UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF CRYSTALLINE SILICON PHOTOVOLTAIC PRODUCTS REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 2 September 2021
Document codes: WT/DS562/R
Complainant: China
Respondent: U.S.
Third parties: Brazil, Canada, EU, India, Japan, South Korea, Malaysia, Philippines, Russia, Taiwan
Dispute stage: Panel
Agreements cited: Art. XIX:1  GATT 1994Art. 2.1, 3.1, 3.2, 4.2(b)  Safeguards

UNITED STATES – SAFEGUARD MEASURE ON IMPORTS OF
CRYSTALLINE SILICON PHOTOVOLTAIC PRODUCTS
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Working Procedures of the Panel 4
Annex A-2 Additional Working Procedures of the Panel on Business Confidential Information 11
Annex A-3 Additional Working Procedures of the Panel Concerning Substantive Meetings
Conducted via Cisco Webex
13
Annex A-4 Additional Working Procedures of the Panel Concerning Substantive Meetings
Conducted via Cisco Webex – Second Substantive Meeting Update
18
Annex A-5 Interim Review 22
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of China 46
Annex B-2 Integrated executive summary of the arguments of the United States 66
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil 89
Annex C-2 Integrated executive summary of the arguments of Canada 91
Annex C-3 Integrated executive summary of the arguments of the European Union 96
Annex C-4 Integrated executive summary of the arguments of Japan 100
Annex C-5 Integrated executive summary of the arguments of the Republic of Korea 104

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of
Footwear, , adopted 12 January 2000, DSR 2000:I, p. 515
Argentina – Footwear (EC) Panel Report, Argentina – Safeguard Measures on Imports of Footwear,
, adopted 12 January 2000, as modified by Appellate Body Report
, DSR 2000:II, p. 575
Argentina – Preserved
Peaches
Panel Report, Argentina – Definitive Safeguard Measure on Imports of
Preserved Peaches, , adopted 15 April 2003, DSR 2003:III,
p. 1037
Australia – Salmon Panel Report, Australia – Measures Affecting Importation of Salmon,
WT/DS18/R and Corr.1, adopted 6 November 1998, as modified by
Appellate Body Report WT/DS18/AB/R, DSR 1998:VIII, p. 3407
Canada – Continued
Suspension
Panel Report, Canada – Continued Suspension of Obligations in the EC –
Hormones Dispute, WT/DS321/R and Add.1 to Add.7, adopted
14 November 2008, as modified by Appellate Body Report WT/DS321/AB/R,
DSR 2008:XV, p. 5757
China – Cellulose Pulp Panel Report, China – Anti-Dumping Measures on Imports of Cellulose Pulp
from Canada, WT/DS483/R and Add.1, adopted 22 May 2017, DSR 2017:IV,
p. 1961
Dominican Republic –
Safeguard Measures
Panel Report, Dominican Republic – Safeguard Measures on Imports of
Polypropylene Bags and Tubular Fabric, WT/DS415/R, WT/DS416/R,
WT/DS417/R, WT/DS418/R, and Add.1, adopted 22 February 2012,
DSR 2012:XIII, p. 6775
India – Agricultural Products Panel Report, India – Measures Concerning the Importation of Certain
Agricultural Products, WT/DS430/R and Add.1, adopted 19 June 2015, as
modified by Appellate Body Report WT/DS430/AB/R, DSR 2015:V, p. 2663
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, p. 9
Indonesia – Iron or Steel
Products
Panel Report, Indonesia – Safeguard on Certain Iron or Steel Products,
WT/DS490/R, WT/DS496/R, and Add.1, adopted 27 August 2018, as modified
by Appellate Body Report WT/DS490/AB/R, WT/DS496/AB/R DSR 2018:VII,
p. 3707
Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I,
p. 97
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000,
DSR 2000:I, p. 3
Korea – Dairy Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products, WT/DS98/R and Corr.1, adopted 12 January 2000, as modified
by Appellate Body Report WT/DS98/AB/R, DSR 2000:I, p. 49
Russia – Pigs (EU) Panel Report, Russian Federation – Measures on the Importation of Live Pigs,
Pork and Other Pig Products from the European Union, WT/DS475/R and Add.1,
adopted 21 March 2017, as modified by Appellate Body Report
WT/DS475/AB/R, DSR 2017:II, p. 361
Ukraine – Passenger Cars Panel Report, Ukraine – Definitive Safeguard Measures on Certain Passenger
Cars, WT/DS468/R and Add.1, adopted 20 July 2015, DSR 2015:VI, p. 3117
US – Continued Suspension Panel Report, United States – Continued Suspension of Obligations in the EC –
Hormones Dispute, WT/DS320/R and Add.1 to Add.7, adopted
14 November 2008, as modified by Appellate Body Report WT/DS320/AB/R,
DSR 2008:XI, p. 3891
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – Lamb Panel Report, United States – Safeguard Measures on Imports of Fresh, Chilled
or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/R,
WT/DS178/R, adopted 16 May 2001, as modified by Appellate Body Report
WT/DS177/AB/R, WT/DS178/AB/R, DSR 2001:IX, p. 4107

Short Title Full Case Title and Citation
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, p. 1403
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R,
WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R,
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 2003:VII,
p. 3117
US – Steel Safeguards Panel Reports, United States – Definitive Safeguard Measures on Imports of
Certain Steel Products, WT/DS248/R and Corr.1 / WT/DS249/R and Corr.1 /
WT/DS251/R and Corr.1 / WT/DS252/R and Corr.1 / WT/DS253/R and Corr.1 /
WT/DS254/R and Corr.1 / WT/DS258/R and Corr.1 / WT/DS259/R and Corr.1,
adopted 10 December 2003, as modified by Appellate Body Report
WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R,
WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R,
DSR 2003:VIII, p. 3273
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain
Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted
5 October 2011, DSR 2011:IX, p. 4811
US – Tyres (China) Panel Report, United States – Measures Affecting Imports of Certain Passenger
Vehicle and Light Truck Tyres from China, WT/DS399/R, adopted
5 October 2011, upheld by Appellate Body Report WT/DS399/AB/R,
DSR 2011:IX, p. 4945
US – Washing Machines
(Article 22.6 – US)
Decision by the Arbitrator, United States – Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea – Recourse to Article 22.6
of the DSU by the United States, WT/DS464/ARB and Add.1, 8 February 2019
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R,
adopted 19 January 2001, DSR 2001:II, p. 717
US – Wheat Gluten Panel Report, United States – Definitive Safeguard Measures on Imports of
Wheat Gluten from the European Communities, WT/DS166/R, adopted
19 January 2001, as modified by Appellate Body Report WT/DS166/AB/R,
DSR 2001:III, p. 779
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short Title (if any) Description
CHN-1 Presidential Proclamation Presidential Documents, United States Federal Register, Vol. 83,
No. 17 (25 January 2018), pp. 3541-3551
CHN-2 USITC final report USITC, Public report, Crystalline silicon photovoltaic cells
(whether or not partially or fully assembled into other products),
Inv. No. TA-201-75, Pub. 4739, Vol. I (November 2017)
CHN-3 USITC final staff report USITC, Public report, Crystalline silicon photovoltaic cells
(whether or not partially or fully assembled into other products),
Inv. No. TA-201-75, Pub. 4739, Vol. II (November 2017)
CHN-6 USITC supplemental report USITC, Supplemental report regarding unforeseen
developments (27 December 2017)
CHN-9 Transcript of the USITC injury
hearing
Transcript of the USITC hearing on injury (15 August 2017)
CHN-19 Econometric report Thomas J. Prusa and J. Landon-Lane, Econometric Analysis of
Residential and Utility-Scale CSPV Pricing (4 August 2017)
CHN-20 SEIA prehearing brief Solar Energy Industries Association, prehearing injury brief
(8 August 2017)
CHN-60 SEIA executive summary of US solar market on 2016
CHN-69 Affidavit of Jay Miles, Russell
Pacific
Affidavit of Jay Miles, Russell Pacific (4 August 2017)
CHN-98 Affidavit of Kenny Hughes,
Radiance Solar
Affidavit of Kenny Hughes, Radiance Solar (4 August 2017)
CHN-99 Affidavit of Laura E. Stern,
Nautilus Solar
Affidavit of Laura E. Stern, Nautilus Solar (7 August 2017)
CHN-100 Affidavit of Zaid Ashai,
Nexamp
Affidavit of Zaid Ashai, Nexamp (3 August 2017)
CHN-101 Affidavit of Richard Matsui,
kWh Analytics
Affidavit of Richard Matsui, kWh Analytics (4 August 2017)
CHN-104 Affidavit of George W.
Hershman, Swinerton
Renewable Energy
Affidavit of George W. Hershman, Swinerton Renewable Energy
(4 August 2017)
CHN-157 Affidavit of Craig Cornelius,
NRG
Affidavit of Craig Cornelius, NRG (22 August 2017)
CHN-170 Supporting footnotes regarding purchasers complaints on
service and delivery issues
USA-1 19 C.F.R. § 206.17 Limited disclosure of certain confidential business information
under administrative protective order, United States Code of
Federal Regulations, Title 19, Section 206.17
(7 November 2011)
USA-7 Application for disclosure of
CBI under administrative
protective order
USITC, Application for disclosure of confidential business
information under administrative protective order (revised
March 2005)
USA-9 Notification of final date for
compliance with APO CBI
requirements
USITC, Notification of final date for compliance with
Administrative Protective Order confidential business
information requirements, Crystalline silicon photovoltaic cells
(whether or not partially or fully assembled into other products)
(14 November 2017)
USA-10 SEIA's posthearing reme dy
brief
Solar Energy Industries Association 's written response to
comments concerning the administration 's action following a
determination of import injury with regard to certain crystalline
silicon photovoltaic cells (29 November 2017)
USA-11 USITC CSPV I final report USITC, Certain crystalline silicon photovoltaic cells and modules
from China, Inv. Nos. 701 -TA-481 and 731 -TA-1190 (Final),
Pub. 4360 (November 2012)
USA-12 USITC CSPV II final report USITC, Certain crystalline silicon photovoltaic products from
China and Taiwan, Inv. Nos. 701 -TA-511 and 731 -TA-1246 to
1247 (Final), Pub. 4519 (February 2015)
USA-16 SolarWorld's posthearing
injury brief
Crystalline silicon photovoltaic cells (whether or not partially or
fully assembled into other products): posthearing brief on injury
of SolarWorld Americas, Inc. (23 August 2017)
USA-17 Suniva's posthearing injury
brief
Crystalline silicon photovoltaic cells (whether or not partially or
fully assembled into other products) : posthearing brief of
Suniva, Inc. (22 August 2017)

Exhibit Short Title (if any) Description
USA-24 USDOC final CVD
determination
Crystalline silicon photovoltaic cells, whether or not assembled
into modules, from the People 's Republic of China: final
affirmative countervailing duty determination and final
affirmative critical circumstances determination, United States
Federal Register, Vol. 77, No. 201 (17 October 2012)
USA-25 Issues and decision
memorandum on CVD
Memorandum dated 9 October 2012 from C. Marsh to
P. Piquado concerning the issues and decision memorandum for
the final determination in the countervailing duty investigation
of crystalline silicon photovoltaic cells, whether or not assembled
into modules, from the People's Republic of China

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
APO administrative protective order
California Solar Systems California Solar Systems, Inc.
CBI confidential business information
CSPV products crystalline silicon photovoltaic cells, whether or not partially or fully
assembled into other products (including, but not limited to, modules,
laminates, panels, and building-integrated materials)
CSPV I US anti -dumping and countervailing duties on impo rts of CSPV from
China (2012)
CSPV II US anti -dumping and countervailing duties on certain CSPV products
from China and Chinese Taipei (2015)
CVD countervailing duty
DEPCOM DEPCOM Power, Inc.
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of
Disputes
FITC Federal Investment Tax Credit
GATT 1994 General Agreement on Tariffs and Trade 1994
Hanwha Hanwha Q Cells
Hanwha Qidong Hanwha Q Cells (Qidong) Co., Ltd.
HS Harmonized system
HTS Harmonized Tariff Schedule
LCOE levelized cost of electricity
MW MegaWatt
NRG NRG Energy Inc.
PERC passivated emitter and rear contact
P-max maximum power
POI period of investigation
PRW production and related workers
R&D research and development
SEIA Solar Energy Industries Association
SolarWorld SolarWorld Americas, Inc.
Suniva Suniva, Inc.
SunPower SunPower Corporation
TPSC Trade Policy Staff Committee
USDOC United States Department of Commerce
USITC United States International Trade Commission
USTR United States Trade Representative
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969,
1155 UNTS 331; 8 International Legal Materials 679
WARN Act Worker Adjustment and Retraining Notification Act
WTO World Trade Organization
Wp watt-peak

