category in the Guiding Catalogue of
foreign invested industries or the Catalogue of advantageous
foreign-invested industries in the Central and Western regions in China. In
addition, there are no objective criteria to limit eligibility for this
programme and no conclusive evidence to conclude that eligibility is automatic
under Article 4(2)(b) of the basic Regulation. The programme is also specific
under Article 4(4)(b) of the basic Regulation because it is contingent upon the
use of domestic over imported goods.

(d)
Calculation of the subsidy amount

(341)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The benefit conferred on the
recipients is considered to be the amount of VAT exempted on domestic
equipment. In order to ensure that the countervailable amount only covered the
IP period the benefit received was amortized over the life of the equipment
according the usual industry practice.

(342)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

VAT rebates on FIE purchases of Chinese-made equipment

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,00 %

Yingli Green Energy Holding Company and related companies ||             0,00 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,00 %

JingAo Group and related companies ||             0,07 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             0,03 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,15 %

Jinko Solar Co. Ltd and related companies ||             0,05 %

3.4.4.3.  VAT ad tariff exemptions for
purchases of fixed assets under the foreign trade development funds programme

(343)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.5.     Government provision of
goods and services for less than adequate remuneration

3.4.5.1.  Government provision of
polysilicon for less than adequate remuneration

(344)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.5.2.  Government provision of
aluminium extrusions for less than adequate remuneration

(345)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.5.3.  Government provision of glass
for less than adequate remuneration

(346)   The investigation confirmed
that no benefits had been received under the programme by the sampled companies
during the IP.

3.4.5.4.  Government provision of power

(a)
Introduction

(347)   The complainant alleged that
some Chinese producers of polysilicon have benefited from the cheap electricity
provided at less than adequate remuneration.

(b)
Findings of the investigation

(348)   The investigation
established that many of the sampled exporting producers had a related
polysilicon producer within their company group. It was found that one of the
sampled groups of exporting producers, i.e. LDK Solar, received regularly
significant electricity fee subsidies from the Financial Bureau of Xin Yu
Economic Zone. Although in this case the company did not benefit directly from
the lower electricity rate than otherwise available on the market, the
significant rebates provided by the Financial Bureau of Xin Yu Economic Zone
eventually resulted in a situation where the company received benefits from the
provision of cheap electricity and are thus functionally equivalent to
government provision at below-market prices. In any event, even if the rebate
is considered as a grant, the measure is closely connected to the complainant’s
allegation and falls within the scope of the investigation. In fact, the company
concerned in the LDK Group received a near total refund of its electricity fees
due in the IP.

(349)   LDK Solar group received,
through its related polysilicon producer, a financial contribution in the sense
of Article 3(1)(a)(iii) of the basic Regulation in that that local government
provided electricity fee subsidies, or in the sense of Article 3(1)(a)(i). This
constitutes a government financial contribution in the form of provision of
goods other than general infrastructure within the meaning of the basic
regulation. Alternatively, it is a direct transfer of funds.

(350)   LDK Solar received a benefit
within the meaning of Article 3(2) of the basic Regulation to the extent that
the government has provided electricity for less than adequate remuneration. It
has been established that this exporter was, because of the electricity fee
subsidies, effectively subject to a rate lower than the rate generally
available. The direct transfer of funds confers a benefit because it is a
non-repayable grant not available on the market.

(351)   The subsidy in form of
provision of the cheap electricity by means of a rebate to one of the sampled
producers is specific within the meaning of Article 4(2)(a) of the basic
Regulation as the electricity fees subsidies have only been paid to LDK. The
subsidy is also regionally specific to certain enterprises within the Xin YU
Economic zone. The non-cooperation of LDK and the GOC in reporting this subsidy
has led to the above findings being made on the basis of facts available.

(c)
Calculation of subsidy amount

(352)   The subsidy amount was equal
to the amount of the rebate covering the IP period.

(353)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Electricity at LTAR

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,00 %

Yingli Green Energy Holding Company and related companies ||             0,00 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,00 %

JingAo Group and related companies ||             0,00 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             2,45 %

Delsolar (Wujiang) Ltd. and related companies ||             0,00 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             0,00 %

Jinko Solar Co. Ltd and related companies ||             0,00 %

3.4.5.5.  Provision of land use rights
for less than the adequate remuneration

(a)
Introduction

(354)   The complainant alleged that
Chinese producers of the product concerned receive land-use rights from the GOC
for less than adequate remuneration in that the national or local governments
do not provide the rights consistent with market principles.

(355)   The GOC claimed that there
is a standardised and orderly competitive land market in which land use rights
must be publicly traded in accordance with the law in the land market. The GOC
also stated that industrial and commercial land should be obtained by
compensation for the use in open market by bidding, auction and competition and
“regardless of the number of bids or the initial price, the price finally
paid is representative of the market price which is determined by free market
supply and demand”. The GOC also claimed that the LUR transfer shall not
include restrictions in the announcement of transfer through tendering, auction
and quotation that affect fair competition.

(356)   The
GOC did not provide any data with respect to the actual land-use rights prices
and initial land prices formulated by the government. The information provided
by the GOC in respect of LUR transactions as requested in the questionnaire was
incomplete. When correcting its initial reply to the questionnaire during the
verification visit, it also confirmed that some of the reported transactions
were subject to bidding procedure. However, no details on the number of bids
and the difference between initial and final price, as requested in the
questionnaire, was provided.

(357)   During the verification the
Commission requested from the GOC evidence to support its claims concerning the
transfers of LUR in China is assigned through bidding, quotation or auction. It
is noted that according to Article 11 of Provisions on Assignment of the
State-owned Construction Land Use Right through Bid Invitation, Auction and
Quotation the responsible state authority issues public notice whenever the
bidding/auction/quotation process takes place. On this basis, the Commission
requested all public notices for the transactions which were subject to these
procedures in order to collect and verify information requested in the
questionnaire. The GOC did not provide any of these notices as it claimed that
“they do not exist anymore”. As a result the Commission was unable to
verify the information concerning the LUR transactions of sampled exporting
producers.

(358)   The Commission informed the
GOC of its consideration to apply provisions of Article 28 of Regulation (EC)
No 597/2009 in respect to this subsidy scheme and since the GOC in its reply to
Commission letter of 23 May 2013 did not provide a satisfactory explanation or
any new evidence concerning this issue, the Commission had to base its findings
on the best facts available, i.e. in this case on the information submitted by
the sampled exporting producers and other publicly available information.

(359)   The
Commission also requested from the GOC, under the assumption that there is no
market price for land in the PRC, its views on possible benchmarks. Although
this was only an assumption and by no means a finding or conclusion at the time
when the questionnaire was sent to the GOC, the GOC expressed its view that
this assumption is false and did not provide any concrete information on
possible benchmarks. The GOC only submitted that “to
the extent that any benchmark should be used, it should be the prices that
Chinese industries which are not favoured would have to pay for similar land”.
Since the GOC did not disclose which industries are not “favoured” and neither
did it provide any information on prices which these industries are paying for
industrial land in China, the Commission was unable to assess whether they constitute
a suitable benchmark. In this respect it is noted that in its previous
investigations concerning Coated Fine Paper and Organic Coated Steel
the Commission found that the provision of LUR to these industries also does
not respect market principles.

(b)
Legal basis

(360)   The land-use right provision
in China falls under Land Administration Law of the People's Republic of China.

(c)
Findings of the investigation

(361)   According to Article 2 of
the Land Administration Law, all land is government-owned since, according to
the Chinese constitution and relevant legal provisions, land belongs collectively
to the People of China. No land can be sold but land-use rights may be assigned
according to the law. The State authorities can assign such rights through
public bidding, quotation or auction.

(362)   The cooperating exporting
producers have reported information regarding the land they hold as well as
most of the relevant land-use rights contracts/certificates, but only very
limited information was provided by the GOC about pricing of land-use rights.

(363)   As mentioned above the GOC
claimed that the land-use rights in China are assigned through bidding, auction
and competition. This is also provided for in the Article 137 of the Real Right
Law of the People's Republic of China.

(364)   However, it was found that this system as described by the
GOC does not always work in the same way in practice. During the verification
of sampled exporting producers, the Commission obtained some notices issued by
relevant authorities concerning LUR available for transfer. While one notice
specifically limits the potential buyers of the LUR to the photovoltaic
industry[80], another sets limits to the price initially set by the authorities
and does not allow the market to determine the price.[81] The
auctions themselves were not seen to provide a real competition because in many
of the examples viewed during the on spot verifications of exporting producers
only one company made a bid (only the sampled PV producer) and therefore their
opening bid (the value set by the local Land Bureau) formed the final price per
square metre.

(365)   The above evidence
contradicts the claims of the GOC that the prices paid for LUR in the PRC are
representative of the market price which is determined by free market supply
and demand and that LUR transfer shall not include restrictions in the
announcement of transfer through tendering, auction and quotation that affect
fair competition. It was also found that some sampled exporting producers
received refunds from local authorities to compensate for the (already low)
prices which they paid for the LURs.

(366)   In addition to the low
prices, some of the sampled exporting producers received other funds related to
the purchase of LURs which effectively decreased the actual price paid for the
LURs even more.

(367)   The
findings of the proceeding confirm that the situation concerning land provision
and acquisition in the PRC is unclear and non-transparent and the prices are
often arbitrarily set by the authorities. The authorities set the prices
according to the Urban Land Evaluation System which instructs them among other
criteria to consider also industrial policy when setting the price of
industrial land[82].

(368)   Also, the independent
publicly available information suggest that the land in the PRC is provided for
below the normal market rates[83]

(d)
Conclusion

(369)   Accordingly,
the provision of land-use rights by the GOC should be considered a subsidy
within the meaning of Article 3(1)(a)(iii) and Article 3(2) of the basic
Regulation in the form of provision of goods which confers a benefit upon the
recipient companies. As explained in recitals (364) to (367) above, there is no functioning market for
land in the PRC and the use of an external benchmark (see recital (372) below) demonstrates
that the amount paid for land-use rights by the sampled exporters is well below
the normal market rate. In addition, the refunds from
local authorities are direct transfers of funds which confer a benefit because
they are non-repayable grants not available on the market. The subsidy is
specific under Article 4 2(a) and 4 2(c) of the basic Regulation because the preferential
access to industrial land is limited only to companies belonging to certain
industries, in this case the photovoltaic industry, only certain transactions
were subject to a bidding process, prices are often being set by the
authorities and government practices in this area are unclear and
non-transparent. The situation concerning land in the PRC is also discussed in
the IMF Working Paper which confirms that the provision of LUR to Chinese
industries does not respect market conditions[84].

(370)   Consequently, this subsidy
is considered countervailable.

(e)
Calculation of the subsidy amount

(371)   As
it was concluded that the situation in the PRC with respect to land-use rights
is not market-driven, there appear to be no available private benchmarks at all
in the PRC. Therefore, an adjustment of costs or prices in the PRC is not
practicable. In these circumstances it is considered that there is no market in
the PRC and, in accordance with Article 6(d)(ii) of the basic Regulation, the
use of an external benchmark for measuring the amount of benefit is warranted.
Given that the GOC did not cooperate or failed to submit any proposal for an
external benchmark the Commission had to resort to facts available in order to
establish an appropriate external benchmark. In this respect it is considered
appropriate to use information from the Separate Customs Territory of Taiwan as
an appropriate benchmark. This information was also
used in previous investigations concerning Coated Fine Paper and Organic
Coated Steel.

(372)   The
Commission considers that the land prices in Taiwan offer the best proxy to the
areas in the PRC where the cooperating exporting producers are based. The
majority of the exporting producers are located in the developed high-GDP areas
in provinces with a high population density.

(373)   The amount of
countervailable subsidy is calculated in terms of the benefit conferred on the
recipients, which is found to exist during the IP. The benefit conferred on the
recipients is calculated by taking into consideration the difference between
the amount actually paid by each company (reduced by the amount of local
government refunds) for land use rights and the amount that should have been
normally paid on the basis of the Taiwanese benchmark.

(374)   In doing this calculation,
the Commission used the average land price per square meter established in
Taiwan corrected for currency depreciation and GDP evolution as from the dates
of the respective land use right contracts. The information concerning
industrial land prices was retrieved from the website of the Industrial Bureau
of the Ministry of Economic Affairs of Taiwan. The currency depreciation and
GDP evolution for Taiwan were calculated on the basis of inflation rates and
evolution of GDP per capita at current prices in USD for Taiwan as published by
the IMF in its 2011 World Economic Outlook. In accordance with Article 7(3) of
the basic Regulation this subsidy amount (numerator) has been allocated to the
IP using the normal life time of the land use right for industrial use land,
i.e. 50 years. This amount has then been allocated over the total sales
turnover of the co-operating exporting producers during the IP, because the
subsidy is not contingent upon export performance and was not granted by
reference to the quantities manufactured, produced, exported or transported.

(375)   The subsidy rate established
with regard to this scheme during the IP for the sampled exporting producers
amounts to:

Land Use Rights at LTAR

Company/Group ||             Subsidy Rate

Wuxi Suntech Power Co. Ltd, and related companies ||             0,31 %

Yingli Green Energy Holding Company and related companies ||             0,77 %

Changzhou Trina Solar Energy Co. Ltd and related companies ||             0,65 %

JingAo Group and related companies ||             1,31 %

Jiangxi LDK Solar Hi-tech Co. Ltd and related companies ||             4,28 %

Delsolar (Wujiang) Ltd. and related companies ||             0,32 %

Renesola Zhejiang Ltd             Renesola Jiangsu Ltd ||             1,73 %

Jinko Solar Co. Ltd and related companies ||             1,66 %

3.5.        Comments
of parties after definitive disclosure

(376)   The GOC objected the fact
that certain information from the definitive disclosure document was cited by
some media and interested parties following the disclosure. In this respect it
is noted that the Commission did not make the document public. But it is not
possible for the Commission to control the actions of several hundred
interested parties which received the disclosure document. If some of the
parties decided to make the disclosure document public or to express their opinion
on the document the Commission had no means to prevent them to do so.

3.5.1.     Comments of the GOC
concerning allegedly erroneous statements in the definitive disclosure document

(377)   The GOC claimed that the
Commission has violated the “ample opportunity” requirement of Article 12.1 of
the SCM Agreement. According to the GOC the extensive deadline extensions
granted by the Commission for the reply to the questionnaire (as detailed in
recital (104) above) were not sufficient for this purpose. The GOC further
claimed that what is the "reasonable period" under Article 12.7 of
the ASCM would also constitute "ample opportunity” under Article 12.1 of
the ASCM for all other questionnaire-type documents. The GOC also claimed that
it could only reach out to the sampled exporting producers once the sample was
finalised and therefore the time granted for the response between the receipt
of the questionnaire and sampling decision was meaningless. The GOC claimed
that the Commission’s “desire” to complete the investigation quickly seems to
trump the “non-negotiable requirement” to accord an ample opportunity under
Article 12.1. The Commission does not agree with these claims as it did its
utmost to grant the maximum possible time to the GOC to submit replies to the questionnaire
and deficiency letter. The GOC was also advised that it would be possible to
submit requested documents up to the date of the verification visit. The
Commission did not preclude the GOC from submitting any information throughout
the proceeding and on a number of occasions reminded the GOC of the possibility
to request hearings where the information and views of the GOC could be
presented. It is noted that no information submitted by the GOC throughout the
proceeding was rejected for the reason of timing. The claim of the GOC that the
time granted for the response between the receipt of the questionnaire and the sampling
decision was useless is not correct. A major part of the questionnaire
concerned the overall level of subsidisation of the industry/product concerned
and the GOC was not in any way limited by the sampling decision to collect
information of general nature. More importantly, following the selection of the
sample the GOC had still 43 days to collect information specific to the sampled
exporting producers. The Commission acted in accordance with Article 12.1 of
the SCM Agreement and granted to the GOC ample opportunity to present all
evidence which it considered relevant, bearing in mind that such an obligation
cannot be open-ended, in order to ensure timely completion of the investigation.

(378)   The
GOC also claimed that the Commission initially requested detailed information
about non-sampled exporting producers which was not "necessary
information" for the purpose of the investigation that is based on
sampling. In this respect it is noted that at the time when the questionnaire
intended for the GOC was dispatched, the decision on whether there will or will
not be sampling applied in this proceeding was not final. After the Commission
received sampling replies from the Chinese exporting producers and it was
apparent that the cooperation from exporters’ side was high, and once it became
clear that the sampled exporters would cooperate by replying adequately to
their questionnaires, the Commission did not insist on provision of company
specific information on subsidisation from non-sampled exporting producers.
Therefore the Commission does not agree with this.

(379)   The GOC claimed that in the
definitive disclosure document the Commission erroneously stated that the GOC
withheld certain information in the questionnaire reply and subsequent
submissions. This is not correct. As the Commission already stated, in its
letter of 23 May 2013 to the GOC, the GOC had failed to provide the requested
information in respect to the state-owned financial institutions, documents
related to Sinosure and provision of export credit insurance, documents related
to the Golden Sun Demonstration Programme, and information related to the provision
of Land-Use Rights.

(380)   According to the GOC the
Commission had not applied facts available as a mechanism to complete the
missing information as prescribed by Panels and the WTO disputes[85] and instead “it has applied adverse inferences in a punitive
manner and further violated the provisions of SCM Agreement”. The GOC
further claimed that the Commission did not use facts available “solely for
the purpose of replacing information that may be missing but as the specific
basis for all its findings of subsidisation in complete disregard of the
significant amount of information provided by the GOC and financial
institutions involved most often on ground of the alleged failure to provide
perfect answers or to prove every figure”. This is not what the Commission
did. All information including plans and legislation submitted by the GOC was
considered and analysed and the findings are based on these documents as
provided by the GOC, wherever those documents were made available and
verification confirmed their accurateness. The frequent citations from these
documents supporting the findings are an example of how the Commission treated
the information submitted by the GOC. In recital (110) above the Commission
clearly explains the only situations when the information submitted was not
taken at its face value.

(381)   The GOC further claimed that
the Commission contradicted itself when in the definitive disclosure document
it claimed that in this investigation it did request transaction specific
information only with regard to the sampled exporters and elsewhere in the same
document it stated that "the government questionnaire is not limited to
the sampled exporters." This is not true. The Commission did not make
contradictory statements. As already explained in the recital (378) above the
Commission limited its initial request on the provision of the company specific
information to the sampled exporting producers following the decision to apply
sampling. However, in order to assess the countervailability of the alleged
subsidy schemes, the Commission requested also other information than
information related to sampled exporting producers, such as information
concerning financial markets in China or market for land use rights. It is
therefore mentioned that “the government questionnaire is not limited to the
sampled exporters”.

(382)   The GOC also claimed that
the Commission seems to overlook that information cannot simply be rejected if
it is not made available for verification. This is not how the Commission
treated information in this proceeding. On no occasion was the
“non-availability of verification” the sole reason for not accepting such
information in full. However, when other information on the file was
contradicting it and at the same time the GOC was not able to support it with
any sort of evidence, such information could not be accepted at its face value.

(383)   According to the GOC, the Commission
in paragraph 85 of the definitive disclosure document (replicated above in
recital (117)) “acknowledged” that the GOC does not control banking and
financial institutions and cannot compel them to provide information. It is
noted that the Commission is not aware of such statement and after reviewing
the text of the recital it does not seem to be the case.

(384)   The GOC claimed that the Commission
seemed to concur with the GOC that the national laws cannot be superseded in
the case of an investigation by the requirements of the EU's basic AD
Regulation or the SCM Agreement. The link the GOC made to the non-provision of
allegedly confidential information is missing the point. The Commission however
argued (recital (117) above) that the provisions of municipal law or internal
rules of the WTO Member cannot absolve it from its WTO obligations to cooperate
with the investigations and in case of conflict it is up to the GOC to suggest
the ways in which access can be afforded to information so that    it can be
adequately verified. The GOC referred to the situation when one bank official
provided one credit risk assessment for a sampled company as an example of
suggesting a way to verify allegedly limited information and stated that “the
Commission was still not satisfied”. On the contrary, as is clear from the
wording of recital (148) above), the Commission did not take an issue with the
verification of this particular document and took this information fully into
account in its findings. However, this was an exceptional situation and
unfortunately was not replicated for most of the information of similar nature
requested in this proceeding.

(385)   In this regard, the GOC
continued to claim that “sensitive internal documents” of banks were envisaged
to be relevant information under the SCM Agreement, and their non-production
could not lead to the application of facts available. The Commission finds this
statement much too sweeping and does not see how proper verification (carried
out with due confidentiality procedures in place) could be undertaken in all
cases if such documents (including those involving transactions with clients)
are simply withheld. In the absence of verifications, facts available may have
to be used to fill gaps in fact-gathering.

(386)   The GOC repeatedly claimed
that the pre-verification letter did not contain specific questions concerning
verification and referred to the Commission letter of 23 May 2013 which used
this wording. The Commission, however, in paragraph 86 of the definitive
disclosure document (replicated as recital (118) above) stated that the
pre-verification letter of 25 March 2013 contained a very specific and detailed
list of issues and documents which would be addressed during the verification,
fully in line with the Article 26(3) of the basic Regulation and the WTO
requirements. The absence of a list of specific questions, provision of which
has no basis in the basic Regulation or WTO rules, is not an excuse for the GOC
being unable to fully cooperate during the verification.

(387)   The GOC claimed that the
Commission showed a complete absence of flexibility during the verification.
This is a misinterpretation of facts and situation before and during the
verification visit. As already explained in paragraphs 88 – 90 of the
definitive disclosure document (replicated as recitals (120) - (122) above) the
degree of flexibility shown by the Commission was full and unconditional.
Unfortunately, attempts by the GOC to provide information which there was no
possibility to verify within the schedule of the on-site visits meant that such
information could not be cross-checked and given the weight of a verified
document. The GOC also reminded the Commission of WTO case law from the EC-Salmon
panel that whether documents are “verifiable” is not always determined only by
the possibility of on-the-spot investigations and claimed that the Commission
cannot reject information simply because it is not available at verification
visits. The Commission notes that such information, not being susceptible to
on-spot verification to test is reliability and accuracy, may be given less
weight that if it had been properly verified and that this sometimes happened
in the present case.

(388)   The GOC contests the
Commission’s alleged practice not to accept new documents and evidence which
require verification after the end of the verification session to which they
belong. As already explained in the paragraph 89 of the definitive disclosure
document (replicated in recital (121) above) this is not and never was the
case. It is true that the Commission cannot normally accept documents as
verification exhibits once the verification session is over and it is not
practically possible to verify such documents, but nothing prevents the GOC from
submitting such documents in writing which in fact happened in this case as
well.

(389)   The GOC claimed that the
Commission did not explain the reason for requesting the six documents referred
to in recital (122) above and on this basis their verification was not permitted.
This claim was already raised by the GOC in its letter of 3 June 2013 and the
Commission fully replied to it in recital (122) above. It is noted once again
that all these documents concern the industry concerned and even relate to
particular subsidy schemes such as preferential lending or preferential tax
schemes. Therefore it is obvious from their names and content that they were
relevant for the investigation.[86]
However the GOC simply refused to answer any questions in this respect during
the verification, citing the alleged irrelevance of the document for the
proceeding as the only reason.

(390)   The GOC
claimed that it could not provide the supporting evidence for the information
it provided in the questionnaire reply concerning percentage of loans granted
to the industry concerned as this information was held by the banks which are
independent entities and not GOC departments and that the Commission should
verify the figures at the banks. GOC referred to the provisions of the
Commercial Banking Law which stipulates that the banks shall carry out their
business in accordance with the law (Article 4) and there shall be no
interference by local governments or government departments at various levels,
public organisations or individuals in the business operation of the banks
(Article 5). The fact is that the GOC made a statement in the questionnaire
reply and it was not able to support it all. The banks which the Commission
attempted to verify were also not able to support this information with any
information whatsoever. If this is to be considered as acceptable practice, the
investigated party could simply make any statement which supports its case and
the investigated authority would have to accept it without having a chance to
verify whether it represents reality. This is even more important taking into
account that this particular information is in contradiction with other
information on the file. There are also other articles in the Commercial
Banking Law which oblige the banks to carry out their loan business upon the
needs of national economy and the social development and with the spirit of the
state industrial policies (Article 34). As correctly pointed out by the GOC in
its comments, the banks shall carry out their business activities in accordance
with law, i.e. also with the said provisions of Article 34 of the Commercial
Banking Law. Therefore, this supposed bright line between the government and
the banks was not borne out by the facts.

(391)   The GOC claimed that it
provided all the information in respect to the ownership of the banks that it
possesses. It also claimed that the reported figures concerning bank ownership
are the official figures of CBRC and therefore there was no reason to believe
that the information provided by the GOC is false or misleading and apply
provisions of Article 28 of the basic Regulation. Further the GOC stated that it
was not aware what the source for the Commission statement in paragraph 95
(replicated in recital (127) above) of the definitive disclosure document was (“The
publicly available information suggests that there are also other state-owned
banks which provided loans to the sampled exporting producers”), i.e. in addition
to those reported by the GOC as being state-owned in its reply to the
deficiency letter. These claims could not be accepted. It is noted that the GOC
initially claimed in its questionnaire reply that it does not possess any
information concerning its ownership in the banks. Only after the Commission
pointed out in the deficiency letter that, according to the Chinese
legislation, the GOC must collect such information, did the GOC provide some
information in this respect. During the verification the CBRC official refused
to support the figures on bank ownership with any evidence, refused to provide
the source of the information and did not explain where it comes from. It is
also noted that the GOC did not contest the fact that at least 5 other banks named
by the Commission in the definitive disclosure document (see footnote in
recital (127)) are state-owned.

(392)   The GOC disagreed with the
statement in the paragraph 97 of the definitive disclosure document (replicated
in the recital (129) above) that CBRC refused to answer the question concerning
the 10 biggest banks in China because it was not submitted in writing and
claimed that the Commission misinterpreted the facts, because the main reason for
not replying was that since this question was not in the pre-verification
letter they needed time to prepare for it. In fact it is the GOC which
misinterprets the facts concerning this issue. The Commission did not insist on
immediate answer, but the CBRC refused to even look at the question on the
pretext that it was not provided in advance in writing. If the reason was
insufficient time to prepare the answer the GOC could have submitted the reply
later during the verification or by email (although without possibility for the
Commission to verify it) as it has done with several other documents. However the
GOC did not do this.

(393)   GOC claimed that it provided
all the documents concerning the establishment and the mandate of the CBRC which
the Commission requested in the questionnaire, and that since the Commission
did not raise any issues with this in the deficiency letter and did not ask for
this documents in the "list of documents to be provided before the start
of verification visit" in Annex 2 to the pre-verification letter the GOC did
not feel obliged to provide any other documents. This is not true. The
Commission requested all documents which were basis for the establishment and
the mandate of the CBRC but the GOC provided only some of them. It was only on
the basis of the statement of the CBRC official that the Commission learned
that there are also other documents in this respect. In fact the reply of the
GOC in the questionnaire in this respect was incomplete and misleading as the
GOC (CBRC) clearly knew about the existence of such additional documents as was
admitted by the CBRC during on-the-spot verification.

(394)   The GOC claimed that during
the verification the Commission did not actually request the statistics and
reports from the banks which provided loans to the sampled exporters for the IP.
They claimed that the Commission only requested the 2012 statistical report
submitted to the CBRC by the Bank of China and for this the CBRC official had
to check with the legal services involved due to the confidentiality
obligations. This is not correct. During the verification the Commission
repeated its request from the questionnaire and deficiency letter for the
statistics from all banks which provided loans to sampled exporters to be
provided[87].

(395)   The GOC further claimed that
the reference of the complainant in the complaint to the Coated Fine Paper case
in which the Commission found “on the basis of adverse inferences” that the
state-owed commercial banks [“SOCBs”] were acting as public bodies is an
“unsubstantiated assertion lacking context with regard to the nature and
existence of a subsidy granted to the exporting producers of the product
concerned and cannot therefore be considered as a sufficient evidence” of the
existence of financial contribution by a government or public body within the
meaning of Article 11.2 of the SCM Agreement. Firstly it must be pointed out
that the findings concerned in the Coated Fine Paper case were not based
on adverse inferences but on facts available in accordance with Article 28 of
the basic Regulation and there is no subsequent ruling which would confirm the
claim of the GOC that the Commission finding in this respect is based on the
“improper use of facts available. On the contrary, the Commission made similar
findings in respect of the SOCBs in another anti-subsidy case concerning
imports from China, Organic Coated Steel, and also other investigating
authorities have come to the conclusion that Chinese SOCB’s are public bodies,
notably the United States, in a finding which was upheld by the WTO Appellate
Body.[88]

(396)   The GOC continued to claim
that the Commission requested certain information from all banks established in
China and that it was not within the GOC’s practical ability to provide such
information for “over 3800” banks. The Commission disagrees with this claim and
once again refers to the deficiency letter where, following the GOC reply to
the questionnaire, it limited the scope of the information requested only to
banks where the GOC has direct or indirect shareholdership[89].

(397)   GOC also claimed that the
Commission statement that it took account of the summary of the PBOC circulars in
question from the website submitted during the verification is incorrect and
that this is proved by paragraph 133 of the definitive disclosure documents
(replicated in recital (164) above). This is not correct. The recital (164)
does not contradict the content of the website extracts. It takes it into
account but also relies on the actual content of the Circular which was, in
fact, never contested by the GOC to date as not being accurate.

(398)   The GOC claimed that the
Commission “has extracted certain terms and phrases out of context from various
documents”, misinterpreted others and tried to tie them together in order to establish
that the GOC promotes the industry producing product concerned or to establish
that the SOCBS are public bodies. It argues that a “complete reading” of these
documents (plans, outlines and decisions) would demonstrate that the
Commission’s findings lack legal basis and are not based on evidence. This is
not correct. The Commission analysed and considered all the documents,
including those referred to in recital (102) in their totality, in exactly the
manner which the GOC advocates.

(399)   Concerning
the Decision No 40, the GOC claimed that in the definitive disclosure document the
Commission quoted from it out of contexts “to distort its correct meaning”.
According to the GOC it is clear from other provisions of Decision No 40 that
it is geared towards the development of the use of renewable energy sources
rather than classifying solar modules and cells as target of any expected
development policy as proposed by the Commission. It is not true that the
Commission’s reference to the text of Article V of the Decision No 40 was out
of context. The Commission is not arguing whether one of the purposes was or
was not the development of the use of renewable energy sources. The fact is
that in the Decision No 40 the State Council identified new energy industry and
solar energy as prioritised industries and therefore they fell under the
encouraged category of projects in the Guiding Catalogue of the Industrial
Restructuring. Taking into account Articles 17, 18 and 19 of the Decision
No 40 the financial institutions may only grant loans to industries/companies belonging
to this category. This is a clear indication that the PV industry producing, inter
alia, solar modules and cells is prioritised.

(400)   The GOC claimed that there
is no reference in the text of the State Council Decision of 10 October to the
solar modules and cells or to the PV industry and that if any fiscal support
has been encouraged it is with regard to the objectives pertaining to the use
of alternative energy which have no bearing on the development of module and
cell production in general. The Commission disagrees. It must be noted that
this Decision of State Council does not seem to aim exclusively on the
promotion of the use of alternative energy sources. From its title (Decision of
the State Council on Accelerating the Incubation and Development of Strategic
Emerging Industries) as well as from the content (inter alia Articles
1(1),1(2),2(2)) it is clear that he aim is to support the development of
selected industries (in this case strategic emerging industries). This is also
confirmed by the fact that the objectives set in this Decision pertain directly
to the output and performance of the strategic emerging industries (Article
2(3). Also, there is clear link in the Decision between strategic emerging
industries and the PV industry which produces, inter alia, solar modules
and cells. Firstly there is no doubt that the PV industry is a segment of
alternative energy industry which is referred to in Article 2 of the Decision
as an industry the state should incubate and develop. Secondly the sampled
exporting producers belong to the category of high-tech industries which are
mentioned in Article 2(2) of the Decision. Similarly the 12th
five-year plan includes the solar power industry amongst the strategic
industries and also the 12th Five Year Plan for the Solar
Photovoltaic Industry confirms that the State Council Decision “has listed
solar photovoltaic industry in important field of strategic emerging
industries, which our country will develop in the future”.[90]

(401)   According
to the GOC, the Commission cited the Medium and Long-term Science and
Technology Plan but failed to refer to single instance or provision where this
document defines high-technology enterprises as including module and cell
producing enterprises or the PV industry in general. According to the GOC the
objectives of the Outline are only focused towards developing of alternative
energy sources to reduce dependence on fossil fuels. The Commission disagrees. The
majority of the investigated sampled exporting producers have been awarded high
and new-technology enterprise certificates and on this basis benefited from
subsidies the provision of which was limited to high and new-technology
enterprises (e.g. tax exemptions). The same types of individual support
programmes which are mentioned in this Plan were used by the sampled exporters.

(402)   The
GOC claimed that the statement of the Commission that the Law of the PRC on the
Scientific and Technological Progress lists a number of measures for the
support of strategic industries including the solar PV industry is not based on
any facts and that this law does not mention the PV industry or strategic
industries and there is no basis to claim that the product concerned is
included in the scope of this law. This is not correct. The basis for this
statement are Articles 18 and 34 of this law. According to Article 18 the State
shall encourage and give guidance to financial institutions on supporting the
development of high and new technology industries. According to Article 34 the
Policy-oriented financial institutions shall offer special aid to enterprises’
projects encouraged by the State. The PV industry fall within the category of
high and new technology industries and the also fall within the category of
enterprises whose projects are encouraged by the State. Moreover Article 17 of
the same law promises preferential tax policies to, amongst others, entities
which are engaged in projects covered by national scientific and technological
plans. From the Article (401) above it is clear that the projects of companies
in the PV industry fall within this scope. In conclusion, there are at least
three clear indications that the PV industry and companies producing and
exporting product concerned are included in the scope of this law.

(403)   The
GOC also claimed that the Commission has considered plans, decisions and laws
of the PRC as having the same legal effect and value and this is contrary to
the principles of legal interpretation, the legislation law of China and the
repeated arguments made by the GOC. According to the GOC the reference to the
general 5 year plan and specific PV plan has no legal reference because no
positive evidence that the plans are legally binding was provided. This is not
correct since the claim of the GOC that the plans are not binding is not
supported by other evidence on the file. To the contrary, the text of the Plan
as submitted by the GOC in the questionnaire reply clearly states: “This plan
was deliberated and approved by the National People’s Congress, and it has the
effect of law.”[91] [emphasis added] The GOC in its comments to the definitive
disclosure stated: “According to the Legislation Law of China, the
Constitution, laws, administrative legislation, local regulations, and rules
are the legislation in China.“ Since the plan has an effect of law and the
GOC confirmed that laws are the legislation in China the Commission arrived to
the conclusion that the plan is indeed legally binding. According to the
explanation of the GOC during the verification visit the sectoral and regional
5-year plans stem from the general plan 5 year plan, therefore the Commission
had no basis to treat the sectoral PV five year plan (2011-2015) differently
than the general 5 year Plan.

(404)   GOC cites the “guidelines
issued by the Commission on reimbursement/refunds” as an example of a similarly
non-binding document in the EU context. The Commission supposes that the GOC
refers to the “Commission Notice concerning the reimbursement of anti-dumping
duties” (O.J. C127 of 29.5.2002 p.10). In fact, it is not accurate to
characterise these guidelines as non-binding because they bind the Commission
to the extent that they do not violate superior rules.. The Commission has
determined that China’s plans are legally binding. However, even assuming
hypothetically this was not the case, it is clear that the national, sectoral
and regional plans, emanating as they do from the highest levels of government
and setting out government policy with regard to economic and industrial
development, would have a high probative value with regard to the de-facto
mandatory nature of their stated objectives. It is equally clear that they
could be invoked by the government to reprimand entities that were not
implementing them correctly. Therefore, they would still be highly relevant to
determinations relating to government intervention in the economy and to the
direction and control of certain industries.

3.5.2.     Comments of parties
concerning preferential policy loans, other financing, guarantees in insurance

(405)   The GOC claimed that its
failure to provide responses to Appendix A should not lead to the application
of facts available in accordance with Article 28 of the basic Regulation.
According to the GOC, if the Commission really intended to verify the
allegations in the complaint that the Chinese state-owned banks are public bodies
it would not have needed to load the questionnaires with requests for internal,
sensitive, transaction-specific data concerning banks many of which were not in
any way owned by the government. In this regard the GOC referred to the
information concerning individual loans provided by the bank to the sampled
exporting producers. The Commission does not agree with this claim. The purpose
of the information requested in Appendix A was to verify whether the Chinese
banks are public bodies and whether they are entrusted and directed by the
government. With the exception to the information on individual loans the GOC
did not specify which other requested information it considered not to be
relevant for that purpose.

(406)   It is recalled that the
questions in Appendix A sought information on the ownership of the banks, on
the composition of the board of directors and board of shareholders, minutes of
shareholders/directors meetings, links of the senior management to the state
authorities, sectoral breakdown of the loans, lending policies and assessment
of risk with respect to loans provided to the cooperating exporting producers. The
GOC claimed that for the findings on public bodies such request was “manifestly
unreasonable” and the scope of requested information was too broad. GOC
also claimed that the “threshold” determination whether the entity is or is not
a public body must be made before such information was even requested. The
Commission does not agree. In the view of high standards set by the WTO AB in
DS 379[92] all the requested information is necessary, including findings on
the extent of government involvement in the financial system. For instance,
evidence that entities act in a non-commercial manner can be to show
entrustment and direction, if combined with indications of government inference.
In any event, it should be noted that once co-operation from the sampled
exporting producers was forthcoming, the Commission decided to limit the
requested information on loans to these firms and did not draw any inferences
from the GOC’s failure to provide other information on individual loans which
was originally requested. However, all other requests for information remained
relevant to the investigation. Concerning the claim of the GOC that it could not
have provided some of the information on the Appendix A it is noted that the
GOC has refused to provide the Appendices A in their totality with the
exception of several banks. Taking the above into account it was concluded that
the GOC failed to provide the remainder of requested information within the
reasonable period.

(407)   The GOC, invoking the WTO US-Hot-Rolled
Steel Appellate Body Report (Para.99)[93],
argues that it did not have the practical ability to provide the Commission’s
“unreasonable” requests for information and that the Commission’s failure to
address this issue, and to link the various requests to the factual
determinations to which they related, meant that the Commission has not acted
in good faith. Although the case cited relates to cooperation by exporters in
an anti-dumping case, the Commission accepts that, in the case of government
questionnaires in CVD cases, there is a need to strike a balance between the
information required and the practical ability of the respondent to comply.
However, this balance must be struck in the context of all the facts.
Determinations with regard to the status of state-owned banks in China as
public bodies had already been made in the Coated Fine Paper and Organic
Coated Steel cases and in this case the complainant provided sufficient prima
facie evidence to show that the state-owned banks remained public bodies.
Therefore, the GOC should have expected a fact-intensive enquiry if it wished
to rebut this allegation. Unfortunately, the GOC continued to make claims e.g.
that it had little or no information on the government ownership of banks (a
highly relevant factor in the public body determination), that suggested that
it was not acting to the best of its ability and refusing access to necessary
information. This is one of the “limited circumstances” where Article 12.7 of
the SCM Agreement can be applied (according to the WTO Panel Report[94]. In addition, while the Commission was aware that its
requests for information were, of necessity, quite extensive, cooperation is a
two-way process and the GOC’s reaction was initially to simply demand
explanations of which factual determinations the requests were tied to
(something that cannot be determined in advance) rather than to propose ways in
which the requests for information could be addressed in a reasonable manner.

(408)   Concerning the verification
of the Bank of Shanghai the GOC claimed that the fact that the verification did
not take place is not a sufficient reason to apply facts available and that in
any event it is Commission's own fault that the verification did not take place.
In reply the Commission notes that the factual situation in respect to the
organisation of the verification visit of the Bank of Shanghai was described in
paragraphs 111 and 112 of the definitive disclosure document (replicated in
recitals (143) and (144) above). There was no change in the factual situation
concerning this verification and the Commission does not agree with the GOC's
interpretation of these facts and maintains that it made its best efforts for
the verification to take place but this was not possible because of the
obstructions in the side of the GOC. The GOC invokes the WTO Panel Report[95], which concluded that the absence of an on-spot visit does not
exhaust all possibilities of verifying documents. However, in the present
investigation, the GOC only informed the Commission of the bank’s availability
for verification one working day before the verification of the GOC started (after
the already extended deadline for such a confirmation), thus closing off any
possibility of an on-spot visit because arrangements had been made and could
not be changed. In these circumstances it is concluded that the GOC did not act
to the best of its ability and the Commission does not see any way in which the
checks provided by an on-spot visit could have been replicated by any other
means.

