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 wa