1 INTRODUCTION
1.1 Complaint by China
1.1. On 14 August 2018, China requested consultations with the United States pursuant to
Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), and Article 14
of the Agreement on Safeguards with respect to the measures and claims set out below.1
1.2. Consultations were held on 22 October 2018, but failed to resolve the dispute.
1.2 Panel establishment and composition
1.3. On 11 July 2019, China requested the establishment of a panel pursuant to Articles 4.7 and 6
of the DSU , Article XXIII of the GATT 1994 , and Article 14 of the Agr eement on Safeguards with
standard terms of reference.2 At its meeting on 15 August 2019, the Dispute Settlement Body (DSB)
established a panel pursuant to the request of China in document WT/DS562/8, in accordance with
Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by China in document
WT/DS562/8 and to make such findings as wil l assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 14 October 2019, China requested the Director -General to determine the composition of
the panel, pursuant to Article 8.7 of the DSU. On 24 October 2019, the Director-General composed
the Panel as follows:
Chairperson: Mr Guillermo Valles

Members: Mr José Antonio de la Puente León
 Ms Chantal Ononaiwu

1.6. Brazil, Canada, the European Union, India, Japan, the Republic of Korea, Malaysia, Philippines,
the Russian Federation, and Chinese Taipei notified their interest in participating in the Panel
proceedings as third parties.
1.3 Panel proceedings
1.7. After consultation with the parties, the Panel adopted its Working Procedures 5, Additional
Working Procedures on Business Confidential Information6, and timetable on 20 December 2019. In
adopting its Working Procedures, the Panel declined the request of the United States to make the
first and second substantive meetings – in whole or in part – open to public observation by other
WTO Members and the public . The timetable was further revised during the panel proceedings in
light of subsequent developments.7
1.8. China submitted its first written submission on 10 January 2020 , and the United States
submitted its first written submission on 21 February 2020. Due to the imposition of various
restrictions on gatherings and international travel in relation to the COVID -19 pandemic, on
14 April 2020 the Panel postponed the original dates for the first substantive meeting. To facilitate

1 Request for consultations by China, WT/DS562/1 (China's consultations request).
2 Request for the establishment of a panel by China, WT/DS562/8 (China's panel request).
3 DSB, Minutes of meeting held on 15 August 2019, WT/DSB/M/433.
4 Constitution note of the Panel, WT/DS562/9.
5 See the Panel's Working Procedures in Annex A-1.
6 See the Panel's Working Procedures on Business Confidential Information in Annex A-2.
7 The timetable was updated and revised on 14 April 2020, 9 June 2020, 14 August 2020,
4 September 2020, 21 September 2020, 9 October 2020, 23 November 2020, 8 March 2021, and 19 May
2021.

its continued work on the dispute, on 8 May 2020 the Panel posed written questions to the parties
and third parties concerning certain factual and legal issues, pursuant to its authority under the
chapeau of paragraph 9 of the Working Procedures of the Panel and Article 13 of the DSU. The Panel
received the parties' and certain third parties' responses to these questions on 29 May 2020, and
comments from the parties on these responses on 30 June 2020.
1.9. Thereafter, i n light of the continuation of the restrictions imposed on gatherings and
international travel in relation to the COVID-19 pandemic, the Panel determined that it would still
not be possible to hold the first substantive meeting in person at the WTO premises within a
reasonable timeframe . Accordingly, a fter several rounds of consultations with the parties,
on 14 August 2020 the Panel decided to hold the first substantive meeting virtually through the
Cisco Webex platform. The Panel decided to proceed in this manner after careful consideration of
the circumstances at hand. Since it did not appear likely that the p arties and the Panel would be
able to meet in person at the WTO premises in the foreseeable future, the Panel considered that
conducting the first substantive meeting virtually was a reasonable and secure alternative that would
comply with the requirements of the DSU, preserve the parties' due process rights, and avoid further
delay in the proceedings.8 For the purpose of the virtual substantive meeting, after again consulting
with the parties, the Panel adopted Additional Working Procedures of the Panel Concerning
Substantive Meetings Conducted via Cisco Webex 9 on 9 September 2020. These procedures
stipulated how the virtual meeting would be conducted and set out certain technical and security
requirements. Throughout this process, the Panel made its best effort to accommodate technological
and logistical concerns raised by the parties. The Panel held the first substantive meeting with the
parties on 15 and 18 September 2020. The third-party session of the first substantive meeting took
place on 17 September 2020. On 21 September 2020, the Panel posed the second set of written
questions to the parties and third parties. The Panel received the parties' and certain
third parties' responses to these questions on 12 October 2020. This was followed by the
second written submissions of the parties, which the Panel received on 6 November 2020.
1.10. Due to the continuing restrictions imposed on gatherings and international travel in relation
to the COVID -19 pandemic, the Panel determined that it would not be possible to meet with the
parties in person at the WTO premise s for the second substantive meeting within a reasonable
timeframe. Therefore, after consultations with the parties, the Panel decided to hold the
second substantive meeting virtually through the Cisco Webex platform . For the purpose of this
virtual substantive meeting, after again consulting with the parties, the Panel adopted Additional
Working Procedures of the Panel Concerning Substantive Meetings Conducted via Cisco Webex –
Second Substantive Meeting Update 10 on 3 December 2020. Throughout this process , t he Panel
again made its best effort to accommodate technological and lo gistical concerns raised by the
parties. The Panel held its second substantive meeting with the parties on 9, 10 , and
11 December 2020. On 15 December 2020, the Panel posed the third set of written questions to the
parties. The Panel received the parties' responses to these questions on 15 January 2021, and
comments from the parties on these responses on 29 January 2021.
1.11. On 12 March 2021, the Panel issued the descriptive part of its Report to the parties. The Panel
issued its Interim Report to the parties on 26 May 2021. The Panel issued its Final Report to the
parties on 16 July 2021.
2 FACTUAL ASPECTS
2.1 The measures at issue
2.1. This dispute concerns a safeguard measure imposed by the United States with regard to
imports of certain crystalline silicon pho tovoltaic cells, whether or not partially or fully assembled
into other products (including, but not limited to, modules, laminates, panels,
and building-integrated materials) (CSPV products) , pursuant to "Proclamation 9693 of

8 In this regard, we note that Article 3.3 of the DSU contemplates the prompt settlement of disputes
while Article 12 of the DSU provides panels with flexibility in terms of the procedures that govern the panel
process.
9 See the Additional Working Procedures of the Panel Concerning Substantive Meetings Conducted via
Cisco Webex in Annex A-3.
10 See the Additional Working Procedures of the Panel Concerning Substantive Meetings Conducted via
Cisco Webex – Second Substantive Meeting Update in Annex A-4.

January 23, 2018 – To Facilit ate Positive Adjustment to Competition from Imports of Certain
Crystalline Silicon Photovoltaic Cells (Whether or Not Partially or Fully Assembled Into Other
Products) and for Other Purposes" , published in the 83 U S Federal Register 3541 on
25 January 2018.11
2.2 Other factual aspects
2.2. In May 2017, two firms representing the United States' domestic industry, Suniva, Inc.
(Suniva) and SolarWorld Americas, Inc. (SolarWorld) , petitioned the United States International
Trade Commission (USITC) seeking the imposition of a safeguard measure on imports of CSPV
products from all sources. After conducting an investigation, the USITC unanimously determined in
its final report of 13 November 2017 that CSPV products were being imported into the United States
in such increased quantities as to be a substantial cause of serious injury to the domestic industry
producing an article like or directly competitive with the imported article . In response to a request
from the United States Trade Representative (USTR) for further information, the USITC issued a
supplemental report on 27 December 2017, wherein the USITC determined that unforeseen
developments had resulted in CSPV products being imported into the United States in such increased
quantities as to be a substantial cause of serious injury to the domestic industry. Following the
receipt of these reports, on 23 January 2018 the President of the United States decided to impose a
safeguard measure beginning on 7 February 2018.12
2.3. The safeguard measure took the form of (a) a 2.5GW tariff-rate quota on imports of solar cells
not partially or fully assembled into other products for a period of four years, with unchanging
in-quota quantities and annual reductions in the rates of duty applicable to goods entered in excess
of those quantities in the second, third, and fourth years ; and (b) ad valorem duties on imports of
modules for a period of four years, with annual reductions in the duty rates in the second, third, and
fourth years.13
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. China requests the Panel to find that the safeguard measure imposed by the United States is
inconsistent with the United States' obligations under Article XIX:1(a) of the GATT 1994 and
Articles 2.1, 3, and 4.2(b) of the Agreement on Safeguards.14 Specifically, China contends that the
United States acted inconsistently with:
a. Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards because
the United States failed to establish, prior to the application of the measures, that the
increases in imports were the result of "unforeseen developments" and were the "effect of
obligations incurred" under the GATT 1994 by the United States15;
b. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards because the United States
failed to establish the required "causal link" between the increased imports and the serious
injury found to exist16;
c. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards because the United States
failed to ensure that injury caused by other factors was not attributed to increased
imports17; and
d. Articles 3.1 and 3.2 of the Agreement on Safeguards because the United States provided
non-confidential summaries to interested parties with such delay that the parties were not

11 Presidential Proclamation, (Exhibit CHN-1). The safeguard measure excludes (a) thin film
photovoltaic products produced from amorphous silicon, cadmium telluride, or copper indium gallium selenide;
(b) CSPV cells, not exceeding 10,000 mm2 in surface area, that are permanently integrated into a consumer
good whose primary function is other than power generation and that consumes the electricity generated by
the integrated CSPV cell; and (c) CSPV cells, whether or not partially or fully assembled into other products, if
such CSPV cells were manufactured in the United States. (Presidential Proclamation, (Exhibit CHN-1), annex I).
12 Presidential Proclamation, (Exhibit CHN-1).
13 Presidential Proclamation, (Exhibit CHN-1).
15 China's panel request, pp. 2-3; first written submission, para. 293.
16 China's panel request, p. 2; first written submission, heading to section III(A).
17 China's panel request, p. 2; first written submission, heading to section III(B)(2).

provided with an adequate opportunity to exercise their right to present a defence , and
because the actual public summaries were not sufficient so as to permit interested parties
to reasonably present a defence.18
3.2. The United States requests the Panel to find that China has failed to establish any inconsistency
with Article XIX of the GATT 1994 or the Agreement on Safeguards.19
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the Panel
in accordance with paragraph 23 of the Working Procedures adopted by the Panel (see Annexes B-1
and B-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Brazil, Canada, the European Union, Japan, and the Republic of Korea are
reflected in their executive summaries, provided in accordance with paragraph 26 of the Working
Procedures adopted by the Panel (see Ann exes C -1, C -2, C-3, C -4, and C -5). India, Malaysia,
Philippines, the Russian Federation, and Chinese Taipei did not submit written or oral arguments to
the Panel.
6 INTERIM REVIEW
6.1. On 26 May 2021, the Panel issued its Interim Report to the parties. On 9 June 2021, China and
the United States each submitted written requests for the review of precise aspects of the Interim
Report. Following a request from China, the Panel held an interim review meeting with the parties
on 23 June 2021. On 30 June 2021, both parties submitted comments on the other party's request
for interim review and oral statement at the interim review meeting.
6.2. The parties' requests made at the interim review stage as well as the Panel's discussion and
disposition of those requests are set out in Annex A-5.
7 FINDINGS
7.1 General principles regarding treaty interpretation, standard of review, and burden of
proof
7.1.1 Treaty interpretation
7.1. Article 3.2 of the DSU provides that the WTO dispute settlement system serves "to preserve
the rights and obligations of Members under the covered agreements, and to clarify the existing
provisions of those agreements in accordance with customary rules of interpretation of public
international law". It further provides that " [r]ecommendations and rulings of the DSB cannot add
to or diminish the rights and obligations provided in the covered agreements".
7.2. The customary rules of interpretation are codified in Articles 31 and 32 of the
Vienna Convention on the Law of Treaties (Vie nna Convention). 20 Article 31(1) of the
Vienna Convention provides that a "treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and in the light of its object
and purpose". Moreover, Article 32 of the Vienna Convention provides for recourse to supplementary
means of interpretation, including the preparatory work of the treaty and the circumstances of its
conclusion, to confirm a meaning resulting from the application of Article 31, or where application

18 China's panel request, p. 2; first written submission, para. 302.
19 United States' first written submission, para. 322.
20 In this respect, we agree with dispute settlement reports previously adopted by the
Dispute Settlement Body (previous DSB reports) that have confirmed this understanding. (See,
e.g. Appellate Body Reports, Japan – Alcoholic Beverages II, para. 22; and India – Patents (US),
paras. 45-46).