(409)   The GOC claimed that the
Commission cannot disregard the information provided by the HuaXia Bank in regards
of its ownership structure for the reason that it is not “ideal in all
aspects”. The Commission notes that the reason for not accepting this
information was not that it was not ideal in all aspects. As already explained
in the recital (147) above, the HuaXia Bank did not disclose any information on
the government ownership until the verification visit even though this was
requested by the Commission already in the initial questionnaire. After the
Commission pointed out that the HuaXia Bank has some state-owned shareholders
the bank submitted a sheet of paper with the information from unknown source
and in addition this information was in discrepancy with other information on
the file. It was not possible to accept such information.

(410)   In
respect of the HuaXia Bank’s decision to provide only some of the
creditworthiness assessments as described in recital (148) above the GOC
claimed that the Commission received a reasonable explanation of why the other
assesments could not be provided. The Commission does not agree. Since it was
clearly stated in the pre-verification letter that such documents will be
subject of the verification visit the explanation that the “two risk assessment
reports were dealt with by other branches of the Bank and the responsible
employees were unavailable at the moment” was not satisfactory. In addition,
the GOC raises the argument, repeated elsewhere in its comments, that
information could not be produced because of client confidentiality. The
Commission notes that there are provisions for the treatment of confidential
information in its countervailing duty investigations[96] and that, in any event, most of the Commission’s requests, on this
and other issues, were to inspect, rather than copy, such information. In any
event, the Commission notes that a strict application of the “client
confidentiality” principle could make verification of much relevant information
in CVD investigations impossible. In such situations, it would become
impossible to cross-check exporter’s replies on many issues and to make random
inspections of recipients of certain schemes in cases where there was no
cooperation from exporters or where the investigation was conducted on an
aggregate basis.

(411)   The
GOC claimed that EXIM Bank fully cooperated with the investigation and certain
documents requested by the Commission could not be provided due to internal
policy rules, state secrecy, confidentiality or other laws. Therefore
non-provision of these documents cannot lead to the application of facts
available. In accordance to the Commercial Banking Law these documents could
not be provided by the EXIM Bank officials during the verification. In this
respect, and contrary to the Commission assumption, the basic Regulation and
the SCM Agreement cannot supersede the sovereign laws of the PRC. GOC also
claimed that the questions on political party affiliations of senior officials
are irrelevant and disturbing for the GOC. The Commission disagrees. While WTO
rules (on which the basic Regulation is largely based) may not “supersede”
domestic law, this does not prevent inferences being drawn by the Commission
when such domestic laws appear to frustrate reasonable requests for
information. Furthermore, the fact is that while EXIM Bank provided some
responses in the reply to Appendix A it refused to support almost any of this
information by source data or any sort of evidence. Therefore the information
has only a value of oral statement, not supported by verified written documents.
If this practice were to be accepted the EXIM Bank could have provided virtually
any information and the investigating authority would have had to accept it
without being able to assess its accuracy. The questions on the political party
affiliations and CCP units within EXIM Bank (an any other bank in this matter)
are highly relevant for the purpose of establishing the extent of state
influence on the banks’ management in the light of the particular role of CCP
under the Constitution of the PRC. In addition to the justification of such
questions which the Commission offered in the recital (151) above it is also
noted that in accordance with CCP Constitution, all organisations, including
private commercial enterprises, are required to established “primary
organisations of the party” if the firm employs at least three party members. These
organisations guarantee and oversee the implementation of the principles and
policies of the Party and the state and supports the meeting of shareholders,
board of directors, board of supervisors, and managers in the exercise of their
functions and powers according to law[97]. The
Company Law of the PRC also obliges all companies in China to set up a CCP
organisation within their organisational structure to carry our activities of
the CCP[98].Therefore, the CCP is demonstrably linked
to the activities of the GOC and to the operation of all kinds of firms and
institutions in China ; it is therefore legitimate to ask questions about party
affiliations in this respect.

(412)   Concerning the verification
of CDB the GOC made the same claim in regards of the questions on political
affiliations of management and the role of CCP in the bank. In this respect the
Commission refers to the justifications in recitals (151) and (411) above. The
GOC also claimed that the CDB could not provide the requested credit risk
assessment reports because of the confidentiality reasons and that it provided
a template of the credit rating and also a concrete example of credit risk
assessment with the company name blanked out. It is noted that the credit rating
template and the credit rating for unknown company of unknown industry is not
an evidence of the credit risk assessment of one of the sampled exporters as
requested by the Commission. With regard to the confidentiality issues, the
Commission refers to the explanation in Recital (410).

(413)   The GOC claimed that the
Commission’s finding that the State-owned commercial banks [SOCBs] are public
bodies is inconsistent with Article 1.1 of the SCM Agreement because the
Commission has not based its determination on any evidence whatsoever and has
not provided a reasoned and adequate analysis of its determination that
government involvement in the Chinese financial sector is so substantial that
banks are required to follow preferential policies. The Commission fundamentally
disagrees with this claim. The independent information referred to in recitals (162)
to (168) shows that the banks implement the preferential policies and this is
also clear from several Chinese plans, laws and policy documents referred to in
recital (102) above. The Commission reviewed, analysed and cited a number of
documents published by the international organisations including WTO, World
Bank, IMF and OECD all of which conclude that the Chinese banking sector is subject
to the significant state interventions in particular with regards to privileged
recipients of loans and interest-rate setting.

(414)   The GOC challenges the
relevance of several documents used as best facts available to which the
Commission referred in relation to the public body determination concerning the
SOCBs. As a preliminary remark, it must be pointed out that the Commission had
to resort to best facts available only because of the non-cooperation of GOC
and its refusal to provide the requested information.

(415)   The
GOC claimed that the Deutsche Bank Research report (‘DB report’) which the
Commission cited in the recital (161) describes a historical situation in China
and cannot provide a positive basis to assess the Chinese banking sector 7
years later. Firstly, the GOC is wrong in claiming that the report provides a
basis to assess situation “7 years later”. The report is from 2007 and the IP,
which is the relevant period for the assessment of the banking sector in China
for the purpose of this proceeding, starts in the year 2011. Therefore the
report refers to a situation 4 years before the relevant period. Secondly the
DB report is not the only document on which the Commission relies in its
findings but only a starting point of the Commissions analysis of the Chinese
banking sector and its ownership structure in particular. Thirdly the other
information which the Commission referred to for the purpose of establishing
the ownership structure of the Chinese banking sector (WTO, IMF and OECD
reports and working papers) is in line with the findings of the DB report. In
this context it must be noted that the GOC itself only provided a minimum of
the repeatedly requested information in this respect and never actually
contested the Commission’s findings on the level of state ownership in the
banking sector and state interference in the banking system on factual basis.

(416)   The
GOC also challenges the Commission’s reference to the 2012 WTO Trade Policy
Review report with the claim that the statement that “there has been generally
little change in the market structure of China’s banking sector” was stated
in comparison to the previous review period in year 2010. The Commission does
not disagree with this claim. In fact the Commission, in its definitive
disclosure document, cited the WTO Trade Policy Review reports from 2010 and
2012 in the same recital (161) in order to demonstrate that very little has
changed in the period of two years. While the 2010 report stated that “the
high degree of state ownership is another notable feature of the financial
sector in China” the 2012 report confirmed that little changed in this
respect. The GOC also cited from the 2012 report and on the basis of these
citations claimed that the report contradicts the Commission’s assessment in
recital (161) above. This claim could not be accepted. None of the citations
from the report reproduced in the GOC’s comments to definitive disclosure
contradicts or even put in question the Commission’s assessment in recital (161).

(417)   The GOC also claimed that
the Commission’s findings in recital (162) above lack positive evidence because
the Commission (in addition to the DB report and WTO Trade Policy Reviews
discussed in recitals above) “simply refers to the World Bank Report and the
Economic survey etc., but does not provide any reasoned and adequate
explanation to support its findings”. This claim could not be accepted. In
this respect it is noted that the World Bank report states, inter alia,
the following: “Despite impressive progress
in reforming and deepening the financial sector in the past three decades,
China’s financial system remains repressed and suffers from key structural
imbalances. The current system, characterized by dominance of state-owned
banks, strong state intervention, and remaining controls on interest rates, has
been remarkably successful in mobilizing savings and allocating capital to
strategic sectors during China’s economic take-off”, or “In parallel, direct and indirect controls of financial
institutions must give way to armslength market-based arrangements. This would
mean an autonomous central bank adopting open market operations and using
interest rates, rather than credit ceilings, to manage liquidity. Commercial
banks would use commercial principles and creditworthiness analysis, rather
than follow government signals, to guide lending” and “The government at
all levels has been closely involved in the commercial operations of financial
institutions, either through holding of shares or indirect influences, mainly
because it is heavily dependent on the use of commercial bank credit for policy
goals”. The 2010 OECD Economic Survey on China describes the PBOC policies
on lending rates floor and deposit rate ceiling as a disincentive for the banks
to price risk appropriately and a counter productive measure for competition in
the banking sector and states that the purpose is to safeguard profitability of
the predominantly state-owned banking sector.

(418)   The
GOC further claims that the Commission’s determination that the PBOC is
involved in and influences the setting of interest rates by State-owned
commercial banks lacks proper reasoning and evidentiary basis. In this respect
the GOC stated that the Commission ought to have known that in July 2013, the
floor lending rates were abolished. Firstly it must by noted that the
Commission did not analyse the situation of the banking market in China in July
2013 as it was not relevant for this investigation. Secondly the claim that the
Commission’s determination lacks proper reasoning and evidentiary basis is
incorrect. The relevant circulars clearly state the PBOC sets limits on lending
as well as on deposit rates. And thirdly, the OECD Economic Survey: China 2010
cited in recital (162) above also confirms the existence of such limits.

(419)   The GOC claimed that the “Commission knew that the circulars,
including the 8 June and 8 July 2012 circulars issued after the Coated Fine Paper
findings had altered the interest rate practice of the PBOC in significant way”.
This is incorrect. The Commission could not know if or how exactly the practice
changed as the GOC refused to provide these circulars. Even the summaries from
the PBOC websites submitted during the verification, but which the GOC
incorrectly claims that the Commission completely disregarded, confirm that
such limits still exist.

(420)   The
GOC also claimed that “the Commission did not appear to base its finding on
actual “facts available” which contradicts the historical information that the
Commission possessed, but rather made it incumbent upon the GOC to prove that
the state of affairs examined during the Organic Coated Steel had changed.” In
view of the explanation in the recitals (415) - (419) above it is clear that
this claim is incorrect. There are no facts available on the file which contradict
Commission’s findings and the findings are not based only on the historical
information but on positive evidence, based on all the information relevant for
the IP.

(421)   The
GOC claimed that the four points claimed by the Commission in the recital (166)
above are incorrect and lack proper legal assessment. GOC argued that the
reference to the Article 34 of the Commercial Banking Law that banks are “to
carry out their loan business according to the needs of the national economy”
is completely neutral. It is not clear what the GOC meant by the term “neutral”
but according to the plans, policy documents and laws cited in recital (102)
above the development of the PV industry and its financial and other support
seems to be amongst the needs of national economy in China. In the context of
the financial support encouraged and expressed in these documents it is clear
that the banks shall support the companies belonging to the PV industry.
Concerning the finding that the banks are subject to legal rules which require
them to provide credit supports to encouraged projects for which the Commission
relied on the wording of the State Council Decision No 40, the GOC claimed that
“it is absolutely misplaced” because the Decision does not state or
indicate that the solar industry is an encouraged project. This claim is also
incorrect. From recital (399) above, it is clear that the solar industry
belongs to the category of encouraged industries/ projects. The GOC made a
similar claim concerning the Law of the PRC on Scientific and Technological
Progress and the Commission’s finding that it requires the banks to give
priority to the development of high and new technology industries and that the
sampled producers fall in the high-tech category. According to the GOC, the Commission
did not make any legal analysis on the issue of whether the solar industry of
modules and cells production described as high-tech industry falls within the
scope of this law. This is not correct. The Commission made a clear link
between the category high-tech industries and the solar industry producing
modules and cells. This is explained in detail in recital (402) above.

(422)   The
GOC claimed that the Commission statement that the state involvement in the
Chinese financial sector is substantial and on-going is not supported by
positive evidence. The GOC contested the evidence cited by the Commission and
claimed that the 2009 IMF report which highlights the lack of interest rate
liberalisation is irrelevant because the interest rates have been completely
liberalised in China. This is not correct. The evidence on the file confirms
that the interest rates liberalisation in China is not finished and this was
also confirmed by the PBOC officials present during the verification visit. In
regards of the 2010 IMF Country Report referred to by the Commission the GOC
claimed that the Commission completely disregarded IMF findings on financial
sector liberalisation. This is not true. The Commission did not disregard any
relevant findings of the IMF in this report which were relevant. The IMF
findings to which the GOC referred to in its comments are not contradicting any
of the Commission’s findings on the state involvement in the Chinese financial
sector and certainly not in respect of the state ownership or loan and deposits
interest rate policy. The fact that the Report stated that progress has been
made in recent years in developing a more market-based financial system in
China does not mean that the Report said that there actually is a market-based
financial system in China. With regard to the OECD surveys cited by the
Commission, the GOC claimed that it cannot be concluded that banks do not
operate independently in China on the basis “of one phrase to the exclusion
of significant progress with regard to the liberalisation of the banking
sector”. Concerning this claim it must be noted that the Commission never
made any conclusion on the basis of “one phrase” but as demonstrated in the
above text, on the basis of several documents compiled by independent international
organisations.

(423)   The
GOC claimed that the Commission’s analysis concerning the public body
determination “is completely flawed” and its conclusion in recital (168)
above is inconsistent with the WTO AB’s interpretation of the term “public body”
in the US - Definitive Anti-dumping and countervailing duties on Certain
Products for China. One exporting producer also claimed that the
Commission’s reasoning concerning public body determination is “legally
erroneous”. The GOC claimed that the Commission failed to establish that SOCBs
posses, are vested with, and exercise governmental authority and that it has
not established i) that the functions in question which are alleged to be
performed by the SOCBs are those that are executed by a government in general,
i.e. are governmental functions in the first place, ii) the common features
which the SOCBs share with the government besides the shareholding which was
also not established for all the SOCBs; and iii) that all the SOCBs posses the
requisite governmental authority in order to be able to exercise it or were
vested with the power to execute the governmental functions concerned. These
claims had to be rejected. The Commission refers to its analysis of this issue
in recitals (158) - (167) . Lending is mentioned in the subsidy definition
under Article 3.1(a)(i) of the basic Regulation as a government function. In the
present investigation SOCBs are instructed by a requirement, through plans and
other policy documents, to promote certain sectors, including the PV sector. On
the basis of facts available, it was also concluded that there is substantial
government ownership of banks in China and that the government exercises
meaningful control over the SOCBs. Since the GOC did not provide the requested
information on the government ownership of all SOCB’s in China, the Commission
made its findings on the facts available. Thus, the Commission concludes that
the SOCBs act as an arm of government performing a public function in
implementing the GOC’s preferential lending policies to certain sectors.

(424)   The GOC also claimed that the Commission failed to establish
direction or entrustment of private banks in China and in particular that the
Commission has not established that the GOC gave an explicit and
affirmative delegation or command or responsibility or authority to the private
banks and the SOCBs to provide preferential loans. The Commission does not
agree with this claim. As explained in recitals (170) - (173), there is a
government policy in China to provide preferential lending support the PV
industry. Private banks are obliged to implement that government policy: The
GOC through the Law on Commercial Banks instructed all banks in China to “carry out their loan business upon the needs of national economy and
the social development and with the spirit of the state industrial policies”. These needs and state industrial policies are, inter alia,
set in various plans and policy documents and the provision of preferential
financing to selected industries including the PV industry is one of them. The
GOC also claimed that the relevant Article of the Law on Commercial Banks has
been extracted out of context and that it does not explicitly demonstrate any
delegation or command, grant of responsibility or exercise of authority by the
GOC on any commercial bank. The Commission does not agree that the Article 34
has been taken out of context as already explained in recital (390) above and
considers its wording a clear, legally binding instruction to all banks in
China. The Commission also does not agree with the GOC’s claim that the
documents providing for the preferential lending to the PV industry referred to
in recital (102) are “inadequate legal basis”. This is explained in length in
recitals (399) - (403) above.

(425)   One
exporting producer claimed that the Commission has not demonstrated
foreign-owned banks in China are entrusted and directed by the GOC. This claim
had to be rejected. The Commission demonstrated entrustment and direction for
all privately owned banks in China (inter alia recitals (169) - (172) and (424)
above) and the banks with foreign ownership belong to this category.

(426)   In
respect of the entrustment and direction determination the GOC also claimed
that the Commission had made conclusions on the basis of credit risk assessment
of one sampled exporter provided by one bank and applied them to all banks in
China and thereby used adverse inferences in this regard. It is noted that the
GOC as well as the banks refused to provide any other credit risk assessments
of other sampled exporting producers. Since the Commission was forced to apply
facts available in this regard and the credit risk assessment mentioned above
is best facts available the Commission partly based its conclusions on this
document. But it is reiterated that the conclusions were made on the basis of
facts available and not adverse inferences.

(427)   The
GOC objected to the Commission’s assessment of the distortion of the Chinese
financial market “as it is legally flawed”. The GOC claimed that there
is no evidence pertaining to the IP which would indicate that the SOCBs account
for 2/3 of the Chinese financial market. The Commission disagrees with this
claim. In the absence of the information on the banking sector ownership which
was repeatedly requested but not provided by the GOC the Commission applied
fact available. The Commission referred to the DB report in this respects which
states that the SOCBs account for more than 2/3 of the Chinese financial
market. This is further corroborated by the evidence from the WTO, IMF, OECD
and World Bank documents which confirm that the state presence in the Chinese
banking sector had not significantly changed in the IP. The GOC also claimed
that the Commission’s statement concerning the interest rates (namely that the
banks are bound to stay within the limits set by the PBOC)is incorrect because
the floor lending rate has been completely abolished. This is not correct. It
is true that the GOC in its comments claimed that the floor lending rates has
been abolished in July 2013, but this is more than one year after the end of
the IP. It is also correct to say that the ceilings on the deposits rates are
still in place. Therefore the Commission’s finding that the banks are not
entirely free to decide the conditions of the loans (at least in regards to the
IP) is correct and supported by the evidence on the file. The GOC also disputed
the Commission’s findings in recitals (183) - (188) on the basis of the alleged
non-relevance of several plans, policy documents and laws cited by the
Commission. Commission does not agree with this claim and refers to the
recitals (399) - (403) above where it explained why these documents are
relevant for such findings. The GOC also stated that the Commission’s finding
that certain banks were granted access to the SAFE foreign exchange reserves is
misplaced because the evidence to which the Commission referred only named EXIM
Bank and CDB and explained that the loans sourced from these reserves are only
given to state-owned enterprises. The Commission does not agree. The evidence
only states that when this program started it was initially available only to
policy banks CDB and EXIM, but also mentions a major loan of the Bank of China,
which indicates that the initial restriction has been removed. Also the claim
that the evidence “clearly states that the loans are given to only state-owned
enterprise like Sinopec” is not accurate. It actually stated that major
state-owned enterprises are preferred, but does not indicate that the provision
of such loans was limited to them. And in any event, given the size of the EXIM
Bank and CDB and their impact on the financial market in China, even if the
program was limited to them it would mean a significant distortion of the
financial market as a whole.

(428)   The GOC also claimed that the Commission has not established
specificity in regards of preferential lending and its specificity analysis is
legally incoherent because it did not establish whether the Decision No 40
refers to projects or industries. According to the GOC the fact that the
“extremely wide array of economic sectors and industries are covered by
Decision No. 40, this document does not explicitly limit access of the alleged
subsidy to certain enterprises as is required to be established by the WTO
jurisprudence”. The Commission does not agree with this claim. With respect to encouraged projects, it is
recalled that these cover only certain activities within limited number of
industrial sectors and thus this categorisation, covering only a subset of
enterprises in China, cannot be considered as of a general nature and
non-specific. The Commission considered this as the most natural interpretation
in the absence of any explanation (and corroborating documents) as to how the
GOC precisely applied the notion of the PV industry e.g. for the purposes of
Decision 40 and the related Guiding Catalogue of the
Industrial Restructuring. Moreover as explained in
recital (102) above the solar PV industry also belongs to the category of
strategic industries as defined by the 12th five-year plan and on
this basis enjoys access to preferential financing which is clear from the
citations from various planning and policy documents and laws in the same
recital.

(429)   The
GOC also claimed that the Commission has not established the existence of
benefit concerning preferential lending because the use for the external
benchmark for the purpose of the benefit establishment was not supported by the Commission findings. According to the GOC,
the Commission had no basis to apply the BB rating as it did not provide any
evidence that the BB rating is more likely to be undistorted credit rating that
any other rating and its application “reflects the impermissible adverse
inferences made in violation of Article 12.7 of the SCM Agreement”. This
claim had to be rejected. Given the distortions and
the lack of proper creditworthiness or risk assessment of the sampled exporting
producers by the lending banks, the Commission could not have taken the credit
rating (if they had any at all) of the individual exporting producers at its
face value. The BB rating is in this case not adverse inference and it is not unfavourable
for the exporting producers because it is the best non- investment rating on
the market.

(430)   The complainant claimed that
the Commission should have used a less favourable credit rating than BB grade
for the benchmark construction for some exporting producers which were in
particularly bad financial situation. For the reasons explained in Recital (429)
above, the Commission considered the BB rating (non-investment grade) to appropriately
reflect the financial situation of sampled exporting producers during the IP.

(431)   The complaint also requested
that the Commission discloses the calculation of mark-up for loans in Chinese
currency. The Commission explained the methodology in paragraph 169 of
definitive disclosure document (replicated in recital (198) above). In line
with the methodology from Coated Fine Paper and Organic Coated Steel
proceedings the Commission adjusted the Chinese interest rates by adding the
interest differential between the best rated bonds and BB rated bonds traded on
markets in the IP.

(432)   One exporting producer
claimed that the Commission, in order to establish the benefit from preferential
lending should compare the lending rates of the “favoured” industries with
those of the “non-favoured” industries. In view of the Commission analysis of
the financial market (recitals (181) - (185)) this claim had to be rejected. Taking
into account the established distortions the interest rates in Chinese
financial market are deemed to be unreliable.

(433)   The GOC also claimed that
for the EUR and USD loans the Commission should not resort to the external
benchmark because one of the key elements on which the Commission based its
distortion analysis, i.e. the PBOC limitations on interest rates does not exist
for such loans. This claim had to be rejected. The PBOC limitations on the
interest rates are just one of the key elements which the Commission used in
its analysis of the Chinese financial market. As explained in recitals (180) - (184)
above there is number of other distortions which justified on their own the use
of external benchmark also for EUR and USD denominated loans.

(434)   Several exporters and the
GOC claim that the Agreements between exporters and certain state-owned banks (referred
to as "the Agreements" in this section) are not equivalent to credit
lines and do not amount to a financial contribution because they do not contain
an obligation or commitment for the bank to provide future funding under
particular terms and conditions. They also refer to the conclusions of the EC-Aircraft
panel, which stated that the "mere possibility" that a government
may transfer funds under the fulfilment of a pre-defined condition will not be
sufficient to demonstrate the existence of a financial contribution. They noted
the panel's statement that the contractual arrangement should “in and
of itself, be claimed and capable of conferring a benefit on the recipient that
is separate and independent to the benefit that might be conferred from any
future transfer of funds.”

(435)   With regard the findings of
the EC-Aircraft panel, the Commission notes that such findings are not
exhaustive with regard to the scope of credit lines or other similar agreements
an do not bind the Commission's interpretation of the basic Regulation in this
case. Nevertheless, the Commission does not disagree with the panel's
conclusions, but with the application of those conclusions to the present
investigation by the GOC. The Agreements normally provide for the state-owned
bank to lend up to the requisite amount of money, sometimes in conjunction with
possible improvements in the performance of the firm involved. So, on the one hand,
the text of the Agreements may contain textually less explicit or automatic
obligations concerning the terms and conditions of future lending than those
which feature some types of Credit Line Agreements. They are sometimes supplemented
by separate loan or credit agreements. However, it has been noted that loans
under these Agreements are usually made on very similar, not to say identical
terms. On the other hand, the Agreements contain a number of provisions which
go far beyond the normal language of credit line agreements and which amount to
the creation of a guaranteed support mechanism by the bank in question. The
Commission considers that in this case the written provisions of the Agreements
are not necessarily conclusive, because “obligations” or “commitments” to
transfer funds may be expressed in written or unwritten form and that their
existence should be determined on the basis of the totality of the facts on the
record.

(436)   On this basis, the exact
nature of the commitments or obligations of the state-owned banks under the
Agreements depends upon:

(a)
The text of the Agreements: The Commission notes that provisions in the most
significant agreements involving large state-owned banks and particular
exporting producers are broadly similar. The agreements establish a close link
between the bank and exporter with regard to a transfer of funds. They provide
for the transfer of the requisite amount of money, sometimes upon the
fulfilment of certain conditions related to performance and credit rating. The
Agreements entitle the firm to “favourable treatment” when applying for a loan
compared to firms which have not signed such agreements. Some of the
amounts of potential funding are huge compared to the firms’ annual turnover. The
amounts of credit promised to the sampled exporters accounted for more than 3
times their annual turnover. Furthermore, the Agreements provide for the bank
to give strong support to the development of the company in question. There are
references to “a long-term stable strategic partnership” between the
bank and the firm, to the bank giving “priority” to the firm’s key
construction projects, offering “long-term stable financial support” to
the firm “in respect of its asset acquisition and reorganization,
fundamental formation of each business unit, technical improvement project, “Go
Global” project and other businesses....” and helping the firm to “formulate
a medium and long term development planning by virtue of its professional
advantages, institutional advantages and performance advantages.” Agreements
also mention that they comply with national macro-economic and industrial
policy. Therefore, it would seem that the strategic support given to the firm,
combined with the “favourable treatment” accorded by the Agreements make it highly
likely that the firm will be automatically eligible to draw down loans from the
Agreements.

(b)
The nature and objectives of the lenders: The lenders are state-owned banks which have been found to
be public bodies or other banks which have been found to be entrusted and
directed by the government and therefore act as an arm of the GOC. They have
also been found to provide loans at well below market rates. For example,
certain Agreements refers to the bank’s “financing advantage” and its
support for “high-tech industry...having priority in development with the
government concession”.

(c)
The government attitude towards the borrower: Borrowers belong to the strategic emerging industries as
shown in the recital (102) above.

(d)
The degree of cooperation of the government
with the investigation: The providers of the credit
lines (state-owned banks and banks entrusted and directed by the government)
have failed to fully cooperate with the investigation and findings relating to
them have been made on facts available.

(e)
The market perception of the Agreements: Companies seem to value the Agreements as evidence that they have
the state backing behind them and publicly announce the conclusions of such
agreements to send a positive signal to markets and potential investors. For
instance, on 9 July 2010, Yingli Solar issued a press release announcing a
“strategic cooperation agreement” with CDB, under which CDB “expects to grant credit
facilities with an aggregate maximum amount of RMB 36 million to support Yingli
Group and its affiliates”. The Chief Financial Officer of Yingli stated that, ”This
agreement raised two parties' cooperation to a
new level, which we believe will give us the ability to pursue opportunities
that will allow us to strengthen our leadership position in the PV industry." Jinko Solar, on 26 January 2011, characterised an RMB 50 billion
credit facility from the Bank of China as a “strategic cooperation
agreement” which would “further strengthen our position as a leading solar
product manufacturer”. The press release went on to state that “With the
long-term financial support of the BOC, we are confident we will deliver
excellent results in 2011 as well as meet our long-term growth targets.” On
14 April 2010, Trina Solar was reported as intending to use the $4.4 billion
credit agreement with CDB “for market expansion”. All these
announcements suggest that the exporting producers concerned see the Agreements
as an established, rather than an uncertain, source of financing

(f)
Operation of the Agreements: Numerous individual loans have been
drawn down by exporting producers i.e. the agreements lead to an actual
transfer of funds, usually at well below market rates.

(437)   On the basis of all the
evidence, it is concluded that the Agreements are offered by the banks as part
of a government strategy to promote the PV industry and are considered to be of
great value by the exporters concerned, irrespective of whether any funds are
actually transferred. This contradicts the arguments of the parties that they
are effectively of no value. Although the Agreements have the characteristics
of normal credit lines, they go beyond the terms and conditions of normal
credit lines and are effectively strategic partnerships between public bodies
and firms to pursue government policy. In this regard, they operate as a
mechanism of state support/guarantee, which enhance the market position
of the exporters concerned and enable them to expand their capacity and output
with the certainty that they will receive the required funding.. In the absence
of such support/guarantee, the exporters would evidently be perceived by the
markets as being in a weaker position. Consequently, they qualify as a
potential transfer of funds or as a provision of financial services. Such a
valuable “guarantee” would have some value in the market and, at the very
least, would involve the payment of a substantial fee. In view of this, the
Agreements also confer a benefit which is, in the words of the EC-Aircraft panel
“separate and independent to the benefit that might be conferred from any
future transfer of funds”, due, inter alia, to the potential
obligation of payments by the Government. They are more than just a
vague “promise to provide “cheap” financing”[99] and
clearly make the recipients “better off” than they would be absent the
Agreement.

(438)   With regard to the amount of
the benefit, this has been established on the basis of the fees charged for
credit line obtained by one of the sampled exporting producers. This credit
line was granted by a bank whose headquarters is established in the financial
jurisdiction other than PRC and it is shows all the elements of commercial
credit lines available on world financial markets and other agreements found in
the commercial sector. It is also noted that this credit lines is not
substantially different in its conditions from the other commercial credit
lines obtained by the sampled exporting producers, where fees are charged,
including those from foreign banks. In view of the above analysis, this is a
conservative benchmark, as the evidence indicates that the Agreements are in
reality more valuable to firms as a stand-alone measure than a standard credit
line. However, the Commission considered the required fees to serve as
reasonably proxy for those that would be payable under the Agreements.

(439)   The GOC also claimed that
the banks which undertook the Agreements with the sampled exporters are not
public bodies or were not entrusted by the government to do so. This claim had
to be rejected. The banks involved were the same banks which provided
preferential financing and in the recitals (159) - (168) and (169) - (180) above
the Commission provided a detailed explanation why they are public bodies
and/or why they are entrusted and directed by the GOC.

(440)   The GOC claimed that the Commission’s
claim that in normal market circumstances credit lines are subject to
substantial commitment and administration fees is groundless as such fees only
apply to “committed credit lines”. This claim had to be rejected. As stated in
the recital above the credit line used as a benchmark is not substantially
different in its conditions from the other commercial credit lines obtained by
the sampled exporting producers, including from banks outside China. Moreover
one of the banks which concluded several such agreements with sampled exporting
producers seems to charge similar fees to its clients abroad[100].

(441)   The
GOC also claimed that the Commission has not provided evidence to support its
statement that the Government provision of credit lines (i.e. the Agreements)
is part of preferential lending. This is not correct. The provision of credit
lines is the standard part of financing provided by banks to companies and the
Agreements are separate and distinct measures falling under the scope of
preferential lending. As stated in recital (102) above the GOC provides through
a number of planning and policy documents and laws for the preferential
financing to the PV industry. In addition numerous loans were drawn under these
agreements, which clearly shows that they are an integral part of preferential financing
of the PV industry.

(442)   One exporting producer
claimed that the provision of credit lines is not a specific subsidy. This
claim had to be rejected. As explained in recital (441) above the provision of
credit lines is an integral part of preferential lending and therefore the
specificity analysis in recitals (191), (192), (209) and (428) above equally
applies to the provision of credit lines.

(443)   According to the complainant,
the Commission should have established a subsidy margin for the use of export
buyers credits, as the EXIM Bank refused to cooperate. The Commission should
have used the information in the complaint and the US DOC findings in the similar
PV case. This claim could not be accepted. The Commission investigated the
allegations in the complaint but no evidence was found that the sampled
exporting producers benefited from such measures during the IP. It is noted
that the investigation periods for the US case and for the case at hand were
different.

3.5.3.     Comments of parties
concerning Export Guarantee and Insurance for green technologies

(444)   With regard to the documents
requested by the Commission at the verification visit as specified in recitals (220)
and (221), the GOC claimed that it has not been clarified when the 840 Plan was
requested, that Sinosure’s 2012 financial statements were not available at the
time of verification, and that information concerning the sampled companies
were confidential and in any event the relevant contracts were not held at the
headquarters of Sinosure. The Commission refers to its explanations included in
recitals (219), (220), and (223) which deal with all these arguments. With
regard to the 840 Plan, the Commission adds that it asked for all of the relevant
documents concerning the activity of Sinosure and the alleged subsidy programme
benefiting the sampled exporters, and that this 840 Plan is certainly relevant
for its findings, together with all the other documents specified in recital (236),
as supported by the explanations in recital (232). As for the Sinosure’s 2012
financial statements, the Commission asked for the trial accounts, if the 2012
financial statements were not finalised, but Sinosure also refused to provide
any trial accounts for 2012.

(445)   The GOC also claimed that
there is no legal or factual evidence to support the conclusion that the
photovoltaic industry is a “strategic industry” and that this would be the
result of a presumption. The Commission refers to the explanation in recital (231)
and recalls that this point was specifically confirmed by the GOC during the
verification visit. With regard to the similar claim concerning the 840 plan,
the 421 plan and the measures to support “Strategic Emerging Industries” and to
the claim that the plans would not be legally binding, the Commission refers to
the explanations in recitals (232) - (234) respectively. It further notes that
the GOC has failed to submit these documents and discuss them with the
Commission, and that there is no evidence on the record proving that the
Commission conclusions are incorrect.

(446)   The GOC and one sampled
exporter claim that the rebates and grants for the payment of export credit
insurance premia granted by the local authorities have been illegally countervailed
because it has not been established that they constitute subsidies within the
meaning of the WTO SCM Agreement. The Commission refers to its analysis on the
findings of the investigation and in particular to recitals (239) and (247).
The Commission further notes that the rebates and grants are inextricably
interlinked with the export credit insurance programme because their repayment
is the consequence of the payment of the premium to Sinosure under the main
export credit insurance policy. Last but not least, these rebates also fall
under the scope of the Notice [2004] No. 368 issued jointly by MOFCOM and
Sinosure, which provides that “the regional and local government authorities
shall jointly make further effort to implement further support measures to the
products included in the Directory and the high and new technological
enterprises for export credit insurance”.

(447)   The GOC also challenge the
finding concerning Item (j) of Annex 1 of the WTO SCM Agreement that Sinosure
short-term export credit insurance programme was operated at premium rates
inadequate to cover the long-term operating costs and losses of the programme.
In support of this the GOC cites the jurisprudence of the WTO Panel finding in US-Upland
Cotton and presents explanations based on different sets of figures and
arguments contained in Sinosure Annual Reports. The GOC also questions the
Commission reference to Article 11 of Sinosure’s Articles of Association and to
the article from the law firm Stewart Law. The Commission restates all of its
arguments in recitals (242) - (245) and recalls that its conclusions are based
on the best available evidence in the file due to the lack of cooperation of
the GOC which prevented the Commission from obtaining the relevant information
it had asked for. For its findings, the Commission considered a number of
elements and evidence on file, among which were Sinosure’s Article of
Association and the article from the law firm Stewart Law. The Commission
considers that, while none of these elements is determinant in itself, these
and all the other elements are relevant for its determination. As for the US-Upland
Cotton jurisprudence, the Commission has fully taken it into account in its
findings and the quotes of this jurisprudence from the GOC are indeed very
pertinent.

(448)   In challenging the
Commission analysis in recital (245), the GOC submits a table with figures
taken from the Income Statement of Sinosure’s publicly available Annual Reports
for the period 2006-2011 and concludes that it is evident that the premiums
received were higher than the operating costs of the programme. First, the
Commission notes that the table provided by the GOC does not include in the
relevant row concerning amounts of the commissions paid by Sinosure but only
the operating expenses. Second, the figures indisputably show that in each
single year from 2006 until 2011 with the exception of 2010 the amounts of net
premium are never higher than the amounts of the net claims plus the operating
expenses, even ignoring the payments of commissions which have been omitted by
the GOC. This includes the year 2011, which partly covers the investigation
period, and the amount of the loss is quite substantial in certain years (e.g.
2008). Third, the Commission notes that for 2010 the GOC has indicated a
disproportionately low amount of net claims paid (premiums paid are stated to
be 20 times higher than the claims paid), which is not reflected in the Annual
Report of 2010. This amount reported by the GOC for the year 2010 is based on massive
ex-post adjustments concerning recovery of claims and change in outstanding
claims reserves which only appear in the Annual Report of 2011 with reference
to the year 2010. These adjustments appear to be of an extraordinary and
abnormal nature and are only reflected in the report of the following year. The
Commission also notes that for 2011 the GOC has instead reported the amounts
included in the 2011 Annual Report. The Commission finds subsequent adjustments
difficult to reconcile with the actual situation, especially given the absence
of cooperation and of further explanation by the GOC or Sinosure in the course
of the investigation. According to US-Upland Cotton as quoted by the GOC
itself, “the reference to “long-term” in item (j) to refer to a period of
sufficient duration as to ensure an objective examination which allows a
thorough appraisal of the programme and which avoids attributing overdue
significance to any unique or atypical experiences on a given day, month,
trimester, half-year, year or other specific time period” [emphasis
added]. The Commission considers the period 2006-2011 as a sufficiently
long-term period to consider, and Sinosure has incurred a loss in each year of
this period. The situation of 2010 is either to be considered unique or
atypical if one takes into account the adjusted figures in the 2011 Annual
Report and thus of limited significance, or the ordinary unadjusted figures in
the 2010 Annual Report must be taken into account as relevant which show that
the result is just slightly above break-even. Given the significant losses
incurred in other years, this confirms the Commission findings that Sinosure
is, overall, in a position of long-term loss during the period 2006-2011. In
addition, even if the data from 2010 were taken into account as being
representative, the fact remains that Sinosure made losses in five out the six
years from 2006 to 2011. The other tables and sets of figures submitted by the
GOC to challenge the Commission findings on item (j) WTO SCM Agreement cannot be
reconciled with other information present on the record and/or are not
verifiable, In any event, they do not by themselves demonstrate that Sinosure
broke even on its short-term export credit insurance programme during the
period 2006-2011.

(449)   As for the benchmark for the
calculation of the benefit, the GOC considers the establishment of an
out-of-country benchmark inconsistent with the SCM Agreement, but it does not
add any argument to justify this claim. The Commission refers to its
explanation in recital (245).

(450)   The GOC and one sampled
cooperating exporter challenge the benchmark used in that the Commission has
not justified why: (i) the premium calculation is based on US EXIM bank data;
(ii) it has used Italy as the importing country and not Germany, which is the
main export market for the product concerned; (iii) it has taken the time
period of 120 days and not 60 days or any other shorter period; (iv) it has not
used the premium calculation for direct exports but rather for the Financial
Institution Buyer Credit (FIBC) Export Insurance. With regard to (i), the
Commission refers to recital (253). With respect to (ii), the Commission
believes that Italy represents the right balance between the EU country with
the lowest risk and EU countries with significantly higher risks and
consequently premia charged, which are also markets for the product concerned.
As for (iii), in the absence of a specific simulation based on a period of 90
days available on the EXIM Bank website the Commission considers the duration
of 120 days as the most appropriate to represent the terms of sales during the
investigation period. With regard to (iv), the Commission was not able to
obtain a simulation for the calculation of the premium for direct exports and
considers this benchmark to reflect the general risk situation in the country
of purchase.

(451)   One sampled cooperating
exporter claims that it has purchased export credit insurance for some of its
exports but it has paid regular insurance premia and did not enjoy the Green
Express programme or any other beneficial treatment alleged by the complaint.
In the absence of evidence proving this claim, the Commission refers to its
findings on this programme in Section 3.4.1.4 if this regulation. As regards
‘Green Express’, the Commission refers to its findings in recital (240) and
notes that this constitutes a specific aspect of Sinosure’s short-term credit
insurance programme and that the Commission findings are not limited to this
aspect but to the programme as a whole.

