Case C‑301/16 P

European Commission

v

Xinyi PV Products (Anhui) Holdings Ltd

(Appeal — Commercial policy — Dumping — Imports of solar glass originating in China — Regulation (EC) No 1225/2009 — Article 2(7)(b) and (c) — Market Economy Treatment (MET) — Concept of ‘significant distortions carried over from the former non-market economy system’, within the meaning of the third indent of Article 2(7)(c) — Tax incentives)

Summary — Judgment of the Court (Second Chamber), 28 February 2018

Common commercial policy—Protection against dumping—Dumping margin—Determination of the normal value—Imports from non-market economy countries—Granting of market economy operator status—Conditions—Production costs and financial situation of the undertaking not forming the subject-matter of any significant distortion, carried over from the former planned economy system—Tax incentives connected with the implementation of a five-year plan in China—Presumption of the existence of a distortion

Appeals—Grounds of appeal—Plea submitted for the first time in the appeal—Pleas raised against a ground of the judgment under appeal—Plea contesting the validity of the judgment under appeal—Plea arising from the judgment under appeal itself—Admissibility

Common commercial policy—Protection against dumping—Dumping margin—Determination of the normal value—Imports from non-market economy countries—Granting of market economy operator status—Conditions—Production costs and financial situation of the undertaking not forming the subject-matter of any significant distortion, carried over from the former planned economy system—Burden of proof—Grant of tax incentives to foreign investments in strategic sectors—Presumption of the existence of a distortion

Common commercial policy—Protection against dumping—Dumping margin—Determination of normal value—Imports from non-market economy countries—Granting of market economy treatment—Conditions—Production costs and financial situation of the undertaking not forming the subject-matter of any significant distortion, carried over from the former planned economy system—Concept of a former planned economy system

See the text of the decision. (see paras 66, 67, 69)

The words ‘former non-market economy system’, as set out in the third indent of Article 2(7)(c) of Regulation No 1225/2009 on protection against dumped imports from countries not members of the European Community, refer to the former economic system which had justified the systematic use of the analogue country method with regard to Chinese producers, but from which the People’s Republic of China has moved away. It is a matter of common knowledge that, well before 1 July 1998, the date of entry into force of Regulation No 905/98 amending Regulation No 384/96 on protection against dumped imports from countries not members of the European Community, which introduced the wording subsequently reproduced in, inter alia, Article 2(7)(b) and (c) of the Regulation No 1225/2009, the economic system prevailing in China was already no longer that of a state-trading country. It was that of a country which, although still not a market economy, had already undergone certain reforms reducing state control, but the economy of which, in a great number of sectors, remained characterised, in particular, by the central role played by five-year plans. (see paras 77, 78)

In relation to the purpose of Article 2(7)(c) of Regulation No 1225/2009 on protection against dumped imports from countries not members of the European Community, which is to ensure that a producer operates under market economy conditions and, in particular, that the costs to which it is subject and the prices which it charges are the result of market forces, it is irrelevant, for the purposes of the third indent of that provision, whether the economic system in question is a state-trading economy or another type of non-market economy. It follows that the third indent of Article 2(7)(c) of that regulation must be understood as meaning that it requires the producer to establish, to the requisite legal standard, that its production costs and its financial situation are not subject to significant distortions arising from a non-market economy system which, as the case may be, is a system already in transition, as regards certain sectors, to a market economy system. Accordingly, the connection of a measure which consists of granting tax incentives to foreign investments in sectors deemed to be strategic, such as the high-tech sector, to different plans implemented in China is sufficient for the assumption that that measure constitutes a distortion carried over from the former non-market economy system, within the meaning of Article 2(7)(c) of Regulation No 1225/2009. (see paras 83-85, 95)

An appellant is entitled to lodge an appeal relying on pleas arising from the judgment under appeal itself which seek to criticise, in law, its merits. (see para. 90)