of Article 31 leaves the meaning ambiguous or obscure, or leads to a result that is manifestly absurd
or unreasonable.
7.1.2 Standard of review
7.3. Article 11 of the DSU sets out a general standard of review for panels, providing, in re levant
part, that:
[A] panel should make an objective assessment of the matter before it, including an
objective assessment of the facts of the case and the applicability of and conformity
with the relevant covered agreements[.]
7.4. With respect to the review of safeguard measures, dispute settlement reports previously
adopted by the Dispute Settlement Body ( previous DSB reports) have found that the obligation to
conduct an "objective assessment" requires panels to evaluate whether the competent authorities
provided a "reasoned and adequate explanation" that demonstrates compliance with the relevant
obligations.21 When carrying out this assessment, panels should not engage in a de novo review of
the evidence or substitute their judgment for that of the competent authorities.22
7.5. Moreover, Article 3.1 of the Agreement on Safeguards requires that the competent authorities
publish a report that sets forth their "findings and reasoned conclusions reached on all pertinent
issues of fact and law". 23 Based on this requi rement, previous DSB reports have found that the
competent authorities' published report must contain the "reasoned and adequate explanation" that
demonstrates compliance with the relevant obligations.24
7.6. As we agree with these findings, we will conduct our review of the present matter accordingly.
7.1.3 Burden of proof
7.7. The general allocation of the burden of proof in WTO dispute settlement requires that the
complaining party assert and prove its claim. 25 Therefore, as the complaining party in these
proceedings, China bears the burden of demonstrating that the challenged aspects of the
safeguard measure at issue are inconsistent with the relevant obligations under the GATT 1994 and
the Agreement on Safeguards.
7.2 "Unforeseen developments " and "the effect of obligations incurred" under
the GATT 1994
7.2.1 Introduction
7.8. The parties disagree on whether the United States' safeguard measure on CSPV products
complied with the requirement in the first clause of Article XIX:1(a) of the GATT 1994 that imports
increased "as a result of unforeseen developments and of the effect of the obligations incurred".
7.9. China claims that the Agreement on Safeguards obligated the USITC to demonstrate in its
published report that imports increased "as a result of unforeseen developments and of the effect of
the obligations incurred". 26 China further claims that the USITC 's supplemental report failed to
appropriately demonstrate compliance with these requirements and advances several lines of

21 Appellate Body Report, US – Steel Safeguards, paras. 296-297. This standard is accepted by the
parties in the present dispute. (See, e.g. China's first written submission, para. 79; and United States' first
written submission, para. 90). As explained below, these principles align with Article 3.1 of the
Agreement on Safeguards, which requires the competent authorities in a safeguard investigation to publish a
report that sets forth "findings and reasoned conclusions reached on all pertinent issues of fact and law".
22 Appellate Body Report, US – Steel Safeguards, para. 299.
23 Appellate Body Report, US – Steel Safeguards, paras. 296 and 299.
24 Appellate Body Report, US – Steel Safeguards, paras. 296-297.
25 In this respect, we agree with the previous DSB reports that have confirmed this principle. (See,
e.g. Appellate Body Report, US – Wool Shirts and Blouses, p. 16).
26 See, e.g. China's first written submission, section III(C)(1); and second written submission,
section IV(A).

argumentation to this effect.27 Based on these claims, China submits that the safeguard measure on
CSPV products is inconsistent with the United States' obligations under Article XIX:1(a) of the
GATT 1994 and Article 3.1 of the Agreement on Safeguards.
7.10. For its part, the United States argues that China misapprehends the legal relationship
between the Agreement on Safeguards and Article XIX:1(a) of the GATT 1994. In its view, the
Agreement on Safeguards does not require the competent authorities of a Member to demonstrate
in their published report that the safeguard measure complied with the requirements in the
first clause of Article XIX:1(a) of the GATT 1994. Thus, in WTO dispute settlement proceedings, a
Member can modify or supplement the competent authorities' explanation as to whether im ports
increased "as a result of unforeseen developments and of the effect of the obligations incurred" .28
Nevertheless, the United States maintains that this interpretive issue does not arise in the present
case, because the USITC appropriately demonstrate d compliance with the requirements of the
first clause of Article XIX:1(a) of the GATT 1994.29
7.11. In this context, our analysis below first addresses China's substantive claim under
Article XIX:1(a) of the GATT 1994 and is organized as follows. In section 7.2.2, we set out the
applicable legal requirements under the first clause of Article XIX:1(a) of the GATT 1994, focusing
on the meaning of the various elements in the phrase "as a result of unforeseen developments and
of the effect of the obligations incurred". Thereafter, in section 7.2.3, we turn to China's substantive
claim concerning these requirements and specifically address:
a. whether China has established that the USITC failed to appropriately demonstrate the
existence of "unforeseen developments" (section 7.2.3.1);
b. whether China has established that the USITC failed to appropriately demonstrate that
imports increased as a result of the "unforeseen developments" (section 7.2.3.2); and
c. whether China has established that the USITC failed to appropriately demonstrate that
imports increased as a result "of the effect of the obligations incurred" by the United States
(section 7.2.3.3).
7.12. After doing so, and to the extent necessary for the resolution of China's overall claim under
Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards, in section 7.2.4
we address the disagreement between the parties concerning the interpretative issue of whether the
Agreement on Safeguards requires the competent authorities to demonstrate in their published
report that imports incr eased "as a result of unforeseen developments and of the effect of the
obligations incurred".
7.2.2 Applicable legal requirements of Article XIX:1(a) of the GATT 1994
7.13. Article XIX:1(a) of the GATT 1994, in full, provides:
If, as a result of unforeseen developments and of the effect of the obligations incurred
by a contracting party under this Agreement, including tariff concessions , any product
is being imported into the territory of that contracting party in such increased quantities
and under such conditions as to cause or threaten serious injury to domestic producers
in that territory of like or directly competitive products, the contracting party shall be
free, in respect of such product, and to the extent and for such time as may be necessary

27 See, e.g. China's first written submission, section III(C)(2); and second written submission,
section IV(B).
28 United States' second written submission, para. 164; response to the Panel question No. 27(e) of the
29 United States' second written submission, para. 176: "[a]t the outset, the United States notes that
the USITC November Report and Supplemental Report demonstrated compliance with both the unforeseen
developments and obligations incurred elements of the first clause of GATT Article XIX:1(a). Therefore, the
legal issue addressed by this question is not necessary to a resolution of the claims raised by China in this
regard." See also Unites States' first written submission, para. 232, which makes the same point.

to prevent or rem edy such injury, to suspend the obligation in whole or in part or to
withdraw or modify the concession.30
7.14. Thus, in addition to the requirements of the Agreement on Safeguards, a safeguard measure
may only be lawfully imposed if the relevant increase in im ports occurs "as a result of unforeseen
developments and of the effect of the obligations incurred by a contracting party under this
Agreement, including tariff concessions". 31 As we see it, this requirement contains three main
elements.
7.15. First, Article XIX:1(a) of the GATT 1994 requires the existence of "unforeseen developments".
Previous DSB reports have found that "unforeseen developments" are those developments that were
"unexpected" at the time the importing Member incurred the relevant GATT obligation. 32 As such,
"unforeseen developments" have both subjective (i.e. what was unforeseen in particular
circumstances for specific negotiators) and objective (i.e. what should or could have been foreseen
in light of the circumstances) elements.33
7.16. Second, Article XIX:1(a) of the GATT 1994 requires that imports increased "as a result of the
unforeseen developments". 34 In US – Steel Safeguards , the Appellate Body addressed this
requirement and found:
Turning to the term "as a result of" that is also found in Article XIX:1(a), we note that
the ordinary meaning of "result" is, as defined in the dictionary, "an effect, issue, or
outcome from some action, process or design". The increased i mports to which this
provision refers must therefore be an "effect, or outcome " of the "unforeseen
developments". Put differently, the "unforeseen developments" must "result" in
increased imports of the product ("such product") that is subject to a
safeguard measure.35
7.17. Third, Article XIX:1(a) of the GATT 1994 requires that imports increased "as a result … of the
effect of the obligations incurred by a contracting party under this Agreement, including tariff
concessions". In Korea – Dairy and Argentina – Footwear (EC), the Appellate Body found that:
[T]his phrase simply means that it must be demonstrated, as a matter of fact, that the
importing Member has incurred obligations under the GATT 1994, including tariff
concessions. Here, we note that the Schedules annexed to the GATT 1994 are made an
integral part of Part I of that Agreement, pursuant to paragraph 7 of Article II of the
GATT 1994. Therefore, any concession or commitment in a Member's Schedule is
subject to the obligations contained in Article II of the GATT 1994.36

30 Emphasis added.
31 Appellate Body Report, Korea – Dairy, para. 77: "any safeguard measure imposed after the entry into
force of the WTO Agreement must comply with the provisions of both the Agreement on Safeguards and
Article XIX of the GATT 1994" (fn omitted; emphasis original). See also Appellate Body Report, Argentina –
Footwear (EC), paras. 83-84; and Panel Reports, US – Lamb, para. 7.11; and US – Steel Safeguards,
para. 10.36.
33 Panel Reports, US – Steel Safeguards, paras. 10.42-10.43. See also Appellate Body Report,
34 Emphasis added.
35 Appellate Body Report, US – Steel Safeguards, para. 315 (emphasis added). While China uses the
term "clear linkage" to describe the requisite relationship between increased imports and "unforeseen
developments", it explains that it uses this phrase "to summarize Appellate Body and panel decisions
characterizing this concept as a 'logical connection', a 'clear temporal connection', and 'clear' relationship". As
such, it does not appear that, by using this phrase, China is arguing that a heightened legal standard should
apply. (China's response to the Panel question No. 24 of the second set, para. 232). Moreover, we note that
the findings from previous DSB reports to which China refers concern the meaning of the treaty text "as a
result of" in the first clause of Article XIX:1(a) of the GATT 1994. (See, e.g. Appellate Body Report, US – Steel
Safeguards, paras. 317-318). In our view, the term "as a result of" is sufficiently clear on its own; therefore,
we will analyse China's claims against the USITC's findings concerning the relationship between increased
imports and "unforeseen developments" on that basis.
36 Appellate Body Reports, Korea – Dairy, para. 84; Argentina – Footwear (EC), para. 91 (emphasis
added). See also Panel Reports, Indonesia – Iron or Steel Products, para. 7.52: "[t]he expression 'the effect of

7.18. As we agree with the findings in the previous DSB reports noted above, we will assess
China's claims concerning the three elements in the first clause of Article XIX:1(a) of the GATT 1994
accordingly.
7.2.3 Whether the USITC 's p ublished report demonstrated compliance with the
requirements of Article XIX:1(a) of the GATT 1994
7.19. As a preliminary matter, we recall that the USITC directly addressed the issue of "unforeseen
developments" in its supplemental report that was prepared in response to a request for additional
information from the USTR. Specifically, the USTR requested that the USITC "identify any unforeseen
developments that led to the articles at issue being imported into the United States in such increased
quantities as to be a substantial cause of serious injury".37
7.20. The Agreement on Safeguards does not dictate the precise format of the "report" that the
competent authorities of a Member must publish following their investigation. 38 We therefore
consider that the USITC final report and the USITC final staff report , along with the supplemental
report, collectively constitute the relevant published "report" within the meaning of Article 3.1 of the
Agreement on Safeguards. Accordingly, in the sections that follow, we address whether China has
established that this report failed to demonstrate compliance with the requirement in
Article XIX:1(a) of the GATT 1994 that imports increased "as a result of unforeseen developments
and of the effect of the obligations incurred" by the United States.
7.2.3.1 The existence of "unforeseen developments"
7.2.3.1.1 Factual background
7.21. In its supplemental report, the USITC found that US negotiators could not have foreseen, a t
the time that the United States acceded to GATT 1947, at the time that the United States acceded
to the WTO, or at the time that the United States agreed to China's accession to the WTO 39, the
series of events that culminated in CSPV products being imported into the United States in increased
quantities. In particular, the USITC found that US negotiators could not have foreseen that:
a. China would implement a series of industrial policies, five -year plans, and other
government support programmes favouring r enewable energy product manufacturing,
including CSPV products.40

the obligations incurred by a Member under this Agreement' requires a competent authority to factually
demonstrate 'that the importing Member has incurred obligations under the GATT 1994, including tariff
concessions'"; Dominican Republic – Safeguard Measures, paras. 7.145-7.146: "in the opinion of the Panel, it
is clear that as a matter of fact the importing Member must have incurred obligations under the GATT 1994, for
example, tariff concessions, with respect to the product in question. It then falls to the importing Member to
identify those obligations incurred under the GATT 1994 that are linked with the increase in imports causing
serious injury to its domestic industry"; and US – Steel Safeguards, para. 10.140: "the logical connection
between tariff concessions and increased imports causing serious injury is proven once there is evidence that
the importing Member has tariff concessions for the relevant product".
37 USITC supplemental report, (Exhibit CHN-6), p. 1.
38 Accordingly, we disagree with the suggestion in China's first written submission that it was improper
for USITC to address "unforeseen developments" in a separate report. (China's first written submission,
paras. 245-248 and 280). In this regard, we observe that the panel in US – Steel Safeguards also found that it
was appropriate to publish the "report" in parts:
[N]othing in the requirement to publish a report dictates the form that the report must take,
provided that the report complies with all of the other obligations contained in the Agreement on
Safeguards and Article XIX of GATT 1994. In the end, it is left to the discretion of the Members to
determine the format of the report, including whether it is published in parts, so long as it contains
all of the necessary elements, including findings and reasoned conclusions on all pertinent issues
of fact and law. Together, these parts can form the report of the competent authority.
(Panel Reports, US – Steel Safeguards, para. 10.49. See also Brazil's third-party submission, para. 10; and
Japan's third-party submission, para. 10)
39 USITC supplemental report, (Exhibit CHN-6), p. 5.
40 USITC supplemental report, (Exhibit CHN-6), pp. 5 and 10.