3.5.4.     The Golden Sun demonstration
programme

(452)   The GOC further argues that
this programme provides grants for “distributed solar PV systems” rather than
for the producers/exporters of the product concerned and that the relevant
criteria in the legislation are not directed to module and cell producers. In
this respect the GOC claims to have provided the relevant documentation on the
programme and that even coordinated with the sampled companies to prove this
point. Three sampled cooperating exporters claim that this is a ‘user subsidy’
and does not confer a benefit to the product concerned, and therefore it is not
countervailable within the meaning of Articles 1(1) and 3(2) of the basic
Regulation, Article VI:3 GATT 1994, and Article 19.1 of the WTO SCM Agreement.
These exporters refer to the EU decision in the Biodiesel from the United
States case (Recital 97 of the Commission Regulation (EC) No 194/2009, OJ L
67 of 12.03.2009 p. 50 and to the WTO jurisprudence in U.S.-Lead Bars (Paras
6.50, 6.53, 6.56 and 6.57 of the Panel Report), Canada-Measures
Affecting the Export of Civilian Aircraft (Para. 9.112 of the Panel Report),
Brazil-Export Financing Programme for Aircraft (Para. 7.24 of the Panel
Report), and Canada-Measures Affecting the Export of Civilian Aircraft (Paras.
157 and 159 of the Appellate Body Report).

(453)   The
Commission refers to its findings of the investigation and in particular to
Recitals (243) - (246) of this Regulation, which
provide exhaustive explanations on the above arguments and confirm that the
determination is consistent with the relevant provisions and with the
jurisprudence quoted by the GOC and the cooperating sampled exporters. The
Commission restates that the grants under the programme are directly linked to
the product concerned because the eligible “distributed solar PV systems”
specifically include the supply of modules and cells as a significant part of
the projects and therefore the nexus between the benefit conferred by the
government and the product concerned is direct and inextricable. As also
specified particularly in Recitals (244) and (245), the investigation has
confirmed that direct payments have been effected by the GOC to several sampled
cooperating exporters (i.e. the purpose of installing solar panels to generate
energy for their own use, including in the production process of the
product concerned) using inter alia their own manufactured solar modules
and cells. It has also been established that the direct payments made to the
exporters in their capacity as suppliers of the product concerned to
third-party project operators are in fact at odds with the provisions in the
relevant legislation and that the GOC has failed to provide evidence to
reconcile the situation (see namely Recitals (245) and (246)). The limited
explanation provided by the GOC and the sampled cooperating exporter that the
direct transfer of funds, in violation of the Chinese legislation, was
necessary because the project operator was in financial difficulty and to
ensure that the grants would be used only for authorised PV systems strongly
indicates that, in the absence of this direct transfer from the government, the
sampled cooperating exporter acting as supplier would not have been able to
receive any money for the supply of the product concerned and that the
government would not have been able to ensure that the subsidy would be used
for its intended purpose. From this perspective and in the absence of further
evidence these payments must be viewed as a direct grant from the GOC to the producer
of the product concerned, which would not otherwise have received any money for
the supply of the product concerned (assuming that this supply ever took place,
for which again there is no evidence on the record). On this basis the
Commission believes that the arguments raised by the GOC and by the sampled
cooperating exporters are legally unfounded.

(454)   The GOC also claims that for
situations in which the benefits from the programme concerned the supply of the
product concerned to unrelated project operators, the Commission was obliged to
conduct a pass-through analysis to establish this point, citing the WTO
decision in US-Softwood Lumber IV (paras. 141 and 142 of the Appellate
Body Report). The Commission refers to the explanations in Recitals (244) -
(246) and in Recital (352) above to dismiss this claim. Furthermore, due to the
non-cooperation of the GOC and interested parties, the Commission was not in a
position to carry out a pass-through analysis. Therefore there is no question
of pass-through and the WTO jurisprudence quoted is irrelevant in this
situation given that the proceeds were directly paid to the producers of the
product concerned and directly linked to the supply of inter alia the
product concerned. Since these payments were non-repayable grants, there is a
financial contribution (a direct transfer of funds) and the Commission is
entitled to presume that they confer a benefit to the recipient (the
producers), in the absence of any evidence on further use made of the sums
concerned. Had payments under this programme been made by the government to
third-party project operators and the equipment acquired for fair market value,
there would be no benefit to the exporters concerned. However, in a situation
where payments are made to the exporting producers, the amounts used by these
companies for the installation of solar panels confer a benefit because it
relieves them of costs they would otherwise have incurred in this process. If
the exporting producer is unable to demonstrate that a part of the grant has
been transferred to third-party users, it is presumed, on the basis of facts
available, that this part of the grant confers a benefit to the exporter as a
general subsidy which benefits the company’s activities as a whole. This is the
case here.

(455)   Two sampled cooperating
exporters claim that the Golden Sun programme is not specific because the
relevant requirements in the Chinese legislation are objective and all
enterprises meeting them can benefit from the programme, and eligibility is
open to all companies, whether or not manufacturers of the product concerned.
The Commission refers to its finding of specificity in Recital (247) showing
that the conditions and selection criteria are not objective and do not apply
automatically. The relevant required criteria confirm that the programme is
limited only to the limited subset of enterprises able to fulfil them, namely
those with a substantial installed capacity of at least 300kWh and with
substantial assets of at least RMB 100 million. The selection criteria also
refer to the need for the recipient enterprises to be included in the local
Golden Sun demonstration project implementation plan, and the investigation has
established that the inclusion in these local plans depend on a discretionary
decision of the competent authorities not transparent and not based on
objective criteria. The Commission adds that eligible “distributed solar
systems” rely on the manufacture and supply of solar-powered generating
equipment the bulk of which is made by solar modules and cells. Therefore,
contrary to the arguments of the sampled exporters this scheme is also specific
in that only producers of solar systems, or in other words producers of the
product concerned, are in practice eligible for the benefits under this
programme either directly in their quality as project owners or indirectly in
their alleged quality as suppliers of the product concerned to projects owners.
Therefore, also considering the absence of cooperation of the GOC that has
failed to provide all the budget documents requested by the Commission (see
Recitals (234)-(239)), it is concluded that this programme is also de facto specific
under Article 4(2)(c) of the basic Regulation because mainly producers of
the product concerned in fact benefit directly or indirectly from this
programme. The subsidy is also used by a limited number of enterprises (the
producers of the product concerned), or is used predominantly or
disproportionately by these firms, since they are only a subset of the allegedly
potential recipients but seem to receive all the funding.

3.5.5.     Direct Tax Exemption and
Reduction programmes

3.5.5.1.  The two free/three half
programme for foreign invested enterprises

(456)   The GOC reiterates its
argument that the programme concerning foreign invested enterprises (FIEs)
alleged in the complaint was terminated as of 2013. The Commission notes that
the investigation period ends well before the year 2013 and thus benefits
granted under this programme during the IP are countervailable. This is
confirmed by the finding of the investigation, which has found benefits
conferred during the IP under this programme to several sampled cooperating
exporters. The benefits conferred under the programme, even if the programme
was terminated in 2013, also continue in the future.

(457)   The
GOC and one sampled cooperating exporter further claim that the variant scheme
for High and New Technology Enterprises (HNTEs) cannot be countervailed on the
basis of Article 10(1) of the basic Regulation as it was not alleged in the
complaint. The Commission refers to its detailed rebuttal of this argument
contained in recital (286). The Commission also recalls that the GOC has
decided not to cooperate during the investigation concerning the variant of
this programme. In addition to these elements, the Commission notes that the
complaint lists other preferential direct tax schemes for HNTEs in addition to
the two free/three half variant for FIEs (section 4.2.5.1 of the complaint),
that is either the tax reductions for HNTEs (section 4.2.5.9 of the complaint)
or the preferential tax programmes for FIEs recognised as HTNE (section 4.2.5.8
of the complaint). Therefore, this programme may also be considered to have a
very close nexus with either or both of these other alleged tax programmes in
that it concerns a reduction of the direct tax rate and is specifically
targeting the same set of beneficiaries HNTEs. Once again, cooperation by the
GOC could have allowed the Commission to assess properly and thoroughly all the
elements that relate to the nexus with the programmes alleged in the complaint
and to fill any information gaps that are present in the complaint, which is
based on the prima facie evidence reasonably available to the
complainant. On the basis of these arguments, the Commission restates that
countervailing this programme is fully in line with Article 10(1) of the basic
Regulation, as this provision allows for the investigation of any “alleged
subsidy” identified by the complainant, not just to a specific programme. In
this case, the alleged subsidy, the foregoing of government tax revenue
targeting the same type of beneficiaries, is common to all the programmes in
question.

(458)   With regard to the
calculation of the subsidy amount, two sampled cooperating exporters argue that
the Commission has erroneously used the full year figures in the 2011 Annual
Income Tax Return despite the fact that the IP covers half of 2011 and half of
2012, and this violates the calculation method in Section E(a)(ii) of the
Commission Guidelines for the calculation of the amount of subsidy in
countervailing duty investigations, OJ C 394, 17.12.1998, p. 6. One of these
exporters further claims that, since the full 2012 tax return was not available
at the time of verification, for 2012 the Commission should have based its
calculation on the quarterly income tax declarations concerning the first half
of the year 2012 collected on spot and/or on the profit and loss tables for
2012, which show that the company was in a loss position.

(459)   The
Commission refers to recital (300) and restates the importance that the
calculation of benefit be based on final audited tax returns for a certain tax
year. The Commission adds that the final settlement of the 2011 tax return
during the IP makes any benefit claimed on the return final, further underlying
the correctness of its approach. The Commission
cannot base its calculation on quarterly tax returns, because these returns
reflect the on-going provisional situation at the time of filing and by
definition do not take into account the final consolidated situation of the
annual tax year. The objective of these returns is to ensure liquidity to the
government in case taxes are provisionally due, but they reflect only the
partial situation at the time of filing. It may well be the case that if the
company turns a substantial profit in the last two quarters of the year that
more than offset the losses in the initial quarters, then it will report a
taxable profit on the final tax return. Therefore while the provisional tax
returns in 2012 give a partial indication of the situation of the exporter at
the time of filing and explains why the Commission collected them, their
relevance is not absolute as it cannot be excluded that the situation at the
end of the fiscal year as shown on the definitive return is completely
different. As for the profit and loss tables concerning the year 2012, the
Commission notes that financial accounting does not always correspond to the
fiscal accounting and it may well be that the obligation to report items of
income and loss for direct tax purposes may substantially differ from the
reporting obligations for accounting purposes. There may also be adjustment for
tax purposes that are not fully reflected on the financial accounts. In sum,
the fact that a company is in a loss position in its financial accounts does
not necessarily mean that it will be in the same loss position in its final tax
return. Based on these arguments the Commission confirms that the subsidy
calculation for direct tax schemes must necessarily rely on the final figures
appearing on the final audited income tax return and not on periodical tax
statement or on definitive or trial accounting statements.

3.5.5.2.  Tax offset for research and
development by FIEs

(460)   The GOC claims to be
informed for the first time that the Commission is countervailing an R&D
programme which is not a replacement programme of the R&D programme for
FIEs alleged in the complaint. The GOC relies on similar arguments used for the
previous scheme as explained in recital (457) and argues that countervailing
this scheme violates Articles 11 and 13 of the WTO SCM Agreement. The GOC goes
on to claim that the R&D programme for FIEs was terminated in 2008 and the
new R&D programme included in the new Chinese Enterprise Income Tax Law is
not a replacement programme since it does not refer to FIEs and it does not
require the R&D expense to be 10% higher than the previous year.

(461)   The Commission notes that
the GOC did not provide information on this scheme in the reply to the
questionnaire reply and to the deficiency letter, but that this scheme was
already countervailed in previous investigations (see recital (310)). However,
the Commission also notes that this programme was discussed during the verification
visit with the GOC and that the relevant implementation provisions were
collected as an exhibit (they had also been submitted by one of the sampled
exporters). Therefore the GOC’s allegation that it is the first time that it
was informed of the potential countervailability of this programme is unfounded,
also given that several sampled cooperating exporters with which the GOC
coordinated its reply have reported this programme in their questionnaire
replies. The GOC was fully aware of this fact since it inspected several times
the non-confidential file. The findings of the investigation show that this
programme is countervailable (recitals (310) - (314) above). The Commission
adds that this programme is clearly a replacement of the previous programme targeting
FIEs, because of the close nexus shown by the same form and amount of the tax
benefit (additional tax offset deductible from the taxable base), the same
ratio and the same underlying situation (eligible costs for R&D activities)
with only slight variations. These slight variations were brought in line with
the reform of the new EIT law in 2008, but the nature and substance of the
programme remains fundamentally the same. The Commission also refers to the
arguments on the standard of initiation set out in recital (457).

(462)   The
GOC and one sampled cooperating exporter also claim that this programme is not
specific because the Commission has not demonstrated that obtaining the
certificate of HNTE is limited to certain enterprises. The Commission refers to
its explanation in recital (313) above and in recitals (321) and (325)
concerning another tax programme for the HNTEs. The Commission adds that the
implementing rules for the application of this programme (see recital (321)) here
further confirm the specificity finding of HNTEs as only companies in sectors
supported by governmental policies and eligible under the relevant Government
Catalogues and Guidelines can obtain the relevant certificate. For instance,
only enterprises engaged in an R&D project prescribed in the High and New
Tech Fields under the Key Support of the State and the Guidelines for Current
Priorities for Development in Key Sectors of the Hi-Tech Industry of 2007 by
the NDRC or R&D activities included in the scope of the Notice of the State
Council on Implementing the Several Supporting Policies for the Outline of the
State Medium and Long-term Scientific and Technological Development
(2006-2020), No. 6 [2006] of the State Council) can obtain this certificate. It
is therefore clear that this tax programme is limited only to those specific
companies in the relevant sectors and R&D activities supported by the GOC,
including companies in the encouraged PV sector.

(463)   With regard to the
calculation of the subsidy amount, two sampled cooperating exporters argue that
the Commission has erroneously used the figures in their 2011 Annual Income Tax
Return whereas the IP covers half of 2011 and half of 2012, and that this
violates the calculation method in Section E(a)(iii) of the Commission Guidelines
for the calculation of the amount of subsidy in countervailing duty
investigation of 1998. The Commission refers to all the arguments developed in
Recital (459) which are equally pertinent to dismiss this claim for this
programme. Furthermore, the Commission notes that the argument concerning a
purported tax loss position in the 2012 tax year has limited or no relevance,
because a tax deduction can be carried forward by five additional tax years and
set off against any taxable income declared in the five following years.
Therefore, even if the Commission would accept that these companies have made a
tax loss in the year 2012 or the final audited 2012 tax return were available
and would show a tax loss (which is not the case here), it would still take account
of the benefits under this programme as it could not be excluded that the
benefits from the tax deduction accrued in 2012 would be used as soon as the
company would report taxable income in any of the following five tax years.

3.5.5.3.  Tax reduction for high and
New Technology Enterprises involved in designated projects

(464)   The GOC and one cooperating
exporter argue that this programme is not specific, that specificity analysis
is not based on any facts, and that the requirements to obtain HTNE states
should be considered objective criteria or conditions governing the eligibility
for the subsidy and the eligibility for this programme is automatic. With
regard to the specificity finding concerning the limitation of this programme
and of the R&D tax offset also to HNTEs, the Commission refers to its
explanation in recitals (321) and (325), and also to recital (462) equally
applicable for this programme. The Commission restates that in particular the
implementing measures and documents listed above show that the application of
this programme and the recognition of HNTE status, far from being available to
all enterprises and relying on objective criteria, is limited only to certain
sectors and enterprises supported by the GOC on the basis of criteria that do
not appear to be objective or neutral. The eligibility for benefits under this
programme is also not automatic but depends on the granting of HNTE
certificate, which is released after a discretionary procedure by the competent
authorities and is therefore not automatic.

(465)   One cooperating exporter
claims that the Commission erroneously calculated the subsidy benefit from this
programme because it used the 2011 audited tax return whereas the quarterly tax
declarations for Q1 and Q2 of 2012 were available and collected at
verification, and in any event the Commission could have requested copy of the
final annual income tax declaration for 2012 as soon as it would have been
available. This exporter also argues that if the 2011 tax return is used to calculate
the subsidy benefit, then the 2011 company turnover and not the turnover during
the IP should be used. The Commission refers to its explanation in recital (459)
above. The Commission further notes that in its pre-verification letter to the
sampled exporters, including the exporter in question, it had specifically
requested the original full tax statements/returns for fiscal years covering
the IP and the three preceding years. Therefore this cooperating exporter could
and should have submitted the 2012 return as soon as available, and the
Commission notes that it has not done so even as recently as it sent its
comments to the disclosure document. With regard to the argument that the
Commission should use the 2011 turnover to calculate the benefit, it notes that
the amount of benefit from the 2011 tax return is considered to be reasonably
reflective of the situation in the IP, especially as the payment of tax for
2011 was due in the IP (month) and final data for 2012 were not available at
the time of verification. In any event, the Commission cannot use different
denominators to measure different subsidies, otherwise the percentage figures
will not be comparable and consistency in the calculation is not guaranteed.
The Commission finally adds that it does not have verified figures for the 2011
turnover but it only has verified turnover figures for the IP.

3.5.6.     Comments of parties
concerning the provision of land use rights for less than adequate remuneration

(466)   The GOC claimed that the
Commission did not determine the specificity under Articles 2.1 and 2.2 of the
ASCM and did not clearly substantiate its determination of specificity on the
basis of positive evidence, as required by Article 2.4 of the ASCM. According
to GOC the Commission had not provided any factual evidence as to which are the
certain industries that are accorded LURs at preferential rates and the legal
basis of its assessment that the industry producing solar cells and modules
forms part of these industries. One exporting producer made similar claim. These
claims had to be rejected. The Commission cited in the recital (364) above the
examples of the LUR notices where the relevant authorities limited the
potential buyers for the set price to the photovoltaic industry and set price
limits on the LUR purchased by the sampled exporting producers. In the absence
of any other information requested from the GOC and, given the government
support to the PV industry, along with discretionary and non-transparent nature
of the allocation of land-use rights, the Commission considered that this
information establish the existence of specificity.

(467)   The GOC and several
exporting producers claimed that the LUR benchmark selected by the Commission
is not adequate. The GOC also claimed that the Commission did not do its best
to identify a benchmark that approximates the market conditions that would
prevail in the absence of the distortion as required by the WTO Panel ruling inthe
US – Definitive Anti-Dumping and Countervailing Duties on Certain Products
from China[101] . This claim had to be rejected. The Commission indeed looked in detail in the various indicators
and compared Taiwan and PRC as a whole as well as individual Chinese provinces
concerned. After such an analysis the Commission considers Taiwan as an
appropriate benchmark because of the totality of the information on the file
i.e. (i) the comparable level of economic development and economic structure prevailing
in Taiwan and big majority of the Chinese provinces and cities where the co -operating
exporting producers are established, (ii) the physical proximity of China and
Taiwan, (iii) the high degree of industrial infrastructure that both Taiwan and
these Chinese provinces have, (iv) the strong economic ties and cross border
trade between Taiwan and the PRC, (v) the high density of population in the
Chinese provinces concerned and in Taiwan, (vi) the similarity between the type
of land and transactions used for constructing the relevant benchmark in Taiwan
with those in the PRC and (vii) the common demographic, linguistic and cultural
characteristics in both Taiwan and the PRC. Furthermore, most of the provinces
concerned are considered top manufacturing provinces in the PRC. Although the
GDP per capita of Taiwan and these provinces and cities is not identical, the
GDP of these provinces and cities has grown rapidly in recent years i.e. they
are catching up with Taiwan. In addition, recent data suggest that the both PRC
as a whole, as well as the provinces and cities concerned have much higher GDP
growth rate than Taiwan, i.e. they are catching up very fast. However, it is
important to note that the exact comparison made between the GDP of a
non-market economy (the PRC) and the GDP of a well- established market economy
(Taiwan) is not a decisive fact because it is normal for a non-market economy
to lag behind a functioning market economy in terms of GDP. In addition, many
other factors e.g. planning rules, environmental policy may affect the supply
and demand of industrial land. The real issue is what would be the 'prevailing
market conditions' with regard to LUR in the Chinese provinces concerned if it
was a functioning market economy and on the basis of all evidence, it is
concluded that they would be very similar to those of Taiwan.

3.5.7.     Other comments

(468)   The complainant claimed that
the Commission should disclose additional subsidy schemes found during the
investigation and also establish subsidy margins for such schemes not mentioned
in the complaint. In this respect it is noted that the all the subsidies which
met the legal requirements for initiation were investigated by the Commission.

(469)   The complainant claimed that
the Commission should have established a subsidy margin with regards to the
provision of polysilicon for less than adequate remuneration on the basis of
the information in the complaint and on the basis of the US DOC findings in
similar PV case. The Commission investigated this programme and, on the basis
of the information received from sampled exporting producers and the GOC,
concluded that there was no benefit from this programme during the IP,
principally because import prices of polysilicon were lower than prices charged
by Chinese suppliers. It is noted that the investigation period for the US case
and for the case at hand were different.

(470)   The complainant also claimed
that the Commission should have established a subsidy margin with regards to provision
of electricity for less than adequate remuneration. This claim had to be
rejected. The Commission did not find sufficient evidence that the sampled
exporting producers, with the exception of LDK, benefited from preferential
provision of electricity in the IP.

(471)   The GOC claimed that the
Commission’s calculation methodology resulted in the “double counting at the level
of the ant-dumping and anti-subsidy margin calculations”. According to the GOC
the Commission should have deducted the subsidy margin calculated for the
export credit insurance programme from the dumping margins on the basis that it
is an export subsidy. The GOC also claimed that the Commission should have
deducted from the dumping margin the subsidy margins calculated on the basis of
out-of-country benchmarks. It reasoned that “part of dumping calculated based
on an analogue country normal value is actually same subsidisation that has
been countervailed in the parallel anti-subsidy investigation". Neither
of these claims would have any impact
on the level of the resulting measures as in
the present case the combined duties are limited by the injury margin. The GOC
also confirmed this in the comments to definitive disclosure
document. Therefore it was not considered necessary to address the
substance of these claims.

3.6.        Amount of countervailable
subsidies

(472)   The
amounts of countervailable subsidies in accordance with the provisions of the
basic Regulation, expressed ad valorem, for the investigated companies are set
out in the table below:

Exporting producer || Definitive subsidy margin

Wuxi Suntech Power Co. Ltd; Luoyang Suntech Power Co. Ltd; Suntech Power Co. Ltd; Wuxi Sun-Shine Power Co. Ltd; Zhenjiang Ren De New Energy Science Technology Co. Ltd; Zhenjiang Rietech New Energy Science Technology Co. Ltd, || 4,9 %

Yingli Energy (China) Co. Ltd; Baoding Tianwei Yingli New Energy Resources Co. Ltd; Hainan Yingli New Energy Resources Co. Ltd; Hengshui Yingli New Energy Resources Co. Ltd; Tianjin Yingli New Energy Resources Co. Ltd; Lixian Yingli New Energy Resources Co. Ltd; Baoding Jiasheng Photovoltaic Technology Co. Ltd; Beijing Tianneng Yingli New Energy Resources Co. Ltd; Yingli Energy (Beijing) Co. Ltd || 6,3 %

Changzhou Trina Solar Energy Co. Ltd; Trina Solar (Changzhou) Science & Technology Co. Ltd; Changzhou Youze Technology Co. Ltd; Trina Solar Energy (Shanghai) Co. Ltd; Yancheng Trina Solar Energy Technology Co. Ltd || 3,5 %

JingAo Solar Co. Ltd; Shanghai JA Solar Technology Co. Ltd, JA Solar Technology Yangzhou Co. Ltd; Shanghai Jinglong Solar Energy Technology Co. Ltd; Hefei JA Solar Technology Co. Ltd, || 5,0 %

Jiangxi LDK Solar Hi-Tech Co. Ltd; LDK Solar Hi-Tech (Hefei) Co. Ltd; LDK Solar Hi-Tech (Nanchang) Co. Ltd; LDK Solar Hi-Tech (Suzhou) Co. Ltd, || 11,5 %

Delsolar (Wujiang) Co. Ltd, || de minimis

Renesola Zhejiang Ltd Renesola Jiangsu Ltd || 4,6 %

Jinko Solar Co. Ltd and related companies || 6,5 %

Other co-operating companies (Annex 1) || 6,4 %

All other companies || 11,5 %

(473)   In accordance with Article
15(3) of the basic Regulation, the total subsidy margin for the cooperating
companies not included in the sample is calculated on the basis of the total weighted
average subsidy margin established for the cooperating companies in the sample,
i.e. 6,4 %.

(474)   Given the high level of
cooperation of Chinese exporting producers, the “all other companies” duty was
set at the level of the highest duty to be imposed on the companies,
respectively, sampled or cooperating in the investigation. The “all other
companies” duty will be applied to those companies which had not cooperated in
the investigation.

4.           INJURY

4.1.        Definition of the Union
industry and Union production

(475)   The
like product was manufactured by around 215 producers in the Union. They
constitute the Union industry within the meaning of Article 9(1) of the basic
Regulation and will hereafter be referred to as ‘the Union industry’. The
Institutions have verified claims by interested parties that there was a higher
number; this verification has revealed that the alleged additional producers
were in reality mostly exporting producers, importers related to those,
distributors and installers.

(476)   All available information
concerning the Union industry, including information provided in the complaint,
macroeconomic data provided by Europressedienst, an independent consultancy
firm (‘the consultant’) and the verified questionnaire responses of the sampled
Union producers were used to establish the total Union production in the IP
since complete public information on production was not available. As modules
and cells are imported into the Union under customs headings covering other
products not subject to the present investigation and the reported import
volumes are in tonnes, Eurostat could not be used to determine import volumes
and values, which were based on the data provided by the consultant. When
possible, the data received from the consultant were cross-checked with other
available public sources and with the verified questionnaire replies.

(477)   On this basis, the total
Union production was estimated to be around 4 GW for modules and 2 GW for cells
during the IP.

(478)   As indicated in recital (21)
above, nine Union producers were selected in the sample representing 18 % - 21
% of the total Union production of modules and 17 % - 24 % of the total Union
production of cells.

(479)   Several parties contested
the fact that data provided by the consultant were used to determine, inter
alia, Union production, Union production capacity as well as other
macroeconomic injury indicators concerning the Union industry and import data.
These parties questioned the independence of the consultant alleging that it was
linked to the complainant. They also requested clarifications on what basis the
consultant was selected by the Commission and questioned its expertise in
collecting economic data related to the PV sector. In this regard, it was
claimed that the Commission should have based its findings on data from other
available sources, in particular known research institutes. Lastly, a reference
to Best Practices for the submission of economic evidence and data collection
in cases concerning the application of Articles 101 and 102 TFEU and in merger
cases was made by AFASE to contest the reliability of the data submitted by the
consultant.

(480)   As regards the alleged links
between the consultant and the complainant, the relevant interested parties did
not submit any evidence showing that such links existed. Likewise, the
investigation did not bring into light any evidence of a relationship going
beyond purely commercial character. Following final disclosure one interested
party claimed that there were indications that the prima facie evidence
provided by the complainant Union industry in the complaint were based on data
provided by the same consultant. Even though it is acknowledged that findings
for some indicators were indeed similar to the evidence provided in the complaint
that does not necessarily mean that they were established on the basis of one
source only. In this regard, the complaint provides the various sources used. The
claims in this regard had therefore to be rejected.

(481)   The
Commission considered it appropriate to make use of this consultancy in the
current investigation, due to the unavailability from other publicly available
sources of the necessary macroeconomic data covering the total Union market as
well as import data. Prior to selecting Europressedienst the Commission
assessed the methodology used by the consultant for the collection of the
relevant data as well as the consultant’s ability to provide the necessary data
separately for all product types and for the entire period considered.

(482)   Furthermore,
during the investigation, data provided by the consultant were counter checked
when possible with other available sources and were confirmed. In this respect,
it is noted that several research companies specialised in collecting PV
statistics exist on the market and the figures reported are almost never
identical. This is due to the fact that precise figures are difficult to derive
for any research institute and therefore the reported PV market indicators will
always be based on estimates, independently of the provider of such figure. In
this context, the cross-checking exercise carried out by the Commission
consisted of comparing the trends of the data received from the consultant with
the trends of the same data published by other research companies, the
Commission's Joint Research Center ('JRC') and the EPIA on the same topics, when
available. No significant differences were noticed as a result of the
cross-checking exercise and the trends of the indicators for which the
cross-checking was done were similar. Provisional anti-dumping findings were
therefore not solely based on data provided by the consultant but also on the
Commission’s own analysis and assessment of these data. In addition, as
mentioned above in recital (8), after the imposition of provisional anti-dumping
measures a verification visit took place at the premises of the consultant. The
Commission carried out the on-the-spot check at the consultant’s premises to
verify the reliability of the methodology and data supplied. The on-the-spot
check was carried out as a follow-up of the cross-checking of the data by the
Commission and to obtain further assurance as regards the reliability and
quality of the data and related methodology. The on-the-spot verification was
considered appropriate in application of the principle of good administration, even
if those data were not provided by an interested party but by a consultant. As
a result, the Commission was further reassured of the reliability of the data
provided by the consultant.

(483)   One
party claimed that the methodology of cross checking used by the Commission was
not explained in sufficient detail and requested that the other sources used
for the cross checking should be disclosed. This party argued further that the
methodology used was in any event invalid insofar that only trends of various
sources were compared and not absolute values.

(484)   As far as the other sources
used to cross check the data provided by the consultant are concerned, these
were reports published by the JRC and by 'EPIA on the same topics. As for the
comparison of data with other sources it is noted that they showed not only
similar trends but also similar magnitudes. Therefore, it was concluded that
the methodology used was appropriate and the claims in this regard were
rejected.

(485)   The consultant’s main
activity is collecting data linked to the PV sector and developing an
up-to-date database of companies active in the PV market.. These data are
published in specialised photovoltaic magazines and also used by individual
companies for which it carries out specialised research. The database developed
by Europressedienst is regularly up-dated and re-published. In addition, the
consultant has several years of experience in this sector. More precisely, the
methodology of the consultant is to collect, cross-check and agglomerate
information using various sources available in the market. To this end, it
collects the data via standard questionnaires sent to the companies listed in
the database or via phone, especially from the Union producers, or during the
specialised fairs, notably from producers in third countries. When the
information cannot be obtained through the channels just mentioned,
Europressedienst checks the financial reports of companies in the photovoltaic
sector or co-operates on a freely basis with other research institutes with a
view to obtaining or cross-checking the data. It was verified that these
sources were used by the consultant in its daily activity. In the light of the
above, it was considered appropriate to make use of Europressedienst’s services
in the present investigation and the parties’ claims in this respect were
therefore rejected.

(486)   With regard to the Best
Practices for the submission of economic evidence issued by the competent
service of the Commission (‘the Best Practices’), the following remarks should
be made. First of all, it is a document that cannot engage the Commission, as
it has not been adopted by the College, but published by the competent service
with the purpose of providing recommendations to parties as to how to present
economic evidence. Secondly, the Best Practices concern the submission of
economic analysis and data used in competition investigations pursuant to Article
101 and 102 TFEU and in merger cases. The applicable rules, standards of proof
and investigating powers of the Commission in those competition cases cannot be
compared to trade defence investigations, to which an entirely different set of
rules applies.

(487)   Several parties contested
the methodology used by the consultant claiming that it would not reach
recognised scientific standards. However, as mentioned above in recital (481) above,
the methodology was assessed and the resulting data were cross-checked and
verified and as a result were considered in line with other published data and
therefore reasonably reliable. Specific points raised
by certain interested parties, were clarified bilaterally and made available in
the open file of the investigation for inspection by interested parties.

(488)   The CCCME argued that the
methodology of data aggregation was not clarified. This claim was rejected as
the relevant information was made available to all interested parties in the
file open for inspection by interested parties.

(489)   After final disclosure,
several parties reiterated their concerns on the selection of the consultant by
the Commission and on the quality of the data supplied. In this respect it was
claimed that the consultant’s data can be ordered and purchased on an ad hoc
basis to meet the specifically identified requests of potential clients and may therefore not be objective. In addition, CCCME
contested that the data collected by the consultant can be considered as
positive evidence within the meaning of Article 3(2) of the basic Regulation
since the data was to a large extent based on assumptions and estimations.
Furthermore, it was claimed that the data supplied were not sufficiently
supported by evidence in the file and that they were not of an affirmative,
objective and verifiable character.

(490)   In respect of these claims,
reference is made to the recitals (481) - (482) above where additional
information was provided regarding the selection of the consultant. In
addition, it is noted that the Commission hired the consultant on the basis of
the best available information at that moment in time and in full compliance
with the Commission Financial Regulation applicable to the procedure.
Furthermore, it is recalled that the consultant’s capacity to provide all the
needed data in due time was of great importance since the Commission was bound
to statutory deadlines for the publication of the provisional findings in the
on-going investigation.

(491)   As regards the quality of
the data supplied and whether it can be considered as positive evidence in
accordance with Article 3(2) of the basic Regulation, as mentioned above in
recital (482), the consultant’s methodology for collecting the data was
examined and it was assessed that it was of satisfactory quality. In addition,
as also mentioned above in the same recital, the data supplied by the
consultant were cross-checked when possible with other sources and found to be
reasonably accurate. Finally, it is noted that the consultant has one database
which is up-dated on a regular basis, independently of the clients’ needs and
requests. The same database is used to aggregate and deliver PV statistics to
various clients, and therefore the allegation that data were not objective had
to be rejected.

(492)   After final disclosure, one
interested party claimed that the Commission had not disclosed the sources, the
methodology used and the companies with which the consultant co-operated to
compile the macroeconomic data supplied. Another interested party reiterated
that the methodology applied by the consultant suggests inaccurate results.
Several interested parties requested further information concerning the
methodology used by the consultant such as the average response rates to the
questionnaires/interviews, the percentage of data collected through each
channel, how these were verified, the approximations/assumptions used to
generate the data, the number of companies for which approximations were made,
and at least a range of the number of employees of the consultant.

(493)   In respect of these claims, it
is noted that subsequently to the imposition of the provisional findings, the
Commission provided interested parties with the methodology and with the
sources used by the consultant in aggregating the data and addressed specific
questions of the interested parties in this regard following the provisional anti-dumping
disclosure. The additional requests for information of the interested parties
concerned following final disclosure are considered to be covered by the
information made available after the imposition of provisional duties to the
extent that the confidentiality limitations allowed it. In addition, it is
underlined that the Commission verified on-the-spot the way the data had been
collected and aggregated by the consultant and the relevant underlying
assumptions for aggregating the data. The results of the verification were
satisfactory and the Commission was reassured of the reasonableness of the
underlying assumptions and of the quality of the data supplied by the
consultant. Furthermore, the parties did not contest the data as such.

(494)   After
final disclosure, another party requested clarifications with regard to the
number of Union producers considered by the consultant in its data collection
and the overlap between these and the around 215 Union producers known to the
Commission. In this respect, it is clarified that the Union producers
considered by the consultant are largely the same than the ones known to
represent the Union industry in this investigation mentioned in recital (475)
above.

(495)   After final disclosure, one
party claimed that the Commission has conducted the injury analysis in an
inconsistent manner since it was done separately for modules and cells while
the injury and subsidy margin calculations had been established as a weighted
average for modules and cells together. In this respect, it is noted that while
indicators were shown separately for each product type, the conclusions reached
for each indicator refer to the product under investigation as a whole. It is
also recalled that modules and cells are one single product and therefore the subsidy
margins and the injury elimination level were established on this basis.
Therefore, the claim was rejected.

(496)   Finally, another party
claimed that the calculation of the values of macroeconomic indicators during
the IP was wrongly based on a simple average of the years 2011 and 2012 as such
methodology would not be objective and would not lead to results reflecting the
reality during the IP. It is clarified that a simple average of the data was
only used in case where there were similar trends in the periods concerned. In
case trends were different, the methodology was adapted accordingly by taking
into consideration market reality. The party concerned did not develop to what extend
the results of the methodology used would not reflect market reality. These claims
were therefore rejected.

4.2.        Determination of the
relevant Union market

(497)   Part of the Union industry
is vertically integrated and a substantial part of the Union industry’s
production was destined for captive use, in particular for the production of
cells.

(498)   In order to establish
whether or not the Union industry suffered material injury and to determine
consumption and other economic indicators, it was examined whether and to what
extent the subsequent use of the Union industry’s production of the like
product (‘captive’ use) had to be taken into account.

(499)   In order to provide a
picture as complete as possible of the situation of the Union industry, data
have been analysed for the entire activity of the like product and it was
subsequently determined whether the production was destined for captive use or
free market.

(500)   It was found that the
following economic indicators related to the Union industry should be examined
by referring to the total activity (including the captive use of the industry):
consumption, sales volume, production, production capacity, capacity
utilisation, growth, investments, stocks, employment, productivity, cash flow,
return on investment, ability to raise capital and magnitude of the amount of
the countervailable subsidies. This is because the investigation showed that
those indicators could reasonably be examined by referring to the whole
activity as the production destined for captive use was equally affected by the
competition of imports from the country concerned. Hereinafter the captive and
the free market together are referred to as ‘total market’.

(501)   As regards profitability,
the analysis focused on the free market since prices in the captive market were
found not to always reflect market prices and did not have an impact on this
indicator.

(502)   Several parties argued that
the injury should have been assessed separately for the captive and for the
free market. One party argued that data relating to cells destined for captive
use should have been excluded from the injury assessment on the grounds that
they were not affected by the subsidised imports.

(503)   The
investigation has shown that vertically integrated Union producers were forced
to import subsidised products (cells) and to cease production of these products
at cost above the import price, as a consequence of the price pressure exerted
by the subsidised imports. Furthermore, the investigation also revealed that
the free market and the captive market displayed the same trends in prices,
which also showed that they were equally affected by the imports concerned.

(504)   After final disclosure,
several parties reiterated that the Commission failed to provide an adequate and
reasoned analysis of the captive market or why a separate analysis had not been
carried out. One party claimed that no information was provided about the
significance of the Union production destined for captive use. In addition, it
was claimed that recital (106) to the provisional anti-dumping Regulation
concluding that prices in the captive market did not always reflect market
prices, contradicted the conclusions set out in recital (503) above that the
free market and captive market displayed similar trends in prices.

(505)   It is firstly noted that
recital (105) to the provisional anti-dumping Regulation sets out the reasons
as to why it was considered appropriate to examine injury indicators (except
for profitability) referring to the total activity of the Union industry
including captive use. In this regard it is recalled, as set out in the same
recital, that the investigation revealed that the production destined for
captive use was equally affected by the competition of the imports from the
PRC, which as such was not contested by the interested parties concerned.
Therefore, the claim that no explanations were given as to why no separate
analysis took place had to be rejected. Likewise, as it follows from this
conclusion, it had also to be rejected that such separate analysis of the
captive market should have taken place.

(506)   Secondly, while on the basis
of the above the significance of the Union production destined for captive use
was not considered an essential element, it is noted that the Union production
of cells destined for captive use represented about half of the total
production in the IP. Finally, it is clarified that the fact that prices in the
captive market do not reflect the prices in the free market is not necessarily
contradicting the fact that both prices followed the same trends, as they may
still be at different levels or price movements may be at a higher or lower
degree and thus depicting a different picture. On the basis of the above, the
claims concerning the captive market were rejected.

(507)   The parties concerned did
not provide any information which could have devaluated this finding. On these
grounds, the claims in this respect were rejected

4.3.        Union consumption

(508)   The Union consumption
comprised the total volume of imports of the product concerned and the volume
of total sales of the like product in the Union, including those destined for
captive use. No complete data for the total sales of the Union industry on the
Union market were available. Furthermore, imports into the Union were
registered under customs headings covering other products not subject to the
present investigation and the reported Eurostat import volumes were in tonnes.
Consequently, Eurostat could not be used to determine import volumes and
values. Therefore, the Union consumption was based on data provided by the consultant
as described above and cross-checked with public sources such as market
researches and publicly available studies and with the verified questionnaire
replies.

(509)   Union
consumption developed as follows:

Table
1- a

Union
consumption for modules (in MW)

||             2009 ||             2010 ||             2011 ||             IP

Total market ||             5 465 ||             12 198 ||             19 878 ||             17 538

Index (2009=100) ||             100 ||             223 ||             364 ||             321

Source: Europressedienst

Table
1-b

Union
consumption for cells (in MW)

||             2009 ||             2010 ||             2011 ||             IP

Total market ||             2 155 ||             3 327 ||             4 315 ||             4 021

Index (2009=100) ||             100 ||             154 ||             200 ||             187

Source: Europressedienst

(510)   In
the period considered, the total Union consumption increased by 221 % for
modules and by 87 % for cells between 2009 and the IP, but decreased in the IP
compared to 2011. In overall terms the Union consumption of the product under
investigation grew significantly when compared to its 2009 level.

(511)   One interested party argued
that data concerning the Union consumption of the product under investigation
vary significantly, depending on the source used. This party argued that
reliable data can only be established on the basis of the information gathered
from specialised institutions or research centres. In view of the explanations
and conclusions reached in the recitals (481) to (483) above concerning the
reliability of the data provided by the consultant used in the investigation,
this argument was rejected.

(512)   The same party argued that
Union consumption should not be established by merely adding up available
module production capacities in the Union and that rather the module consumption
for the Union’s industry own projects should be deducted therefrom. This
argument was rejected, as consumption of modules was established on the basis
of newly installed capacities in the Union. This is a common practice for
determining the module consumption. For cells, the consumption was determined
on the basis of the Union production of modules.

(513)   Another party argued that
that the methodology described by the consultant admits the difficulty to
establish reliable consumption figures. It was further argued that import data
as well as export sales from the Union industry were either based on
unverifiable estimations or incomplete data and that the cross checking of the
Commission was not sufficient to allow the conclusion that those data were
indeed reliable and accurate.

(514)   As already mentioned above
in recitals (481) to (482) above the quality of the data and the methodologies
used to collect them was verified by the Commission during an on-spot visit on
the basis of which it was considered that the methodologies used were
appropriate and the results accurate and reasonably reliable. This claim was
therefore rejected.

4.4.        Imports from the country
concerned

4.4.1.     Volume and market share of
the imports from the country concerned

(515)   Imports
into the Union from the country concerned developed as described in the tables
below. Figures are reported only in indexes and in ranges for reasons of
confidentiality. This is because imports made by the exporting producer for
which no subsidies were found as mentioned in recital (472) above, have been
deducted from the total imports from the PRC.

Table
2-a

Imports
of modules from the PRC (in MW)

|| 2009 || 2010 || 2011 || IP

Import volumes from PRC Index (2009=100) || 100 || 251 || 462 || 408

Market share in total market || 60 % - 65 % || 68 % - 73 % || 75 %-80 % || 78 % - 83 %

Source: Europressedienst

Table
2-b

Imports
of cells from the PRC (in MW)

|| 2009 || 2010 || 2011 || IP

Import volumes from PRC Index (2009=100) || 100 || 273 || 491 || 506

Market share in total market || 5 % - 10 % || 12 % - 17 % || 17 % - 22 % || 22 % - 27 %

Source: Europressedienst

(516)   Over
the period considered, import volumes to the Union from the country concerned
increased considerably by around 300 % for modules and by more than 400 % for
cells. This led to significant market share increases of the imports from the
country concerned into the Union. More specifically, the market shares of
imports from the country concerned increased from [60 % - 65 %] to [78 % - 83 %]
for modules and from [5 % - 10 %] to [22 % - 27 %] for cells. In overall terms
the imports of the product concerned from the PRC increased significantly in terms
of volume and market share between 2009 and the IP.

(517)   It
should be noted that the increase in imports from the country concerned was
much higher than the increase in the Union consumption for the product
concerned. Consequently, the exporting producers were able to benefit from
Union’s growing consumption and their position on the market became stronger
due to larger market shares.

(518)   One interested party argued
that data concerning import volumes of the product under investigation vary
significantly, depending on the source used. This party argued that reliable
data can only be established on the basis of the information gathered from
specialised institutions or research centres. In view of the explanations and
conclusions reached in the recitals (481) to (483) above, concerning the reliability
of the data used in the investigation, this argument was rejected.

(519)   After final disclosure, one
interested party contested the methodology to determine the total import value
from the PRC claiming that it had been based on transactions made at CIF level
duty unpaid and it is therefore doubtful whether these transactions had been
destined for Union consumption. In respect of this claim, it is clarified that
the total import value from PRC as provided by the consultant had not been used
in the findings and that only import volumes and import prices were determined
during the investigation.. As the methodology to determine import prices was
not contested as such by the interested party concerned reference is made to
the relevant findings in recitals (520) to (528) below. Therefore, the above
claim was rejected

4.4.2.     Prices of imports and price
undercutting

(520)   The average price of imports into the Union from the country
concerned developed as follows:

Table
3-a

Import
price of modules from PRC (in EUR/kW)

|| 2009 || 2010 || 2011 || IP

Import prices || 2 100 || 1 660 || 1 350 || 764

Index (2009=100) || 100 || 79 || 64 || 36

Source: Europressedienst and verified
sample questionnaire replies

Table
3-b

Import
price of cells from PRC (in EUR/kW)

|| 2009 || 2010 || 2011 || IP

Import prices || 890 || 650 || 620 || 516

Index (2009=100) || 100 || 73 || 70 || 58

Source: Europressedienst and verified
questionnaire replies

(521)   The average import price
from the PRC dropped significantly over the period considered for modules and
cells. For modules, the average import price decreased by 64 %, from 2100
EUR/kW in 2009 to 764 EUR/kW in the IP. Likewise, the average import price of
cells from PRC dropped by 42 %, from 890 EUR/kW to 516 EUR/kW.

(522)   In overall terms, the price
of the product concerned decreased significantly between 2009 and IP.

(523)   One cooperating unrelated
importer claimed that import prices should have been established on the basis
of its imports of the product concerned in the Union as provided by this
importer during the investigation. However, the data provided by this importer during
the investigation only represented a fraction of the total imports in the Union
and no meaningful conclusions could be drawn as to the average import price of
all imports from the PRC during the whole period under consideration covering
several years on this basis. Therefore, this claim was rejected.

(524)   Another party claimed that
the methodology to determine the prices was not explained, in particular as to
how the data of various sources had been merged and reconciled. In addition it
was argued that importation costs should have been based on the verified
information collected during the investigation rather than on estimates.

(525)   It is considered that the
methodology made available to interested parties is sufficiently complete to
understand as to how figures were established. As far as ‘importation’ cost is
concerned, it is clarified that an adjustment was made to on-the-spot-prices to
arrive to CIF prices. The estimation made was confirmed with the data collected
during the investigation.

(526)   In order to determine price
undercutting during the IP, the weighted average sales prices per product type
of the sampled Union producers charged to unrelated customers on the Union
market, adjusted to an ex-works level, were compared to the corresponding
weighted average prices per product type of the imports from the cooperating
Chinese exporting producers to the first independent customer on the Union
market, established on a CIF basis, with appropriate adjustments for post-importation
costs, i.e. custom clearance, handling and loading costs. The average
post-importation costs of the sampled importers of modules were used when their
data were available.

(527)   The
price comparison was made on a type-by-type basis for transactions at the same
level of trade, duly adjusted where necessary, and after deduction of rebates
and discounts. The result of the comparison, when expressed as a percentage of
the sampled Union producers’ turnover during the IP, showed weighted average undercutting
margins within the ranges of [19,8 % - 37,5 %] for modules and [12,6 %-53,8 %]
for cells, and [19,8 %-37,5 %] in overall terms for the product concerned.

(528)   It
should be noted that for one sampled exporting producer a negative price
undercutting for cells was calculated. However, as the exported quantities were
not significant this cannot be considered representative. Moreover, another
sampled exporting producer, contested the source for the adjustment for mono
cells to multi cells, without however substantiating the argument. Indeed the
specific adjustment was not contested by the exporting producer nor did they
provide any new information or evidence, therefore this claim was rejected.

4.5.        Economic situation of the
Union industry

4.5.1.     General

(529)   Pursuant
to Article 8(4) of the basic Regulation, the Commission examined all relevant
economic factors and indices having a bearing on the state of the Union
industry. As mentioned in recitals (14) to (22)
above, sampling was used for the examination of injury suffered by the Union
industry.

(530)   For the purpose of the
injury analysis, the Commission distinguished between macroeconomic and
microeconomic injury indicators. The Commission analysed the macroeconomic
indicators for the period considered on the basis of the data obtained from the
independent consultant as cross checked whenever possible with other available sources
and from the sampled Union producers’ verified questionnaire responses. The
Commission analysed the microeconomic indicators on the basis of the sampled
Union producers’ verified questionnaire responses.

(531)   For
the purpose of this investigation, the following macroeconomic indicators were
assessed on the basis of information relating to all producers of the like
product in the Union: production, production capacity, capacity utilisation,
sales volume, market share, growth, employment, productivity, magnitude of the
amount of countervailable subsidies and recovery from past subsidisation or
dumping.

(532)   The following microeconomic
indicators were assessed on the basis of information relating to the sampled
producers of the like product in the Union: average unit prices, unit cost,
labour costs, inventories, profitability, cash flow, investments, return on
investments and ability to raise capital.

(533)   One
interested party claimed that market conditions of the product concerned differ
per Member State and that therefore the injury analysis should be made at the
level of each Member State separately. This allegation was not substantiated.
In addition, the investigation did not reveal any particular circumstances
justifying an injury analysis per Member State. This claim was therefore
rejected.

(534)   Some parties questioned the
overall reliability of macroeconomic injury indicators used by the Commission
for the purpose of this investigation. They argued that the trends established
for a number of these indicators diverged from the trends for the same
indicators established for the sampled Union producers. Particular reference
was made to Union production, productivity, sales, average labour costs and
employment.

(535)   The macroeconomic indicators
were established in relation to all producers in the Union. In case the same
data are compiled in relation to individual Union producers or a group of Union
producers (i.e. the sampled Union producers), the trends are not necessarily
identical, as e.g. the weight of each company considered is not taken into
consideration in such comparison. Therefore, the results of the exercise of comparing
the macroeconomic indicators for all Union producers and those for sampled
Union producers are not necessarily meaningful and do not allow for the
conclusion that the one or the other set of data is unreliable. In any event,
when comparing the trends of the macroeconomic indicators of the Union industry
with the same consolidated indicators of the sampled Union producers,
differences in trends can be noted for several indicators, such as the
production, production capacity, sales volumes, employment and productivity of
the Union industry between 2011 and the IP. For all these indicators, the
sampled Union producers performed better than the overall Union industry. The
reason is that in the IP many Union producers, not included in the sample,
stopped their production or became insolvent, thus having a negative impact on
the macroeconomic indicator calculated at the Union level. These claims were
therefore rejected.

(536)   One interested party claimed
that the conclusion as set out in recital (153) to the Provisional anti-dumping
Regulation that the analysis of the situation of the Union industry showed a
clear downward trend of all main injury indicators was based on data provided
by the consultant. In this respect, it is clarified that, on the one hand, the
macroeconomic indicators, as listed in Tables 4-a to 6-c to the Provisional anti-dumping
Regulation, were based on data obtained from the consultant and cross-checked
when possible with other available sources. On the other hand, the microeconomic
indicators, as listed in the Tables 7-a to 11-c to the Provisional anti-dumping
Regulation, were based on data collected from the sampled Union producers and
verified on-the-spot by the Commission. It should also be noted that
determinant factors for the injurious situation of the Union industry such as
the profitability levels of the Union industry, the average sales price in the
Union as well as price undercutting calculations were based on data collected
from the sampled Union producers and exporting producers as verified
on-the-spot. The above claim was therefore rejected.

4.5.2.     Macroeconomic indicators

4.5.2.1.  Production, production
capacity and capacity utilisation

(537)   The
total Union production, production capacity and capacity utilisation developed as
follows over the period considered:

Table 4-a

Modules – production, production capacity and capacity utilisation (MW)

|| 2009 || 2010 || 2011 || IP

Production volume || 2 155 || 3 327 || 4 315 || 4 021

Index (2009=100) || 100 || 154 || 200 || 187

Production capacity || 4 739 || 6 983 || 9 500 || 9 740

Index (2009=100) || 100 || 147 || 200 || 206

Capacity utilisation || 45 % || 48 % || 45 % || 41 %

Source: Europressedienst

Table 4-b

Cells – production, production capacity and capacity utilisation (MW)

|| 2009 || 2010 || 2011 || IP

Production volume || 1 683 || 2 376 || 2 723 || 2 024

Index (2009=100) || 100 || 141 || 162 || 120

Production capacity || 2 324 || 3 264 || 3 498 || 3 231

Index (2009=100) || 100 || 140 || 151 || 139

Capacity utilisation || 72 % || 73 % || 78 % || 63 %

Source: Europressedienst

(538)   The overall Union production of
modules increased by 87 % during the period considered. Production reached a
peak in 2011 and then dropped in the IP. The Union production of modules
increased at a much slower pace than the growth in consumption, which more than
tripled during the same period. Against the background of a significant
increase in consumption, the Union producers doubled their production capacity
for modules during the period considered. However, in spite of higher
production levels, the Union industry’s capacity utilisation rate decreased by
4 percentage points, reaching only 41 % during the IP.

(539)   The Union production of cells increased by 20 % in overall terms
during the period considered. It reached a peak in 2011 and decreased after
that in the IP. The Union production of cells followed the trend of Union
consumption with a slower increase until 2011 and then a more pronounced fall
in the IP. In line with the evolution of Union consumption, the Union industry
first increased their capacity by 51 % until 2011 and then this decreased
during the IP. In overall terms, the capacity increased by 39 % during the
period considered. The capacity utilisation rate increased until 2011 reaching
a peak of 78 % and then decreased by 15 percentage points during the IP.
Overall, the capacity utilisation of the Union industry of cells decreased over
the period considered reaching 63 % during the IP.

(540)   Therefore,
the Union industry expanded their capacity in response to an increased
consumption. However, the Union industry’s production levels increased at a
much slower pace than the consumption, which led to a decrease of the capacity
utilisation rates for the product concerned during the period considered.

(541)   AFASE
claimed that the production volume established for modules and cells in recital
(537) above and the production capacity of the Union industry established for
modules and cells in the same recital were overestimated and provided data from
other sources (i.e. EPIA, IMS and BNEF) showing lower volumes. These figures
are those retained in recital (537) above.

(542)   The
production volume established in recital (537) above is based on information
covering both publicly listed companies and non-listed companies. The development of the Union production as established in recital (537)
above is furthermore in line with the development of Union consumption
established in recital (509). To the contrary the data provided by AFASE on
production volumes showed different trends with the Union consumption as
established in recital (509) and with the statistics of Union consumption
published by the EPIA.

(543)   As
far as production capacity is concerned, the investigation revealed that the
findings as set out in recital (537) included the production capacities of
companies that filed for insolvency or stopped production during the IP, while
they had not sold their production plants and machinery and thus able to resume
production very quickly. Likewise, as mentioned above in recital (542), the
figures in recital (537) included data from non-listed companies.

(544)   Finally,
the data provided by the independent consultant were counter-checked and
verified and found to be reasonably accurate. On the basis of the above, the
data provided by AFASE based on other available sources were not found to be
necessarily in contradiction with the findings of the Provisional anti-dumping
Regulation.

(545)   In
any event, accepting the figures provided by AFASE would not have an impact on
the overall finding that the Union industry suffered material injury as the
trend of these indicators, i.e. Union production and Union production capacity
would be even more pronounced.

(546)   One cooperating
unrelated importer argued that production volume, production capacity and
capacity utilisation should have been established on the basis of the data of
the sampled Union producers only. However as these are macroeconomic indicators
they should be established at the level of all Union producers in order to
establish a meaningful and complete picture of the situation of the Union
industry. This claim was therefore rejected.

(547)   After final disclosure, one
party requested the Commission to clarify how the annual Union production had
been calculated by the consultant. Another party requested the Commission to give
further explanations concerning the reconciliation of the different data
available related to the total Union production capacity. Another party
suggested that the total Union production and production capacity should have
been obtained from the Union producers selected in the sample as this would
have given a more reliable result. In this regard, it was alleged that publicly
available data were imprecise due to the confidential character of these data
and that any research centre or consultant had to base its analysis on a number
of estimations and assumptions.

(548)   It is clarified that the
annual Union production was calculated on the basis of the figures reported by
the Union producers to the consultant. When the annual production of a certain
Union producer could not be obtained for a specific year, this was estimated by
applying the capacity utilisation rate from the previous year to the new
production capacity of that year. The Institutions have also compared the
figure obtained by the consultant with the figures reported in the replies of
the Union industry to the standing questionnaires prior to initiation. Both
figures are similar.

(549)   As regards the request to
provide further explanations concerning the reconciliation of the different
data available for Union production capacity, it is noted that this information
had already been provided in the open file open for inspection to the
interested parties. Therefore, this request was rejected.

(550)   Finally, the Union
production and production capacity are macroeconomic indicators and therefore have
to be established at the level of the entire Union industry rather than on the
level of the sampled Union producers.

(551)   After final disclosure, one
party argued that the methodology used to collect production data (mainly
interviews and visits of production sites) did not allow for reliable results
due to the confidential character of these data and as a consequence the
reluctance of companies to disclose them. Such methodology cannot therefore be
considered as adequate. This was allegedly confirmed by the fact that although
a much higher number of Union producers was used by the consultant than the one
taken into account by the Commission during the examination of standing at initiation
stage, the total production volume established by the consultant is lower than
the total production volume established by the Commission for the purpose of
the examination of the standing. This party further claimed that consequently
the information related to this injury indicator cannot be considered as
positive evidence within the meaning of Article 8(1) of the basic Regulation.

(552)   It
is first clarified that the number of producers taken into consideration by the
consultant on the one hand and the Commission on the other hand was largely the
same and that the argument that results were inconsistent had therefore to be
rejected. It is further recalled that the data collected by the consultant were
cross checked with other sources wherever possible and it was found that the
estimations were sufficiently reliable. It is therefore confirmed that the
information on production data provided by the consultant was considered as
positive evidence within the meaning of Article 8(1) of the basic Regulation.

4.5.2.2.  Sales volumes and market
share

(553)   The Union industry’s sales volume and market share developed as
follows over the period considered:

Table 5-a

Modules - sales volume and market share (in MW)

|| 2009 || 2010 || 2011 || IP

Sales volume on the Union market || 1 037 || 1 890 || 2 683 || 2 357

Index (2009=100) || 100 || 182 || 259 || 227

Market share || 19 % || 15 % || 13 % || 13 %

Source: Europressedienst

Table 5-b

Cells - sales volume and market share (in MW)

|| 2009 || 2010 || 2011 || IP

Sales volume total market || 1 470 || 1 913 || 2 245 || 1 545

Index (2009=100) || 100 || 130 || 153 || 105

Market share || 68 % || 57 % || 52 % || 38 %

Source: Europressedienst

(554)   During
the period considered, the sales volume of modules increased by 127 %. However,
in the context of an increase in consumption of 221 %, this was translated into
a decrease of the Union industry’s market share from 19 % in 2009 to 13 %
during the IP. As regards cells, the Union industry’s sales increased only
marginally by 5 % while consumption increased by 87 % resulting in a market
share reduction from 68 % in 2009 to 38 % in the IP. In
response to a growing consumption, the Union industry’s sales of modules and
cells grew much less than the imports from the country concerned. Thus, the
Union industry could not benefit from the growing consumption. As a
consequence, the market shares for modules and cells decreased over the period
considered.

(555)   One
interested party claimed that the market share of the Union industry for
modules was already only 19 % in 2009 and that a decrease by 6 percentage
points during the period considered cannot be considered as injury.

(556)   The
decrease in market share by 6 percentage points over the period considered has
to be seen against the background of an increase of the Union consumption for
modules by over 200 % over the same period. As mentioned above, even under the
scenario of an increased consumption it could not increase its sales volume
accordingly and suffered losses in market share. This argument had therefore to
be rejected.

(557)   One party argued that the
methodology used to collect sales data (mainly interviews and visits of production
sites) did not allow for reliable results due to the confidential character of
these data and as a consequence the reluctance of companies to disclose them.
Such methodology cannot therefore be considered as adequate. Likewise, they
cannot be considered as positive evidence within the meaning of Article 8(1) of
the basic Regulation. As mentioned above in recital (482) above the data
collected by the consultant were cross checked with other sources wherever
possible and it was found that the estimations were sufficiently reliable. It
is therefore confirmed that the information on sales data provided by the
consultant was considered as positive evidence within the meaning of Article 8(1)
of the basic Regulation.

4.5.2.3.  Employment and productivity

(558)   Employment and productivity developed as follows during the period
considered:

Table 6-a

Modules –employment and productivity

|| 2009 || 2010 || 2011 || IP

Number of employees || 11 779 || 15 792 || 17 505 || 16 419

(Index 2009 = 100) || 100 || 134 || 149 || 139

Productivity (kW/employee) || 183 || 211 || 247 || 245

(Index 2009 = 100) || 100 || 115 || 135 || 134

Source: Europressedienst Table 6-b

Cells – employment and productivity

|| 2009 || 2010 || 2011 || IP

Number of employees || 5 281 || 5 937 || 5 641 || 4 782

(Index 2009 = 100) || 100 || 112 || 107 || 91

Productivity (kW/employee) || 319 || 400 || 483 || 423

(Index 2009 = 100) || 100 || 126 || 151 || 133

Source: Europressedienst

(559)   Employment
for modules increased between 2009 and the IP by 39 %, while it decreased by 9
% for cells. However, it is noted that employment increased until 2011 and then
decreased during the IP for modules. For cells, employment increased until 2010
and then decreased during 2011 and IP. The total productivity showed positive
trends for modules and cells increasing by 34 % and 33 %. This is partly due to
the efforts of the Union industry to respond to the pressure of the subsidised
imports from the PRC.

(560)   Therefore, in line with the decrease in Union production of modules
between 2011 and the IP, employment for modules also decreased during the same
period. For cells, the employment increased until 2010 and then decreased in
2011 and in the IP while the Union production of cells grew steadily until 2011
and then started to fall.

(561)   Following final disclosure,
one party claimed that the methodology to establish total employment in the
Union during the period considered was incorrect. This party alleged that
wherever the employment rate of a specific Union producer was not available,
the average employment of those Union producers for which this information was
available was taken into consideration instead. This had to be rejected as the
methodology to establish total employment was different, i.e. in case
employment data for a certain Union producer was not available, this figure was
estimated on the basis of data of that same company from the previous year(s).
As mentioned above in recital (482) this methodology was verified and found
reasonable. Therefore, the claim was rejected.

4.5.2.4.  Magnitude of the amount of
the countervailable subsidies and recovery from past subsidisation or dumping

(562)   All subsidy margins are significantly above the de minimis
level. As regards the impact of the magnitude of the amount of the
countervailable subsidies on the Union industry, given the volume and prices of
imports from the country concerned, the impact can be considered substantial.

(563)   Since this is the first anti-subsidy proceeding regarding the
product concerned, no data are available to assess effects of possible past
dumping or subsidisation.

4.5.3.     Microeconomic indicators

4.5.3.1.  Prices and factors affecting
prices

(564)   The average sales prices of the sampled Union producers to unrelated
customers in the Union developed as follows over the period considered:

Table 7-a

Modules - average sales prices in the Union

|| 2009 || 2010 || 2011 || IP

Average sales price in the Union on free market (EUR/kW) || 2 198,75 || 1 777,15 || 1 359,35 || 1 030,83

(Index 2009 = 100) || 100 || 81 || 62 || 47

Cost of production (EUR/kW) || 2 155,02 || 1 599,44 || 1 400,13 || 1 123,60

(Index 2009 = 100) || 100 || 74 || 65 || 52

Source: verified questionnaire replies Table 7-b ||

Cells- average sales prices in the Union ||

|| 2009 || 2010 || 2011 || IP ||

Average sales price in the Union on free market (EUR/kW) || 1 525,09 || 1 160,99 || 777,62 || 474,91 ||

(Index 2009 = 100) || 100 || 76 || 51 || 31 ||

Cost of production (EUR/kW) || 1 647,10 || 1 021,67 || 1 057,56 || 745,61 ||

(Index 2009 = 100) || 100 || 62 || 64 || 45 ||

Source: verified questionnaire replies

(565)   Sales prices fell sharply i.e. by 53 % for modules and by 69 % for
cells during the period considered. Sales prices fell continuously throughout
the period considered, but the decrease in prices was particularly pronounced
during the IP where they collapsed to unsustainable levels. Over the period
considered the cost of production fell by 48 % for modules and by 55 % for
cells. The Union industry could neither benefit from its continuous efforts to
increase its cost efficiency nor from the impact of the decrease in cost of the
main raw material, polysilicon. This was mainly due to the increasing price
pressure of the subsidised imports which had a negative effect on the sales
prices of the Union industry which decreased even more than efficiency gains.
This can be seen in the negative trend of the Union industry’s profitability as
described in recital (579) below. Overall there was a significant decrease of
the average sales price and the cost of production of the like product with
devastating effect on Union industry’s profitability.

(566)   One
interested party contested the findings that the decrease of the average sales
prices had a devastating effect on the profitability of the Union industry. It
claimed that the average cost of the Union industry decreased equally and that
therefore a decrease in price is natural. However, as described in recital (565)
above, the investigation established that Union industry sales price decreased
even more than its average cost of production and therefore such decrease in
costs was not reflected in the Union industry’ profitability. It is therefore
confirmed that the decrease in sales price of the Union industry had a
devastating effect on the profitability of the Union industry and the claims in
this regard were rejected.

(567)   Another
party contested the conclusion in recital (138) to the provisional anti-dumping
Regulation that prices were at unsustainable levels in the IP, claiming that
this would be for market forces to decide. The same party also objected to the
conclusion in the same recital that the Union industry was not able to benefit
from cost decreases due to the price pressure of the subsidised imports. In
this regard, the Institutions observe the following: "unsustainable
level" refers to the fact that the Union industry was selling at loss, and
therefore could not survive in the long term. The question whether the price
level is sustainable is therefore only a question of the relationship between
production costs and prices. By "not being able to benefit from cost
decreases", it is referred to the fact that costs fell less quickly than
prices. Both those statements are backed up with evidence in recital (138) to the
provisional anti-dumping Regulation. Therefore, this argument had to be
rejected.

4.5.3.2.  Labour costs

(568)   The average labour costs of the sampled Union producers developed as
follows over the period considered:

Table 8-a

Modules- average labour costs per employee

|| 2009 || 2010 || 2011 || IP

Average labour cost per employee (EUR) || 38 194 || 40 793 || 41 781 || 42 977

(Index 2009 = 100) || 100 || 107 || 110 || 113

Source: verified questionnaire replies

Table 8-b ||

Cells - average labour cost per employee ||

|| 2009 || 2010 || 2011 || IP ||

Average labour cost per employee (EUR) || 49 677 || 49 357 || 49 140 || 49 350 ||

(Index 2009 = 100) || 100 || 99 || 99 || 99 ||

Source: verified questionnaire replies

(569)   Between 2009 and the IP, the average labour cost per employee for
modules continuously increased overall by 13 %. Regarding cells, the average
labour cost remained stable throughout the period considered and slightly
decreased by 1 % between 2009 and 2010 but then remained stable until the IP.
The overall increase of labour cost can be partly explained by the simultaneous
increase in productivity (modules and cells) and the evolution of inflation.

(570)   One
interested party claimed that there has not been any inflation during the
period considered and that therefore the overall increase of labour costs could
not have been caused by this factor.

(571)   In contrast to what was
claimed by the party concerned, the investigation revealed that there has been
inflation during the period considered and that the increase in labour cost, limited
to modules, can be explained by the inflation and the increase in productivity.

(572)   One interested party claimed
that the injurious situation of the Union industry was caused by the increase
in labour costs and the parallel decrease in productivity. However, first it should
be noted that labour cost remained stable in case of cells, while productivity
increased both for cells and modules. Therefore, the increase of the latter can
be explained by increased productivity. Moreover the investigation has shown
that labour costs do not represent a significant part of the cost of
production, as already cited in recital (203) to the provisional anti-dumping
Regulation. Therefore, this argument had to be rejected.

4.5.3.3.  Inventories

(573)   Stock levels of the sampled Union producers developed as follows
over the period considered:

Table 9-a Modules - inventories ||

|| 2009 || 2010 || 2011 || IP

Closing Stocks (in kW) || 28 612 || 40 479 || 74 502 || 65 415

(Index 2009 = 100) || 100 || 141 || 260 || 229

Source: verified questionnaire replies

Table 9-b

Cells - inventories

|| 2009 || 2010 || 2011 || IP

Closing Stocks (in kW) || 16 995 || 23 829 || 76 889 || 68 236

(Index 2009 = 100) || 100 || 140 || 452 || 402

Source: verified questionnaire replies

(574)   Stocks increased significantly i.e. by 129 % for modules and by 302
% for cells over the period considered. Concerning modules, stocks increased
continuously reaching very high levels in 2011 (by 160 %), while it decreased
in the IP but still remaining at very high levels in comparison with the
beginning of the period considered. Concerning cells, the development was even
more pronounced, with an increase in stocks between 2009 and 2011 more than 350
%. Likewise, the stocks decreased during the IP but remained at very high
levels in comparison with the beginning of the period considered.

(575)   The investigation showed that given the adverse current situation,
Union producers would tend to hold limited stocks for the like product, basing
their production on orders. Therefore, the increase in stocks for the like
product over the period considered is not a relevant factor in establishing if
the Union industry suffered material injury.

(576)   One
party argued that the presentation of the stock values in recital (141) to the provisional
anti-dumping Regulation was misleading as stocks were expressed in kW rather
than MW unlike the Union industry’s production volume.

(577)   Whether
stocks are expressed in kW or in MW as such was considered irrelevant in the
determination whether or not the Union industry suffered material injury. The
argument was therefore rejected.

(578)   After final disclosure,
several parties claimed that stocks should have been determined for the whole
Union industry and that the figures of only ten Union producers were not
representative. It is clarified that the stocks were considered as a
microeconomic indicator and should therefore be established on the basis of the
information collected on a per company basis, in this case from the sample of
Union producers considered as representative for the whole Union industry. The
above claim was therefore rejected.

4.5.3.4.  Profitability, cash flow,
investments and return on investments, ability to raise capital

(579)   Profitability and cash flow developed as follows over the period
considered:

Table 10–a

Modules - profitability and cash flow

|| 2009 || 2010 || 2011 || IP

Profitability of sales in the Union to unrelated customers (% of sales turnover) || 2 % || 10 % || -3 % || -9 %

Cash flow || 13 % || 10 % || 12 % || 3 %

Source: verified questionnaire replies

Table 10-b ||

Cells - profitability and cash flow ||

|| 2009 || 2010 || 2011 || IP ||

Profitability of sales in the Union to unrelated customers (% of sales turnover) || -8 % || 12 % || -36 % || -57 % ||

Cash flow || 75 % || 52 % || -0,3 % || -46 % ||

Source: verified questionnaire replies

(580)   Profitability
of the sampled Union producers was established by expressing the pre-tax net
profit of the sales of the like product to unrelated customers in the Union, as
the percentage of the turnover of such sales.

(581)   The
profitability decreased sharply and turned to losses over the period considered
for the like product. The profitability dropped by 11 percentage points for
modules and by 49 percentage points for cells.

(582)   Profitability
for the like product increased between 2009 and 2010 but then decreased
significantly in 2011 where Union industry realized losses and further
decreased significantly in the IP. Losses were particularly high for cells.

(583)   The
trend of net cash flow, which is the ability of the sampled Union producers to
self-finance their activities, likewise followed a negative trend between 2009
and the IP. Thus, decreasing by 10 percentage points for modules with a slight
increase in 2011, the highest decrease of the cash flow occurred between 2011
and the IP. The decline of cash flow for cells was more pronounced than modules
and reached significantly negative levels during the IP. Therefore, the cash
flow for the like product decreased over the period considered.

(584)   The figures below represent the evolution of investments and return
on investments of the sampled Union producers in relation to the total market
during the period considered:

Table 11-a Modules - investments and return on investments ||

|| 2009 || 2010 || 2011 || IP

Investments (EUR) || 12 081 999 || 50 105 017 || 64 643 322 || 32 730 559

(Index 2009 = 100) || 100 || 415 || 535 || 271

Return on investments || -15 % || 19 % || -15 % || -17 %

Source: verified questionnaire replies

Table 11-b

Cells - investments and return on investment

|| 2009 || 2010 || 2011 || IP

Investments (EUR) || 31 448 407 || 34 451 675 || 10 234 050 || 6 986 347

(Index 2009 = 100) || 100 || 110 || 33 || 22

Return on investments || -4 % || 10 % || -20 % || -19 %

Source: verified questionnaire replies

(585)   The
table above shows that the Union industry increased its investments by 171 %
for modules between 2009 and the IP. This was mainly linked to the significant
additions of capacity. However, during the same period, the Union industry
decreased its investments by 78 % for cells; the investments made were mainly
linked to R&D as well as improving and maintaining production technology
and process in order to improve efficiency. Since the Union industry could not
afford making additional investments for cells during the period considered,
the level of investments during the IP was rather low. As investments were
financed basically by cash flow and intercompany loans, the decrease in the cash
flow had immediate effect on the level of investments made.

(586)   The
return on investments (‘ROI’) was expressed as the profit in percentage of the
net book value of investments. ROI of the like product followed the similar
negative trends as the other financial performance indicators between 2009 and
the IP for all the three types of product. For cells, while there was an
increase in 2009 and 2010, ROI decreased significantly in 2011 reaching
negative levels. For modules, ROI was at negative levels throughout the period
considered, except in 2010 where it reached 19 %. Overall, it decreased during
the period considered reaching -17 % in the IP for cells, i.e. by 1 %, however
still remaining at significant negative levels, i.e. -19 %. Overall ROI
for the like product showed negative trends during the period considered.

(587)   The
ability to raise capital was analysed in relation to the total market and it
has been found that there was a constant deterioration of the ability of the
Union industry to generate cash for the like product and, consequently, a
weakening of the financial situation of the Union industry.

(588)   One interested party alleged
that investment figures as shown above were too low when compared to the
production capacity of the Union industry as shown in recital (538). In support
of this claim the party submitted to be aware of the investment made by one
Union producer in capacity increases which was at a much higher cost. The party
concerned concluded that therefore the established production capacity of the
Union industry must have been overestimated. It is noted that this claim was
not supported by any evidence, in particular as regards the investment made by
the Union producer in question. In contrast, the investment figures in the provisional
anti-dumping Regulation were based on actual and verified information from the
sampled Union producers. It should be noted that this claim was also based on
the comparison between the total investments of the sampled Union producers and
the total production capacity of the whole Union industry, which cannot be
considered an appropriate basis for comparison as not the total investments of
the whole Union industry was taken into consideration. Therefore, this argument
had to be rejected.

4.5.3.5.  Conclusion on injury

(589)   The analysis of the situation of the Union industry showed a clear
downward trend of the main injury indicators. Against a generally increasing
consumption, overall production increased for modules and cells in the period
considered. Although the volume of sales increased, the market share of the
Union industry shrank in the IP due to the higher increase of the consumption
during the period considered. Average sales price fell sharply throughout the
period considered, negatively impacting on all the financial performance
indicators such as profitability, cash flow, return on investments and ability
to raise capital.

(590)   Over the period considered, the overall Union industry's sales
volume increased. However, the increase in sales volumes of the Union industry
was accompanied by a tremendous decrease in average sales price.

(591)   During
the period considered, imports of the interested parties from the PRC increased
in terms of volumes and market share. At the same time, import prices continuously
decreased, undercutting significantly the Union industry’s average price on the
Union market.

(592)   Several
interested parties claimed that the Union industry and in specific the sampled
Union producers were performing well. It was claimed that the evolution of
certain injury indicators, namely production volume, production capacity, sales
and employment but even in some sampled producers’ profitability, were
increasing and would not show material injury. These allegations were not
confirmed by the results of the investigation, which has shown clear downward
trends of many injury indicators, relevant for the conclusion that the Union
industry suffered material injury.

(593)   In view of the above, the investigation confirmed in particular the
fact that the sales prices are below the production costs, thus having a
negative effect on the Union industry’s profitability, reaching negative levels
during the IP. It is concluded that should subsidised imports continue to enter
the Union market, the losses of the Union industry would be likely to lead to
the permanent discontinuation of any sizeable Union production of the like
product. This seems to be confirmed by the developments during and after the
IP, i.e. some companies has declared insolvency and/or stopped temporarily or
permanently production.

(594)   In the light of the foregoing, it is concluded that the Union
industry suffered material injury within the meaning of Article 8(4) of the
basic Regulation.

5.           CAUSATION

5.1.        Introduction

(595)   In accordance with Article
8(5) and (6) of the basic Regulation it was examined whether the material
injury suffered by the Union industry was caused by the subsidised imports from
the country concerned. Furthermore, known factors other than subsidised imports,
which might have injured the Union industry, were examined to ensure that any
injury caused by those factors was not attributed to subsidised imports.

(596)   Some interested parties
claimed that market conditions of the product concerned differ per Member State
and that therefore the causality analysis should be made at the level of each
Member State separately.

(597)   National support schemes
determine to a certain extent the size of the Member States’ markets. The
investigation has however also revealed that demand does not exclusively depend
on support schemes. Depending on geographical location (sun exposure) and the
electricity price at a given location, solar panels appear to have reached, or
were at least close to, grid parity (i.e. when the cost to produce solar energy
equals the cost to produce conventional energy), which means that certain
investments take place independently of support schemes. Therefore, it could
not be established that market conditions depend exclusively on support schemes
and this claim was therefore rejected.

(598)   Several interested parties
claimed that the causation analysis conducted did not separate, distinguish and
quantify the injurious effects of the subsidised imports from the effects of
other known factors which at the same time are injuring the Union industry.
Moreover, it was claimed that the Commission failed to undertake a collective
analysis of these other known factors.

(599)   In reply to this claim it
should be noted that the Commission, as per established practice, first
examined whether there is a causal link between the subsidised imports and the
injury suffered by the Union industry and secondly examined whether any of the
other known factors had broken the causal link established between the material
injury suffered by the Union industry and the subsidised imports. In this
analysis, the effects of the other known factors on the situation of the Union
industry were assessed, distinguished and separated from the injurious effects
of the subsidised imports to ensure that injuries caused by these factors were
not attributed to the subsidized imports. It was found that none of them had a
significant impact, if any, on the situation of the industry that could reverse
the fact that the material injury assessed must be attributed to the subsidised
imports. On these grounds the argument was dismissed.

(600)   Following the final
disclosure, several interested parties reiterated the above arguments. In this
regard it was claimed that the Commission should establish explicitly, through
a reasoned and adequate explanation, that the injury caused by factors other
than the subsidised imports is not attributed to these imports.

(601)   In this investigation, it
was concluded, after examining all the facts, that the subsidised imports taken
in isolation have caused material injury to the Union industry. In this
respect, quantifying the effects of other known factors was not possible and
therefore a qualitative assessment was carried out as set out in recitals (164)
to (222) to the provisional anti-dumping Regulation. In conclusion, it was
confirmed that the material injury of the Union industry was caused by the subsidised
imports. Indeed the effects of other factors on the Union’s industry’s negative
development were considered to be limited. It should be noted that, under
Article 8(5) and (6) of the basic Regulation, no obligation is imposed as to
the form of the attribution and non-attribution analyses which should be
carried out. On the contrary, under Article 8(5) and (6) of the basic
Regulation, those analyses must be carried out in such a way as to enable the
injurious effects of the subsidised imports to be separated and distinguished
from the injurious effects caused by other factors. The investigation did not
reveal any evidence that all other known factors which may have contributed to
the injury suffered, together or in isolation, broke the causal link between
the subsidised imports and the material injury suffered by the Union industry.
Given the above analysis, it was confirmed that other known factors were not
such as to reverse the finding that the material injury suffered by the Union
industry must be attributed to the subsidised imports. On these grounds these
arguments were dismissed.

(602)   Some interested parties claimed
that the national support schemes, the sun exposure and the electricity prices (including
regulatory charges) differ per Member State and that furthermore there are
different market segments in each market (the residential- installations of
less than 40 kW, commercial and industrial- installations between 40 kW and 1MW
and the utility market segment- installations between 1 MW and 10 MW). In view
of this, they claimed that the causation analysis should be conducted
separately for each Member State on the one hand and for the large-scale and
the residential segments on the other hand.