b. The effect of such industrial policies, plans, and support programmes would lead to the
development and expansion of capacity to manufacture CSPV products in China to levels
that substantially exceeded the level of its internal consumption.41
c. This increased capacity would be largely directed to export markets such as the
United States and would take advantage of the existence of programmes implemented by
the US government to encourage renewable energy consumption.42
d. The United States' use of authorized tools, such as anti-dumping and countervailing duty
measures on imports from China, would have limited effectiveness and instead lead to
rapid changes in the global supply chains and manufacturing processes in order to facilitate
US imports of non-covered products from China and Chinese Taipei, and later US imports
from Chinese producers' affiliates in other countries.43 In this regard, the USITC explained
that in 2012 the United States imposed anti-dumping and countervailing duties on imports
from China (CSPV I). Before the CSPV I orders could have a meaningful effect, Chinese
producers reorganized their production facilities to avoid being subject to the anti-dumping
and countervailing duties. Consequently, in 2013, US CSPV producers filed another petition
seeking the imposition of anti-dumping and countervailing duties on imports from China
and Chinese Taipei, which ultimately resulted in additional duties being imposed on certain
CSPV products from these sources (CSPV II).44 However, before the CSPV II orders went
into effect, imports from third countries started to enter the US market. By the end
of 2015, total imports had almost doubled their level from 2014 , and imports continued
to grow into 2016 . At the same time, the six largest firms producing CSPV products in
China increased their global manufacturing capacity by expanding investments in the same
third countries without reducing their capacity in China. 45 Between 2015-2016, imports
from four different third countries where Chinese affiliates had added CSPV production
capacity increased their share of US consumption, just after the CSPV II orders went into
effect.46
7.22. As such, the USITC considered these eve nts constituted "unforeseen developments" within
the meaning of Article XIX:1(a) of the GATT 1994.
7.2.3.1.2 Main arguments of the parties
7.23. China argues that the USITC failed to demonstrate that the events to which it referred were
unforeseen by US negotiators. 47 In particular, China claims that the USITC failed to appropriately
identify the "series of industrial policies, five -year plans, and other government support programs
favouring renewable energy product manufacturing, including CSPV products" and explain why it

41 USITC supplemental report, (Exhibit CHN-6), pp. 5 and 7-10.
42 USITC supplemental report, (Exhibit CHN-6), p. 5.
43 USITC supplemental report, (Exhibit CHN-6), pp. 5-10.
44 USITC supplemental report, (Exhibit CHN-6), pp. 5-7. Pursuant to the CSPV I investigation, the
United States imposed anti-dumping duties ranging from 18% to 249.46%. The United States further identified
12 programmes as providing countervailable subsidies to CSPV producers/exporters in China that resulted in
the imposition of countervailing duties ranging from 14% to 16%. Among others, the countervailable subsidies
included programmes involving preferential policy lending; provision of polysilicon, land, and electricity for less
than adequate remuneration; preferential taxes; import tariff and value added tax exemptions for use of
imported equipment; value added tax rebates on foreign-invested enterprises' purchase of Chinese-made
equipment; and export credit subsidies.
Furthermore, pursuant to the CSPV II investigation, the United States imposed anti-dumping duties
ranging from 26.71% to 165.04% on imports from China and 11.45% to 27.55% on imports from
Chinese Taipei, and countervailing duties ranging from 27.64% to 49.79% on imports from China. The
United States again identified a variety of countervailable programmes in China, including grants; provision of
inputs or land for less than adequate remuneration; preferential loans and directed credit; tax benefit
programmes; value added tax rebates on equipment purchases; export guarantees and insurance for green
technology; and export credit subsidies.
45 USITC supplemental report, (Exhibit CHN-6), p. 8 (referring to Canadian Solar (China),
Hanwha Qidong (China), Shanghai JA Solar, Jinko Solar (China), Changzhou Trina (China), and Yingli Green).
46 USITC supplemental report, (Exhibit CHN-6), pp. 8-9 (referring to Korea, Malaysia, Thailand, and
Viet Nam).
47 China's first written submission, paras. 260-273; comments on the United States' response to Panel
question No. 23 of the first set, paras. 175-190.

considered those developments to be unforeseen. 48 In China's view, it is "hardly 'unforeseen' that
countries would seek economic development and energy security".49 In addition, China argues that
the USITC failed to demonstrate that it was "completely unforeseen" that, in a situation where
US demand for CSPV products significantly exceeds US CSPV production capability, the imposition
of anti-dumping and countervailing duties against China would lead to increased imports from other
countries.50 China further claims that US negotiators would have foreseen that the imposition of
anti-dumping and countervailing duty orders on products from one country would naturally lead to
increased imports from another country with lower duties, especially considering that this proposition
is well -established in economic literature. 51 According to China, the USITC recognized this very
dynamic in its 2001 safeguard investigation against steel products.52
7.24. For its part, the United States submits that the USITC identified a number of developments
that were unforeseen. 53 According to the United States, WTO Members have declared that their
economies will participate in the international trading system based on "open, market -oriented
policies and the commitments set out in the Uruguay Round Agreements and Decisions". 54 In this
context, the United States argues that the USITC appropriately identified the "industrial policies,
five-year plans, and other government support programs" by reference to China's subsidy
programmes and explained that they resulted in a massive and unforeseen increase in
Chinese production capacity for CSPV products. 55 The United States asserts that, con trary to
China's argument concerning economic development and energy security, the USITC found "what
was unforeseen was the scale of the effort, the speed with which it boosted Chinese production, the
overcapacity that it created, and the degree to which these effects spilled into other countries where
Chinese producers expanded their operations". 56 In this respect, the United States contends that
China essentially ignores "the speed of its industry 's growth and th e overcapacity that resulted,
which are central to the USITC's conclusions".57 Relatedly, the United States advances that the
intentional development of overcapacity in China and in other countries after the imposition of the
CSPV I and CSPV II orders demonstrates that China is incorrect to argue that CSPV production
"naturally" shifted to countries with lower duties and therefore would have been foreseen.58
7.2.3.1.3 Evaluation of the Panel
7.25. We do not consider that China has demonstrated that it was inappropriate fo r the USITC to
find that "unforeseen developments" existed during the period of investigation (POI).
7.26. First, in line with the United States' argument, we note that the USITC identified
China's "industrial policies, five-year plans, and other government support programs" by reference
to the findings in the previous countervailing duty investigations on CSPV products from China
(i.e. CSPV I and CSPV II).59 We further note that the USITC found that the same "industrial policies,
five-year plans, and other government support programs" were connected to the rapid increase of

48 China's first written submission, paras. 261-263.
49 China's first written submission, para. 261.
50 China's second written submission, paras. 269-277.
51 China's response to Panel question No. 21 of the second set, para. 220; first written submission,
para. 270.
52 China's second written submission, paras. 277-279; first written submission, paras. 271-272; and
response to Panel question No. 21 of the second set, paras. 221-222.
53 United States' first written submission, paras. 262-266 and 276-285; second written submission,
paras. 157-158; and response to Panel question No. 23 of the first set, paras. 67-77.
54 United States' response to Panel question No. 23 of the first set, para. 76; second written submission,
para. 157.
55 United States' first written submission, paras. 277-278.
56 United States' first written submission, para. 278 (emphasis original). See also
United States' response to Panel question No. 23(a) of the first set, paras. 67-73.
57 United States' first written submission, para. 278.
58 United States' first written submission, paras. 279 and 281; second written submission,
paras. 157-158.
59 USITC supplemental report, (Exhibit CHN-6), pp. 5-7. In this respect, we recall that the USITC
referred to a variety of countervailable programmes in China that were identified in the CSPV I and CSPV II
investigations and the resultant countervailing duty rates that were imposed on imports from China. (See fn 44
above).

CSPV capacity in China that significantly exceeded domestic consumption within China.60 Based on
these findings, we do not consider that the USITC failed to appropriately identify developments that
could not have been foreseen by US negotiators, contrary to China's view.
7.27. Second, we are not persuaded by China's claim that it was inappropriate for the USITC to find
that the ineffectiveness of anti-dumping and countervailing duty orders could not have been foreseen
by US negotiators. As noted above, China bases its argument on general economic principles and
on a statement from the USITC in its 2001 steel safeguard investigation, both of which allegedly
suggest that the USITC would have anticipat ed that the imposition of trade remedy orders on
products from one country would lead to an increase in imports from other countries. However, even
if it was generally foreseeable that anti-dumping and countervailing duty orders might lead to trade
diversion, the USITC's finding in the present case was more specific. The USITC found that what was
unexpected was the "rapid changes in the global supply chains and manufacturing processes" that
immediately followed the imposition of the CSPV I and CSPV II orders, combined with the significant
increase in global capacity of CSPV production.61 As these particular developments are documented
in record evidence (which China does not contest)62, we agree with the United States that China has
not demonstrated that it was inappropriate for the USITC to find that these developments could not
have been foreseen by US negotiators.63
7.28. Based on the foregoing, we reject China's claim that the USITC failed to appropriately identify
the existence of "unforeseen developments" within the meaning of Article XIX:1(a) of the
GATT 1994.
7.2.3.2 The relationship between increased imports and "unforeseen developments"
7.2.3.2.1 Factual background
7.29. The USITC found that the unforeseen developments described in section 7.2.3.1.1 above "led
to CSPV products being imported into the United States in such increased quantities as to be a
substantial cause of serious injury to the domestic industry producing an article like or directly
competitive with the imported article".64
7.2.3.2.2 Main arguments of the parties
7.30. China argues that the USITC failed to establish the requisite connection between increased
imports and the "unforeseen developments".65 China contends that the USITC failed to demonstrate
that increased imports "were largely attributable to increased Chinese CSPV capacity and
China's government policies".66 China further contends that the USITC failed to demonstrate that
China's government policies encouraged production outside of China 67 and that Chinese producers
actually took advantage of such policies to build production facilities in countries outside of China.68

60 In this respect, we note that record evidence identified by the USITC shows that, within China,
CSPV capacity grew significantly and far exceeded domestic consumption, particularly for CSPV modules.
Record evidence identified by the USITC also shows that the largest Chinese producers substantially increased
their global capacity over the 2012-2016 period. (USITC supplemental report, (Exhibit CHN-6), fns 24, 25,
and 29; see also USITC final staff report, (Exhibit CHN-3), pp. IV-20-IV-35). In addition, we note that the
findings in the CSPV I and CSPV II investigations are pertinent to the safeguard investigation due to the
temporal connection between the POIs in all three proceedings. (USITC CSPV I final report, (Exhibit USA-11),
fn 63 (noting that the POI was January 2009 to June 2012); USITC CSPV II final report, (Exhibit USA-12),
fn 30 (noting that the POI was January 2011 to June 2014)).
61 USITC supplemental report, (Exhibit CHN-6), p. 10.
62 USITC supplemental report, (Exhibit CHN-6), p. 10 and fn 32; USITC final staff report,
(Exhibit CHN-3), pp. IV-26-IV-29. See also United States' response to Panel question No. 23 of the first set,
paras. 67-77; and China's comments on the United States' response to Panel question No. 23 of the first set,
paras. 178-190.
63 United States' second written submission, paras. 157-158.
64 USITC supplemental report, (Exhibit CHN-6), p. 10.
65 China's second written submission, paras. 280-305; first written submission, paras. 279-292.
66 China's first written submission, para. 284.
67 China's second written submission, paras. 284 and 290.
68 China's second written submission, paras. 284 and 291. According to China, although some Chinese
producers constructed factories outside China, there is no evidence that these Chinese producers received any
support from the government of China to do so.