(603)   After the final disclosure
some interested parties reiterated their claim that the causation analysis
should be conducted on a per Member State basis, without however providing
further arguments or new evidence in this respect.

(604)   The investigation has shown
that sales and import prices are similar across the Union. It can therefore be
considered that there is indeed one market for the product under investigation.
The investigation did also not reveal that producers in each Member State or
region concentrated their activities in this specific market or that the subsidised
imports concentrated in one Member State or region. Moreover, none of the
interested parties argued that subsidization and injury should be analysed on a
per Member States basis which would however be a pre-condition for conducting a
separate causation analysis per Member State. The investigation did not reveal
any evidence that this would have been an appropriate approach, in particular
given that there were similar prices across the Union of the product under
consideration at Union level. Moreover, it is noted that the sun exposure can
be different in different regions of the same Member States, e.g. Southern
France has more sun exposure than Northern France, or different regions within
one Member State can have different support schemes (e.g. Belgium) and that
therefore the impact of these factors on the demand may vary from one region to
another within the same Member State. However, the differences in the
regulatory framework of each Member State and/or region and the differences in
conditions such as sun exposure do not warrant a separate causation analysis,
and thus separate injury and subsidization analysis. Therefore, these arguments
had to be rejected.

(605)   Another interested party
argued that while other factors are relevant, the national support schemes
remain the main factor in determining the demand. The same party also contested
that grid parity was reached at least in some locations arguing that prices of
modules increased since the IP while electricity prices decreased. It further
argued that, in any event, at least in certain Member States, the regulatory,
economic and technical conditions do not allow for the connection to the grid
and for those Member States it was therefore irrelevant whether or not grid
parity was reached. This party however did not provide any supporting evidence
for the above allegations. In any event the above arguments confirm that the
situation with regard to national support schemes as well as grid parity may be
different to a certain extent between Member States. Moreover, none of the
information submitted was of such a nature to show that an analysis separately
per Member State would be warranted. The arguments were therefore rejected.

(606)   Following the final
disclosure, the same interested party reiterated the claim and provided some
information allegedly showing the different market conditions per Member State
and per segment. However, the information submitted could not be considered as
conclusive as it consisted of a power point presentation without any supporting
evidence, and therefore, did not show that an analysis separately per Member
State would be warranted. The claim of this party was therefore rejected.

(607)   On this basis, it was
concluded that an analysis of the causation per Member State and/or region and
per segment would not correspond to market reality.

(608)   The
GOC claimed that the Commission has conducted the causation analysis in an
inconsistent manner as the injury analysis was done separately for modules and
cells, while the causation analysis did not separate between product types. In
this respect, it is noted that while the injury indicators were indeed shown
separately for each product type, the conclusions reached for each indicator
refer to the product under investigation as a whole. It is also recalled that
modules and cells are one single product and therefore the causation analysis
was conducted on this basis. Therefore, the claim was rejected.

5.2.        Effect of subsidised
imports

(609)   The
investigation showed that subsidised imports from the PRC increased
dramatically over the period considered, increasing their volumes significantly
by around 300 % for modules and around 400 % for cells and their market share from
[60 % - 65 %] in 2009 to [78 % - 83 %] in the IP for modules, and from [5
% - 10 %] in 2009 to [22 % - 27 %] in the IP for cells . Therefore, it is
confirmed that volume of imports and market share for the product concerned
increased dramatically during the period considered. There was a clear
coincidence in time between the increase in subsidised imports and the loss of
market share of the Union industry. The investigation also established that, as
mentioned in recital (527) above, the subsidised imports undercut the prices of
the Union industry during the IP.

(610)   The
investigation showed that the prices of the subsidised imports decreased by 64
% for modules and by 42 % for cells during the period considered and led to an
increase of undercutting. Against this price pressure, the Union industry
underwent considerable effort to decrease its production costs. Despite these
efforts the exceptionally low level of Chinese import prices forced the Union
industry to further decrease its sales price to unprofitable levels. Thus, the
profitability of the Union industry decreased dramatically during the period
considered and showed losses during the IP.

(611)   Based
on the above, it is concluded that the presence of Chinese imports and the
increase of the market share of subsidised imports from the PRC at prices
constantly undercutting those of the Union industry have had a determining role
in the material injury suffered by the Union industry, which is reflected in
particular in its poor financial situation and in the deterioration of most of
the injury indicators.

(612)   One interested party contested
that there was a sufficient correlation between the subsidised imports of the
product concerned from the PRC and the material injury suffered by the Union
industry. It was argued that this would be supported, on the one hand, by the
fact that from 2009 to 2010 the Union industry’s profit margin for cells
significantly increased (from loss making to 12 % profit) while Chinese imports
were 36 % lower priced than Union industry’ prices and doubled their market
share during the same period. On the other hand, between 2010 and 2011 Chinese
imports only gained 6 percentage points of market share, even though
consumption increased much more during the same period, while the Union
industry realised nonetheless a loss of 36 %. This party argued further that,
as regards the IP, imports of cells from other third countries were at the same
price level as Chinese imports but gained more market share corresponding to
the loss of market share of the Union industry.

(613)   The investigation showed
that there was a constant increase of Chinese market share for modules and
cells over the period considered (17 percentage points for modules, 17
percentage points for cells). Indeed, as mentioned above in recital (609), subsidised
imports from the PRC increased significantly while import prices decreased. In
parallel, the Union industry lost market share over the period considered and,
as described in recitals (589) to (593) above, all main injury indicators
showed a negative trend. Therefore it is confirmed that there is a clear
coincidence in time between the increase in subsidised imports and the loss of
market share of the Union industry.

(614)   The above mentioned
correlation in time was established for all product types separately. In
addition, the analysis of the impact of the imports on the Union industry’s
profit margin separately for each year of the period considered does not lead
to meaningful results as the existence of subsidy and material injury as well
as a causal link between them does not need to be established for each year
separately. The correlation between the subsidised imports and the material
injury is sufficiently demonstrated when analysing the developments over the
whole period considered.

(615)   It is also noted that the
profitability of the Union industry is one of the factors mentioned in Article
8(4) of the basic Regulation which should be investigated when examining the
impact of the subsidised imports on the Union industry’s situation. The fact
alone that the Union industry was profitable during a specific year does not
necessarily mean that it did not suffer any material injury. Moreover, the loss
of the market share of the Union industry should not correspond exactly to the
increase of the market share of the subsidised imports in order to establish a
causal link between the injury and the subsidised imports. Finally, other factors
(e.g. imports of other third countries or development of the consumption) which
could have had an impact on the injurious situation of the Union industry were
examined and addressed separately in recitals (619) to (732) below.

(616)   The
coincidence between the increasing subsidised imports in significant
quantities, which undercut prices of the Union industry and, the increasingly
precarious situation of the Union industry is a clear indicator of causation in
the present case, as established in recitals (609) to (611) above. The claims
with regard to the lack of any correlation between the subsidised imports and
the material injury suffered by the Union industry were therefore rejected.

(617)   Following the final
disclosure, the same interested party continued to contest the causation
analysis as the profitability of the Union industry was not analysed
specifically in relation to certain years (in particular 2010), but for the
whole period considered.

(618)   In this regard, it should be
noted that no valid conclusions can be drawn concerning causality by isolating
one specific year of the period considered while ignoring the development of
the Union industry during the entire period considered and its correlations
with the development of the subsidised imports. Such analysis can only lead to
a partial picture and no sound conclusions can be drawn therefrom. Thus, the
profitability rates that drove also other financial indicators that the Union
industry achieved during 2010, was high because of the particularly strong jump
in Union consumption, driven by very generous support schemes, that allowed
Union industry to have their strongest sales improvement that same year, but
only of a temporary nature and in any event not sustainable for this type of
industry. Therefore, this argument had to be rejected.

5.3.        Effect of other factors

5.3.1.     Imports from other third
countries

(619)   The
volume of imports from other third countries during the period considered for
modules increased by 19 % while the market share decreased over the period
considered from 18,4 % to 6,8 %. Taiwan is the second largest exporter after
the PRC.

(620)   The volume of imports from
other third countries for cells increased by 186 % during the period considered
which translated in an increase of market share from around 24 % in 2009 to
around 36 % during the IP. As for cells, Taiwan is second largest exporter
after the PRC, by far exceeding import quantities and market shares from the
other third countries, but still below those from the PRC.

(621)   The
import prices of third countries of modules and cells were on average higher
than the average unit price of the Chinese imports. The information available
as regards imports from Taiwan shows that the average import price for modules
was higher than the average Chinese import price for modules, while the average
import price for cells was in the same range as the average Chinese import
price for cells. However, since no detailed price information per product type
was available, the price comparison on an average basis can only be used as an
indication but no firm conclusions can be drawn on this basis. Throughout the
period considered, volume of imports of cells from Taiwan increased
continuously, resulting in a gain of market share of around 14 percentage
points. Therefore, even if it is acknowledged that imports of cells from Taiwan
may have contributed to the injury suffered by the Union industry, it cannot be
concluded that they broke the causal link between the subsidised imports from
the PRC and the injury suffered by the Union industry, as the import volume of
cells from the PRC was slightly higher than the import from Taiwan. As far as
the prices are concerned, although the average indicative prices are in the
same range, no conclusion can be drawn on that basis since no information are
available concerning the specific types of the imported cells. However, overall
for the product under investigation, despite their increase in market share,
the volumes were lower than the PRC and their price levels were generally
higher with the exception of cells during the IP. On these grounds, in
particular in view of the import volumes and market shares from other third
countries as well as their price levels, which are on average similar or higher
than those from the Union industry it can be concluded that third country
imports did not break the causal link between the subsidised imports and the
injury suffered by the Union industry.

(622)   Several interested parties
made comments following the final disclosure with regard to the findings
concerning imports from other third countries. However, these parties did not
bring into light new information and supporting evidence which could have
altered the relevant findings.

(623)   Those parties underlined in
particular the volume of imports of cells from Taiwan. However, the absolute
volume of imports of the product concerned from Taiwan (1132 MW) represents
only a very small share (less than 5%) of the overall Union consumption (21559
MW) and compared to imports from the PRC (15005 MW). Therefore, imports from
Taiwan have, if at all, only marginally contributed to injury of the Union
industry, and not broken the causal link.

Table 12

Imports and market shares from
other third countries

MODULES || 2009 || 2010 || 2011 || IP

Volume of imports from all other third countries (MW) || 1 003 || 1 702 || 1 385 || 1 195

(Index 2009 = 100) || 100 || 169 || 138 || 119

Market share of imports from all other third countries || 18,4 % || 14,0 % || 7,0 % || 6,8 %

Average import price EUR/kW || 2 385,34 || 1 852,23 || 1 430,90 || 1 218,41

(Index 2009 = 100) || 100 || 78 || 60 || 51

Volume of imports from Taiwan (MW) || 49 || 144 || 140 || 135

(Index 2009 = 100) || 100 || 294 || 286 || 276

Market share of imports from Taiwan || 0,9 % || 1,2 % || 0,7 % || 0,8 %

Average import price EUR/kW || 2 102,04 || 1 659,72 || 1 350,00 || 1 125,93

(Index 2009 = 100) || 100 || 79 || 64 || 54

Volume of imports from USA (MW) || 140 || 180 || 51 || 60

(Index 2009 = 100) || 100 || 129 || 36 || 43

Market share of imports from USA || 2,6 % || 1,5 % || 0,3 % || 0,3 %

Average import price EUR/kW || 2 400,00 || 1 872,22 || 1 431,37 || 1 233,33

(Index 2009 = 100) || 100 || 78 || 60 || 51

Volume of imports from rest of Asia (MW) || 720 || 1.140 || 1.029 || 879

(Index 2009 = 100) || 100 || 158 || 143 || 122

Market share of imports from rest of Asia || 13,2 % || 9,3 % || 5,2 % || 5,0 %

Average import price EUR/kW || 2 400,00 || 1 870,18 || 1 440,23 || 1 229,81

(Index 2009 = 100) || 100 || 78 || 60 || 51

Volume of imports from rest of the World (MW) || 94 || 238 || 165 || 121

(Index 2009 = 100) || 100 || 253 || 176 || 129

Market share of imports from rest of the World || 1,7 % || 2,0 % || 0,8 % || 0,7 %

Average import price EUR/kW || 2 404,26 || 1 869,75 || 1 442,42 || 1 231,40

(Index 2009 = 100) || 100 || 78 || 60 || 51

Source: Europressedienst

CELLS || 2009 || 2010 || 2011 || IP

Volume of imports from all other third countries (MW) || 510 || 884 || 1 100 || 1 457

(Index 2009 = 100) || 100 || 173 || 216 || 286

Market share of imports from all other third countries || 23,7 % || 26,6 % || 25,5 % || 36,2 %

Average import price EUR/kW || 1 166,67 || 1 072,40 || 751,82 || 553,88

(Index 2009 = 100) || 100 || 92 || 64 || 47

Volume of imports from Taiwan (MW) || 235 || 400 || 540 || 997

(Index 2009 = 100) || 100 || 170 || 230 || 424

Market share of imports from Taiwan || 10,9 % || 12,0 % || 12,5 % || 24,8 %

Average import price EUR/kW || 948,94 || 1 100,00 || 670,37 || 514,54

(Index 2009 = 100) || 100 || 116 || 71 || 54

Volume of imports from USA (MW) || 40 || 40 || 40 || 33

(Index 2009 = 100) || 100 || 100 || 100 || 83

Market share of imports from USA || 1,9 % || 1,2 % || 0,9 % || 0,8 %

Average import price EUR/kW || 1 350,00 || 1 050,00 || 825,00 || 636,36

(Index 2009 = 100) || 100 || 78 || 61 || 47

Volume of imports from Japan (MW) || 60 || 154 || 170 || 145

(Index 2009 = 100) || 100 || 257 || 283 || 242

Market share of imports from Japan || 2,8 % || 4,6 % || 3,9 % || 3,6 %

Average import price EUR/kW || 1 350,00 || 1 051,95 || 829,41 || 641,38

(Index 2009 = 100) || 100 || 78 || 61 || 48

Volume of imports from rest of the world (MW) || 175 || 290 || 350 || 282

(Index 2009 = 100) || 100 || 166 || 200 || 161

Market share of imports from rest of the world || 8,1 % || 8,7 % || 8,1 % || 7,0 %

Average import price EUR/kW || 1 348,57 || 1 051,72 || 831,43 || 638,30

(Index 2009 = 100) || 100 || 78 || 62 || 47

Source: Europressedienst

5.3.2.     Non subsidised imports from
the PRC

(624)   Non subsidised imports from
the PRC were carefully analysed and were found not to have any significant
impact on the situation of the Union industry, susceptible of breaking the
causal link established between the subsidised imports and the injury suffered
by the Union industry.

5.3.3.     Development of the Union
consumption

(625)   As mentioned in recital (509) above, Union consumption
increased by 221 % for modules and by 87 % for cells during the period
considered. Consumption reached a peak in 2011 and dropped during the IP while
still remaining far above the level at the beginning of the period considered
in 2009. The Union industry could not benefit from this increase in consumption
as its market share fell from 19 % to 13 % for modules and from 68 % to 38 %
for cells during the same period. At the same time, the market share of the PRC
was increasing sharply, until 2011 and then remained stable at significant high
level during the IP, when consumption fell. Therefore, in view of the fact
that, despite a decrease in Union consumption in the IP, the subsidised imports
from the PRC either maintained their market share (modules) or increased it
(cells) to the detriment of the Union industry over the period considered, it
cannot be concluded that the decrease in consumption was such as to break the
causal link between the subsidised imports and the injury suffered by the Union
industry. Moreover, the investigation showed that,
as the capacity of the Union industry was in any event much lower than the
levels of consumption, the shrinking consumption in the IP could not have had
an impact on the injurious situation of the Union industry.

(626)   Based
on the information available it is difficult to establish to what extend the
demand is driven by the Member States support schemes. Indeed, as mentioned
below in recital (632) a variety of support schemes exists and interaction
between those and demand is highly complex and therefore their precise impact
is difficult to quantify. However, the evidence available also indicates that
even in the absence of support schemes the demand for solar energy will
continue to exist and will even grow over time, albeit at lower levels than in
the context of support schemes. In this context, several parties argued that grid
parity had already been reached or nearly reached in some regions of the Union.

(627)   One interested party argued
that the imports from the PRC did not capture the entire increase in
consumption and that, while in the case of modules the Union industry lost
market share between 2009 and 2010, it still increased its profitability during
the same period. Furthermore, it was argued that in 2009 when imports for cells
from PRC had only 8 % market share, the Union industry still suffered 8 % loss.

(628)   As already
mentioned in recitals (609) to (616) above, despite the decrease in Union
consumption in the IP, the subsidised imports from the PRC either maintained
their market share (modules) or increased it (cells) to the detriment of the
Union industry over the period considered. Therefore, it cannot be concluded
that the decrease in consumption was such as to break the causal link between
the subsidised imports and the injury suffered by the Union industry. Moreover,
the investigation showed that as the capacity of the Union industry was in any
event much lower than the levels of consumption, the shrinking consumption in
the IP could not have had an impact on the injurious situation of the Union
industry. Therefore, this claim was rejected.

(629)   Another interested party
contested that the demand in the Union will continue to exist even in the
absence of the national support schemes. This party argued that there is a
correlation between demand and support schemes and that in the absence of such
schemes projects in the PV sector it would not be profitable anymore and
therefore the demand for solar panels will disappear as well. However, the party did not provide any evidence which could
devaluate the findings above under recital (626). In the absence of any new
information in this regard, this claim was rejected.

(630)   Following final disclosure, the
GOC argued that the fact that the Union industry’s capacity did in any event
not meet the Union demand is irrelevant since the sales volume of modules of
the Union industry decreased in line with the decrease in consumption and
reiterated that the decrease in consumption between 2011 and the IP caused the
material injury suffered by the Union industry. While indeed between 2011 and
the IP the Union consumption decrease and the sales volume of modules decreased
with a similar trend, this has to be seen in relation to the development of the
Chinese subsidised prices, significantly undercutting the Union industry
prices, thus forcing the Union industry selling at losses. In this regard it is
recalled, as mentioned in recital (111) to the provisional anti-dumping
Regulation that imports from the PRC either maintained their market share
(modules) or increased it (cells) when the consumption was decreasing. At the
same time Chinese import prices decreased significantly and substantially
undercut the Union industry’s sales prices. Therefore, this claim was rejected.

5.3.4.     Feed-in-tariffs ('FITs') as
the main example of support schemes

(631)   It has been claimed by
several interested parties that the cause of the injury suffered by the Union
industry was linked to the reductions in the feed-in-tariffs implemented by the
Member States. Those cuts had allegedly led to a decrease of the solar
installations and reduced demand for the product under investigation in the
Union market, thus causing material injury to the Union industry.

(632)   Member States introduced FITs, quota obligations with
tradable green certificates, investment grants and tax incentives to support
renewable energy generation. Support is also granted in certain Member States
from EU structural funds. The most frequently implemented support instruments
for solar energy were FITs. The analysis of the
Commission focused on this type of support scheme.

(633)   FITs are a financial support
instrument aiming to achieve mandatory national targets for the use of
renewable energy, as prescribed by the Directive 2009/28/EC on the promotion of
the use of energy from renewable sources. The level of support and the way FITs
operate vary by Member State. By means of FITs grid operators are bound to buy
solar energy at prices which ensure that solar energy producers (usually the
owners of the solar installations) recover their costs and earn reasonable
rates of return. FITs, as other support schemes, are in most cases also subject
to State aid control pursuant to articles 107, 108 TFEU, which ensures the absence
of overcompensation for electricity producers.

(634)   In spite of the national
differences, three phenomena could be observed as regards the evolution of FITs
in the Union: (i) the reduction of the FIT rates, (ii) the suspension of the
FIT scheme as a whole (Spain) and (iii) the introduction of capacity thresholds
(‘caps’) for the installations eligible for financing as well as overall caps
on the yearly installed new supported capacity at the Member State level. As
regards the caps, they appear to have been introduced mainly during 2012 and,
most likely, do therefore not have any effect on the consumption during the IP.
Consequently, the analysis focused on the recent FIT suspensions in Spain and
reductions of FIT rates in most Member States. It was analysed whether they had
an impact on the demand in the Union market and whether this could have caused
the material injury suffered by the Union industry. In this regard, it was
considered that the impact of the evolution of FITs with regard to the demand of
modules was also representative for the situation with regard to cells. Indeed,
as cells are indispensable for the production of modules and as they are not
used in other production processes, a decrease in demand for modules triggers
automatically a decrease in demand for cells.

(635)   While
the investigation confirmed the link between the evolution of FITs and
consumption, the investigation established that the decrease in consumption
between 2011 and the IP did not contribute to break the causal link between the
subsidised imports from the PRC and the material injury suffered by the Union
industry as described in detail in recital (625) above. Indeed, the
investigation showed that while the situation of the Union industry was
deteriorating, the exporting producers were able to maintain their high market
shares for modules (80 %) and even increased their market shares slightly for
cells (from 20 % in 2011 to 22 % during the IP). In addition it should be noted
that the average price of modules charged by the Union industry dropped by 53 %
over the period considered, mainly due to the significant increase of
subsidised imports and the substantial price pressure they exerted on the Union
market. Therefore, the loss in profitability suffered by the Union industry
cannot be mainly attributed to the FIT cutbacks.

(636)   Consequently,
it is acknowledged that FITs generated demand for solar energy and that recent
FIT suspensions (as in Spain) and reductions in other Member States lowered the
consumption for the product under investigation during the IP, thus possibly
having contributed to the injury suffered by the Union industry. However, the
decrease in consumption during the IP was not such as to break the causal link
between the subsidised imports and the injury suffered by the Union industry.

(637)   Several parties argued that
FITs cutbacks rendered the solar investment opportunities unattractive for
investors and thus lowered the demand for the product concerned in the Union.

(638)   While
the investigation confirmed a link between the FIT rates and the level of
investments in the solar industry, it also showed that investments in the solar
energy are less dependent in regions with high sun exposure where production of
solar energy is more efficient and in regions with high electricity prices.
Indeed, showed that investments are still being made (e.g. in Spain) in spite
of the suspension of the FIT scheme. Moreover, the investigation showed that
solar energy investment opportunities still remained attractive even with lower
FIT rates. On the basis of the above, this claim
was rejected.

(639)   Several parties claimed that
the FIT developments exercised a strong downward pressure on prices and
therefore on the profitability of the Union industry. One interested party claimed
that only the impact of the development of FITs on the demand was examined,
while the impact on prices should also have been analysed instead. In the same
context, several interested parties argued that most of the Member States
implemented major cutbacks already in 2010 thus putting a downward pressure on
the prices for modules.

(640)   In
respect of this claim it should be noted that the Member States implemented FIT
cutbacks at different moments in time and at different speeds and that drawing
a general picture for the entire Union is rather difficult. Irrespective of the
moment when the FIT rates reached very low levels, the significant decrease in
the Union prices and profitability during the period considered cannot be
solely or mainly explained by the reduction of FITs. First, on the basis of the
information collected for Germany and Italy that represented together around
75% of the Union consumption in 2011, the drop in the average sales price was
more pronounced than the decrease in the FIT rates during the IP. Second, the
evidence collected shows that, for some countries such as Italy, even in the
context of very generous FIT rates, the Union industry had to decrease
significantly their prices. Finally, during the IP, the Union industry had to sell
at prices below their cost of production, which was mainly a consequence of the
fact that the Chinese exporting producers had 80% of the Union consumption and
therefore the power to influence the price-setting mechanism.

(641)   The
investigation further established that up to 2011 the higher FIT rates together
with the decrease in the prices of modules in the Union rendered the
investments in solar energy extremely attractive as investors were earning very
high rates on return. Therefore, this resulted in a high number of investments
and consequently high demand of solar panels. As a consequence of the increased
demand, the total amount of FITs paid increased significantly and most Member
States revised the existing FIT schemes downwards to avoid inter alia an
increase of electricity costs. This shows that FIT cutbacks may also have been
the result of the decreasing prices and not vice versa. Therefore, this claim
was rejected.

(642)   After final disclosure one
party claimed that there was a contradiction between the recital (640) above, that an assessment of the demand for the
Union as a whole is difficult, and the recital (608)
above stating that a causation analysis per Member State would not lead to
meaningful results. In this respect, it is clarified that in the assessment
made as described in recital (640) above, reference is made to the difficulty to
draw a general picture of the FIT developments for the entire Union and not to
the Union demand as claimed by the interested party. As a consequence, it
follows that no contradiction exists between the two recitals and therefore the
claim was rejected.

(643)   After final disclosure, one
party claimed that even in the context of high FIT rates, the module price may
decrease significantly due to technological development, economies of scale,
cost reductions and growing global production capacity. In respect of this
claim, it is noted that the evidence collected shows that the Italian producers
had to reduce their prices below the cost of production even when FIT rates
were high. While the factors mentioned above may indeed have had an impact on
the average costs they cannot explain why Union producers had to reduce their
prices below their cost of production. Therefore, it is concluded that it was
mainly the subsidised imports from the PRC that pushed the prices to
unsustainable levels and this claim was rejected.

(644)   After final disclosure, one
party claimed that the conclusion drawn in recital (641) above, that FIT
cutbacks may have also been the result of the decreasing prices and not vice
versa, is not supported by any evidence.

(645)   It is noted that the
conclusions drawn in recital (641) above were based on the information
available during the investigation and the scenario described was indeed
considered as reasonable given the circumstances in this specific market.
Therefore, this argument was rejected.

(646)   After final disclosure, one
party disagreed with the conclusion that the downward price pressure on Union
producers was mainly exerted by the subsidised imports and claimed that, to the
contrary, it was the FIT cutbacks that forced the Union producers to reduce
their prices. The same party reiterated that when FITs were reduced, the PV
system prices decreased in line with the decrease in FITs so that costs for
project developers do not increase, which ultimately caused the price pressure
on the Union producers.

(647)   Since no conclusive evidence
was brought in support of these claims, the Commission maintained its analysis
and conclusions as stated in recitals (640) to (641) above.

(648)   The same party claimed that
markets are driven by the development of FITs and provided information showing
the number of PV installations for the years 2012 and 2013 in the UK. The
information provided by this party was a publication of the UK government based
on the weekly registrations in the UK Central FiT Register (CFR). It is noted
that this information related mostly to a period outside the IP and referred
only to one Member State, while the current investigation focused on the
situation of the Union market as a whole. In any event, it is not contested
that FIT levels influence demand, as the profitability of investments in
locations with less solar radiation depends on the FIT level. However, in order
to show that the level at which FIT were set during the IP has caused the
injury, interested parties would have had to show that a price increase of the
Union producers to the non-injurious level would have meant that the Union
producers would not have been able to sell the product concerned because
investments into PV systems would not have been viable at those price levels.
No such evidence has been provided. This argument was therefore rejected.

(649)   Several parties claimed that
in the context of the low FIT rates, investments in PV projects were
economically viable only when supplied with the lower priced solar panels
imported from the PRC. Therefore, it was argued that the FIT cutbacks caused
material injury to the Union industry. Another party argued that the level of
the FIT rate influences the price setting mechanism for modules.

(650)   It should be noted that the
cost of a module at which a project would still be economically viable varies
by Member State or by region in function of numerous factors such as FITs,
other regulatory incentives, sun exposure, conventional electricity prices,
etc. In addition, the investigation showed that current installations depend
less and less on the FITs as PV grid parity is likely to have been reached for
certain types of installations in several regions in Europe, such as a large
portion of Italy, Spain, Portugal, southern France and Greece. On the above
grounds, the claims made in this regard were rejected.

(651)   One interested party claimed
that the Commission did not investigate whether Union industry failed to
anticipate that government support schemes would be abruptly withdrawn or
decreased. No arguments were brought in support of this claim. However, it
should be noted that, based on the evidence collected, there is no information
indicating that the Union industry responded to the market signals (i.e.
development in consumption) and other available information (i.e. reduction in
support schemes) in an unreasonable way. Therefore, this claim was rejected.

(652)   One interested party argued
that the FIT cutbacks caused Union industry sales decline because investments
had been viable only at the affordable Chinese prices. The evidence collected
in fact shows only a slight decrease in the sales of the Union industry during the
IP, in contrast to what it would be expected had the PV projects been feasible
only with Chinese modules. On the contrary, the sales of module of the Union
industry increased until 2011 and then slightly decreased in the IP, following
the same trend as of the consumption. Therefore, this claim was rejected.

(653)   One interested party argued
that the decrease in FITs forced Union industry to decrease their prices to
keep the interests of the investors in PV energy and to keep developing demand
and growth.

(654)   The investigation showed
that the Union industry was forced to decrease its prices mainly due to the
pressure of the subsidised imports and not to the FIT cutbacks. This is
indicated by the fact that the most significant decrease in the prices of the
Union industry occurred in 2010 and 2011, before the major FIT cutbacks took
place. Indeed, the increase in subsidized imports from the PRC significantly
undercutting the Union industry’s prices forced the Union industry to cut down
their prices to increasingly low levels. On these grounds, the claim was
therefore rejected.

(655)   Another interested party
argued that the findings as set out in recitals (174) and (175) to the provisional
anti-dumping Regulation that the FIT changes did not break the causal link has
no factual or legal basis and is inconsistent with Article 8(5) of the basic
Regulation because the Commission failed to assess the level of injury caused
by the FIT reductions and because it considered that the significant drop in
the Union industry’s price had been a consequence only of the subsidised Chinese
imports. The same party argued that the decrease in the price of modules and
cells was a global phenomenon and not due to the pressure of the Chinese
imports.

(656)   In respect of the claim that
the Commission failed to assess the level of injury caused by the FIT cutbacks,
reference is made to recitals (628) and (629) above as well as (640) and (641),
where the Commission concluded that neither the decrease in demand nor the
impact of FITs on Union prices were as such as to break the causal link between
the injury suffered by the Union industry and the subsidized imports from the PRC,
irrespective of whether and to which extent they were possibly caused by the
FITs cutbacks. Therefore, the claim that the Commission’s findings have no
factual basis was rejected. As regards the claim that the decrease in the price
of modules and cells was a global phenomenon, reference is made to recitals (619)
to (621) above where import volumes and prices from other countries than the
PRC into the Union are assessed. While indeed there was a global downward trend
in the prices of modules and cells, the subsidized import prices from the PRC
have exacerbated the downward trend to loss making levels. On the basis of the
above, this claim was rejected.

(657)   In summary, FITs have been
an important factor for the development of the PV market in the Union and the
evolution of consumption of the product under investigation was influenced by
the existence of the FITs. However, the investigation showed that the
consumption did not decrease significantly despite important FIT cutbacks. Furthermore,
the investigation showed that the decrease in Union prices did not occur mainly
due to the FIT cutbacks. Therefore, it is concluded that the developments of
FITs were not such as to break the causal link between the subsidised imports
and the material injury suffered by the Union industry.

5.3.5.     Other financial support
granted to the Union industry

(658)   Some interested parties
claimed that the material injury suffered by the Union industry was due to a
decrease of financial support granted to the Union industry. In support of this
claim, information was provided based on subsidies granted to one of the Union
producers prior to the period considered (between 2003 and 2006).

(659)   The evidence provided did
not reveal any link between the material injury suffered by the Union industry
and any alleged subsidy received by one of the Union producers during the
period preceding the period considered. Moreover, as this information predates
the period considered, it seems to be irrelevant. Therefore, no link could be
established between any alleged subsidy received by the Union industry and the
material injury suffered. On this ground, the argument was rejected.

5.3.6.     Overcapacity

(660)   It has been claimed that the
material injury suffered by the Union industry was due to an overcapacity in
the Union market and in the global market in general. It was also argued that
the overcapacity in the global market led to the consolidation of the Union
industry that is currently taking place and that any injury suffered was a
consequence of too many production facilities. Moreover, several interested
parties claimed that the material injury suffered by the Union industry was
linked to the self-inflicted overexpansion of capacity of the Union industry.
On the contrary, some interested parties claimed that the injury suffered by
the Union industry is due to the Union industry’s failure to make the necessary
investments in capacity additions.

(661)   While the Union industry
indeed increased its production capacity, its total production volume did not
cover the increasing consumption levels in the Union market during the period
considered. Thus, the increase of the Union industry production capacity was
reasonable and followed market developments, i.e. the increase in consumption.
It cannot therefore be considered as a cause of the injury suffered.

(662)   Likewise, on this basis, the
argument that the Union industry did not invest in capacity expansion was not
confirmed during the investigation. To the contrary however, as mentioned
above, throughout the period considered the Union industry progressively
increased capacity and had available excess capacity throughout the period
considered, indicating that it was capable of supplying additional demand.
Therefore, this argument had to be rejected.

(663)   Some interested parties
claimed that all operators in the market, including the ones in the downstream
and upstream sectors were in a difficult situation which was due to the
overcapacity in the global market and the resulted change of the market. In
this regard it was argued that the product under investigation has become a
commodity where individual producers are not able anymore to set prices but
where prices are subject to worldwide demand and supply. It was alleged that
this situation has caused the material injury of the Union industry rather than
the subsidised imports.

(664)   The investigation confirmed the
existence of overcapacity in the global market, mainly originating in the PRC.
Concerning the market change that would allegedly bring the product under
investigation to be a commodity, this would not justify unfair price behaviour
and unfair trade practices. In this respect, it should be noted that the Union
industry has been producing and selling the product under investigation for
more than 20 years, while the PRC industry of the product concerned developed
only recently (around mid of last decade), mainly attracted by the
feed-in-tariffs and other policy incentives in Union and the subsequent
increase in demand. On these grounds, the arguments above were rejected.

(665)   One interested party claimed
that the overcapacity led to price rationalization. In this regard, it should
be noted, on the one hand, that the overcapacity led in fact to a ‘race to the
bottom’ and the suppression of the prices of Union industry, which on average
exceeded the reduction of the costs of production. On the other hand, the
capacity increases by the Union industry followed the market developments and
were considered reasonable. Moreover, the increase in production capacity of
cells was at a lower level than modules. The claim in this regard had therefore
to be rejected.

(666)   Another interested party
claimed that the injury suffered by the Union industry is due to the Union
industry’s focus only on specialized investments and its failure to make the
necessary investments in capacity additions and cost reductions. Likewise, this
claim could not be confirmed by the findings of the investigation which showed
that the Union industry increased its production capacity and efficiency during
the period considered. This claim was therefore rejected.

(667)   Moreover, an interested
party claimed that the Union industry increased its production capacity in
spite of already low capacity utilisation rates, thus resulting in self-inflicted
injury. However this claim was based on the comparison between the trend of
investments of the sampled Union producers and the trend of the capacity
utilisation of the whole Union industry, which is not an appropriate basis for
comparison. Furthermore, the investigation showed that the Union industry had
not expanded its production capacities on a scale which exceeded the
development of Union consumption, therefore this argument was rejected.

(668)   Moreover, the evidence
collected indicates that through investments in new machinery, the Union
industry could reduce its cost of production and become more cost competitive. Therefore,
this argument had to be rejected.

(669)   Following the final
disclosure, some interested parties contested that the capacity additions of
the Union industry were reasonable and followed market developments and in
particular the development of the Union consumption. However, as far as modules
are concerned the production capacity increased by 106%, while the Union
consumption increased by 221% over the period considered, i.e. more than
double. Likewise, as far as cells are concerned, the production capacity
increased by 39%, while the Union consumption increased by 87% during the
period considered. This shows that the increase in capacity was substantially
below the increase in consumption and can therefore not be considered as unreasonable
given that there never was overcapacity in the Union. Moreover, the analysis
whether the capacity additions were reasonable should not be based on a year to
year analysis, but should take into consideration the trend during the whole
period considered. Thus, capacity additions will typically only become fully
operational after a certain period of time after the investment made and the
isolated analysis of one year may lead to a distorted picture. This argument
was therefore rejected.

5.3.7.     Impact of raw material
prices

(670)   Several interested parties
claimed that the material injury suffered by the Union industry was linked to
the evolution of prices of polysilicon, the main raw material for the
production of wafers. It was argued that the Union industry concluded long term
fixed priced supply contracts and could therefore not benefit from the decrease
in polysilicon prices during the period considered.

(671)   The investigation showed
that although the Union industry had long term supply contracts for
polysilicon, the terms of these contracts were mostly renegotiated based on the
price developments of polysilicon and contract prices reached levels close to
or sometimes even lower than prices on the spot market.

(672)   Some interested parties
argued that the Union industry or at least part of it could not benefit from
the decrease in prices of polysilicon, during the IP, because of long term
contracts for raw material. These parties claimed that the renegotiations or
termination of long term contracts of polysilicon and/or wafers resulted in
penalties. To support this argument, these parties provided press articles
reporting that some Union producers were facing litigation or that they
terminated their contracts. Some parties provided information allegedly
confirming that the long term contracts could not be re-negotiated.

(673)   Polysilicon is the main raw
material for the wafers producers. The investigation revealed that polysilicon
prices increased in 2008 when they reached their peak at around 500$/kg, but
decreased again in 2009 reaching about 50-55 $/kg at the end of 2009 with only
a slight upwards trend in 2010 and early 2011. Prices dropped significantly
during the IP resulting in the 30$/kg (JRC Scientific and Policy Reports, PV
Status Report 2012). It should be noted that the impact of polysilicon prices
on the Union industry could only be rather marginal as any effect on the cost
of production of cells and modules was diluted through the value chain.
Moreover, the above mentioned press articles referred to post-IP developments,
which did not affect the situation of the Union industry concerned during the
IP, and cannot therefore be taken into account. It can be confirmed that the
Union industry was indeed able to renegotiate not only the prices of the
long-term contracts but also any contractual penalties relating to these
long-term contracts.

(674)   One interested parties
argued further that it is sufficient that only some Union producers have been
affected by the long term contracts and that the situation of the overall Union
industry is irrelevant. It claimed that higher costs do not necessarily have to
affect all operators in the same way. This argument ignores the finding that
overall, for the Union industry, the average polysilicon prices were in many
cases not found to be higher than the market prices or than the spot prices and
that therefore the issue whether higher costs affect all or only few operators
was not considered pertinent. This argument was therefore rejected.

(675)   Another interested party
requested that the Commission separate, distinguish and quantify the effects of
each factor having an impact on the situation of the Union industry; in
particular the effect of the significant drop in polysilicon prices should be
considered separately. In this regard, it was argued that it was the decrease
in the polysilicon prices rather than the price pressure from the Chinese
imports that caused the decrease in sales prices. As far as the Union industry
is concerned its average selling prices decreased much further than the
decrease of the average cost of production, on which the decline of raw
material prices could have an impact. This argument was therefore rejected.

(676)   Following the final
disclosure, some interested parties reiterated that the impact of the decrease
of polysilicon prices on the Union industry’s cost was not limited or diluted
through the value chain as concluded in the investigation. However, as already
mentioned in recital (255) above, polysilicon is the main raw material for
wafers producers, thus any impact on the production cost of cells or modules
was found to be diluted in the value chain. The interested parties did not
provide any evidence which could have devaluated this finding. Moreover, the
investigation showed that the decrease of polysilicon prices over the period
considered was reflected in the average cost of production of cells and modules
of the sampled Union industry which decreased to a similar degree than the
polysilicon prices. One interested party questioned the impact of alleged
penalties that the Union industry had to pay due to the re-negotiation of the
supplier contracts. In this regard, it cannot be excluded that some producers
may have had to pay penalties for the cancellation of wafers supply contracts
during the period considered. However, the Commission did not find any evidence
that these penalties could have had an effect on the situation of the Union
industry as a whole or would be representative. Such evidence was also not
provided by the interested party in question. While it can therefore not be
completely excluded that penalties could have had a certain negative impact on limited
number of Union producers, the overall impact on the Union industry is at best
marginal and hence could not break the causal link between the subsidised imports
and the material injury suffered by the whole Union industry. Therefore, these
arguments had to be rejected.

(677)   Another interested party
claimed that the decrease of sales prices of the product under investigation in
the Union is partly due to the reduction in the price of polysilicon. However,
in this regard, it should be noted that the investigation showed that the
imports from the PRC were subsidised and substantially undercutting the prices
of the Union industry. The price decrease therefore goes beyond the reduction
in production costs that can be explained by the decrease in the raw material
prices. If the price decrease was merely the effect of the decrease of the raw
material prices, the Union industry would not have been forced to decrease
their sales prices below their cost of production. Therefore, this claim has to
be rejected.

(678)   Another interested party
reiterated that the litigation of one Union producer after the IP may has
affected the situation of at least this Union producer already during the IP.
This party did not explain however how and to what extend such event that
occurred after the IP could indeed have had an effect on this producer’s
situation during the IP. Likewise, the investigation did not reveal any
evidence showing such effects. Therefore this claim had to be rejected.

(679)   Moreover, the same
interested party questioned the above mentioned findings, as allegedly no
evidence was shown. However, the findings of the investigation were based on
facts and positive evidence, non-confidential versions of which were available
to all interested parties.

(680)   On the basis of the above,
it is concluded that even if some specific Union producers may have been
affected by long term contracts, the Union industry, overall, did not suffer
from these long term contracts and was able to fully benefit from the price
decrease in raw material prices. The long term contracts were therefore not
found to break the causal link between the subsisdised imports and the material
injury suffered by the Union industry.

5.3.8.     Self-inflicted injury:
impact of automation, size, economies of scale, consolidation, innovation, cost
efficiency, imports of the Union industry

(681)   Several
interested parties claimed that the injury suffered by the Union industry was
due to the high degree of automation of the production process. It was claimed
that the small-scale producers had a disadvantage compared to the larger
vertically integrated producers and therefore any injury suffered by the small
scale producers cannot be attributed to the subsidised imports. In this context
it was also claimed that in any event, overall, the Union industry was of a
small size and therefore was not able to benefit from economies of scale.

(682)   The
investigation showed that also the small-scale producers in Union market had a
high level of automation in their production process with a positive effect to
their production costs. Most Union producers have specialised in one part of
the production process (cells or modules), which, through specialisation,
increased their competitiveness with regard to the specific product type they
were producing. The argument that impact of the high degree automation caused
the injury suffered by the Union industry, had therefore to be rejected.

(683)   Some interested parties
claimed that the price pressure resulted in the consolidation of the Union
industry and the Chinese industry, the latter being the cause of the material
injury suffered by the Union industry. However, the investigation showed that
the consolidation was rather a consequence of the subsidised imports and the
unfair trade practices. Furthermore, this party did not support with any
evidence to what extend the consolidation process could have been the cause of
the injury suffered.

(684)   Moreover,
it was claimed that the lack of vertical integration of the Union industry is
the cause of the injury suffered. In general the vertically integrated
producers in normal market conditions should have more security over their
supply chain. However, the investigation showed that the advantage of vertical
integration by part of the Union industry that was vertically integrated could
not be fully exploited as the price pressure from subsidised imports was
extremely high. Moreover, the Union industry, even the vertically integrated
Union producers, due to the subsidized imports could not fully benefit from
high capacity utilisation rates to achieve economies of scale. Furthermore, the
investigation did not reveal any correlation between vertical integration and
better profitability rates, as the high price pressure has altered this
correlation.

(685)   Some interested parties
claimed that the Union industry lacked technical innovation as well as
investments in new technology. However, the investigation did not bring to
light any factual evidence confirming these allegations. To the contrary, the
investigation showed that the majority of the investments made by the Union
industry were dedicated to new machinery and R&D and that there are no
meaningful differences in technology between the products world-wide.

(686)   Moreover, one interested
party claimed that the material injury suffered is due to the poor project
execution (failed projects). In this respect, it should be noted that the
argument was not substantiated. In addition, any failed project could rather be
considered as a consequence of the subsidised imports. The argument had
therefore to be rejected.

(687)   Several interested parties
claimed that the Union industry was not able to rationalize its costs in time
to respond to the developments in the world market. Other parties claimed that
labour and overhead costs are higher in the Union than in the PRC.

(688)   The investigation showed
that the cost of production of the Union industry was steadily decreasing
during the period considered. Productivity increased for modules and cells. As
mentioned above, due to the surge of subsidised imports from the PRC and the
consequent significant price pressure on the Union market, the Union industry
was not able to benefit from the reductions in cost.

(689)   It is noted that the
exporting producers in the PRC do not enjoy any comparative advantage with
regard to raw materials (polysilicon) and the machinery used as both were
mostly imported from the Union. As far as labour and overhead costs, including
depreciation are concerned, they represented on average less than 10 % of the
total cost of a module in the IP and are not considered to have played any
significant role. As far as electricity costs are concerned, they represented
on average less than 1 % of the total cost of a module in the IP and are not
considered to have played any significant role. Moreover, the claim that the
Chinese were using the newest equipment was not substantiated.

(690)   Moreover, it was claimed
that some Union producers sourced cells and/or modules from the country
concerned, and re-sold those products on the Union market as their own. Injury
resulting from these transactions should not be attributed to the subsidized imports.
However, the investigation revealed that imports from the Union industry of the
product concerned were complementary in nature as well as limited in terms of
volume when compared to the total Union production and therefore their effect,
if any would only be marginal and could not be considered breaking the causal
link between the subsidized imports and the injury suffered by the Union
industry.

(691)   Therefore, in order to match
the decreasing price trend of the imports from the PRC, the Union industry had
to make considerable efforts to rationalize its cost of production. Despite the
efforts of the Union industry, this cost rationalization could not be reflected
in the sales price due to the significant undercutting exerted by the
subsidised imports.

(692)   Certain interested party
claimed that the injury suffered by the Union industry was due to the Union
industry’s lack of sufficient economies of scale. It was argued that
small-scale producers had a disadvantage compared to larger vertically
integrated producers and therefore any injury suffered by these producers
cannot be attributed to the subsidised imports. Another interested party argued
that the automation of the production process is costly and that therefore
economies of scale are even more important to reduce the cost of production.

(693)   The investigation showed
that the Union industry, even the larger and vertically integrated ones, due to
the subsidised imports, could not fully benefit from high capacity utilization
rates to achieve economies of scale. In any event, the investigation did not
reveal any correlation between size, vertical integration and better
profitability rates, as the high price pressure from subsidised imports has
altered this correlation. The investigation has showed that the benefit of
economies of scale no longer existed in a market where the utilization rates
were low, which was also true for the Chinese producers. Therefore, these
arguments were rejected.

(694)   Furthermore, one interested
party claimed that investors and banks would not finance projects if the module
manufacturer is too small, as larger producers provide better guarantees and
are more ‘bankable’. In other terms, investors and banks are reluctant to
finance PV related projects using modules produced in the Union. However, the
investigation showed that any possible preference of investors and banks to
finance Chinese producers which have larger production capacities is the result
of the distortion that subsidised imports have created on the Union market. As
mentioned above, the size of the production lines does not play a role if
utilisation rates remain low. Therefore, this argument was dismissed

(695)   One interested party claimed
that the Union industry had an unfavourable cost structure compared to its
Chinese competitors, as the latter enjoyed lower labour, electricity and
depreciation costs, and in addition had the newest equipment. However, the
party concerned was unable to provide new information or supporting evidence that
could reverse the findings of this investigation in this regard. In particular,
the claim that the Chinese producers were using the newest equipment was
addressed by the findings in recital (203) to the Provisional anti-dumping Regulation,
stating that the exporting producers in the PRC did not enjoy any comparative
advantage, in particular because machinery and equipment was imported from the
European Union. The above claims were therefore rejected.

(696)   Another party claimed that
the Chinese enjoyed a comparative advantage with regard to polysilicon prices
and to economies of scales which resulted in lower cost of the machinery. This
party did not provide any new information or supporting evidence in this
regard. The claim of this party had therefore to be rejected.

(697)   Moreover, one interested
party claimed that some Union producers sourced cells and/or modules from the
country concerned, and re-sold those products on the Union market as their own.
It requested that injury resulting from these transactions is not attributed to
the subsidised imports. However, the investigation revealed that imports from
the Union industry of the product concerned were complementary in nature as
well as limited in terms of volume when compared to the total Union production
and therefore their effect, if any, would only be marginal and could not be
considered as breaking the causal link between the subsidised imports and the
injury suffered by the Union industry.

(698)   One unrelated importer
argued that the fact that the number of employees increased should be
considered in the analysis. In respect of this claim, it is noted that
employment increased between 2009 and 2011 for modules and then decreased
during the IP. For cells, the employment increased until 2010 and then
decreased in 2011 and further decreased in the IP. It is further noted that for
modules, employment followed the trend of the Union production. For cells, as
the Chinese imports increased their market share during the entire period to
the detriment of the Union industry, the Union industry could not benefit from
the growing consumption as expected. Therefore, the employment decrease in 2011
and in the IP corresponds to companies that either had become insolvent or
stopped their cell production.

(699)   Following the final
disclosure one interested party reiterated that the injury suffered by the
Union industry was due to the small scale and the lack of economies of scale.
As already explained in the recital (682) above and in recitals (195) and –(196)
to the provisional anti-dumping Regulation, even in the global market, the size
and therefore the benefit of economies of scale cannot longer exist where the
utilization rates were generally low, and where enormous overcapacities existed
world-wide. Therefore this claim had to be rejected.

(700)   Moreover, the same party
reiterated that the injury suffered by the Union industry was due to the
inability of the Union industry to realize any cost advantage. This party
claimed that this was in particular due the fact that most of the Union
producers were vertically integrated. However, this party did not provide any
further information to what extend the fact that producers are vertically
integrated could have had a negative impact on their cost structure. Therefore this
claim had to be rejected

(701)   On these grounds, all the
above mentioned arguments had to be rejected.

5.3.9.     Competition from thin film
PV products and other PV technologies

(702)   Several interested parties
claimed that the injury suffered by the Union industry was caused by the
competition from thin film PV products and other PV technologies, as these
technologies were interchangeable and with same end use. It was also argued
that thin film was competing with the product under investigation especially
for ground-mounted and commercial/industrial rooftop systems, which constitute
a substantial part of the total Union PV market.

(703)   The
investigation showed that thin film PV products are produced from different raw
materials and do not use crystalline silicon wafers. In general, they have much
lower conversion efficiencies and a lower wattage output than crystalline
silicon modules. As a result, they cannot be used on restricted areas such as
roof-tops, i.e. they are not fully interchangeable with the product concerned.
The investigation also showed that although thin film PV products are less
expensive than the product under investigation, they only capture a limited
market share of the total Union solar market, during the period considered.
Therefore, although there may be some competition between the thin film
products and the product concerned, this competition is considered to be limited.

(704)   Following the final
disclosure, one interested party reiterated that the competition from thin film
products likely caused the material injury suffered by the Union industry. In
this regard, the party submitted that in Germany the market share of thin film
products in the total solar market was substantial during most of the IP and
only declined towards the beginning of 2012.

(705)   The investigation showed
indeed that the average prices of thin film products were at lower levels than
the average price levels of the product under investigation.

(706)   However, as set out in
recital (703) above thin film products have much lower conversion efficiencies
and a lower wattage output than crystalline silicon modules and therefore
competition between these product, if any, could not contribute to the injury
of the Union industry, as crystalline silicon modules are the dominant
technology in the Union solar market. The JRC PV Status Report 2012 stated that
as a consequence of the drop in polysilicon prices, thin film has in the last
years lost market share to crystalline silicon modules.

(707)   On these grounds, these arguments
were rejected.

5.3.10.   Financial crisis and its
effects

(708)   It was claimed that the
financial crisis and the economic recession had a negative effect on the access
to finance for the Union industry and thus caused the injury suffered by the
Union industry.

(709)   The ability of the Union
industry to raise capital decreased significantly during the period considered.
As the solar industry is capital intensive, the ability to raise capital is
crucial. The economic recession had a certain impact on the situation of the
Union industry. The investigation showed, however, that despite the growth of
the Union market between 2009 and 2011, the situation of the Union industry
deteriorated as a result of the subsidised imports from the PRC heavily
undercutting the Union industry’s sales prices. It was therefore concluded that
the potential effects of the financial crisis was aggravated by the increase of
subsidised imports from the PRC and that the limited access to finance was
largely a consequence of the negative market climate, the situation and
prospects of the Union industry a consequence of the subsidised imports.

(710)   Moreover it was examined
whether the injury suffered by the Union industry was due to the Union’s
industry failure to seek appropriate financing while they were profitable. The
investigation showed that e.g in 2010 that Union industry was still profitable,
the level of investment increased for modules by 315 % compared to 2009, while
at the same time for cells by 10 %. As the PV industry is capital intensive, it
is expected that the Union industry is continuously seeking appropriate
financing in order to improve its cost efficiency and compete with the unfair subsidised
imports. Therefore, it is concluded that, the lack of access to finance was a
result of the distorted situation and not the cause.

(711)   Following the final
disclosure, one interested party reiterated that the injurious effects of the
financial crisis should be separated and distinguished and not be attributed to
the subsidised imports. This party referred to publicly available information
indicating that at least one Union producer perceived the financial crisis as
the main cause for its injurious situation. The current investigation based its
findings on specific company data which go significantly beyond publicly
available statements of specific companies. Therefore, the publicly available
statement to which reference was made cannot devaluate the findings that while the
financial crisis had a certain impact on the situation of the Union industry,
it could not break the causal link between the subsidised imports and the
material injury suffered by the Union industry. Therefore, this claim had to be
rejected.

(712)   Another interested party
claimed that the different access to financing between the Union industry as
compared to the Chinese exporting producers should be taken into consideration.
This party claimed that this was one of the main factors which caused the
material injury to the Union industry and not the subsidised imports. However,
the preferential access to financing of a number of Chinese exporting producers
has been found to distort the market and may well be one of the main reasons
allowing Chinese exporting producers to export the product concerned at subsidised
prices. This factor can therefore not break the causal link between the subsidised
imports and the material injury suffered by the Union industry. This claim was
therefore rejected.

(713)   On these grounds, it was
concluded that, while the financial crises had a certain impact on the
situation of the Union industry, it could not break the causal link between the
subsidised imports and the injury suffered by the Union industry. The arguments
were therefore rejected.

5.3.11.   Export performance of the
Union industry

(714)   Some interested parties
claimed that the Union industry’s export sales dropped significantly during the
period considered and especially between 2009 and 2011 for modules and between
2009 and first quarter of 2012 for cells and that this has caused the material
injury suffered by the Union industry.

(715)   However, as shown in the
table below, the export volumes for modules remain significant despite a slight
decrease in the IP and average price levels during the IP were above the
average costs of modules throughout the period considered. Therefore, this
could not have caused the injury suffered by the Union industry. As for cells,
the export volumes represented only around 12 % of the total production volume
of cells. Therefore, despite the low prices during the IP, this could only have
had limited impact on the situation of the Union industry. The arguments in
this respect had therefore to be rejected.

Table
13-a

Modules

||               2009 ||               2010 ||               2011 ||               IP

Volume of exports modules in MW ||               989 ||               1 279 ||               1 157 ||               1 148

(Index 2009 = 100) ||               100 ||               129 ||               117 ||               116

Average export price (EUR/kW) ||               2 500 ||               1 900 ||               1 470 ||               1 230

(Index 2009 = 100) ||               100 ||               76 ||               59 ||               49

Source: Europressedienst

Table
13-b

Cells

||               2009 ||               2010 ||               2011 ||               IP

Volume of exports cells in MW ||               62 ||               320 ||               315 ||               238

(Index 2009 = 100) ||               100 ||               516 ||               508 ||               384

Average export price (EUR/kW) ||               1 350 ||               1 050 ||               830 ||               640

(Index 2009 = 100) ||               100 ||               78 ||               61 ||               47

Source: Europressedienst

(716)   On these grounds, it was
found that the impact of the Union’s industry’s export performance was not such
as to contribute to the material injury suffered by the Union industry.
Therefore, the parties’ arguments in this respect had to be rejected.

5.3.12.   The discovery of shale gas
deposits in the Union

(717)   One
interested party claimed that the injury suffered by the Union industry was
caused by the discovery of shale gas deposits in the Union and the prospect of
increasing production of cheap shale gas in the Union has reduced public and
private investments in renewable energy projects.

(718)   The investigation found that
the consumption for the product under investigation increased substantially
throughout the period considered, as already mentioned in recital (509) above.
Moreover, the investigation did not bring into light any factual evidence that
the injury suffered by the Union industry was due to the discovery of shale gas
deposits in the Union. The claim was therefore rejected.

5.3.13.   The European Union’s
Emissions Trading Scheme (ETS)

(719)   The same party claimed that
the injury suffered by the Union industry was caused by the low investments in
solar energy production due to the low market prices for the European Union’s
Emissions Trading Scheme CO2 emission credits.

(720)   No evidence was however
provided and the investigation did not bring into light any factual
circumstances confirming these allegations. To the contrary, the investigation
showed that the consumption of the product under investigation was increasing
substantially during the period considered. On these grounds, the claim was
rejected.

5.3.14.   Management decisions

(721)   Some interested parties
claimed that the material injury suffered by at least one of the Union
producers was caused by a wrong management decisions. These allegations were
based on the annuals accounts, some information contained in a letter sent by a
shareholder of the company to the other shareholders and a press article.

(722)   None of the information in
the file showed that any of the management decisions of the company concerned
were unusual or imprudent or had an impact on the entire Union industry.
Therefore, the arguments in this respect were rejected.

5.3.15.   Other government policies

(723)   One interested party claimed
that the material injury suffered by the Union industry was caused by other
government policies such as renewable energy policies, policies aimed at
encouraging innovation, policies of cutting red tape, trade facilitation
policies and grid access regulations, as these policies benefit the exporting
producers. However, even if it is true that certain of the claimed policies
might facilitate imports from other third countries and overall growth of solar
industry, these policies would also benefit the Union industry. Moreover, these
policies should not be meant that such imports in the Union should be made at
injurious subsidised prices. Therefore, the arguments in this respect were
rejected.

5.3.16.   Other arguments

(724)   One interested party claimed
that the injury suffered by the Union industry was due to the forerunner disadvantage
and the lack of political support from the European Commission in previous
years. This party also claimed that apart from the national support schemes,
also population, GDP, electricity consumption, financing opportunities and
connectability to the grid are important factors in each market. However, the
above party was not able to substantiate its claims which were therefore
rejected.

(725)   Following the final
disclosure, the same interested party reiterated that the injury suffered by
the Union industry was due to the forerunner disadvantage. However, the claim
was neither analysed nor substantiated; therefore it had to be rejected.

5.4.        Cumulative assessment of
those other factors that have been found to contribute to injury

(726)   The investigation has shown
that the following other factors may have contributed to injury: Imports of the
product concerned from Taiwan; Reduction in the level of FIT; Long-term polysilicon
contracts of a limited number of Union producers; the financial and economic
crisis.

(727)   As has been shown above in
sections 5.3.1 respectively 5.3.7, the possible contribution of imports from
Taiwan and of long-term polysilicon contracts of a limited number of Union
producers are, at best, marginal, as any impact of them was further diluted
through the value chain.

(728)   With regards to the economic
and financial crisis, the investigation has shown that the main reason for
difficulties of the Union industry in accessing the capital needed for
investments were the subsidised imports, which prevented the Union industry
from selling its products at profitable prices when the Union market showed
strong growth rates (2009-2011).

(729)   With regards to FIT, third
parties have not been able to demonstrate that FIT levels during the IP would
have been so low that they would have prevented Union producers from selling
the product concerned at non-injurious prices. The Institutions take the view
that reductions in FIT levels may explain reduced demand, as investments in
certain locations were no longer viable. They cannot, however, break the causal
link, even taken together with the other factors that have been found to
contribute to injury, because they were still at a level at which, absent the subsidised
imports, the Union producers could have sold their products at non-injurious
prices.

(730)   Therefore, even if the
cumulative effect of the four other factors possibly contributing to injury is
assessed, the causal link between subsidization and injury is not broken.

5.5.        Conclusion on causation

(731)   The investigation has
established a causal link between the material injury suffered by the Union
industry and the subsidised imports from the PRC. Other possible causes of
injury, such as imports from other third countries, non subsidised imports from
the PRC, consumption, FITs, other financial support granted to the Union
industry, overcapacity, impact of raw material prices, self-inflicted injury,
competition from thin-film, financial crisis and its effects, export
performance of the Union industry, the discovery of shale gas deposits in the
Union, managements decisions, the European Union’s Emissions Trading Schemes,
other government policies were analysed and none of them was found to be such
as to break the causal link established between the subsidised imports from the
PRC and the material injury suffered by the Union industry.

(732)   All
the effects of the injury factors other than the subsidised imports have been
individually and collectively analysed. Therefore, it is concluded that the
collective assessment of all the factors that may have had an impact on the
injurious situation of the Union industry (i.e. imports of third countries,
FITs, impact of raw material prices, financial crisis) collectively fail to
explain the injury suffered by the Union industry in particular in terms of low
prices and financial losses due to the penetration of low priced imports in
significant quantities of the product concerned from the PRC. Based on the
above analysis, which has properly distinguished and separated the effects of
all known factors on the situation of the Union industry from the injurious
effects of the subsidised imports, it was therefore concluded that there was a
causal link between the subsidised imports from the PRC and the material injury
suffered by the Union industry during the IP.

6.           UNION INTEREST

6.1.        Preliminary remarks

(733)   In accordance with Article
31 of the basic Regulation, it was examined whether, despite the above findings
on injurious subsidisation, compelling reasons existed for concluding that it
was not in the Union interest to adopt countervailing measures in this
particular case. For this purpose, and in accordance with Article 31(1) of the
basic Regulation, the analysis of the Union interest was based on an appreciation
of all the various interests involved, including those of the Union industry,
companies in the upstream and downstream markets of the PV sector, importers,
users and consumers of the product concerned.

(734)   Around
150 operators made themselves known after the initiation of the parallel
anti-dumping investigation and were duly considered in the framework of the
current investigation. Specific questionnaires were sent to unrelated
importers, upstream operators (including a raw material producer and suppliers
of production equipment for the product under investigation), downstream
operators (including project developers and installers) and BEUC a consumer
organisation. Three associations representing various operators (Union
industry, upstream and downstream operators) in the PV sector submitted
information.

(735)   It
was claimed that the assessment of the Union interest was not based on a
representative number of operators.

(736)   The Commission has contacted
the different operators in the following manner.

(737)   As
concerns upstream and downstream operators: as mentioned above in recital (734),
the Commission sent specific questionnaires to about 150 operators including
those unrelated importers that had come forward after the initiation of the
investigation, and which had therefore the opportunity to provide the relevant
data to the Commission. Twenty-one questionnaire replies were received. Moreover,
not only the replies to the questionnaires but also verifiable and duly
substantiated comments and submissions provided by interested parties within
the deadlines were taken into consideration in the investigation, irrespective
of whether or not these parties had replied to the questionnaire. In
particular, AFASE has transmitted to the Commission comments on behalf of its
members - PV operators that were also analysed.

(738)   As concerns unrelated
importers, as mentioned in recital (25) above, the Commission contacted all the
250 unrelated importers made known by the complainant and selected a
provisional sample in accordance with Article 27 of the basic Regulation to
cover the largest representative volume of imports which can reasonably be
investigated within the time available. However, only one of the companies
provisionally selected was indeed, after verification, confirmed to be an
unrelated importer. At a later stage of the investigation, further unrelated
importers, which had initially submitted a sampling form at the initiation
stage but were not sampled, were invited to cooperate further with the investigation.
Six of them agreed and received a questionnaire, and five submitted a reply out
of which three were considered to be sufficiently complete. The definitive
sample of unrelated importers therefore comprises four unrelated importers,
representing a range of 2 % to 5 % of the imports of the product concerned.
With regards to that low percentage, it has to be kept in mind that the
majority of imports of the product concerned into the Union does not take place
via unrelated importers.

(739)   To sum up, for the analysis
of Union interest, the following information has been relied on:

–
the questionnaire replies received from eight
sampled Union producers and four sampled unrelated importers as well as the
replies to the specific questionnaire received from eight upstream and thirteen
downstream operators (seven project developers/installers; six service
providers also active in the PV sector) out of 150 operators that had come
forward after the initiation and received the specific questionnaires;

–
the data verified during the on-site
verifications at the premises of eight Union producers, one unrelated importer,
two upstream operators, four downstream operators (project
developers/installers) and one association (see recital (17) to the provisional
antidumping Regulation and recital (29) above)

–
the data on Union interest submitted by other
interested parties, including associations, as well as publicly available data
on the evolution of the PV market in Europe, in particular: EPIA’s Global
Market Outlook for Photovoltaics 2013-2017.

6.2.        Interest of the Union
industry

(740)   The Union industry directly
employed about 21 000 people in the IP in the production and sale of the like
product.

(741)   The investigation
established that the Union industry has suffered material injury caused by the
subsidised imports from the country concerned during the IP. It is recalled
that a number of injury indicators showed a negative trend during the period
considered. In particular, injury indicators related to the financial performance
of the cooperating Union producers, such as profitability, cash flow and return
on investments were seriously affected. In fact, the Union producers of modules
and cells were loss making in 2011 and in the IP. Consequently, some Union
producers were already forced to close down their production facilities while
some others have faced insolvency. In the absence of measures, a further
deterioration in the Union industry’s economic situation appears very likely.

(742)   It
is expected that the imposition of countervailing measures duties will restore
fair trade conditions on the Union market, allowing the Union industry to align
the prices of the like product to reflect the costs of production thus
improving its profitability. It can also be expected that the imposition of
countervailing measures would enable the Union industry to regain at least part
of the market share lost during the period considered, with a positive impact
on its overall financial situation. Moreover the Union industry should be able
to have better access to capital and to further invest in R & D and
innovation in the PV market. Finally, the investigation also pointed to a
possible restarting of the business activity of the Union producers who were
forced to stop the production as a result of the pressure of the Chinese
imports. Overall, under this scenario, not only the existing 21 000 jobs of the
Union industry (in the IP) would be secured but there would also be a
reasonable prospect for further production expansion and increase in employment.

(743)   Should measures not be
imposed, further losses in the market share are expected with a further
deterioration of the Union industry’s profitability. This would be
unsustainable in the short to medium-term. As a consequence, in addition to the
large number of the Union producers that were already forced out of the market,
other producers could be facing insolvency which would in the short to medium
term lead to a likely disappearance of the Union industry with the consequent
significant impact of the existing jobs.

(744)   Some interested parties
contested that the Union industry would be able to benefit from any
countervailing measures arguing that (i) the measures will lower the demand for
PV products in the Union and therefore the Union industry will not be able to
increase their sales, (ii) the Union industry has small production facilities
and is therefore not able to meet the demand of certain types of installations
such as commercial rooftop and large ground-mounted installations, (iii) the
Union producers are not ‘bankable’ (iv) the imposition of duties on cells will de
facto increase the cost of production of the Union producers of modules and
make them less attractive for consumers, (v) in case of significant drop of
Chinese imports, the producers from other third countries will most likely take
advantage of the fewer imports from the PRC.

(745)   Concerning the claim that
measures will lower the demand for PV products in the Union and therefore the
Union industry will not be able to increase their sales, it is noted that the
parties were unable to provide any verifiable evidence of the existence of a
direct link between the imposition of measures and the decrease demand for PV
product which proved to be influenced over the years by several factors.

(746)   In reply to the claim that
the Union industry has small production facilities and is therefore not able to
meet the demand of certain types of installations such as commercial rooftop
and large ground-mounted installations, it should be noted that the
investigation has showed that the Union industry has the capacity to supply
both the commercial and industrial-installations (between 40 KW and 1MW) and
the utility market segment- installations (1 MW and 10 MW). Moreover, the
investigation did not reveal that products supplied by different manufacturers
could not be used in the same project. This claim was therefore rejected.

(747)   The argument that the Union
industry would not benefit from the measures because Union producers are not “bankable”
and that investments funds would not accept to finance projects using EU-made
modules was not substantiated. In any event, it is expected that the imposition
of measures will restore fair market conditions which should reassure investors,
including from the banking sector, as to the ability of Union industry to
develop viable projects. On these grounds, this argument was rejected.

(748)   With
reference to the claim that the imposition of duties on cells will de facto
increase the cost of production of the Union producers of modules and make them
less attractive for consumers, while it is not excluded that a certain increase
in prices could occur further to the imposition of duties, it should also be
considered that public available sources indicate that the price trend of
modules and cells is downward. Thus, even if the cost of cells might increase
as a result of measures, the overall decreasing trend of prices should result
in decreasing costs of modules. The producers in question may also decide to
source their cells in the Union, and no longer from the PRC. Finally, it is
expected that the imposition of measures will increase the capacity utilization
of cells producers in the Union thus increasing their economy of scale and as a
consequence reduce costs. This claim was therefore rejected.

(749)   The
argument that in case of a significant drop of Chinese imports further to the
imposition of measures, the other third countries will most likely take
advantage of this, rather than the Union industry was not confirmed by the
investigation. The investigation did not reveal any clear indications that the
other third countries would direct their exports massively to the Union market,
in particular taking into account the likely expansion of other third country markets,
notably in Asia, as forecasted by publicly available sources. Finally, there is
no indication that even if imports from other third countries would increase as
a result of a drop of Chinese imports, the Union industry will not be able to
compete with imports from these countries.

(750)   In
reply to the final disclosure some parties argued that it is unrealistic to
expect the emergence of a sustainable Union industry manufacturing modules and cells
because there is no rational investor that would invest in the Union producers
that allegedly suffer from an unfavourable cost structure and can therefore not
produce at competitive prices. The investigation did not confirm that the Union
industry is suffering from an unfavourable costs structure, as explained in
recitals (202) and (203) to the provisional anti-dumping Regulation. Therefore,
absent subsidized imports and utilising the production capacities to a larger
extent should bring economies of scale and allow for the emergence of a
sustainable Union industry. In view of the above the argument was rejected.

(751)   One party argued that the
demand in the Union is driven by the development of FITs and the expected
return on investment by the investors is linked to this development. In
particular, it claimed that, if prices increase in the Union, as a consequence
of the duties, and FITs do not follow this increase accordingly, demand will
decrease and the Union industry will not benefit from the duties imposed.

(752)   In
reply to the above claim, it is noted that despite the correlation between the
level of FITs and the demand for PV installations, the evidence collected
during the investigation indicates that future demand will be less and less
dependent on FITs and other support schemes as PV grid parity is likely to have
been reached by certain types of installations in several places in the Union.
Furthermore, the expected return on investment should be based on fair market
prices. Finally, while it is not excluded that a certain increase in prices may
occur further to the imposition of measures, it should be noted that public
available sources indicate that the overall price trend is downward. The
argument was therefore rejected.

(753)   Interested parties have
pointed out that because demand for solar panels is driven by support schemes,
in particular FIT, and by the level of electricity prices for the final
consumer (which determine grid parity), price elasticity of demand can be very
high. Whereas it is correct that an important increase in prices may lead to an
important reduction of demand because of the particular nature of the market
pointed out by those interested parties, the argument has to be rejected
because it is very unlikely that price increases caused by the measures will be
important, for the following reasons. First of all, all available sources
confirm that the important decrease in prices for the product concerned
throughout the IP and since the IP until today will continue. Secondly, the
economic effect of the undertaking that has been accepted by the Commission is
that Chinese exporting producers will supply the product concerned at a minimum
import price of less than 60 c/W, which is far below the price that has been
observed during the IP, at a volume that corresponds roughly to their current
market share. At this price level, demand is very unlikely to drop in a
significant manner, as that price level ensures sufficient demand both under
the current level of support provided by support schemes and under the current
levels of grid parity. Furthermore, the price of electricity for final
consumers is expected to increase, whereas the price of the product concerned
is expected to decrease. Through an indexation formula, the undertaking ensures
that further price decreases of the product concerned are taken into account
for the minimum import price. Therefore, those arguments have to be rejected.

(754)   Several interested parties argued
that the interest of the Union industry is not significant since the value
added created by the upstream and downstream industries is far more significant
than the value added created by the Union industry in the PV value chain. The
argument that the various segments in the PV sector have a different added
value is not disputed. The investigation established that the Union industry
has suffered material injury caused by unfair trade practices. Indeed some
Union producers have already been forced to close down and in the absence of
measures, a further deterioration appears certain. As all segments in the PV
sector are closely interrelated, the disappearance of the Union production
would be detrimental to the whole PV sector making it fully dependent on
outsourced supply. Therefore, also for reasons of security of supply, the
argument was therefore rejected.

(755)   In
reply to the final disclosure, one interested party reiterated the claim that the
higher value-added created by the upstream and downstream industry, as compared
to the Union industry of the product concerned, is relevant to whether
countervailing duties should be imposed. In this respect, it is confirmed that in
assessing the Union interest the Institutions did balance the positive and
negative consequences the duties may have on the various economic operators.
Whereas the impact on the upstream and downstream industry is limited, the
measures will afford the Union industry the possibility to recover from
injurious subsidisation.

(756)   One party contested the
number of jobs that would be secured by the imposition of measures. It claimed
that the Union industry employs about 6 000 people, and not 25 000 as reported
in recital (229) to the provisional anti-dumping Regulation.

(757)   No evidence was however
provided to support the above claim and therefore it was dismissed. It is
clarified that in view of the exclusion of wafers from the product scope, the
employment in the Union industry amounted to around 21 000 employees during the
IP. Interested parties did not provide any proof that the number of employees
in the Union industry has changed significantly post-IP.

(758)   In conclusion, the
investigation proved that the Union industry suffered material injury from the subsidized
imports from the PRC, being unable to recoup the investment through profitable
sales. It is expected that the imposition of measures will restore fair trade
conditions on the Union market, allowing the Union industry to compete on equal
footing. The likely decrease in imports from the PRC should enable the Union
industry to increase their sales in the Union and thus better utilise the
available production capacities in the short term. This in turn may bring
economies of scale. While it is possible that the prices of the like product
will raise in a short period of time due to the measures, the overall descending
price trend is likely to be maintained also thanks, on the one hand, to the
further decrease of cost of production of the product under investigation, and,
on the other hand, the competitive pressure from the third countries'
producers, which would also compete in the Union market.

(759)   It is therefore concluded
that the imposition of definitive countervailing measures would be in the
interest of the Union industry.

6.3.        Interest of unrelated
importers

(760)   As mentioned in recital (26)
above the situation of the sampled importers was analysed.

(761)   Overall,
during the IP, the activity of the four cooperating unrelated
importers related to the product concerned varied
between 60 % and 100 % of their total business. In addition, the four
cooperating unrelated importers sourced from the PRC between 16 % to 100 % of
their total imports of modules, only one sourcing exclusively from the country
concerned. The profitability of the four cooperating unrelated
importers related to the product concerned was on
average 2.3 % in the IP.

(762)   An argument was put forward
that the imposition of measures on the product concerned will negatively affect
the importers’ business activity. Firstly, the imposition of duties should not
result in the elimination of all imports from the PRC. Secondly, although it
can be expected that the imposition of measures may have a negative effect on
the financial situation of the importers importing only from the PRC, in view
of the possible increase of imports from other third countries, the importers
sourcing from the PRC should be in the position to shift their sources of
supply.

(763)   One interested party argued
that the impact of the duties on the unrelated importers was underestimated as
there are no immediate alternative sources of supply that could replace the
Chinese imports of the product concerned if the duties were imposed and that
changing a source of supply is difficult in view of the fact that the major
production is based in the PRC and this would entail additional significant
costs.

(764)   In this respect, it is
recalled that the imposition of measures should not result in the disappearance
of the imports of the product concerned from the PRC. The investigation indicated
that the possible decrease of imports from the PRC will impact in particular
those importers that source the product concerned exclusively from the PRC,
which is the case only for one out of the four cooperating unrelated importers.
Concerning the impact of measures on the unrelated importers' financial
situation, it was not excluded that it can be negative, but it has been
concluded that this will largely depend on their capacity to switch sources of
supply or to pass at least part of the possible price increase on to their
customers. For operators importing the product also from other sources than the
PRC or importing also other products than the product concerned the negative
impact will be further limited. The Commission therefore considers that
although there is likely to be a negative impact on the importers of the
product concerned, this impact will, on average, remain limited.

(765)   One unrelated importer
argued that it needs significant working time and financial investment before
accepting the products of a new supplier. In this respect a claim was made in
reply to the final disclosure that relevant evidence was provided to the
verification team at the time of the on-the-spot visit on the long testing
requirement that an importer must do before taking the decision to supply from
a particular exporter.

(766)   It is acknowledged that the setting
of a new relationship between an importer and a supplier may entail additional
costs and time investment (e.g. in testing the product). However, this does not
outweigh the need to restore fair competition in the market.. At the same time,
changing suppliers seems to be a normal risk calculated in an importers'
professional activity and is related to the fact that the PV market is maturing
and thus undergoes constant changes (e.g. bankruptcies, consolidations)
requiring switching to new suppliers. Moreover, it can be assumed that new
types of modules that reach the market on a constant basis (containing e.g. new
efficiency characteristics) also require testing. In this respect, testing of a
new product (even from the same supplier) appears to be a standard rather than
an unusual activity. The argument is therefore rejected.

(767)   In reply to the final
disclosure two parties reiterated the claim that the interest of the unrelated
importers was not properly considered. One party claimed that the lack of the
non-confidential version of the replies to the questionnaires by the additional
cooperating importers did not allow a proper assessment by the parties. It
questioned the Commission's assessment regarding the possibility that other third
country imports in the Union would increase thus allowing the importers to
switch their supplies, on the basis of the allegation that other third markets
are booming. To this end, the party claimed that such assumption is in
contradiction with the conclusion set out in recital (749) above i.e .that , imports
from other third countries would not be massive. Another party questioned
whether the Commission respected the principle of non-discrimination as the
Union producers were given more prominence in the Commission's assessment than
the other operators.

(768)   First, it is confirmed that
the non-confidential version of the replies to the questionnaires received
after the publication of the provisional anti-dumping Regulation by the
additional cooperating importers was included in the file for consultation by
interested parties. Secondly, there is no contradiction between the assumption
that the imports from other third countries can increase in response to lower
imports from the PRC and that such increase should not be massive in view of
the growing demand for PV installations world-wide. At the same time, as the
Union industry is expected to retake a certain part of the market share that
was previously held by products from the PRC, a certain loss in business for
unrelated importers cannot be excluded. However, it is observed that the
overall size of the PV market is expected to continue to grow in the long term,
as grid parity is reached in more and more locations. Finally, it is clarified
that, as in all trade defence investigations, while the situation of the Union
industry was assessed in order to establish if it suffered material injury due
to the subsidised imports, in the context of the Union interest analysis the
interest of the Union industry was assessed on an equal basis to the other
economic operators, including the unrelated importers. It is also clarified
that the investigation whether or not the Union industry suffered material
injury is governed in particular by Article 8(4) to the basic Regulation which
set the minimum standards of such investigation. The Union interest is only
analysed once a positive determination of injurious subsidisation was made in
accordance with the standards set out in Article 31 to the basic Regulation. As
a result it was considered that the likely negative impact of the measures on
certain importers, in particular those sourcing exclusively from the PRC, did
not outweigh the benefits of the measures for the Union industry and the mid-
and long term benefits to the Union PV market resulting from fair competition.

(769)   It was therefore concluded
that the imposition of measures at the proposed level may have a certain
negative impact on the situation of unrelated importers of the product
concerned.

6.4.        Interest of the upstream
operators

(770)   The upstream operators are
mainly active in the production of the raw materials and in the production and
engineering of the manufacturing equipment for the product under investigation.
Eight replies were received to the questionnaires from the upstream operators.
Two verification visits were carried out covering a raw material producer and a
producer of manufacturing equipment.

(771)   Overall, during the IP, the
activity of the eight cooperating upstream operators related to the product
under investigation varied in proportion to their total activity and only for
one cooperating company represented 100 % of its business, while for the others
it varied between 6 % and 80 %. On average, in the IP, the activity related to
the product concerned represented around 41 % of the total activity of the
cooperating upstream operators. In terms of jobs, the eight cooperating
upstream operators employed in the IP about 4 200 people. Profitability varied
according to segment and individual company from high rates to slightly
negative profitability. The investigation showed that those operators with a
negative profitability suffered from the deteriorated situation of the Union
industry, as some of the clients they lost were Union producers of the product
under investigation, and from the decline in consumption. Following the
exclusion of wafers from the product scope, the producers in the Union of this
product should benefit from the imposition of duties, since the Union industry
is expected to increase its production of cells and modules.

(772)   The sales of the Union
upstream operators covered the Union, the PRC and other third countries. In the
IP, the repartition of the sales corresponded on average to around 20 % of
sales in the Union, almost 50 % to the PRC and around 30 % to other third
countries.