China considers that such a demonstration was necessary because imports of CSPV products from
China decreased in the 2015-2016 period when imports from other sources increased.69
7.31. In a related line of argumentation, China claims that the USITC failed to establish that
increased imports originated from Chinese -affiliated companies that had expanded to
third countries.70 In China's view, it was improper for the USITC to infer that Chinese-affiliated CSPV
producers that had expanded to third countries contributed to the increase in US imports because
the increase "could have come from other non-Chinese producers in these countries".71 In addition,
China advances that Korea was responsible for the single largest increase in imports72; however, no
Chinese producer had "substantial CSPV production factories"73 or "controlled" the export market in
Korea.74 Accordingly, China argues that, even if the USITC correctly found that the increase in
imports from certain third countries other than Korea came from Chinese-owned companies, "there
is still a very large increase in imports that has nothing to do with the USITC's alleged unforeseen
development", and therefore there is no "clear linkage" be tween the alleged unforeseen
development and the increase in imports.75
7.32. The United States argues that the USITC appropriately demonstrated that imports increased
"as a result of unforeseen developments".76 Contrary to China's argument, the USITC explained how
China's policies, plans, and programmes resulted in increased imports not only from China, but also
from third countries where Chinese -affiliated producers had expanded their production capacity,
without reducing their production capacity in China. 77 By demonstrating that US imports from the
same third countries increased massively after this expansion, the USITC established that increased
imports were the result of this unexpected development.78
7.33. In response to China's argument that it was improper for the USITC to infer that imports
increased as a result of the expansion of Chinese -affiliated producers in third countries, the
United States advances the following arguments. The United States asserts that the unforeseen
developments requirement in Article XIX:1(a) of the GATT 1994 does not require import -specific
information on a transaction -by-transaction (or company -by-company, or country -by-country)
basis.79 Thus, the United States contends that it was appropriate for the USITC to base its conclusion
that imports increased "as a result" of unforeseen developments on evidence demonstrating that
Chinese-affiliated producers massively increased their production in Korea, Malaysia, Thailand, and
Viet Nam, and that the imports from these countries, collectively, more than doubled their share of
the US market during the time just after the trade remedy orders in CSPV II took effect.80 According
to the United States, China cannot reasonably argue that its producers' massive increase in
production capacity in third countries is unrelated to the significant increase in US imports from
those same countries, when both developments occurred at the same time.81

69 China's second written submission, para. 281; response to Panel question No. 54 of the third set,
para. 144.
70 China's second written submission, paras. 284 and 292-302; response to Panel question No. 21 of the
second set, paras. 216-217.
71 China's second written submission, paras. 237 and 286-288.
72 China's second written submission, para. 301.
73 China's second written submission, para. 294.
74 China's second written submission, paras. 297-302.
75 China's second written submission, para. 303.
76 United States' first written submission, para. 293.
77 United States' first written submission, paras. 282-285; second written submission,
para. 17; response to Panel question No. 22 of the second set, paras. 52-54; and response to Panel question
No. 55 of the third set, paras. 48-52.
78 United States' first written submission, paras. 282-285; second written submission, paras. 154-155.
79 United States' second written submission, para. 156.
80 United States' second written submission, para. 17. The United States further argues that the USITC
also found that four of the six largest Chinese firms added CSPV module capacity in two additional countries
(Canada and Indonesia). This, coupled with the USITC's findings concerning the "large and attractive nature of
the U.S. market and the large and growing size of the export-oriented foreign industries", reveals that the
increased imports resulting from China's efforts to target the United States' market are not limited to Korea,
Malaysia, Thailand, and Viet Nam. (United States' response to Panel question No. 22 of the second set,
para. 53).
81 United States' second written submission, para. 156; response to Panel question No. 22 of the
second set, para. 54; and response to Panel question No. 55 of the third set, para. 52.

7.34. Finally, the United States argues that China's argument concerning Korea is flawed on several
fronts. According to the United States, the USITC found that Hanwha Qidong was one of the
six largest CSPV cell and module producers in China, and that Hanwha Qidong 's corporate parent
(Hanwha) produced CSPV cells and modules in Korea. 82 Thus, regardless of whether Chinese
producers controlled significant production in Korea, Korea was one of the countries where
Chinese-affiliated CSPV producers expanded their production "in efforts to circumvent the CSPV I
and CSPV II orders".83 The United States also argues that China fails to cite the most accurate record
evidence regarding the increase in imports from Korea. 84 Yet, even the record evidence to which
China refers shows that imports from Malaysia, Thailand, and Viet Nam (the three other countries
where Chinese firms had added both cell and module capacity) accounted for almost two-thirds of
the total increase in imports. 85 In the United States' view, this was sufficient for the USITC to
establish that increased imports were "as a result of unforese en developments" for purposes of
Article XIX:1(a) of the GATT 1994.86
7.2.3.2.3 Evaluation of the Panel
7.35. Article XIX:1(a) of the GATT 1994 requires that increased imports occur " as a result of the
unforeseen developments".87 Consistent with the ordinary meaning of this phrase, we consider that
this element of Article XIX:1(a) of the GATT 1994 may be satisfied where increased imports are an
effect or outcome of the "unforeseen developments".88
7.36. In this context, the parties' arguments raise two main issues: (a) whether t he USITC
appropriately demonstrated that imports increased as a result of China's "industrial policies,
five-year plans, and other government support programs" that supported the development of CSPV
capacity; and (b) whether the USITC appropriately demonstrated that imports increased as a result
of the overall increase in global capacity and the rapid reorganization of global supply chains that
followed the imposition of the CSPV I and CSPV II orders. Since the "unforeseen developments"
found by the USITC consisted of a series of events, we do not consider that it was necessary for the
USITC to directly connect each specific development to the increase in imports so long as there was
sufficient evidence to find that the "unforeseen developments", overall, re sulted in increased
imports.
7.37. Turning to the first main issue, we recall that the USITC identified record evidence
demonstrating that China adopted "industrial policies, five -year plans, and other government
support programs" that benefit ted CSPV producers and exporters in China and led to a significant
and rapid expansion of their capacity and production for CSPV cell s and modules.89 We also recall
that the USITC found that this increased capacity significantly exceeded domestic consumption
within China.90 In addition, the USITC identified record evidence demonstrating that US imports of
CSPV products from China increased significantly over the POI, from 326,846 kW in 2012
to 2,720,193 kW in 2016. 91 The USITC further recognized that, with the exception of 20 13
(i.e. immediately after the imposition of the CSPV I order), imports from China were consistently a
significant source of CSPV imports in the US market. 92 Based on this evidence, contrary to
China's view, we do not consider that the USITC failed to demonstrate that increased imports were
attributable to "increased Chinese CSPV capacity and China's government policies".93

82 United States' response to Panel question No. 56 of the third set, para. 53.
83 United States' response to Panel question No. 56 of the third set, para. 54.
84 United States' response to Panel question No. 56 of the third set, para. 55.
85 United States' response to Panel question No. 56 of the third set, para. 56.
86 United States' response to Panel question No. 56 of the third set, para. 56.
87 Emphasis added.
88 See section 7.2.2 above.
89 USITC supplemental report, (Exhibit CHN-6), pp. 6-7 (referring to the US Department of Commerce
(USDOC) investigations that determined countervailable subsidies were being provided to producers and
exporters of CSPV products from China; USITC CSPV I final report, (Exhibit USA-11), p. I-5; USITC CSPV II
final report, (Exhibit USA-12), p. I-5). See also USDOC final CVD determination, (Exhibit USA-24); and Issues
and decision memorandum on CVD, (Exhibit USA-25).
90 USITC supplemental report, (Exhibit CHN-6), fns 24, 25, and 29; see also USITC final staff report,
(Exhibit CHN-3), pp. IV-20-IV-35.
91 USITC final staff report, (Exhibit CHN-3), p. IV-2, table IV-1.
92 USITC final report, (Exhibit CHN-2), p. 29.
93 China's first written submission, para. 284.

7.38. In line with China's argument, we note that record evidence does not appear to directly
connect China's "industrial policies, five-year plans, and other government support programs" to the
expansion of capacity and production of CSPV products in third countries. However, we do not
consider that the absence of such direct evidence undermines the linkage that the USITC established
between those policies, plans, and programmes and the significant volume of increased imports from
China. Nor do we consider that the relevance of imports from China, or the connection between
those imports and the "industrial policies, five-year plans, and other government support programs",
is undermined by the fact that import volumes from China declined in 2016. As noted above, CSPV
imports from China were consistently a significant source of the overall imports of CSPV products in
the US market.
7.39. This brings us to the second main issue. As indicated above, the USITC found that the overall
increase in global CSPV capacity and the rapid reorganization of global supply chains that followed
the imposition of the CSPV I and CSPV II orders was part of the "unfo reseen developments" that
resulted in increased imports of CSPV products. 94 In particular, the USITC found that, after the
imposition of the CSPV I order, "rapid changes in the global supply chains and manufacturing
processes" facilitated US imports of non -covered products from China and Chinese Taipei. 95 It also
found that, after the imposition of the CSPV II order, "rapid changes in the global supply chains and
manufacturing processes" facilitated US imports from Chinese producers' affiliates in third
countries.96
7.40. China argues that the USITC's finding on this point is deficient because it (a) relied on an
inference to find that Chinese-affiliated CSPV producers in third countries contributed to the increase
in US imports97; and (b) ignored that a significant share of the increased imports originated from
Korea, where no Chinese producer that had "substantial CSPV production factories"98 or "controlled"
the export market.99 However, for the reasons explained below, we are not convinced by either of
China's arguments.
7.41. Regarding China's argument that it was inappropriate for the USITC to infer that
Chinese-affiliated CSPV producers in third countries contributed to the increase in imports, we note
that the USITC relied on evidence demonstrating that the six largest firms producing CSPV cells and
modules in China increased their global capacity over the POI.100 Four of these six firms added CSPV
cell manufacturing capacity in one or more of the following countries: Korea, Malaysia, the
Netherlands, Thailand, and Viet Nam.101 Meanwhile, four of these six firms added CSPV module
manufacturing capacity in one or more of the following countries: Canada, Indonesia, Korea,
Malaysia, Thailand, and Viet Nam.102 In addition, imports from four countries where Chinese affiliates
added both CSPV cell and CSPV module capacity, i.e. Korea, Malaysia, Thailand, and Viet Nam,
increased their share of apparent US consumption, particularly in 2015 and 2016. 103 Collectively,
imports from these countries more than doubled their share of the US market just after the CSPV II
orders took effect in 2015.104
7.42. Aside from its argument concerning Korea, China does not contest any of these findings.
Rather, China claims that it was inappropriate for the USITC to infer that the increase in production
capacity of Chinese-affiliated CSPV producers in these countries contributed to the increased imports
in the United States, advancing that the "increase in exports could have come from other

94 Based on our reading of the supplemental report, we understand that the USITC found that the
increase in global CSPV capacity and the rapid reorganization of global supply chains, as well as the
consequent ineffectiveness of the CSPV I and CSPV II orders, collectively constituted an independent
explanation for why imports of CSPV products increased in the US market. As such, we do not consider that the
appropriateness of the USITC's finding concerning the connection between these unforeseen developments and
increased imports depends on whether record evidence showed that the same developments directly resulted
from China's "industrial policies, five-year plans, and other government support programs".
95 USITC supplemental report, (Exhibit CHN-6), pp. 6-7 and 10.
96 USITC supplemental report, (Exhibit CHN-6), pp. 8-10.
97 China's second written submission, paras. 286-287.
98 China's second written submission, para. 294.
99 China's second written submission, paras. 297-302.
100 USITC supplemental report, (Exhibit CHN-6), p. 8; USITC final report, (Exhibit CHN-2), p. 44.
101 USITC final report, (Exhibit CHN-2), pp. 40-41 and 44.
102 USITC final report, (Exhibit CHN-2), pp. 40-41.
103 USITC supplemental report, (Exhibit CHN-6), pp. 8-9.
104 USITC supplemental report, (Exhibit CHN-6), p. 9.