(773)   Some parties in the upstream
sector claimed that the imposition of countervailing measures would affect
their business activities negatively as the PRC is their main exporting market.
It was argued that the duties would seriously limit the imports of the product
concerned from the PRC to the Union as a result of which the PRC would limit
the imports of polysilicon and production equipment from the Union. As a
consequence, the Union upstream operators in the Union would allegedly need to
scale down their business activities and reduce employment.

(774)   It is noted that the aim of
the duty is not to eliminate the Chinese imports of the product concerned but
to restore a level playing field. Thus, the Chinese imports should continue to
supply the Union market to a certain degree, but at fair prices. Furthermore,
the investigation showed that the Union upstream operators are present globally
on different national markets and therefore do not depend exclusively on their export
to the PRC. It is thus reasonable to assume that in the global PV market, Union
upstream operators would likely be able to compensate the eventual decrease in
the export to the PRC by the export to the other markets which according to
publicly available market studies are expected to grow. In any case, the
Chinese PV market is already facing a significant production overcapacity and
therefore it is doubtful whether the Union machinery producers would be able to
sell much more of manufacturing equipment in the short to medium term in the
PRC.

(775)   Interested parties made the
argument that a majority of inputs in the PV value chain comes from the Union
and that such advantageous situation may cease should the duties be imposed. In
reply to the final disclosure one party pointed out that the measures in this
case may trigger other measures, which the PRC may impose on the Union
products.

(776)   In this respect, Chinese
imports are expected to continue to supply the Union market even with duties in
place. In addition, various publicly available sources in the PV sector, such
as EPIA’s Global Market Outlook for Photovoltaics 2013-2017, forecast that the
possible contraction in demand in the Union should be only in the short-term
(in 2013 and 2014) and that consumption in the Union will increase again in the
following years. Furthermore, addressing unfair trade practises is likely to allow
building a sustainable growth in the PV market in the Union in the mid and
long-term, from which all operators in the Union should benefit. Finally, as
regards the argument on the possible retaliation of the PRC in reply to the
measures in this case, it is recalled that the PRC as any other WTO member, may
have a recourse to trade defence investigations only in justified circumstances
and any such investigation has to comply with strict WTO rules. The Commission monitors
any such investigation to ensure that the WTO rules are respected. The argument
was therefore rejected.

(777)   Some parties contested the
argument that the decreased exports of Union PV upstream operators to the PRC
might be compensated by exports to other markets arguing that the duties will
decrease the world-wide demand for the product.

(778)   In
this respect, it is firstly noted that Chinese imports are not expected to
cease completely as a result of the duties. In addition, the information
collected in the course of the investigation did not establish any correlation
between the development of the imports from the PRC in the Union market and the
exports from the PRC to other markets. Moreover, public available sources, such
as EPIA’s Global Market Outlook for Photovoltaics 2013-2017, forecast that the
PV market world-wide will grow in the next years. As far as the Chinese PV market
is concerned, there are indications that the domestic consumption in the PRC
will increase substantially (e.g. as indicated by EPIA). In view of the above,
the exports of the Union upstream operators to the PRC are not expected to drop
significantly as a consequence of the imposition of measures.

(779)   It should also be noted that
the contraction of demand in the Union in 2013 and 2014 may have a negative
impact on the upstream operators. This however cannot be linked, at least not
for its major part, to the duties. Moreover, concerning the Union producers of
machinery for the PV industry, due to the existing substantial spare capacity
in the PRC, it is unlikely that their exports to the PRC can significantly
increase even under the scenario that the Chinese producers increase their production
volume. Finally, the information gathered during the investigation indicated
that the machinery producers may also be impacted by the Chinese 12th
five-year plan for Solar Photovoltaic Industry which foresees that by 2015 80 %
of the manufacturing equipment for cells should come from the PRC. As long as
this change is achieved in compliance with WTO rules, this may also further
limit the possibility of manufacturers of machinery in the Union to compete in
the Chinese market. The above argument was therefore rejected.

(780)   In reply to the final
disclosure the GOC argued that the 12th five-year plan for the Solar
Photovoltaic Industry offers only some general guiding principles that are not
binding as there are no enforcement powers foreseen, and that therefore it
should not be considered as an indication that the possibility of manufacturers
of machinery in the Union to compete in the Chinese market will be limited. In
this respect it is noted that the GOC included the PV industry amongst strategic industries in the 12th
five-year plan and also issued a specific plan for the solar photovoltaic
industry. In this plan the GOC expressed its support for “superior
enterprises” and “key enterprises”, committed itself to “promote
the implementation of various photovoltaic support policies”, and “formulate
overall preparation of supporting policies on industry, finance, taxation ...”.
Furthermore, as the plan contains
essential directives to be achieved by the Chinese industry during the period
of five years it has a deep
impact on the business landscape, both within the PRC and in countries that do
business with the PRC. Considering the above,
there are clear indications that the freedom of choice of the Chinese
manufacturers of cells and the competitive pressure of the Union producers of
the manufacturing equipment exporting to the Chinese market is restricted by
the plan. Therefore this argument was rejected.

(781)   One cooperating raw material
producer contested the prospect of other markets compensation for the decreased
production on the Chinese market, in view of the substantial installed
production capacity in the PRC, which could not be easily built elsewhere. This
argument is dismissed since there are no indications of the alleged decreased
production on the Chinese market.

(782)   One interested party
contested the number of employees in the upstream sector quoted in recital
(236) to the provisional anti-dumping Regulation. It is clarified that the
number of 4 200 employees only refers to the cooperating upstream operators,
such as equipment manufacturers and polysilicon supplier, based on their
questionnaire replies, and not to the whole sector.

(783)   In view of the above, it is
concluded that the impact of the countervailing measures on the machinery producers
would not be significant, while the impact on the raw material supplier may be
negative in the short term in view of the possible reduction of its sales to
the PRC.

6.5.        Interest of downstream
operators

(784)   The
downstream operators are mainly active in project development, marketing, communications
and PV installations. Thirteen replies to the downstream questionnaires were
received from the downstream operators, i.e. seven from operators whose
activity is directly related to the like product (namely the project developers
and installers) and six from service providers in the PV sector (logistics,
transport, public relations, etc.) i.e. operators whose activity is not
directly related to the product under investigation. These questionnaire
replies included the reply received from one unrelated importers which turned
out to qualify as downstream operator, as its main activity is installation
(see recital (25) above).

(785)   In
recital (242) to the provisional anti-dumping Regulation, it was assessed that
overall, the activity of the downstream operators (installers and project
developers) in relation to the product under investigation varied as compared
to their total activity. On average, in the IP, it represented 41 %. The
profitability of the cooperating operators related to the product under
investigation was on average around 11 %, in the IP. In terms of jobs, the
seven cooperating downstream operators employed in the IP about 550 people.

(786)   Several parties contested
the representativity of the data concerning the downstream operators on
turnover, profitability and employment derived by the Commission from the
replies to the questionnaires by the seven downstream operators. AFASE
submitted a ‘survey’ conducted amongst its members (installers) to illustrate
that for the majority of the installers the PV business constitutes a primary
source of income. AFASE further alleged that the downstream operators, in
particular installers, in contrast to the findings set out in recital (242) to
the provisional anti-dumping Regulation would only realise one-digit profit
margins which do not allow for absorption of any duties.

(787)   As regards the
representativity of the data used in the provisional anti-dumping Regulation the
Commission has used all the data provided by those downstream operators that
have filled in the specific questionnaire, as well as the submissions provided
by AFASE, as explained in recital (737) above.

(788)   As regards the claim that
the PV business constitutes a primary source of income for installers, further
analysis of the questionnaire replies submitted by the seven downstream
operators (installers and project developers) confirmed that the activity
directly related to the like product under investigation represented on average
around 42% of the total activity of these operators and the profitability equalled
11 % on average. However, when taking into account also their activities (not directly
related to the product under investigation), their overall importance increases
substantially for three out of the seven operators. As a result, the
corresponding ratio would range from around 45 % to 100 % during the IP. In
addition, for the seven operators (installers and project developers) the
profitability of the PV activity including the activities not directly linked
to the product under investigation would amount to 9% on average. Employment-wise,
the PV activity including the activities not directly linked to the product under
investigation would amount to around 660 full-time jobs in the IP for the seven
operators. Apart from PV projects and installations these operators were also
active in wind energy installations and production of electrical equipment.

(789)   It is considered that any
impact of measures on the downstream operators has to be primarily assessed on
their activity directly related to the product under investigation which in the
IP reached a profitability of 11 % on average. However, even if it is assessed
on the basis of the overall PV activity not directly related to the product under
investigation the conclusions will not change significantly since, overall, the
various factors taken into account, namely profitability and possibility to
absorb part of the duty, do not vary significantly (the profitability decreases
from 11 % on average to 9 % on average). In reply to the final disclosure one
party on which premises the Commission had carried out a verification visit
contested the representativity of the conclusion on profitability of the
installers and developers, which, as far as it is concerned, would allegedly be
based only on a single transaction. This argument is dismissed as the
Commission calculated the profitability of the downstream operators, on the
basis of all data submitted by the downstream operators in their questionnaire
replies.

(790)   Regarding the survey
conducted by AFASE amongst its members, it is firstly noted that all operators
had the opportunity to come forward at the initiation of the investigation and
to reply to the specific questionnaire designed for downstream operators
requesting the necessary information for the assessment of the impact of duties
on these operators. Secondly, the identity of the installers was not provided
in the survey which did not allow for a verification of e.g. the relevance and
reliability of the data provided. Thirdly, while a number of questions asked in
this survey concerned the installers' capacity to absorb the possible duties,
the survey lacked any reference to the profit achieved by these installers in
the IP, thus missing an important element for the evaluation of the impact of
measures. As a consequence no meaningful conclusions could be drawn from the
survey provided.

(791)   An
argument was raised that measures are not in the interest of the Union as they
will increase the price of modules, thus discouraging the end-users/consumers
from making installations. Consequently, the downstream operators would have
far fewer orders and would have to scale down their businesses. This assessment
was based on a study made by Prognos on the possible loss of jobs submitted in
the course of investigation. The study foresees that the great majority of jobs
in the PV market of the Union are in danger, if duties are imposed. The study
uses an estimation by the EPIA according to which the total number of direct
jobs existing in 2011 at all stages of the Union PV market including Union
producers, importers, the upstream and downstream operators is 265 000. Taking
as a starting point the 2011 estimation on the total direct PV jobs, the study
by Prognos concluded that out of 265 000 jobs up to 242 000 jobs will be lost
in three years, depending on the level of duties. Most of the job losses will
allegedly occur in the downstream market, which in 2011 was said by Prognos to
employ about 220 000 people.

(792)   The
investigation did not confirm the above scenario and pointed to a much lower
number of direct jobs existing in the Union PV market in 2011, during the IP
and in 2012.

(793)   To start with, the
investigation raised doubt as to the accuracy of the total number of direct PV
jobs as estimated by EPIA. In particular, during the verification visit at the
EPIA, it turned out that the underlying data leading to a conclusion of 265 000
was imprecise and did not allow for such conclusion. In fact, the information
obtained during the verification visit indicates that the number of direct PV
jobs calculated for 2011 would have a margin of error of up to 20 %. In
addition, the estimation includes employment in other European countries
outside the Union as well the employment related to thin film product, which
falls outside the scope of this investigation.

(794)   It is clarified that the
margin of error of 20 % in the total number of direct PV jobs as estimated by
the European PV association, which may apply upward or downward, became
apparent during the verification visit at EPIA. It shows the difficulty to
assess precise figures on employment in the downstream sector as there are few
sources, often contradictory, of data collection.

(795)   Despite these doubts, even
if the original estimation of jobs was used to analyse the impact on the
measures the following remarks must be made. The estimation covers the European
PV jobs in 2011, which was correlated with a very high number of PV
installations in the Union that year (about 20 GW). It is reasonable to assume
that in view of the decline in installations reaching about 17,5 GW in the IP
and 15 GW in 2012 the number of downstream jobs in particular, as directly
correlated to the level of installations decreased accordingly. To this end,
publicly available specialised press indicated that in Germany, the largest
national market, between 2011 and 2012 the employment in the PV sector
decreased from 128 000 to 100 000, including the jobs on the side of the producers.
Furthermore, the investigation raised serious doubts on whether the figure
included only full time jobs dedicated solely to the PV industry. To this end,
the investigation revealed that, especially in the downstream market
(installations) the PV activity is in general only a part of a much broader
business activity, primary business activity being heating or electricity
installations, plumbing etc.

(796)   In view of the above, it is
likely that the imposition of measures may lead to an increase of prices in the
Union of the product under the investigation thus possibly generating less PV
installations in the short term. Nevertheless the jobs in this part of the
market may be negatively affected only to a limited extent in view of the
following. Firstly, the PV related activity for at least some of the installers
constitutes only part of their business activities and is also seasonal.
Therefore, the installers should be able to carry out other activities in a situation
of reduced demand for PV installations. As the renewable and energy efficiency
objectives agreed at the level of the Union are legally binding on Member
States, it is to be expected that reduced demand for solar installations will
translate into increased demand for other forms of renewable electricity and
energy efficiency. Many of the employees in the downstream sector are likely to
have the skills necessary to benefit from the increased demand in these
neighbouring sectors. Secondly, in view of the existing profits in the
downstream market (see recital (785) above) installers should be able to absorb
part of the price increase thus limiting the impact on the final prices and on
the demand for PV installations.

(797)   Independently of the
imposition of duties, the publicly available forecasts on the demand for the PV
installations indicate a likely contraction in demand in 2013, with annual
installations of between 9,8 GW and 16,5 GW in 2013, which would likely have in
any event a negative impact on the number of jobs in the downstream market.

(798)   Finally, it is remarked that
the possible increase of PV prices would be likely to happen in any event as
the production of the PRC supplying the Union market appears to be largely
loss-making, which is an unsustainable situation.

(799)   As
far as job losses are concerned, the information gathered during the
investigation confirmed that the downstream sector has been experiencing job
losses as a result of the contraction of the demand for PV installations in the
Union of about 5 GW between 2011 and 2012. These job losses cannot be linked to
the measures as they reflected a market evolution. Moreover, a further
contraction of demand is foreseen in 2013 and 2014 and will most likely result
in further job losses in the PV sector. Similarly, such evolution of the demand
was forecasted by major research centres before the initiation of the
investigation and therefore such job losses cannot be attributed to the
imposition of measures.

(800)   The
Union industry submitted a study by a consultant PriceWaterHouseCoopers (‘PWC’)
on the possible impact of measure on PV related jobs. The PWC study refers to the
study by Prognos, which envisaged high job losses in the PV market resulting
from the imposition of measures, which was submitted by AFASE prior to the imposition
of provisional anti-dumping duties and which was addressed in recital (791) above.
The PWC study criticised the study by Prognos pointing to the fact that the
total job losses estimated by Prognos exceeded in fact the total number of
existing PV jobs in the Union. Regarding the impact of duties in the Union
market, PWC reached opposite conclusions than Prognos, forecasting a net
positive impact on jobs in the Union and that the benefits outweigh the
possible negative effects of the duties (e.g. on demand).

(801)   AFASE argued that the
Commission did not disclose the source of the margin of error of 20 % for the
direct PV jobs calculated for 2011 by EPIA.

(802)   This margin of error of 20%,
which may apply upward or downward, became apparent during the verification
visit at EPIA. It shows the difficulty to assess precise figures on employment
in the downstream sector as there are few sources, often contradictory, of data
collection.

(803)   In
reply to the final disclosure some parties claimed that
the Commission's analysis was silent about the fact that the duties will only
add to the loss of jobs resulting from the smaller number of PV installations
after 2011. It was argued that such job losses, in particular in the downstream
sector, are closely linked to the fact that the PV installers are dependent on
the solar installations. In addition, AFASE criticised the Commission for not
having properly considered the survey it conducted amongst its members and a
similar survey conducted by a UK Solar Trade Association, which allegedly
illustrated such dependence.

(804)   As regards the alleged
silence of the Commission concerning the impact of the duties on jobs,
reference is made to recitals (799) and (800) above, where the claims
concerning the impact of the measures on jobs in the PV sector are addressed
and where it is acknowledged that indeed the jobs in the downstream sector
might be affected in the short term due to the measures.

(805)   With regard to the survey
conducted by AFASE and the UK Solar Trade Association, in response to the final disclosure the identity of the
companies participating in the interview was provided. The surveys remained
however deficient, since for example certain replies were incomplete. The
analysis of the surveys showed the following. Concerning the survey by AFASE,
it is firstly noted that the majority of the 50 installers who replied to the
interview declared to be exclusively active in the PV market. 15 out of 50
installers declared to be also active in other non-PV activities such heating,
electrical installations, and wind to a certain extent. In case of the UK
survey, 21 out of 31 UK companies who replied to the interview had also other
than PV activities. This result shows that with regards to a nearly a half of
the project developers and installers, the finding set out in recital (247) to
the provisional anti-dumping Regulation on the ability to perform other
activities such as electrical and heating installations, plumbing and other
green energies installations, is correct. It is, however, recognized that this
ability may exist to a lesser extent than assumed in the provisional anti-dumping
Regulation. Its mitigating impact on job losses may therefore be less important
than initially assumed. Secondly, some of the operators surveyed by AFASE and
the UK Solar Trade Association have been using products produced in the Union
and some foresee buying non-Chinese products following the measures to avoid a
price increase. Thus, their dependence on the Chinese imports and the impact of
the measures is expected to be reduced as they can access products produced in
the Union. Thirdly, the estimation of the impact of the measures on the
businesses of all surveyed operators’ did not allow for firm conclusions as
their assessment was very diverse. Some companies were even unable to assess
such impact. Fourthly, also the answers to the question about the number of the
PV projects that risk cancelling in case of duties ranged from 'not many' to
'all projects' in the UK survey. Some operators were unable to make an
estimation. Finally, both surveys lacked the question about the profitability
of the economic operators interviewed, which is important for the assessment of
the possible absorption of the price increase, if any, resulting from the duty.

(806)   Several parties claimed that
installers cannot easily change their activities or switch to other green
energy installations because of the very different technologies and know-how
involved. Therefore, should the duties be imposed, they would go out of
business. After final disclosure, this claim was reiterated by one interested
party, arguing that installers have invested substantial resources in PV
specialisation, such a specific training, which would show that their main
focus is on the PV sector and that they would not be able to switch easily to
other activities.

(807)   This argument was
insufficiently substantiated as it was not demonstrated what precise knowledge
an installer would need to acquire and how difficult and expensive it is to obtain
it. Irrespectively, the institutions acknowledge that installers have developed
know-how specific to the installation of PV modules. However, the development
of this know-how is relatively recent and adds to the primary expertise of the
installers being electrical and heating installations, plumbing etc. It also developed
in response to an unfair practice namely with the massive inflow of subsidised imports
from the PRC. Independently from the specialised skills of the employees of the
installers, the argument has to be considered in parallel with the analysis
made in recitals (792) to (800) above on the employment situation in the
downstream sector which in the short term might be negatively impacted but
which, thanks to sustainable trade, would lead to an increase in the employment
of installers in the mid- to long term. Therefore, the argument was rejected.

(808)   Several parties contested
the ability of the downstream operators to absorb even partly the possible
price increase. This argument was insufficiently substantiated thus preventing
from assessing to which extent this allegation was accurate. Profitability of
the downstream cooperating operators related directly to the product concerned was
assessed at around 11 % on average which leaves to the operators in question
the possibility to absorb at least partially some price increase if any. In
this context, it is recalled that the overall trend of prices is downward.

(809)   In reply to the final
disclosure some parties reiterated the claim of the serious risk of contraction
of demand for solar products in the Union as a result of the measures, which
according to these parties speaks against the measures. One party argued that
the solar energy currently has a high price elasticity of demand and even a
limited increase in the price of solar products would result in a severe
contraction of demand. This party estimated that a countervailing duty in the
range of 30 % may further contract demand by 8 GW whereas a duty of 50 % would
contract demand by 10 GW. In the same tone, AFASE referred to a study made by a
market analyst, which also foresees a contraction of demand of up to 2GW in
2013 as a result of a duty of 50 %, thus a contraction of a much smaller
magnitude.

(810)   Although different
contraction scenarios were submitted by parties during the investigation in
addition to the ones referred to above, they did not contain comparable
results. While it cannot be excluded that the duties might result in a
contraction of demand for PV installations, the quantification of such effect
is difficult to establish in view of the various elements that influence the
attractiveness of the PV installations in the Union. In addition, even if such
contraction were to take place in the short-term, the mid- and long-term
benefits resulting from fair trade are expected to outweigh the short term
negative impact. Finally, AFASE itself recognised that the assessment of the
direct link between the demand and the duties would only be available once
duties are in place. Therefore, this argument was rejected.

(811)   As mentioned in recital (784)
above six questionnaire replies were received from service providers in the PV
sector (logistics, transport, public relations, etc.) thus operators whose
activity is not directly related to the product under investigation. These
replies were found to provide indications on the relative importance of the PV
related activity as compared to the total activity of the cooperating operators
concerned. Despite certain deficiencies in the replies, the data in the
questionnaires allowed to assess that the PV related activity of these
operators is marginal as compared to their total activity. Indeed the PV
related activity represented on average only around 5 % of their total turnover
and around 8 % of total employment. As regards profitability, this was on
average around 7 %. However, it is noted that data concerning profitability
were not complete, as not all operators reported on this item. Therefore, it was concluded that any possible impact of the
measures on the economic situation of the service providers in the PV sector is
unlikely to be significant.

(812)   In view of the above, it was
concluded that the impact of measures on the downstream operators would be to a
limited extent negative in the short term, in view of the higher contraction in
installations than in a counterfactual scenario without duties forecasted by
major research centres and to the extent the duty cannot be absorbed by the
downstream operators. Despite the possible reduction in demand for PV
installations, installers should be able to carry out other activities, whether
related to other green energy sources or the installers’ primary business
activity, as referred to above. It was concluded that, in the light of the data
provided, any possible impact of the measures on the economic situation of the
service providers in the PV sector is unlikely to be significant.

6.6.        Interest of end-users
(consumers)

(813)   No parties directly
representing the interests of end-users such as associations of consumers made
any representations. In this case reference is made to two types of end-users:
consumers (households) and other end-users (e.g. institutions, other investors).
The investigation revealed that only about a quarter of existing PV installations
in the Union (so called roof-top, smaller installations) was ordered by
consumers. The other installations (ground mounted, industrial and commercial
of a much bigger scale) were ordered by other end-users.

(814)   Several parties claimed that
if measures are imposed, consumers would suffer from a price increase of PV
modules. While as a result of duties the prices of PV modules in the Union
market could be expected to rise somewhat, it is likely that the consumers and
other end-users would be affected only to a limited extent because the
investigation revealed that the price of a module represents up to 50 % of the
total costs of a PV installation. In view of the profit margins earned by the
project developers and installers, it is reasonable to assume that the eventual
price increase of modules for the consumer may be at least partly absorbed and
therefore mitigated. On the basis of the available evidence it is concluded
that measures at the proposed duty level will be at least partly taken in by
the supply chain and, therefore, not necessarily result in higher prices for
consumers at the retail level.

(815)   It is further noted that
should duties not be imposed, the likely disappearance of the Union Industry
could leave the consumers with only one source of supply of modules in the
future. In this scenario the Chinese exporting producers would be in a position
to further increase their very strong position on the market and this could
also result in increased prices in the short to medium term to the detriment of
the consumers/end- users. In any case, as mentioned above, the increase in
prices would be likely to happen in any event in view of the fact that the PRC
production is loss-making.

(816)   Some parties argued that the
duties would increase the price of the product under investigation.
Consequently there would be a decline in demand for PV installations as they
would be too expensive for consumers and not attractive enough for the other
investors.

(817)   As already mentioned in
recital (752) even if a temporary increase of prices may happen as a result of
the imposition of measures, the overall trend of prices is downward as
confirmed by several public sources. The argument is therefore dismissed. While
it is difficult to quantify the exact possible price increase resulting from
the measures and a consequent possible contraction of the demand, several
elements are recalled. Firstly, the product under investigation constitutes up
to 50% of the total cost of a PV installation and therefore the duty may be at
least partly absorbed. Secondly, the competition of the Union industry with the
third countries' producers, already present on the Union market, is likely to
keep the prices down. At the same time the Union industry should be able to
achieve better financial results thanks to the economies of scales resulting
from a better utilisation of the production plants and reduced cost of
production. Thirdly, the demand for PV installations is correlated not only
with the price levels of the product under investigation but also with the
level of FITs. At present low levels of demand, as compared to those achieved
in 2011 and the IP, it is expected that the FITs should not decrease as quickly
as in the period considered, allowing for continuous investment in PV projects.
The argument was therefore dismissed

(818)   In reply to the final
disclosure one party contested the above reasoning. It claimed that the
downward price trend cannot be maintained after the imposition of the measures.
The party recalled that the measures represent a very significant cost increase
that cannot be fully offset by cost decreases and or imports from the third
countries. In addition, it was reiterated that the Union industry will not be
able to undertake new investments in plants and machinery and the downstream
operators can absorb a little if their profit is 11 %. Finally there is no
evidence that suggests that FITs might compensate the price increase.

(819)   It is recalled that contrary
to this claim it is not expected that the price increase resulting from the
measures may be fully offset but rather that a temporary increase in prices following
the measures is possible (see recital (247) to the provisional anti-dumping Regulation).
Indeed, such price increase may result from the difference in price levels
between the Chinese subsidised prices and the non-Chinese products. Yet, the
information gathered during the investigation allows claiming that the eventual
price increase may be partly absorbed by a number of factors in view of the
profits in the downstream sector at the level of 11 % on average. Finally,
regarding the claim that there is no evidence that suggests that FITs might
compensate the price increase, it is reasonable to assume that FITs will be
adjusted over time in line with the development of prices for projects

(820)   One party claimed that since
March 2013 modules prices increased by 20 % in the Union and that there is a
severe lack of stock since 2013. The argument was not substantiated and to the
contrary, the public information sources confirm a relative stability of prices
in the second quarter of 2013. Even if that information was correct, it would
only reflect the fact that following registration of imports, the risk of a
possible countervailing duty has been priced in. The argument was therefore
rejected.

(821)   Another party claimed that
the PV projects would not generate a return for an investor if the fall in FITs
is not correlated with falling project costs, including the price of modules,
as they represent a significant part of the costs in a given project. To this
end, it was claimed that the duties would put in question the viability of many
PV projects as they increase the price.

(822)   As mentioned in recital (752)
above, the overall trend of prices of the product under investigation appear to
be downward. Furthermore, the importance of FIT with regard to the market is
decreasing as grid parity is likely to be achieved in several regions. On these
grounds the argument that the price of PV modules could have a negative impact
on PV projects including the question of their viability was rejected.

(823)   One interested party
provided an internal modelling to prove that the viability of many PV projects
was endangered if duties were applied.

(824)   This modelling did not allow
for a proper quantification as to what extent the attractiveness of the
investment in the PV installations (e.g. return on investment) could decline in
the event of increased prices of the product under investigation. Nevertheless,
the assumption that any duty would be entirely passed on to end-users or
consumers, used in the said modelling, is unlikely in view of the existing
profit margins of downstream operators. Moreover, an investment decision is not
only based on the price of modules but also depends on many other factors
including inter alia the existence of a general favourable framework for PV
installations in a given country, the level of support respectively the
electricity price (for grid parity) Therefore this argument had to be rejected.

(825)   On the basis of the above,
it was concluded that the imposition of measures would have overall a limited
impact on consumers and other end-users. This is irrespective of the role of
the national support schemes in stimulating the demand for PV. If national
support schemes are adapted to higher prices for solar panels (by means of
higher FITs), the impact on consumers may be inexistent.

6.7.        Other arguments

(826)   Some parties argued that the
Union industry is not capable of supplying the Union market in the quantities
required and thus if countervailing duties are imposed there is a serious risk
of shortage in the Union, which may lead to a further increase of prices of the
product concerned.

(827)   The investigation has found
this argument to be unjustified. The Union industry has been underutilising
their production capacities since 2009. In the IP, the utilisation rate of the
Union production capacity of modules was 41 % with additional spare capacity of
about 5,7 GW; the utilisation rate of the Union production capacity of cells
was 63 %, with additional spare capacity of about 1,2 GW. Therefore,
thanks to the spare capacity, the Union industry would be able to compete for
an additional part of the market in short term. Also in the medium-term, it is
reasonable to assume that the Union industry will expand its production
capacity to be able to achieve better economies of scale and allow for further
price reductions. Furthermore, there are also other sources of supply in the
world, which are present on the Union market and which will be able to compete
on the Union market in case of decrease of imports of the Chinese products. The
investigation revealed that the existing spare capacity of the non-Chinese
production outside the Union was in the IP, 5,6 GW for modules and, 6 GW for
cells. It is therefore concluded that the total spare capacity of the Union and
third producers outside the Union is sufficient to complement in the short term
the potential decrease in Chinese imports in light of the demand for PV
installations in the EU as forecasted for 2013 (between 9,8 GW and 16,5 GW) and
2014 (9 GW and 17,1 GW) by major research centres such as EPIA.

(828)   Even if more conservative
assumption on the Union production capacity was made (see recital (545) above),
the joint Union and third countries spare capacity would be sufficient to
complement in the short-term the potential decrease of Chinese imports. Also in
the medium-term it is reasonable to assume that the Union industry will expand
its production capacity to be able to achieve economies of scale, which in turn
would allow for further price reduction. Therefore, this argument was rejected.

(829)   Some parties also argued
that the imposition of duties on the product concerned will harm the development
of the PV market in Europe and thus the goals of the EU Agenda 2020 concerning
the renewable sources of energy and a reduction in EU greenhouse gas emissions
will not be achieved.

(830)   To start with, the 2020
goals do not depend on the solar energy exclusively. Equally important are
other green energies such as: wind, biomass, hydro etc. Since no particular
percentage is attributed to the solar energy for the 2020 goals, a slightly
lower number of PV installations is not expected to raise the overall cost of
the 2020 Agenda. Furthermore, the price of solar panels is only one of many
factors, which are vital for the development of the PV industry in the Union.
Equally important are: a favourable legal and financial framework at Union and
national levels, improved access to financing of renewable energies projects
and the investment in R & D. As regards the financing of solar investments,
the imposition of duties will enhance the situation of the Union industry and
of the PV sector in total. As a result, it will also likely enhance access to
capital for both the Union industry and investors in the PV sector. Finally, it
is recalled that the aim of the duty is not to eliminate the Chinese imports
but restore fair competition. Should the price of the product concerned rise
the evidence on the profits achieved in the downstream market allows the
assumption that the price increase will be partly absorbed by the operators in
the downstream market. Therefore the price of modules should not rise
significantly for the end-users/consumers and the demand for solar
installations could be maintained in the forecasted range.

(831)   On the basis of the above,
it is concluded that the imposition of measures would not, overall, have a
significant adverse impact on other EU policies.

6.8.        Conclusion on the Union
interest

(832)   The overall positive effects
for the Union industry outweigh the likely negative impact on other operators
on the PV market including end-users (consumers).

(833)   In view of the above, it is
concluded that based on the information available concerning the Union
interest, there are no compelling reasons against the imposition of definitive
measures on imports of the product concerned originating in the PRC.

7.           DEFINITIVE COUNTERVAILING
MEASURES

(834)   In view of the conclusions
reached with regard to subsidisation, injury, causation and Union interest,
definitive countervailing measures should be imposed in order to prevent
further injury being caused to the Union industry by the subsidised imports.

7.1.        Injury elimination level

(835)   For the purpose of
determining the level of these measures, account was taken of the subsidy
margins found and the amount of duty necessary to eliminate the injury
sustained by the Union producers, without exceeding the subsidy margins found.

(836)   When calculating the amount
of duty necessary to remove the effects of the injurious subsidisation, it was
considered that any measures should allow the Union industry to cover its costs
of production and to obtain a profit before tax that could be reasonably
achieved by this industry under normal conditions of competition, i.e. in the
absence of subsidised imports, on sales of the like product in the Union. In
line with the jurisprudence of the General Court, such profit is the one realised
at the beginning of the period considered, i.e. before the increase in
subsidised imports. Therefore the target profit was fixed at 8 % on the basis
of the weighted average profit realised by the EU industry in 2009 and 2010 for
modules and cells when profitable.

(837)   Following the final
disclosure, the Union industry claimed that the profitability of the year 2010
should be used as the level of profitability that Union industry could
reasonably achieve in the absence of subsidised imports rather than the average
profit margin of the years 2009 and 2010. In this respect, it was argued that,
the profitability in 2009 was insufficient and the circumstances in the two
years were clearly distinct given in particular the development in consumption
in 2010 which alleviated the effects of subsidization in that year. In this
regard, it should be noted that it is not relevant whether the average profit
margin realised by the Union industry was ‘sufficient’ when determining the
injury elimination level. The injury elimination level should be based on the
profit which can be reasonably achieved in the absence of subsidised imports.
It is the Investigating Authorities’ practice to consider that this level had
been reached at the beginning of the period considered. As in this case the
Union industry realised losses with regard to the sales of cells at the
beginning of the period considered in 2009, this methodology was unsuitable and
it was deemed more reliable to base the determination of the injury elimination
level on the average profit margin of the first and the second year of the
period considered. In this regard it was also considered that it is irrelevant
that circumstances were different in these two years.

(838)   Another party reiterated
that the different target profits should be established for modules and cells,
as the profitability of these product types showed different trends during the
period considered. While indicators were shown separately for each product
type, the conclusions reached for each indicator refer to the product under
investigation as a whole. It is also recalled that modules and cells are one
single product and therefore the subsidy margins and the injury elimination
level were established on this basis.

(839)   On this basis, a non-injurious
price was calculated for the Union industry for the like product. The
non-injurious price was obtained by adding the abovementioned profit margin of 8
% to the cost of production during the IP of the sampled Union producers.

(840)   The necessary price increase
was then determined on the basis of a comparison of the weighted average import
price of the sampled cooperating exporting producers in the PRC, as established
for the price undercutting calculations, duly adjusted for importation costs
and customs duties with the weighted average non-injurious price of the like
product sold by the sampled Union producers on the Union market during the IP.
Any difference resulting from this comparison was then expressed as a
percentage of the weighted average CIF import value.

(841)   One party argued that sales
of the sampled Union producers focused on the high-end market, such as the
residential/small commercial sector, which attracted higher FITs and suggested
that the Union industry’s sales price should therefore be adjusted accordingly.
It should be noted that this claim should not be decisive for the calculation
of the injury margin, since the investigation showed that Union producers were
not profitable.

7.2.        Definitive measures

(842)   In the light of the foregoing,
and in accordance with Article 15 of the basic Regulation, a definitive
countervailing duty should be imposed on imports of crystalline silicon
photovoltaic modules and key components (i.e. cells) originating in or
consigned from the PRC at the level of the lower of the subsidy or injury
margins found, in accordance with the lesser duty rule. In this case, the duty
rate should accordingly be set at the level of the subsidy margins found.

(843)   Given the high rate of
cooperation of Chinese exporting producers, the ‘all other companies’ duty was
set at the level of the highest duty to be imposed on the companies,
respectively, sampled or cooperating in the investigation. The ‘all other
companies’ duty will be applied to those companies which had not cooperated in
the investigation.

(844)   For the cooperating
non-sampled Chinese companies listed in the Annex, the definitive duty rate is
set at the weighted average of the rates of the sampled companies.

(845)   On the basis of the above,
the rates at which such duties will be imposed are set as follows:

Company Name || Subsidy margin || Injury margin || Countervailing duty

Wuxi Suntech Power Co. Ltd Suntech Power Co. Ltd Wuxi Sun-Shine Power Co. Ltd Luoyang Suntech Power Co. Ltd Zhenjiang Ren De New Energy Science Technology Co. Ltd Zhenjiang Rietech New Energy Science Technology Co. Ltd || 4,9 % || 46,3 % || 4,9 %

Yingli Energy (China) Co. Ltd; Baoding Tianwei Yingli New Energy Resources Co. Ltd; Hainan Yingli New Energy Resources Co. Ltd; Hengshui Yingli New Energy Resources Co. Ltd; Tianjin Yingli New Energy Resources Co. Ltd; Lixian Yingli New Energy Resources Co. Ltd; Baoding Jiasheng Photovoltaic Technology Co. Ltd; Beijing Tianneng Yingli New Energy Resources Co. Ltd; Yingli Energy (Beijing) Co. Ltd || 6,3% || 41,8 % || 6,3%

Changzhou Trina Solar Energy Co. Ltd; Trina Solar (Changzhou) Science & Technology Co. Ltd; Changzhou Youze Technology Co. Ltd; Trina Solar Energy (Shanghai) Co. Ltd; Yancheng Trina Solar Energy Technology Co. Ltd || 3,5 % || 48,2 % || 3,5 %

JingAo Solar Co. Ltd; Shanghai JA Solar Technology Co. Ltd, JA Solar Technology Yangzhou Co. Ltd; Hefei JA Solar Technology Co. Ltd, Shanghai JA Solar PV Technology Co. Ltd; || 5,0 % || 56,5 % || 5,0 %

Jiangxi LDK Solar Hi-Tech Co. Ltd; LDK Solar Hi-Tech (Nanchang) Co. Ltd; LDK Solar Hi-Tech (Suzhou) Co. Ltd, || 11,5 % || 58,2 % || 11,5 %

LDK Solar Hi-Tech (Hefei) Co. Ltd || 11,5 % || 58,2 % || 11,5 %

Delsolar (Wujiang) Co. Ltd, || de minimis || 64,9 % || 0,0 %

Renesola Jiangsu Ltd Renesola Zhejiang Ltd || 4,6 % || 80,1 % || 4,6 %

Jinko Solar Co. Ltd Jinko Solar Import and Export Co. Ltd ZHEJIANG JINKO SOLAR CO. LTD ZHEJIANG JINKO SOLAR TRADING CO. LTD || 6,5 % || 60,1 % || 6,5 %

Companies listed in the Annex || 6,4 % || 51,1 % || 6,4 %

All other companies || 11,5 % || 80,1 % || 11,5 %

(846)   The above definitive
countervailing measures are established in the form of ad valorem
duties.

(847)   The individual company
countervailing duty rates specified in this Regulation were established on the
basis of the findings of the present investigation. Therefore, they reflect the
situation found during that investigation with respect to these companies.
These duty rates (as opposed to the countrywide duty applicable to ‘all other
companies’) are thus exclusively applicable to imports of products originating
in the country concerned and produced by the companies and thus by the specific
legal entities mentioned. Imported products produced by any other company not
specifically mentioned in Article 1 with its name and address, including
entities related to those specifically mentioned, cannot benefit from these
rates and shall be subject to the duty rate applicable to ‘all other
companies’.

(848)   Any claim requesting the
application of an individual company countervailing duty rate (e.g. following a
change in the name of the entity or following the setting-up of new production
or sales entities) should be addressed to the Commission[102] forthwith with all relevant
information, in particular any modification in the company's activities linked
to production, domestic and export sales associated with, for example, that
name change or that change in the production and sales entities. If
appropriate, the Regulation will then be amended accordingly by updating the
list of companies benefiting from individual duty rates.

(849)   In order to ensure proper
enforcement of the countervailing duty, the residual duty level should not only
apply to the non-cooperating exporting producers but also to those producers
which did not have any exports to the Union during the IP.

(850)   Measures are imposed to
allow the producers in the Union to recover from the injurious effect of
subsidy. To the extent that there would be any initial imbalance between the
potential benefit for producers in the Union and the cost for other economic
operators in the Union, this imbalance could be offset by an increase and/or
restart of the production in the Union. However, the
envisaged scenario of increased production in the Union may not be in line with
the market development in this volatile market. Union consumption of modules
increased by 264 % between 2009 and 2011, only to decrease by 43 percentage
points during the 6 month period between 2011 and the IP. The volatility is
even more impressive when looking at the period of 2006-2011, where the Union
consumption of modules increased from less than 1 GW to almost 20 GW or an
increase of around 2000% in just five years. This volatility is expected to
continue, and forecasts published by business associations show differences of
100% and more between the different scenarios even for the medium term period of
2014-2015.

(851)   For
these reasons, it is considered appropriate, in such exceptional circumstances,
to limit the duration of measures to a period of two years only.

(852)   This
period should be enough for the producers in the Union to increase and/or restart
their production, while at the same time not significantly endanger the
situation of other economic operators in the Union. It is considered that the period of two years will be the most
appropriate to analyse whether the imposition of measures had indeed the effect
of increasing Union production and thereby balancing the negative effects on
other economic operators in the Union.

(853)   Following
final disclosure, one Union producer raised the argument that the limited
duration of 2 years is too short to recover from the injury suffered. In
addition it was argued that a duration of 2 years would not allow Union
producers to file business plans for the current and the coming business year.
In this respect, it is noted that the duration of the measures until December
2015, which should be sufficient for Union producers to file business plans
until 2015.

(854)   Furthermore,
the Union producer did not contest the reasons for which the duration was
limited to two years, notably the volatility of the market. The producer even
explicitly appreciated a review in case the measures need to be changed due to
changed market situation. Since the likelihood of a change in market
circumstances within two years is indeed high in this volatile market, it is
considered appropriate to limit the measures to two years from the outset.

(855)   Following
final disclosure, the complainant argued that two years are insufficient to
invest in production, referring to recital (852). However, due to the
substantial spare capacity of the Union industry, an increase in production can
be done through a better utilisation of the existing production capacities,
which should be feasible without significant additional investments.

(856)   The complainant
further argued that an imposition of definitive countervailing duties for a
period of two years is insufficient for the Union Industry to recover from the
injurious effects of past subsidisation. However, the imposition of countervailing
duties cannot only look at the interests of the Union Industry alone, but needs
to balance the potential benefit for producers in the Union and the cost for
other economic operators in the Union. On this basis, the decision to limit
measures to two years is maintained.

(857)   All parties were informed of
the essential facts and considerations on the basis of which it was intended to
recommend the imposition of a definitive countervailing duty on imports of
crystalline silicon PV modules or panels and cells of the type used in
crystalline silicon PV modules or panels, originating in or consigned from the
PRC (final disclosure). All parties were granted a period within which they
could make comments on the final disclosure.

(858)   The oral and written
comments submitted by the interested parties were considered and taken into
account where appropriate.

7.3.        Registration and
retroactivity

(859)   As mentioned in above
recital (7), the Commission adopted on 1 March 2013 Regulation No 182/2013
making imports of crystalline silicon PV modules and key components (i.e. cells
and wafers) originating in or consigned from the People’s Republic of China
subject to registration as of 6 March 2013.

(860)   As of 6 June 2013,
registration of imports for the purpose of protection against dumped imports
was terminated through the provisional anti-dumping Regulation. As far as the
current anti-subsidy investigation is concerned and in view of the above
findings, the registration of imports for the purpose of the anti-subsidy
investigation in accordance with Article 24(5) of the basic Regulation should
also be discontinued.

(861)   As concerns a possible
retroactive application of countervailing measures, the criteria set out in
Article 16(4) of the basic Regulation have to be evaluated. Pursuant to this article,
a definitive countervailing duty may be levied on products which were entered
for consumption no more than 90 days prior to the date of application of
provisional measures but not prior to the initiation of the investigation.

(862)   In this case, no provisional
countervailing measures were applied. As a consequence, it is decided that the
definitive countervailing duty shall not be levied retroactively.

8.           FORM OF THE MEASURES

(863)   Subsequent to the adoption of the provisional anti-dumping measures in the
parallel anti-dumping investigation[103], a
group of cooperating exporting producers, including their related companies in
the PRC and in the European Union, and together with the China Chamber of
Commerce for Import and Export of Machinery and Electronic Products (‘CCCME’)
offered a joint price undertaking in accordance with Article 8(1) of the basic
anti-dumping Regulation[104].
The undertaking offer was also supported by the Chinese authorities. The Commission examined the offer, and by
Decision 2013/423/EU[105]
accepted this undertaking offer.

(864)   Subsequent
to Decision 2013/423/EU, the exporting producers together with CCCME submitted
a notification to amend their initial undertaking offer. They requested to
revise the undertaking to take account of the exclusion of wafers from the
product scope as described in recitals (46) and (99). In addition, a number of
additional exporters, within the deadline stipulated in Article 8 (2) of the
basic anti-dumping Regulation, requested to be included in the undertaking.

(865)   The
same group of exporting producers, together with the CCCME, within the deadline
specified in Article 13(2) of the basic Regulation[106], requested
that the terms of that Undertaking be accepted by the Commission to eliminate
any injurious effects also of the subsidised imports.
By Decision 2013/XXX/EU, the Commission accepted this offer with regards to the definitive
duties.

HAS ADOPTED THIS REGULATION:

Article 1

1.           A definitive
countervailing duty is hereby imposed on imports of crystalline silicon
photovoltaic modules or panels and cells of the type used in crystalline
silicon photovoltaic modules or panels (the cells have a thickness not
exceeding 400 micrometres), currently falling within CN codes ex 8501 31 00, ex
8501 32 00, ex 8501 33 00, ex 8501 34 00, ex 8501 61 20, ex 8501 61 80, ex 8501
62 00, ex 8501 63 00, ex 8501 64 00 and ex 8541 40 90 (TARIC codes 8501 31 00
81, 8501 31 00 89, 8501 32 00 41, 8501 32 00 49, 8501 33 00 61, 8501 33 00 69,
8501 34 00 41, 8501 34 00 49, 8501 61 20 41, 8501 61 20 49, 8501 61 80 41, 8501
61 80 49, 8501 62 00 61, 8501 62 00 69, 8501 63 00 41, 8501 63 00 49, 8501 64
00 41, 8501 64 00 49, 8541 40 90 21, 8541 40 90 29, 8541 40 90 31 and 8541 40
90 39) and originating in or consigned from the People’s Republic of China,
unless they are in transit in the sense of Article V GATT.

The following product types are excluded from
the definition of the product concerned:

–
solar chargers that consist of less than six
cells, are portable and supply electricity to devices or charge batteries,

–
thin film photovoltaic products,

–
crystalline silicon photovoltaic products that
are permanently integrated into electrical goods, where the function of the
electrical goods is other than power generation, and where these electrical
goods consume the electricity generated by the integrated crystalline silicon
photovoltaic cell(s),

–
modules or panels with a output voltage not
exceeding 50 V DC and a power output not exceeding 50 W solely for direct use
as battery chargers in systems with the same voltage and power characteristics.

2.           The rate of the definitive
countervailing duty applicable to the net, free-at-Union-frontier price, before
duty, of the products described in paragraph 1 and manufactured by the
companies listed below shall be as follows:

Company || Duty rate || TARIC additional code

Wuxi Suntech Power Co. Ltd; Suntech Power Co. Ltd; Wuxi Sunshine Power Co. Ltd; Luoyang Suntech Power Co. Ltd; Zhenjiang Ren De New Energy Science Technology Co. Ltd; Zhenjiang Rietech New Energy Science Technology Co. Ltd, || 4,9 % || B796

Yingli Energy (China) Co. Ltd; Baoding Tianwei Yingli New Energy Resources Co. Ltd; Hainan Yingli New Energy Resources Co. Ltd; Hengshui Yingli New Energy Resources Co. Ltd; Tianjin Yingli New Energy Resources Co. Ltd; Lixian Yingli New Energy Resources Co. Ltd; Baoding Jiasheng Photovoltaic Technology Co. Ltd; Beijing Tianneng Yingli New Energy Resources Co. Ltd; Yingli Energy (Beijing) Co. Ltd || 6,3 % || B797

Changzhou Trina Solar Energy Co. Ltd; Trina Solar (Changzhou) Science & Technology Co. Ltd; Changzhou Youze Technology Co. Ltd; Trina Solar Energy (Shanghai) Co. Ltd; Yancheng Trina Solar Energy Technology Co. Ltd || 3,5 % || B791

JingAo Solar Co. Ltd; Shanghai JA Solar Technology Co. Ltd, JA Solar Technology Yangzhou Co. Ltd; Hefei JA Solar Technology Co. Ltd, Shanghai JA Solar PV Technology Co. Ltd || 5,0 % || B794

Jiangxi LDK Solar Hi-Tech Co. Ltd; LDK Solar Hi-Tech (Nanchang) Co. Ltd; LDK Solar Hi-Tech (Suzhou) Co. Ltd, || 11,5 % || B793

LDK Solar Hi-Tech (Hefei) Co. Ltd || 11,5 % || B927

Delsolar (Wujiang) Ltd || 0% || B792

Renesola Jiangsu Ltd Renesola Zhejiang Ltd || 4,6 % || B921

Jinko Solar Co. Ltd Jinko Solar Import and Export Co. Ltd ZHEJIANG JINKO SOLAR CO. LTD ZHEJIANG JINKO SOLAR TRADING CO. LTD || 6,5 % || B845

Companies listed in the Annex || 6,4 % ||

All other companies || 11,5 % || B999[107]

3.           Unless otherwise
specified, the provisions in force concerning customs duties shall apply.

Article 2

1.           Imports declared for
release into free circulation for products currently falling within CN code ex
8541 40 90 (TARIC codes 8541 40 90 21, 8541 40 90 29, 8541 40 90 31 and 8541 40
90 39) which are invoiced by companies from which undertakings are accepted by
the Commission and whose names are listed in the Annex of Decision 2013/XXX/EU,[108]
shall be exempt from the anti-subsidy duty imposed by Article 1, on condition
that:

(a)
a company listed in the Annex of Decision 2013/XXX/EU manufactured, shipped and invoiced
directly the products referred to above or via its related company also listed
in the Annex of Decision 2013/XXX/EU
either to their related companies in the Union acting as an importer and
clearing the goods for free circulation in the Union or to the first
independent customer acting as an importer and clearing the goods for free
circulation in the Union; and

(b)
such imports are accompanied by an undertaking
invoice which is a commercial invoice containing at least the elements and the
declaration stipulated in Annex 2 of this Regulation and

(c)
such imports are accompanied by an Export
Undertaking Certificate according to Annex 3 of this Regulation; and

(d)
the goods declared and presented to customs
correspond precisely to the description on the undertaking invoice.

2.           A customs debt shall be
incurred at the time of acceptance of the declaration for release into free
circulation:

(a)
whenever it is established, in respect of
imports described in paragraph 1, that one or more of the conditions listed in
that paragraph are not fulfilled; or

(b)
when the Commission withdraws its acceptance of
the undertaking pursuant to Article 13(9) of Regulation (EC) No 597/2009
in a Regulation or Decision which refers to particular transactions and
declares the relevant undertaking invoices as invalid.

Article 3

The companies from which undertakings are accepted by
the Commission and whose names are listed in the Annex of Decision 2013/XXX/EU and subject to certain
conditions specified therein, will also issue an invoice for transactions which
are not exempted from the anti-subsidy duties. This invoice is a commercial
invoice containing at least the elements stipulated in Annex 4 of this Regulation.

Article 4

Registration of imports resulting from
Commission Regulation (EU) No 182/2013 making imports of crystalline silicon PV
modules and key components (i.e. cells and wafers) originating in or consigned
from the People’s Republic of China subject to registration shall be
discontinued.

Article 5

This Regulation shall enter into force on
the day following that of its publication in the Official Journal of the
European Union. It shall be in force for a period of 2 years..

This Regulation shall be binding
in its entirety and directly applicable in all Member States.

Done at Brussels,

For
the Council

The
President

ANNEX 1

Name of the Company || TARIC additional code

Anhui Schutten Solar Energy Co. Ltd Quanjiao Jingkun Trade Co. Ltd || B801

Anji DaSol Solar Energy Science & Technology Co. Ltd || B802

Canadian Solar Manufacturing (Changshu) Inc. Canadian Solar Manufacturing (Luoyang) Inc. CSI Cells Co. Ltd CSI Solar Power (China) Inc. || B805

Changzhou Shangyou Lianyi Electronic Co. Ltd || B807

CHINALAND SOLAR ENERGY CO. LTD || B808

CEEG Nanjing Renewable Energy Co. Ltd CEEG (Shanghai) Solar Science Technology Co. Ltd China Sunergy (Nanjing) Co. Ltd China Sunergy (Shanghai) Co. Ltd China Sunergy (Yangzhou) Co. Ltd || B809

Chint Solar (Zhejiang) Co. Ltd || B810

ChangZhou EGing Photovoltaic Technology Co. Ltd || B811

ANHUI RINENG ZHONGTIAN SEMICONDUCTOR DEVELOPMENT CO. LTD. CIXI CITY RIXING ELECTRONICS CO. LTD. HUOSHAN KEBO ENERGY & TECHNOLOGY CO. LTD. || B812

CNPV Dongying Solar Power Co. Ltd || B813

CSG PVtech Co. Ltd || B814

DCWATT POWER Co. Ltd || B815

Dongfang Electric (Yixing) MAGI Solar Power Technology Co. Ltd || B816

EOPLLY New Energy Technology Co. Ltd SHANGHAI EBEST SOLAR ENERGY TECHNOLOGY CO. LTD JIANGSU EOPLLY IMPORT & EXPORT CO. LTD || B817

Era Solar Co. Ltd || B818

ET Energy Co. Ltd ET Solar Industry Limited || B819

GD Solar Co. Ltd || B820

Guodian Jintech Solar Energy Co. Ltd || B822

Hangzhou Bluesun New Material Co. Ltd || B824

Hangzhou Zhejiang University Sunny Energy Science and Technology Co. Ltd Zhejiang Jinbest Energy Science and Technology Co. Ltd || B825

Hanwha SolarOne Co. Ltd || B929

Hanwha SolarOne (Qidong) Co. Ltd || B826

Hengdian Group DMEGC Magnetics Co. Ltd || B827

HENGJI PV-TECH ENERGY CO. LTD. || B828

Himin Clean Energy Holdings Co. Ltd || B829

Jetion Solar (China) Co. Ltd Junfeng Solar (Jiangsu) Co. Ltd Jetion Solar (Jiangyin) Co. Ltd || B830

Jiangsu Green Power PV Co. Ltd || B831

Jiangsu Hosun Solar Power Co. Ltd || B832

Jiangsu Jiasheng Photovoltaic Technology Co. Ltd || B833

Jiangsu Runda PV Co. Ltd || B834

Jiangsu Sainty Machinery Imp. And Exp. Corp. Ltd Jiangsu Sainty Photovoltaic Systems Co. Ltd || B835

Jiangsu Seraphim Solar System Co. Ltd || B836

Changzhou Shunfeng Photovoltaic Materials Co. Ltd Jiangsu Shunfeng Photovoltaic Electronic Power Co. Ltd Jiangsu Shunfeng Photovoltaic Technology Co. Ltd || B837

Jiangsu Sinski PV Co. Ltd || B838

Jiangsu Sunlink PV Technology Co. Ltd || B839

Jiangsu Zhongchao Solar Technology Co. Ltd || B840

Jiangxi Risun Solar Energy Co. Ltd || B841

Jiangyin Hareon Power Co. Ltd Taicang Hareon Solar Co. Ltd Hareon Solar Technology Co. Ltd Hefei Hareon Solar Technology Co. Ltd Jiangyin Xinhui Solar Energy Co. Ltd Altusvia Energy (Taicang) Co, Ltd || B842

Jinggong P-D Shaoxing Solar Energy Tech Co. Ltd || B844

Jinzhou Yangguang Energy Co. Ltd Jinzhou Huachang Photovoltaic Technology Co. Ltd Jinzhou Jinmao Photovoltaic Technology Co. Ltd Jinzhou Rixin Silicon Materials Co. Ltd Jinzhou Youhua Silicon Materials Co. Ltd || B795

Juli New Energy Co. Ltd || B846

Jumao Photonic (Xiamen) Co. Ltd || B847

Kinve Solar Power Co. Ltd (Maanshan) || B849

GCL SOLAR POWER (SUZHOU) LIMITED GCL-Poly Solar Power System Integration (Taicang) Co. Ltd GCL Solar System (Suzhou) Limited GCL-Poly (Suzhou) Energy Limited Jiangsu GCL Silicon Material Technology Development Co. Ltd Jiangsu Zhongneng Polysilicon Technology Development Co. Ltd Konca Solar Cell Co. Ltd Suzhou GCL Photovoltaic Technology Co. Ltd || B850

Lightway Green New Energy Co. Ltd Lightway Green New Energy (Zhuozhou) Co. Ltd || B851

Motech (Suzhou) Renewable Energy Co. Ltd || B852

Nanjing Daqo New Energy Co. Ltd || B853

LEVO SOLAR TECHNOLOGY CO. LTD NICE SUN PV CO. LTD || B854

Ningbo Jinshi Solar Electrical Science & Technology Co. Ltd || B857

Ningbo Komaes Solar Technology Co. Ltd || B858

Ningbo Osda Solar Co. Ltd || B859

Ningbo Qixin Solar Electrical Appliance Co. Ltd || B860

Ningbo South New Energy Technology Co. Ltd || B861

Ningbo Sunbe Electric Ind Co. Ltd || B862

Ningbo Ulica Solar Science & Technology Co. Ltd || B863

Perfectenergy (Shanghai) Co. Ltd || B864

Perlight Solar Co. Ltd || B865

Phono Solar Technology Co. Ltd Sumec Hardware & Tools Co. Ltd || B866

RISEN ENERGY CO. LTD || B868

SHANDONG LINUO PHOTOVOLTAIC HI-TECH CO. LTD || B869

SHANGHAI ALEX NEW ENERGY CO. LTD SHANGHAI ALEX SOLAR ENERGY SCIENCE & TECHNOLOGY CO. LTD || B870

BYD(Shangluo)Industrial Co.Ltd Shanghai BYD Co. Ltd || B871

Shanghai Chaori International Trading Co. Ltd Shanghai Chaori Solar Energy Science & Technology Co. Ltd || B872

Propsolar (Zhejiang) New Energy Technology Co. Ltd Shanghai Propsolar New Energy Co. Ltd || B873

Lianyungang Shenzhou New Energy Co. Ltd Shanghai Shenzhou New Energy Development Co. Ltd SHANGHAI SOLAR ENERGY S&T CO. LTD || B875

Jiangsu ST-Solar Co. Ltd Shanghai ST-Solar Co. Ltd || B876

Shanghai Topsolar Green Energy Co. Ltd || B877

Shenzhen Sacred Industry Co. Ltd || B878

Leshan Topray Cell Co. Ltd Shanxi Topray Solar Co. Ltd Shenzhen Topray Solar Co. Ltd || B880

Shanghai Sopray New Energy Co. Ltd Sopray Energy Co. Ltd || B881

Ningbo Sun Earth Solar Energy Co. Ltd NINGBO SUN EARTH SOLAR POWER CO. LTD. SUN EARTH SOLAR POWER CO. LTD. || B882

TDG Holding Co. Ltd || B884

Tianwei New Energy (Chengdu) PV Module Co. Ltd Tianwei New Energy Holdings Co. Ltd Tianwei New Energy (Yangzhou) Co. Ltd || B885

Wenzhou Jingri Electrical and Mechanical Co. Ltd || B886

Winsun New Energy Co. Ltd || B887

Wuhu Zhongfu PV Co. Ltd || B889

Wuxi Saijing Solar Co. Ltd || B890

Wuxi Solar Innova PV Co. Ltd || B892

Wuxi Machinery & Equipment Import & Export Co. Ltd Wuxi Taichang Electronic Co. Ltd Wuxi Taichen Machinery & Equipment Co. Ltd || B893

Shanghai Huanghe Fengjia Photovoltaic Technology Co. Ltd State-run Huanghe Machine-Building Factory Import and Export Corporation Xi’an Huanghe Photovoltaic Technology Co. Ltd || B896

Wuxi LONGi Silicon Materials Co. Ltd Xi’an LONGi Silicon Materials Corp. || B897

Years Solar Co. Ltd || B898

Yuhuan BLD Solar Technology Co. Ltd Zhejiang BLD Solar Technology Co. Ltd || B899

Yuhuan Sinosola Science & Technology Co. Ltd || B900

Yunnan Tianda Photovoltaic Co. Ltd || B901

Zhangjiagang City SEG PV Co. Ltd || B902

Zhejiang Global Photovoltaic Technology Co. Ltd || B904

Zhejiang Heda Solar Technology Co. Ltd || B905

Zhejiang Jiutai New Energy Co. Ltd Zhejiang Topoint Photovoltaic Co. Ltd || B906

Zhejiang Kingdom Solar Energy Technic Co. Ltd || B907

Zhejiang Koly Energy Co. Ltd || B908

Zhejiang Longbai Photovoltaic Tech Co. Ltd || B909

Zhejiang Mega Solar Energy Co. Ltd Zhejiang Fortune Photovoltaic Co. Ltd || B910

Zhejiang Shuqimeng Photovoltaic Technology Co. Ltd || B911

Zhejiang Shinew Photoeletronic Technology Co. Ltd || B912

Zhejiang SOCO Technology Co. Ltd || B913

Zhejiang Sunflower Light Energy Science & Technology Limited Liability Company Zhejiang Yauchong Light Energy Science & Technology Co. Ltd || B914

Zhejiang Tianming Solar Technology Co. Ltd || B916

Zhejiang Trunsun Solar Co. Ltd Zhejiang Beyondsun PV Co. Ltd || B917

Zhejiang Wanxiang Solar Co. Ltd WANXIANG IMPORT & EXPORT CO LTD || B918

Zhejiang Xiongtai Photovoltaic Technology Co. Ltd || B919

ZHEJIANG YUANZHONG SOLAR CO. LTD || B920

Zhongli Talesun Solar Co. Ltd || B922

ZNSHINE PV-TECH CO. LTD || B923

Zytech Engineering Technology Co. Ltd || B924

ANNEX 2

The following elements shall be indicated
in the Commercial Invoice accompanying the Company's sales to the European
Union of goods which are subject to the Undertaking:

1.         The heading "COMMERCIAL
INVOICE ACCOMPANYING GOODS SUBJECT TO AN UNDERTAKING".

2.         The name of the Company issuing
the Commercial Invoice.

3.         The Commercial Invoice number.

4.         The date of issue of the
Commercial Invoice.

5.         The TARIC additional code under
which the goods on the invoice are to be customs-cleared at the European Union
frontier.

6.         The exact plain language
description of the goods and:

–
the product code number (PCN),

–
technical specifications of the PCN,

–
the company product code number (CPC),

–
CN code,

–
quantity (to be given in units expressed in
Watt).

7.         The description of the terms of
the sale, including:

–
price per unit (Watt),

–
the applicable payment terms,

–
the applicable delivery terms,

–
total discounts and rebates.

8.         Name of the Company acting as an
importer to which the invoice is issued directly by the Company.

9          The name of the official of the
Company that has issued the Commercial Invoice and the following signed
declaration:

"I, the undersigned, certify that the
sale for direct export to the European Union of the goods covered by this
invoice is being made within the scope and under the terms of the Undertaking
offered by [COMPANY], and accepted by the European Commission through
Commission Decision 2013/XX/EU. I declare
that the information provided on this invoice is complete and correct."

ANNEX 3

EXPORT UNDERTAKING CERTIFICATE

The following elements shall be indicated
in the Export Undertaking Certificate to be issued by CCCME for each Commercial
Invoice accompanying the Company's sales to the European Union of goods which
are subject to the Undertaking:

1.         The name, address, fax and
telephone number of the China Chamber of Commerce for Import & Export of
Machinery & Electronic Products (CCCME).

2.         The name of the company
mentioned in the Annex of Commission Decision 2013/XX/EU issuing the Commercial Invoice.

3.         The Commercial Invoice number.

4.         The date of issue of the
Commercial Invoice.

5.         The TARIC additional code under
which the goods on the invoice are to be customs cleared at the European Union
frontier.

6.         The exact description of the
goods, including:

·
the product code number (PCN),

·
the technical specification of the goods, the
company product code number (CPC) (if applicable),

·
CN code,

7.         The precise quantity in units
exported expressed in Watt.

8.         The number and expiry date (three
months after issuance) of the certificate.

9.         The name of the official of
CCCME that has issued the certificate and the following signed declaration:  
“I, the undersigned, certify that this certificate is given for direct exports
to the European Union of the goods covered by the Commercial Invoice
accompanying sales made subject to the undertaking and that the certificate is
issued within the scope and under the terms of the undertaking offered by
[company] and accepted by the European Commission through Commission Decision
2013/XX/EU. I declare that the information
provided in this certificate is correct and that the quantity covered by this
certificate is not exceeding the threshold of the undertaking.

10. Date.

11. The signature and seal of CCCME.

ANNEX 4

The following elements shall be indicated
in the Commercial Invoice accompanying the Company's sales to the European
Union of goods which are subject to the anti-subsidy duties:

1.         The heading "COMMERCIAL
INVOICE ACCOMPANYING GOODS SUBJECT TO ANTI-DUMPING AND COUNTERVAILING
DUTIES".

2.         The name of the Company issuing
the Commercial Invoice.

3.         The Commercial Invoice number.

4.         The date of issue of the
Commercial Invoice.

5.         The TARIC additional code under
which the goods on the invoice are to be customs-cleared at the European Union
frontier.

6.         The exact plain language
description of the goods and:

–
the product code number (PCN),

–
technical specifications of the PCN,

–
the company product code number (CPC),

–
CN code,

–
quantity (to be given in units expressed in
Watt).

7.         The description of the terms of
the sale, including:

–
price per unit (Watt),

–
the applicable payment terms,

–
the applicable delivery terms,

–
total discounts and rebates.

8.         The name and signature of the
official of the Company that has issued the Commercial Invoice.’

[1]               OJ L 188, 18.7.2009, p. 93.

[2]               OJ C 340, 8.11.2012, p. 13.

[3]               OJ L 188, 18.7.2009, p. 93.

[4]               OJ C 269, 6.9.2012, p. 5.

[5]               OJ L 152, 5. 6.2013, p. 5.

[6]               Appelate Body Report, European Communities –
Measures Affecting Asbestos and Asbestos-Containting Products, WT/DS135/AB/R,
adopted 5 April 2001

[7]               Case T-401/06 Brosmann Footwear (HK) Ltd and
others vs Council; Case T-314/06 Whirlpool Europe vs Council

[8]               Footwear with uppers of leather originating in the
People's Republic of China and Vietnam, Commission Regulation (EC) No. 553/2006
of 23 March 2006 (prov.);

Council Regulation
(EC) No. 1472/2006 of 5 October 2006 (def.).

[9]               Case T-401/06 , Brosmann Footwear (HK) Ltd. vs
Council of the European Union, para 133.

[10]             Case T-401/06 , Brosmann Footwear (HK) Ltd. vs
Council of the European Union, para 135.

[11]             Chapter 10, Section 1, of the 12th 5-Year
Plan: “In the new energy industry, focus on the development of... ... solar
energy utilisation, photovoltaic and photo-thermal power generation”.

[12]             Section III.ii.1 of the 12th Five-year Plan
for the Solar Photovoltaic Industry.

[13]             Section III.iii.1 of the 12th Five-year Plan
for the Solar Photovoltaic Industry.

[14]             Section III.ii.3 of the 12th Five-year Plan
for the Solar Photovoltaic Industry.

[15]             Section VI.i of the 12th Five-year Plan for
the Solar Photovoltaic Industry.

[16]             Chapter Orientation and Priorities of Industrial
Restructuring, Article 5 of the Decision No 40 of the State Council on
Promulgating and Implementing the Temporary Provisions on Promoting the
Industrial Structure Adjustment.

[17]             Chapter III, Article 17 of the Decision No 40 of the
State Council on Promulgating and Implementing the Temporary Provisions on
Promoting the Industrial Structure Adjustment.

[18]             Articles 7.1 and 7.3 of the State Council Decision of
10 October 2010 to encourage development of 7 new strategic industries.

[19]             Section VII, Chapters 1 and 5 of the National Outline
for the Medium and Long-term Science and Technology Development (2006 – 2020).

[20]             Article 18 of the Law of the PRC on Scientific and
Technological Progress.

[21]             Ibid.

[22]             Article 34 of the Law of the PRC on Scientific and
Technological Progress.

[23]             With the exception of certain state-owned financial
institutions.

[24]             National Outline for Medium and Long-term Science and
Technology Development (2006-2020); Catalogue of Chinese High-Tech Products for
Export; Export list of High- and New-tech products; Law of the PRC on
Scientific and Technological Progress (Order N.82 of the President of the PRC);
Provisional Regulations on Management of National Science and Technology Plan
and Provisional Measure on Management of National Science and Technology Plan
Project.

[25]             E.g. National Outline for Medium and Long –term Science
and Technology Development (2006-2020) identifies the Solar industry as key
field and foresees to “give the first place to policy finance” or “encourage
financial institutions to grant preferential credit support to major national
scientific and technological industrialisation projects” or suggests some
preferential tax policies which were indeed used by the sample exporting
producers. Catalogue of Chinese High-Tech Products for Exports and Export list
of High and New-Tech Products are also highly relevant for the PV industry
since most of the sampled exporting producers are holders of the certificate of
High and New Technology Enterprise. As for the Law of the PRC on Scientific and
Technological Progress it, inter alia, instructs the Policy-oriented
financial institutions to give priority to the High – and new-technology
industries (where PV industry also belongs). Provisional Regulations on
Management of National Science and Technology Plan and Provisional Measure on
management of national science and technology plan project are also both
directly involved in the organisation and functioning of some PV projects.

[26]             E.g. China Bohai Bank, Guangdong Development Bank,
Huishang Bank, Bank of Shanghai, Shenzhen Development Bank.

[27]             Commission
pre-verification letter of 25 March 2013, page 7: “The Commission will seek
explanations concerning the information requested in Appendix A of the
questionnaire. The questions raised during verification will cover points a) to
r) of the Appendix A”. Point g) of the Appendix A: List each shareholder of the
bank/financial institution who owned at least 1% of the shares or of the value
of the company and list the activities of these shareholders in Excel table
Appendix A–1.

[28]             Article 33 of Law
of the PRC on Regulation of and Supervision over the Banking Industry :The banking regulatory authority shall, in light of the need for
performing its duties, have the power to require the financial institutions of
the banking industry to submit, in accordance with relevant regulations, their
balance sheets, profit statements, other financial accounting statements,
statistical reports and information concerning business operations and
management, as well as the audit reports prepared by certified public
accountants.

[29]             Commission deficiency letter of 30 January 2013,
question C-III-A.A.

[30]             Not filled in by the Bank of China, but by the GOC on
its behalf.

[31]             The verification visit was originally scheduled from 15
to 19 April 2013.

[32]             Preamble of the Constitution of the Communist Party
of China.

[33]             Document WT/DS379/AB/R, 11 March 2011.

[34]             Para 317 of the AB report.

[35]             Para 290 of the AB report.

[36]             Para 297 of the AB report.

[37]             http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000204417.PDF.

[38]             Document
WT/TPR/S/230 p. 79, April 2010.

[39]             Document WT/TPR/S/264 p.122, July 2012.

[40]             Ibid.

[41]             Article 15 of the Article of Assocation of China
Development Bank (CDB) states that the business purpose of the CDB is inter
alia “to serve for middle- and long-term development strategy of the
national economy”. Further the Financial Statements of CDB for the
financial year 2011 state “The Bank and its
subsidiaries (together, the "Group") are dedicated to the mission of
strengthening the competitiveness of China and improving the living standards
of its people in support of the State's key medium to long-term strategies and
policies, through their medium- to long-term lending, investment, securities
and leasing activities” and “In response to the
call of the State to encourage domestic enterprises to "Go Global" and “In response to the call of the
State to encourage domestic enterprises to "Go Global", the Group
also engages in a wide range of activities focused on international
cooperation”.

[42]             Deutsche Bank Research, China’s Banking Sector: Ripe
for the next stage, 7 December 2006.

[43]             China Trade Policy Review WT/TPR/S/264, p. 122, recital
98.

[44]             China 2030 Building a modern, harmonious, and creative
society, The World Bank and Development Research Center of the State Council,
the PRC, pages 28-29, 125.

[45]             OECD
Economic Surveys: China 2010, p. 55 “the primary purpose of the PBoC’s lending
rate floor and deposit rate ceiling is to safeguard the profitability of the
predominantly state-owned banking sector. By progressively widening the margin
between benchmark lending and deposit rates, the PBoC has effectively pushed
some of the cost of bank restructuring onto Chinese borrowers and savers,
though it narrowed that gap in 2008-09. However, the benchmark rates weaken the
incentive for commercial banks to price risk appropriately and stifle
competition in the banking sector”.

[46]             Information retrieved from the 2006 Deutsch Bank
Research on China's banking sector, pages 3-4.

[47]             Information retrieved from the China Monetary Report
Quarter Two, 2010 of the Monetary Policy Analysis Group of the People's Bank of
China, dated 5 August 2010, page 10.

[48]             Information submitted by the GOC, information retrieved
from the Articles of Association and Annual Reports of certain banks and information
retrieved from internet (e.g. http://www.fas.org/sgp/crs/row/R42380.pdf).

[49]             Recital 169 of the Council implementing regulation (EU)
No 215/2013 of 11 March 2013.

[50]             Law of the PRC on Commercial Banks (Article 34).

[51]             Decision No 40 of the State Council on Promulgating and
Implementing the Temporary Provisions on Promoting the Industrial Structure
Adjustment.

[52]             Law of the PRC on Scientific and Technological Progress
(Order No 82).

[53]             IMF Working Paper, "Progress in China's Banking
Sector Reform: Has Bank Behaviour Changed?", WP/06/71, March 2006, (see
pages 3-4, 13, 18-20).

[54]             IMF Working Paper, "Interest Rate Liberalization
in China", WP/09/171, August 2009, (see pages 3-4, 21-23).

[55]             IMF Country Report, PRC: 2010 Article IV Consultation,
No 10/238, July 2010, (see pages 22, 24 and 28-29).

[56]             OECD 2010 Economic Survey of China, February 2010, (see
Chapter 3, pages 71, 73-81, 97).

[57]             OECD China's Financial Sector Reforms, Economic
Department Working Paper No. 747, ECO/WKP (2010) 3, 1 February 2010, (see pages
2, 8-15, 36).

[58]             See finding on public bodies in paragraph recital 53.

[59]             Article VII of the State Council Decision of 10
October 2010 to encourage development of 7 new strategic industries.

[60]             National Outline for Medium and Long-term Science
and Technology Development (2006-2020), Section III, chapter 1.

[61]             Law of the PRC on Scientific and Technological
Progress (Order N.82 of the President of the PRC), Article 18.

[62]             Law of the PRC on Scientific and Technological
Progress (Order N.82 of the President of the PRC), Article 34.

[63]             Article 34 of the Commercial Banking Law.

[64]             Document WT/TPR/S/264 p. 122, July 2012.

[65]             Law of the PRC on Commercial Banks (Article 34).

[66]             Decision No 40 of the State Council on Promulgating and
Implementing the Temporary Provisions on Promoting the Industrial Structure
Adjustment.

[67]             Law of the PRC on Scientific and Technological Progress
(Order No 82).

[68]             http://english.caixin.com/2012-04-19/100381773.html.

[69]             The Chinese banking regulator (CBRC) decided that the
Commercial Banks in China can buy CDB bonds (this applies to CDB bonds only)
and assign zero-risk weighting to these assets. This effectively means that the
banks are not required to set any capital against these assets as a risk
precaution when they hold these bonds which has an impact on the bank’s access
to capital and provides access to cheap money. The yields on CDB bonds are
usually higher than the benchmark deposit rates but lower than the lending rate
and the result is that Chinese commercial banks can make money with buying
risk-free CDB bonds. This being the steady source of income, the banks can
afford to borrow to certain industries at preferential rates because they will
compensate the lost profits via the described mechanism.

[70]             Report of the Panel, European Communities and Certain Member States
- Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R (30/06/2010),
paras. 7.735-7.738.

[71]             http://www.gov.cn/ldhd/2009-05/27/content_1326023.htm.

[72]             Appellate Body report US –
Anti-Dumping and Countervailing Duties (China),
para. 317.

[73]             Appellate Body report US –
Anti-Dumping and Countervailing Duties (China),
para. 318.

[74]             Sources:
http://en.wikipedia.org/wiki/China_Export_%26_Credit_Insurance_Corporation and http://uk.reuters.com/article/2011/05/26/china-cic-sinosure-idUKL3E7GQ10720110526.

[75]             http://www.gov.cn/ldhd/2009-05/27/content_1326023.htm.

[76]             http://www.stewartlaw.com/Article/ViewArticle/608,
Stewart and Stewart, How trade rules can help level the export financing
playing field: New developments and a path forward for 2013: “Sinosure,
China’s official export credit insurance agency, operates at a significant
cumulative loss to the government, indicating its support is also highly
subsidized” and “A review of Sinosure’s annual reports from 2002 through 2011
reveals a cumulative operating loss of RMB 3.3 billion.

[77]             Source:
http://en.wikipedia.org/wiki/US-Exim_Bank.

[78]             Recital 116 of the Council Implementing Regulation (EU)
No 452/2011 of 6 May 2011 imposing a definitive anti-subsidy duty on imports of
coated fine paper originating in the PRC, OJ of the EU L 128, 14
May 2011;

[79]             Recital 226 of the Council Implementing Regulation (EU)
No 215/2013 of 11 March 2013 imposing a definitive anti-subsidy duty on imports
of certain organic coated steel products originating in the PRC, OJ of the
EU L 73, 15 March 2013;

[80]             Announcement on Bid Invitation for Assignment of
Yangzhou Urban State-owned Construction Land for Industrial Use with Land Use
Right (Plot Numbers 2008G017, 2008G018 and 2008G019, Yangzhou Municipal Land
Resources Bureau, 30 January 2008.

[81]             Notice on transferring of state-owned Land Use Right
(2009-02) in Tianwei issued by Baoding City Land Bureau, Article 7.

[82]             Council Implementing Regulation (EU) No 215/2013 of 11
March 2013, recital 116.

[83]             George E. Peterson, Land leasing and land sale as an
infrastructure-financing option, World Bank Policy Research Working Paper 4043,
at 7 November 2006, IMF Working Paper (WP/12/100), An End to China’s
Imbalances, April 2012, p. 12.

[84]             IMF Working Paper (WP/12/100), An End to China’s
Imbalances, April 2012, p. 12.

[85]             AB Report Mexico-Rice, paras. 289 and 293. Panel Report
, China-GOES, paras. 7.296 and 7.302

[86]

[87]             The statistics of the banks were requested under
section III.A.A of the initial questionnaire, page 4 of the Annex 1 to the
deficiency letter and page 7 of the pre-verification letter

[88]             See Footnote 28

[89]             Please kindly provide the information as already
requested in the questionnaire, in any event at least those where the GOC
has direct or indirect shareholdership.

[90]             The 12th Five-year Plan for the Solar
Photovoltaic Industry, Preface

[91]             The 12th five year plan for national
economic and social development of the People’s Republic of China, Part XVI and
Chapter 61

[92]             Appellate Body Report, US-Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China

[93]             Appellate Body Report, US-Hot-Rolled Steel, para.
99

[94]             Panel Report, US-Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, para. 16.9

[95]             Panel Report, EC-Salmon, para. 7.358

[96]             Article 29 of the Council Regulation (EC) No 597/2009
of 11 June 2009, OJ L188, 18.7.2009

[97]             Article 32 of the CCP Constitution

[98]             Article 19 of the Companies Law of the People’s
Republic of China, http://www.china.org.cn/china/LegislationsForm2001-2010/2011-02/11/content_21898292.htm

[99]             EC-Aircraft panel Para 7.743

[100]            http://www.chinaafricarealstory.com/2011/08/china-development-banks-3-billion-line.html,
“The
terms of the CDB line of credit differ in its two instalments. The
first tranche of $1.5 billion will have a 20yr maturity including a 5yr
grace period. The interest rate will be 6 month LIBOR (London Inter-Bank
Offered Rate) plus a margin of 2.95%, with a commitment fee of
1% and an upfront fee of 0.25%. The terms of the second $1.5bn tranche are 15yr
maturity including a 5yr grace period, interest rate of 6 month LIBOR plus a
margin of 2.28%, and probably the same fees”

[101]            Panel Report, US – Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, para. 10.187

[102]            European Commission, Directorate-General for Trade,
Directorate H, B-1049 Brussels.

[103]            Regulation (EU) No 513/2013, OJ L
152, 5. 6.2013, p. 5.

[104]            OJ L 343, 22.12.2009, p.51.

[105]            OJ L 209, 3.8.2013, p. 26.

[106]            Council Regulation (EC) No597/2009 of 11 June 2009; OJ
L188, 18.7.2009, p.93

[107]            Companies mentioned in Annex II of the parallel
anti-dumping Implementing Regulation (EU) No XXX/2013 shall have the TARIC
additional code mentioned in that Annex II

[108]            See page XX of this
Official Journal.