non-Chinese producers in these countries". 105 Yet, in our view, even if this were a hypothetical
possibility, the circumstantial evidence relied upon by the USITC suggests otherwise. Indeed, in line
with the United States' argument, the fact that Chinese-affiliated companies significantly increased
their production capacity in third countries in the same years when imports from those countries
into the US market significantly increased suggests to us that there was a meaningful connection
between these developments.106 Therefore, we disagree with China that it was inappropriate for the
USITC to rely on this evidence to find that US imports increased as a result of the increase in global
capacity and the rapid reorganization of global supply chains, particularly from Chinese -affiliated
producers that expanded outside of China in the 2015-2016 period.
7.43. We are also not persuaded by China's argument concerning the significant share of increased
imports that originated in Korea. The USITC found that, following the imposition of the CSPV II
order, the largest f irms producing CSPV products in China increased their global manufacturing
capacity by expanding investments in affiliated companies in third countries without reducing their
capacity in China.107 With respect to Korea, record evidence indicates that Hanwha , a Korea-based
CSPV producer, also produced CSPV products in China under the affiliated company Hanwha
Qidong108, and that Hanwha increased its production of CSPV products in Korea following the
imposition of the CSPV II order. Based on these circumstances, and noting that Hanwha is therefore
a "Chinese-affiliated" company that increased its production in Korea, we do not consider the fact
that no Chinese producers had "substantial CSPV production factories" 109 or "controlled" the
market110 in Korea would contradict the USITC's finding regarding the activities of Chinese-affiliated
companies, contrary to China's argument.
7.44. In any event, even if we were to accept China's contention that a significant share of the
increased imports originated from Korea had nothing to do with the "unforeseen developments", we
fail to see why this would undermine the USITC's finding that a significant share of imports also
increased as a result of the expansion of Chinese-affiliated CSPV operations in other third countries,
particularly Malaysia, Thailand, and Viet Nam.111 In this regard, we do not read Article XIX:1(a) of
the GATT 1994 to require that all of the increased imports are a result of the "unforeseen
developments".
7.45. Based on the foregoing, we reject China's claim that the USITC failed to appropriately
demonstrate that imports increased "as a result of unforeseen developments".
7.2.3.3 The relationship between increased imports and "obligations incurred" by the
United States
7.2.3.3.1 Factual background
7.46. In its final staff report, the USITC noted:
The imported articles are provided for in subheading 8541.40.60 (statistical reporting
numbers 8541.40.6020 ("solar cells, assembled into modules or made up into
panels") and 8541.40.6030 ("solar cells, other")) of the Harmonized Tariff Schedule of
the United States ("HTS"), and have been free of duty under the general duty rate since
at least 1987.112

105 China's second written submission, para. 237.
106 United States' second written submission, para. 156.
107 USITC supplemental report, (Exhibit CHN-6), pp. 8-10.
108 USITC final staff report, (Exhibit CHN -3), tables IV-16, IV-17, and IV-18. See also ibid. fn 38:
Hanwha is based in Korea, but *** of its cell and module production occurred in China.
Hanwha's first large scale entry into the solar business was via its 2010 acquisition of 49.99 percent
of Solarfun, a Chinese firm that was at the time the fourth largest module producer in China. In
2012, Hanwha acquired bankrupt German manufacturer QCells, which had production in Germany
and Malaysia. (redacted original)
109 China's second written submission, para. 294.
110 China's second written submission, paras. 297-302.
111 USITC final staff report, (Exhibit CHN-3), pp. C-10-C-11; USITC supplemental report,
(Exhibit CHN-6), pp. 7-9 and fns 24, 26-28, and 29-31.
112 USITC final staff report, (Exhibit CHN-3), p. I-38.

7.47. The USITC referred to the same tariff treatment of CSPV products in footnote 10 in the
supplemental report:
In this case, the increased imports were largely attributable to increased CSPV cell and
CSPV module capacity by Chinese producers both within China and globally.[ 9] The
United States has been a GATT member since January 1, 1948, and has incurred the
obligations of WTO memb ership since January 1, 1995, whereas the government of
China acceded to the WTO effective December 11, 2001. Prior to China's WTO
accession, there were a series of negotiations with individual and collective WTO
members, including the United States, before they agreed to extend the WTO's trade
liberalization and market access benefits to China.[10]
9 USITC Pub. 4739 at 40-41, 44-45; Confidential Injury Views at 54-55, 61-63.
10 Imported articles that are provided for in subheading 8541.40.60 of the U.S. Ha rmonized Tariff
Schedule have been free of duty under the general duty rate since at least 1987. CR at I -52;
PR at I-38.113
7.2.3.3.2 Main arguments of the parties
7.48. China advances a series of arguments in support of its claim that the USITC failed to
appropriately demonstrate that imports increased "as a result … of the effect of the obligations
incurred" by the United States. In particular, China argues that the USITC failed to identify the
specific obligations that the United States incurred114, as the US general zero duty rate on CSPV
products since at least 1987 is neither a "commitment" nor a "tariff concession" reflecting an
obligation incurred by the United States under Article II of the GATT 1994, or through any prior
GATT round of negotiations. 115 China further argues that the USITC supplemental report provides
no discussion at all "of the effect of" those obligations and how they resulted in increased imports ,
and specifically how and why those obligations constrained the United States' ability to react to
increased imports of CSPV products.116 To do so, the USITC was required to analyse the timing and
magnitude of the tariff concessions on CSPV products to demonstrate that imports increased as a
result of those obligations. 117 Finally, China claims that, even if the USITC identified a zero bound
tariff rate as the obligation incurred, the WTO covered agreements allow Members to impose
anti-dumping, countervailing, and safeguard measures. Therefore, it would not necessarily be
inconsistent with Article II of the GATT 1994 to use a safeguard measure to increase tariffs above
the bound levels to remedy the serious injury caused by increased imports.118
7.49. In addition to these arguments, China advances that the United States engages in
impermissible post hoc rationalization in its defence of the USITC report on this issue , contending
that the United States is now asserting that the zero general duty rate was the actual bound rate
established during the GATT negotiations, and that the USITC intended to refer to this bound rate
as the obligation incurred. China argues that this fact was not s et forth in the USITC supplemental
report. Moreover, China argues that the United States did not identify where the USITC mentioned
the bound duty rate of zero on CSPV products under GATT 1994.119
7.50. For its part, the United States argues that the USITC appro priately demonstrated that the
increase in imports was the result of the obligations incurred. In its view, the supplemental report
clearly identified that CSPV products covered by the safeguard measure "are provided for in
subheading 8541.40.60 of the U.S. Harmonized Tariff Schedule [and] have been free of duty under

113 USITC supplemental report, (Exhibit CHN-6), p. 4.
114 China's first written submission, paras. 251, 253, and 255; second written submission,
paras. 258-268.
115 China's second written submission, paras. 263 and 265; first written submission, paras. 257-258.
China further argues that the United States cannot submit that it logically follows that subheading 8541.40.60
of the US HTS is part of the US Schedule annexed to the GATT 1994 as its binding tariff. (China's second
written submission, para. 264).
116 China's first written submission, para. 282; comments on the United States' response to Panel
question No. 27 of the first set, para. 206; and response to Panel question No. 26 of the second set, para. 250.
117 China's second written submission, para. 266; response to Panel question No. 26 of the second set,
paras. 255-258.
118 China's response to Panel question No. 23 of the second set, para. 229.
119 China's response to Panel question No. 57 of the third set, para. 163.

the general duty rate since at least 1987". 120 This "commitment represents a tariff concession that
the United States undertook as part of its obligation to bind its Schedule under Article II of the
GATT 1994".121 The United States further advances that, due to this concession, it was unable to
increase its tariffs above the duty -free bound level, so as to modulate the increase in imports. 122
As such, the USITC's reference to this concession established that the increased imports were a
result of the "obligations incurred". 123 Finally, the United States argues that China is incorrect to
argue that Members' ability to use anti-dumping, countervailing, and safeguard measures (if they
meet the requisite conditions) means that tariff concessions do not prevent Members from increasing
tariffs to remedy the serious injury caused by increased imports.124
7.51. With respect to China's claim that the United States engages in post hoc rationalization, the
United States responds by arguing that " it is an incontrovertible fact that the U.S. duty rate for
imports of CSPV products is bound at zero percent". 125 Thus, "[t]he only thing necessary to carry
out this task is an identification of t he tariff lines in question for a cross reference within the WTO
systems".126
7.2.3.3.3 Evaluation of the Panel
7.52. Article XIX:1(a) of the GATT 1994 stipulates that imports must increase "as a result … of the
effect of the obligations incurred" by the Member implementi ng the safeguard measure. We agree
with previous DSB reports to the effect that this requirement may be satisfied when the Member
implementing the safeguard measure identifies a WTO obligation that would have prevented it from
raising tariffs on the product at issue.127
7.53. In the present case, the USITC identified the United States' domestic tariff treatment of CSPV
products when it observed that CSPV products covered by the safeguard measure "are provided for
in subheading 8541.40.60 of the U.S. Harmonized Tar iff Schedule [and] have been free of duty
under the general duty rate since at least 1987".128 Although we recognize that this statement does
not explicitly establish that such tariff treatment was required under the United States' WTO
obligations, we consider that the supplemental report appropriately demonstrates that this was the
implication of the USITC's statement.
7.54. In the supplemental report, we recall that the USITC found:
In this case, the increased imports were largely attributable to increased CSPV cell and
CSPV module capacity by Chinese producers both within China and globally.[ 9] The
United States has been a GATT member since January 1, 1948, and has incurred the
obligations of WTO membership since January 1, 1995, whereas the government of
China acceded to the WTO effective December 11, 2001. Prior to China's WTO
accession, there were a series of negotiations with individual and collective WTO
members, including the United States, before they agreed to extend the WTO's trade
liberalization and market access benefits to China.[10]

120 United States' first written submission, paras. 272-273; comments on China's response to Panel
question No. 57 of the third set, para. 91.
121 United States' first written submission, paras. 272-273; comments on China's response to Panel
question No. 57 of the third set, para. 91.
122 United States' second written submission, para. 159; response to Panel question No. 28 of the
first set, para. 82; first written submission, para. 218; and comments on China's response to Panel question
No. 57 of the third set, para. 91.
123 United States' first written submission, paras. 269 and 275. Additionally, the United States advances
that a tariff rate bound at 0% is more than sufficient to constitute a restraint on a Member's freedom to raise
its ordinary customs duties, and thereby qualifies as a per se commitment that satisfies the requirement in
Article XIX:1(a) concerning the "effect of obligations incurred". (United States' second written submission,
para. 175; opening statement at the first meeting of the Panel, para. 43; response to Panel question No. 26 of
the second set, para. 59; and comments on China's response to Panel question No. 57 of the third set,
para. 91).
124 United States' second written submission, para. 161.
125 United States' comments on China's response to Panel question No. 57 of the third set, para. 90.
(emphasis omitted)
126 United States' comments on China's response to Panel question No. 57 of the third set, para. 90.
127 See section 7.2.2 above.
128 USITC supplemental report, (Exhibit CHN-6), fn 10.

9 USITC Pub. 4739 at 40-41, 44-45; Confidential Injury Views at 54-55, 61-63.
10 Imported articles that are provided for in subheading 8541.40.60 of the U.S. Harmonized Tariff
Schedule have been free of duty under the general duty rate since at least 1987. CR at I -52;
PR at I-38.129
7.55. In our view, the USITC's placement of footnote 10 imm ediately after two sentences
concerning the United States' rights and obligations under the WTO agreements – including those
arising from its trade liberalization and market -access commitments to China following a series of
negotiations – reasonably reflec ts a connection between those rights and obligations and the
duty-free treatment of CSPV products under subheading 8541.40.60 of the US HTS.130 Implicitly,
therefore, the USITC supplemental report indicates that the United States' duty-free treatment of
CSPV products was related to its WTO obligations. In a similar vein, the placement of the same
two sentences immediately after a sentence explaining why imports increased logically establishes
a connection between the United States' WTO obligations and the increase in imports during the POI.
7.56. While we recognize that the USITC could have been clearer on this issue, we consider the
foregoing aspects of the USITC supplemental report appropriately identified a WTO obligation that
would have prevented the United States from raising its tariffs on CSPV products. On this basis, we
consider that the USITC appropriately demonstrated that imports increased "as a result … of the
effect of the obligations incurred", as required under Article XIX:1(a) of the GATT 1994. Accordingly,
we reject China's argument that the USITC's reference to the United States' domestic tariff
treatment of CSPV products
the
Indeed, accepting China's argument would
involve an overly formalistic approach to Article XIX:1(a) of the GATT 1994 and would ignore the
connection drawn in the USITC supplemental report between the United States' WTO obligations and
the treatment of CSPV products under its domestic tariff schedule.
We are also not persuaded by the other arguments raised by China on this issue.
7.58. First, contrary to China's position concerning when the United States started applying
duty-free treatment to CSPV products 132, we do not think that the fact that the United States
extended this treatment prior to incurring WTO obligations (i.e. since at least 1987) means that it
did not incur relevant obligations within the meaning of Article XIX:1(a) of the GATT 1994. In this
regard, we consider that the USITC was correct to point out that the United States incurred
obligations when it joined the WTO and agreed to make its tariff concessions subject to Article II of
the GATT 1994 – treatment that was later extended to China when the Members agreed to its
accession to the WTO. 133 In our view, the legal status of these obligations , and their practical
consequences (such as the inability to raise tariffs rates beyond the bound rate), are unaffected by
the fact that the relevant tariff treatment existed before they were incurred.
7.59. Second, we disagree with China's argument that it was necessary for the USITC to assess the
magnitude of a tariff concession to determine whether imports increase d as a result of that
obligation.134 While it is true that a tariff concession involving a significant reduction in the applied

129 USITC supplemental report, (Exhibit CHN-6), p. 4. (emphasis added)
130 More generally, we observe that the tariff code used for import classifications under the US HTS
corresponds with the United States' WTO Schedule of Concessions. In this regard, we note that the arbitrator
in US – Washing Machines made the factual observation that "[t]he Harmonized System (HS) classifies goods
by six-digit codes. The United States classifies imports on the basis of a 10-digit classification system, the
Harmonized Tariff Schedule (HTS). Notably, an HTS code shares the same beginning six digits as an HS code."
(Decision by the Arbitrator, US – Washing Machines (Article 22.6 – US), fn 248). Moreover, as noted by the
Appellate Body in Korea – Dairy, "the Schedules annexed to the GATT 1994 are made an integral part of Part I
of that Agreement, pursuant to paragraph 7 of Article II of the GATT 1994. Therefore, any concession or
commitment in a Member's Schedule is subject to the obligations contained in Article II of the GATT 1994."
(Appellate Body Report, Korea – Dairy, para. 84).
131 China's comments on the United States' response to Panel question No. 57 of the third set, para. 99.
In arriving at this finding, we note that China has not referred to record evidence that demonstrates – directly
or indirectly – that the United States had not incurred GATT 1994 obligations that would have prevented it
from raising tariffs on CSPV products.
132 China's second written submission, paras. 263 and 265; first written submission, paras. 257-258.
133 See, e.g. USITC supplemental report, (Exhibit CHN-6), p. 4.
134 China's second written submission, para. 266; response to Panel question No. 26 of the second set,
paras. 255-258.

duty rate may result in increased imports due to the increased market access that becomes available
after the concession, it is also true that tariff concessions in the form of bound rates prevent Members
from being able to raise tariff rates beyond the bound rate in reaction to an increase in imports. This
fact is unchanged by the magnitude of the tariff concession.
7.60. Finally, we dis agree with China's contention that, because the United States could have
increased duties on CSPV products through the imposition anti-dumping, countervailing, and
safeguard measures, "obligations incurred" did not prevent the United States from raising duties on
CSPV products.135 Although the WTO agreements permit Members to raise tariffs through, inter alia,
the application of trade remedies under certain circumstances, we fail to see why the existence of
these rights means that tariff concessions – i.e. "obligations" – do not prevent Members from being
able to raise tariffs in reaction to an increase in impor ts. In this respect, we note that
China's argument is at odds with the text of Article XIX:1(a) of the GATT 1994, which explicitly
contemplates that "obligations incurred" include "tariff concessions".
7.61. For the above reasons, we reject China's claim that th e USITC failed to appropriately
demonstrate in its report that imports increased "as a result … of the effect of the obligations
incurred" by the United States.
7.2.4 Whether the Agreement on Safeguards obligates the competent authorities of a
Member to demonstr ate in their published report that imports increased "as a result of
unforeseen developments and of the effect of the obligations incurred"
7.62. In the sections above we have rejected China's claims that the USITC failed to appropriately
demonstrate that imports of CSPV products increased "as a result of unforeseen developments and
of the effect of the obligations incurred". Based on these findings, we do not consider it necessary
to resolve the disagreement between the parties concerning the interpretative issue of whether the
Agreement on Safeguards requires the competent authorities of a Member to make this
demonstration in their published report.
7.3 The causal link between increased imports and serious injury
7.3.1 General factual background
7.63. In the safeguard investigation, the USITC adopted a single product definition (CSPV products)
that included CSPV cells and modules.136 The USITC also determined that imports of CSPV products
increased significantly over the 2012-2016 POI, specifically along the following trajectory:
Imports of CSPV products increased by 492.4 percent between 2012 and 2016.
They increased each year, from 2.1 million kW in 2012 to 3.1 million kW in 2013,
4.6 million kW in 2014, 8.4 million kW in 2015, and 12.8 million kW in 2016. Imports
as a ratio to domestic production also increased overall and in each year, from
733.9 percent in 2012 to 948.4 percent in 2013, 1,141.0 percent in 2014,
1,593.5 percent in 2015, and 2,276.2 percent in 2016.137
7.64. In addition, the USITC found that the domestic industry producing CSPV products was
seriously injured during the POI. The USITC based this determination on a variety of factors
concerning the condition of the domestic industry, specifically finding : (a) significant idling of
domestic production facilities 138; (b) significant unemployment and underemployment 139;
(c) inability of a significant number of firms to operate at a reasonable level of profit 140, generate
adequate capital to finance plant and equipment modernization, and maintain existing research and
development ( R&D) expenditures141; (d) declines in sales, market share, and other operating

135 China's response to Panel question No. 23 of the second set, para. 229.
136 USITC final report, (Exhibit CHN-2), pp. 13-16.
137 USITC final report, (Exhibit CHN-2), p. 21. (fns omitted)
138 USITC final report, (Exhibit CHN-2), pp. 31-33.
139 USITC final report, (Exhibit CHN-2), pp. 33-34.
140 USITC final report, (Exhibit CHN-2), pp. 34-35.
141 USITC final report, (Exhibit CHN-2), pp. 35-37.

indicators142; and (e) adverse price conditions. 143 The USITC noted that the domestic
industry's condition particularly declined in 2015 and 2016, and appeared to be continuing to decline
in 2017.144 The USITC further took into account that the US market was a focal point for exports.145
7.65. As part of its serious injury determination, the USITC also recognized that certain i njury
factors improved during the POI, such as the domestic industry's capacity, production, and
shipments.146 However, for certain of these factors, the USITC found that , because the
improvements were not commensurate with the increase in demand in the US market, they
supported its overall conclusion that the domestic industry was seriously injured.147
7.66. China does not challenge the USITC's determinations concerning the product definition,
increased imports, or serious injury in these proceedings. Rather, China challenges the
USITC's determination that a causal link existed between increased imports and serious injury.148
7.67. The USITC determined that such a causal link existed based on the following subsidiary
findings:
a. Declining prices and market share: During a period of substantial and growing volumes of
low-priced imports, the domestic industry had to reduce prices and/or roll back announced
price increases to compete with imported CSPV products, which were highly
substitutable for US -manufactured C SPV products and were generally lowered priced.
Prices declined substantially in 2012, but temporarily stabilized as a result of the CSPV I
and CSPV II orders. However, as imports from additional sources rapidly entered the
US market and increased to highe r volumes , the domestic industry's prices fell
significantly throughout 2016 as the domestic industry's market share fell to its lowest
level.149 Although the domestic industry increased its shipments during the POI, this
overall increase was dwarfed by growth in US consumption. Domestic producers reported
losing sales to low -priced imports of CSPV products, and the majority of purchasers
reported that they had increased their purchases of imported CSPV products.150
b. Deteriorating financial conditions: The domestic industry's financial condition, which was
at its worst at the beginning of the POI, improved marginally after the imposition of the
CSPV I and CSPV II orders, but remained poor and deteriorated further in 2016, as imports
peaked and market share and prices dropped anew. Consequently, a significant number
of domestic producers were unable to generate adequate capital to finance plant and
equipment modernization, and a significant number of domestic producers were unable to
maintain existing R&D expenditures.151
c. Poor operating indicators: Despite the need in the CSPV industry to increase capacity in
order to achieve economies of scale, domestic capacity and production did not grow
commensurately with demand, and capacity utilization remained low and dropped at the
end of the POI when imports reached their summit. This resulted in the closure of facilities,
layoffs, and increased trade adjustment assistance claims.152

142 USITC final report, (Exhibit CHN-2), pp. 37-38.
143 USITC final report, (Exhibit CHN-2), pp. 41-43.
144 USITC final report, (Exhibit CHN-2), p. 43.
145 USITC final report, (Exhibit CHN-2), pp. 38-41.
146 USITC final report, (Exhibit CHN-2), pp. 32-33 and 37.
147 USITC final report, (Exhibit CHN-2), pp. 33 and 37-38 (finding this dynamic to exist specifically with
respect to increases in the domestic industry's capacity, production, and shipments).
148 We note, however, that China claims that its lack of challenge should not be construed as acceptance
that there was serious injury. (China's comments on the United States' response to Panel question No. 33 of
the third set, para. 4; response to Panel question No. 33 of the third set, paras. 9-10; second written
submission, para. 17 and fn 25; and responses to Panel question Nos. 1(a) and 1(b) of the second set).
149 USITC final report, (Exhibit CHN-2), pp. 45-46.
150 USITC final report, (Exhibit CHN-2), p. 49.
151 USITC final report, (Exhibit CHN-2), p. 47.
152 USITC final report, (Exhibit CHN-2), pp. 47-48.

7.68. Based on these findings, the USITC determined that "increased imports are a substantial
cause of serious injury to the domestic industry manufacturing CSPV products based on a clear
causal link between them".153
7.3.2 Applicable legal requirements concerning the causal link between
increased imports and serious injury under Articles 2.1, 3.1, and 4.2(b) of the
Agreement on Safeguards
7.69. The core conditions for applying a safeguard measure are set out in Article 2.1 of
the Agreement on Safeguards, which in full provides:
A Member may apply a safeguard measure to a product only if that Member has
determined, pursuant to the provisions set out below, that such product is being
imported into its territory in such increased quantities, absolute or relative to domestic
production, and under such conditions as to cause or threaten to cause serious injury
to the domestic industry that produces like or directly competitive products.154
7.70. Accordingly, a safeguard measure may only be imposed when a product (a) is being imported
in such increased quantities, (b) and under such conditions, that (c) cause or threaten to cause
serious injury to the domestic industry.
7.71. The requirements concerning serious injury are elaborated in Article 4 of the
Agreement on Safeguards. Article 4.1(a) defines "serious injury" as "a significant overall impairment
in the position of a domestic industry", while Article 4.1(c) clarifies that a "domestic industry" is "the
producers as a whole of the like or directly competitive products operating within the territory of a
Member, or those whose collective output of the like or directly competitive products constitutes a
major proportion of the total domestic production of those products".
7.72. Articles 4.2(a) and 4.2(b) specifically pertain to the causal link between increased imports
and serious injury. In full, they provide:
(a) In the investigation to determine whether increased impor ts have caused or are
threatening to cause serious injury to a domestic industry under the terms of
this Agreement, the competent authorities shall evaluate all relevant factors of an
objective and quantifiable nature having a bearing on the situation of t hat industry, in
particular, the rate and amount of the increase in imports of the product concerned in
absolute and relative terms, the share of the domestic market taken by increased
imports, changes in the level of sales, production, productivity, capac ity utilization,
profits and losses, and employment.
(b) The determination referred to in subparagraph (a) shall not be made unless this
investigation demonstrates, on the basis of objective evidence, the existence of the
causal link between increased imp orts of the product concerned and serious injury or
threat thereof. When factors other than increased imports are causing injury to the
domestic industry at the same time, such injury shall not be attributed to increased
imports.
7.73. Pursuant to these provisions, the competent authorities of a Member must analyse whether
increased imports are causing, or threatening to cause, serious injury to the domestic industry. They
must also consider whether "factors other than increased imports are causing injury to the domestic
industry at the same time" as increased imports and ensure that the injury caused by those factors
is not "attributed to increased imports".

153 USITC final report, (Exhibit CHN-2), p. 50.
154 Fn omitted.

7.74. Previous DSB reports have found that the Agreement on Safeguards does not establish any
specific methodology as to how the existence of a causal link must be determined; as a consequence,
the competent authorities of a Member have discretion in this regard.155
7.75. Moreover, when assessing whether the causation requirement in Article 4.2(b) of
the Agreement on Safeguards has been fulfilled, previous DSB reports have considered ,
inter alia: (i) whether an upward trend in imports coincides with downward trends in relevant injury
factors, and if not, whether an appropriate explanation was provided as to why nevertheless the
data show causation; and (ii) whether the conditions of competition between the imported and
domestic products as analysed demonstrate the existence of a causal link between the imports and
serious injury.156
7.76. Previous DSB reports have also found that, i f the competent authorities decide to base their
causation analysis on the coincidence between increased imports and downward injury factors,
"overall coincidence" is what matters and not whether coincidence or lack thereof can be shown in
relation to a few selected factors. Thus, the mere presence of positive injury factors does not
necessarily negate the existence of an "overall coincidence". 157 Moreover, in the absence of an
"overall coincidence", the competent authorities may still be able to demonstrate the existence of a
causal link if they can explain why a causal link nevertheless exists.158
7.77. Lastly, previous DSB reports have found that, regardless of the methodology used, in order
to demonstrate that increased imports are causing serious injury, the competent authorities must
find a "sufficiently clear " contribution by those imports.159 However, the increased imports do not
need to be the sole cause of injury, and the causal link between increased imports and serious injury
may exist even though other factors are also contributing at the same time to the situation of the
domestic industry.160
7.78. As we agree with the foregoing findings in previous DSB reports, we will assess China's claims
against the USITC's determination of a causal link between increased imports and serious injury
accordingly.
7.3.3 Whether the USITC acted inconsistently with Articles 2.1, 3.1, and 4.2(b) of
the Agreement on Safeguards in respect of its determination of a causal link between the
increased imports of CSPV products and serious injury of the domestic industry
7.3.3.1 Introduction
7.79. The parties disagree on whether the USITC appropriately demonstrated that increased
imports caused serious injury to the domestic industry.
7.80. China argues that the USITC failed to establish an "overall coincidence" between increased
imports and the indicators of serious injury due to the prevalence of significant positive injury trends
during the POI.161 Relying on previous DSB reports, China contends that the failure of the USITC to
establish an "overall coincidence" meant that it was required to explain why, notwithstanding the

155 Panel Reports, Korea – Dairy, para. 7.96; US – Steel Safeguards, paras. 10.294 and 10.296; and
Ukraine – Passenger Cars, para. 7.296.
156 See also Panel Reports, Argentina – Footwear (EC), para. 8.229 (confirmed in Appellate Body Report,
(emphasis omitted)
158 Panel Reports, US – Steel Safeguards, paras. 10.303-10.304.
159 Appellate Body Report, US – Wheat Gluten, para. 67.
160 Appellate Body Report, US – Wheat Gluten, para. 67. See also Panel Report, China – Cellulose Pulp,
paras. 7.26-7.27.
161 China's first written submission, paras. 111-115; response to Panel question No. 2 of the second set,
para. 11: "China argues that an overall coincidence is absent in the underlying investigation because even as
imports increased, significantly important injury factors such as U.S. cell and module production, production
capacity, cell capacity utilization, U.S. shipments, employment for cell manufacturing, and capital expenditures
and financial performance actually improved" (fns omitted; emphasis original). See also China's second written
submission, paras. 56-57.

absence of a coincidence, a causal link existed by providing an explanation that was "compelling".162
According to China, the USITC did not meet this standard, as it failed to appropriately explain "why
any negative trends that might e xist are in fact linked to imports, and in fact demonstrate the
required nexus between imports and the trends". 163 In this context, China submits that the
USITC's analysis failed to properly account for key conditions of competition in the US market.164
China alleges that , as a consequence of these deficiencies, the USITC's explanation is not
"compelling".165
7.81. For its part, the United States claims that the USITC grounded its causation analysis in the
findings that imports increased and that the domestic indust ry was experiencing serious injury,
which are not challenged in this dispute. 166 The United States further argues that, contrary to
China's claims, the USITC appropriately demonstrated an "overall coincidence" between the
increased imports and the serious injury that it determined to exist, taking into account positive and
negative injury trends, as well as the prevailing conditions of competition in the market.167
7.82. At the outset, we note that the USITC determined that increased imports caused serious injury
to the domestic industry based on a coincidence between increased imports and a variety of injury
factors, as well as on the conditions of competition between domestic and imported CSPV products.
As noted above, the USITC identified downward injury factors , as well as fluctuating or positive
injury factors that, when viewed in light of the conditions of competition, the USITC considered to
support its determination that increased imports caused serious injury to the domestic industry.
7.83. China argues that the presence of positive injury trends during the POI means that there was
no "overall coincidence" between increased imports and serious injury factors. 168 We disagree. In
our view, the mere presence of positive trends or lack of perfect correlation between increased
imports and serious injury trends do not necessarily preclude the existence of an "overall
coincidence".169 Moreover, contrary to China's view, we consider that our assessment of whether
the USITC appropriately demonstrated an "overall coincidence" requires that we account for the full
context of the USITC's causation determination, and specifically the relative importance of particular
injury factors to the overall causal link. We base this understanding on the fact that certain injury
factors may be less relevant due to the prevailing conditions of competition in the market or the
nature of serious injury found to exist, and therefore are less relevant to whether a coincidence
between increased imports and serious injury exists overall.170
7.84. China also argues that, due to the absence of an "overall coincidence", the USITC was required
to provide a "compelling explanation as to why a causal link exists notwithstanding the absence of
coincidence".171 Based on this requirement, China contends that the USITC was further required to
provide a "compelling" explanation to justify the linkage that it found between increased imports
and specific injury factors. 172 Here we also disagree. As noted above, previous DSB reports have

162 China's first written submission, paras. 116-125. For a general overview of the structure of
China's causation claims, see China's first written submission, paras. 106-110; and second written submission,
paras. 13-18.
163 China's first written submission, para. 126.
164 China's second written submission, para. 54; first written submission, paras. 130-132.
165 China's first written submission, paras. 116-125; second written submission, paras. 51-55.
166 United States' first written submission, paras. 109-111.
167 For an overview of the United States' response to China's causation claims, see United States' first
written submission, paras. 112-113; and second written submission, paras. 22-30.
168 China's first written submission, paras. 111-115; second written submission, paras. 46-50.
169 We agree with previous DSB reports that have addressed this issue. See Panel Reports,
(upheld on appeal; see Appellate Body Report, US – Tyres (China), paras. 244-248).
170 In this regard, we note that the panel in US – Tyres (China) found that it was appropriate for the
USITC to "support its determination of 'significant cause' with a finding of overall coincidence between an
upward trend in subject imports from China and downward trends in the relevant injury factors". (Panel
Report, US – Tyres (China), para. 7.234 (emphasis added)). In the same case, the Appellate Body similarly
observed that "[w]e do not consider that a single injury factor should be determinative, provided that the
investigating authorities' correlation analysis provides a reasoned and adequate explanation for a
determination that subject imports are a significant cause of material injury to the domestic industry".
(Appellate Body Report, US – Tyres (China), para. 246).
171 China's first written submission, paras. 25 and 116 (quoting Panel Reports, US – Steel Safeguards,
para. 10.308). See also China's second written submission, paras. 51-52.
172 See, e.g. China's second written submission, paras. 18, 91, 102, 115, and 119-120.

found that the Agreement on Safeguards does not establish any specific methodological
requirements with respect to the causation analysis so long as the competent authorities of a
Member provide a reasoned and adequate explanation demonstrating a causal link between
increased imports and serious injury.173 This standard remains the same irrespective of whether an
"overall coincidence" has been demonstrated between increased imports and relevant serious injury
factors. While it may be the case that, as a factual matter, it is more difficult to demonstrate a causal
link when a significant number of injury factors are positive, we reject the notion that a more
exacting legal standard would be applicable in those circumstances. Rather, the explanation
demonstrating the causal link would need to properly account for any positive injury factors to be
reasoned and adequate.174
7.85. In accordance with these considerations, our analysis below focuses on whether China has
demonstrated that the USITC's determination that "increased imports are a substantial cause of
serious injury to the domestic industry" failed to appropriately address the relevant injury factors
and account for the prevailing conditions of competition in the US market for CSPV products.
In section 7.3.3.2, we address whether China has established that the USITC failed to provide a
reasoned and adequate explanation linking increased imports to the negative injury factors. We do
so by first addressing the USITC's findings concerning certain key conditions of competition before
addressing the USITC's specific findings concerning the relationship between increased imports and
the specific negative injury factors that existed during the POI, i.e. adverse price conditions, lost
market share, deteriorating financial performance, and plant closures. Thereafter, in section 7.3.3.3,
we address whether China has established that the USITC failed to appro priately reconcile the
seemingly positive injury factors that existed during the POI with its determination that increased
imports caused serious injury to the domestic industry, focusing on the USITC's specific findings
concerning increases in the domestic industry's capacity, production, and shipments; employment;
and capital expenditures, R&D expenses, and value of production assets. Finally, we conclude in
section 7.3.3.4 by addressing whether China has established that the USITC's overall causation
determination failed to comply with the requirements of the Agreement on Safeguards.
7.3.3.2 The USITC's findings concerning the relationship between increased imports and
negative factors of serious injury
7.86. As noted above, China contends that the USITC failed to appropriately explain why the
negative trends were linked to imports, so as to demonstrate an "overall coincidence" between
imports and trends.175 According to China, the USITC overstated the importance of negative trends
in light of the conditions of competition and thereby failed to provide a "compelling" explanation to
justify the causal link. 176 The United States responds to these claims by arg uing that the USITC
provided a reasoned and adequate explanation demonstrating an overall coincidence between
increased imports and negative injury trends that took into account relevant conditions in the
US market.177
7.87. Below, we address this disagreement b y first considering the parties' arguments concerning
the USITC's analysis of the conditions of competition in the US market, focusing on the key issues
of market segmentation and the substitutability of domestic and imported CSPV products. We
address these conditions of competition at the outset as they directly pertain to several aspects of
the parties' disagreement concerning the USITC's analysis. After doing so, we address the
parties' disagreement concerning the USITC's analysis of the relationship between increased imports

173 Panel Reports, Korea – Dairy, para. 7.96; US – Steel Safeguards, paras. 10.294 and 10.296; and
Ukraine – Passenger Cars, para. 7.296. In this context, we disagree with China's argument that, as a
consequence of the USITC's "choice" to conduct a coincidence analysis, the USITC was required to "first
demonstrate the existence of such overall coincidence, and then provide a reasoned and adequate explanation
for its finding of causality", which must be "compelling" explanation because it "failed to establish that an
overall coincidence exists". (China's second written submission, para. 51).
174 China effectively concedes this point. (China's second written submission, para. 29: "[t]o be clear,
asking for the explanation to be 'compelling' does not mean that the panels – or China – are reading additional
requirements into Article 3.1 of the Agreement on Safeguards, nor a 'heightened standard' under Article 3.1 as
alleged by the United States. This is merely a reflection of the requirement that the explanation must be
'reasoned and adequate' in a context where there is an absence of a coincidence in trends, and how the
requirement ought to be applied in such a scenario" (fn omitted)).
175 China's first written submission, paras. 126-127.
176 China's second written submission, paras. 87-90. See also China's first written submission,
paras. 158-159.
177 United States' first written submission, paras. 114-116.

and the specific negative injury factors that existed during the POI, i.e. adverse price conditions,
lost market share, deteriorating financial performance, and plant closures.
7.3.3.2.1 Key conditions of competition
7.88. The parties disagree on wh ether the USITC's analysis of the causal link between increased
imports and serious injury appropriately accounted for the prevailing conditions of competition in
the US market.
7.89. China argues that the USITC failed to properly account for key conditions of competition,
which weighed in favour of a finding that no causal relationship existed between increased imports
and serious injury.178 According to China, the relatively small size of the domestic industry and the
explosive growth in demand "severely attenu ated the ability of changes in imports to affect the
domestic industry". 179 China contends that this was the case particularly because the domestic
industry focused on the residential and commercial segments of the US market, whereas the
explosive growth in demand occurred in the utility segment. 180 As a consequence of this
segmentation, as well as differing product features and customer preferences, China claims that the
domestic industry was unable to supply CSPV products that were substitutable with import s.181
China contends that it was for these reasons, rather than competition from low-priced imports, that
the domestic industry was unable to capitalize on the growth in the US market during the POI.182
7.90. The United States disputes China's characterization of these conditions of competition in the
US market. According to the United States, "China's argument that the domestic industry did not
have the ability to meet increasing demand fails because it misses the point that increased imports
themselves directly impeded the domestic industry's ability to compete with low -priced imports in
the first instance".183 In this context, the United States contends that the USITC properly found that
domestic and imported CSPV products com peted in the residential, commercial and utility
segments184 and also that domestic and imported CSPV products were "highly substitutable".185
7.91. Overall, we are not persuaded by China's argument that key conditions of competition (rather
than increased imports) meant that the domestic industry was unable to capitalize on growth in the
domestic market. As an initial matter, we fail to see why the small size of the domestic industry in
relation to the overall US market necessarily demonstrates that the domestic industry would have
been unaffected by the significant increase in imports that occurred over the POI. This is particularly
the case because the USITC found that the domestic industry had significant unused capacity186 and
was prevented by increased imports from meaningfully increasing its capacity to become more
competitive.187 In addition, by focusing on the significant growth in the utility segment,
China's argument concerning the conditions of competition fails to account for the USITC's findings
that the residential and commercial segments of the market also grew considerably during the
POI.188 Further to these shortcomings, as explained below, we do not consider that China has

178 China's second written submission, para. 54.
179 China's second written submission, para. 54; first written submission, paras. 130-132.
180 China's second written submission, para. 54 ("the explosive growth in demand in the utility segment
explains the increase in imports, which focused on satisfying that unmet demand. The relatively small domestic
industry, focused on the residential and commercial segment, simply could not satisfy this rapidly growing
demand"), para. 96 ("[i]f imports can better meet changing needs because the domestic industry cannot offer
products demanded by the growing market, as a result of its focus on a different market segment and the
consequent lack of product substitutability, imports might well grow faster than the competing domestic
industry"), and heading of section II(B)(2)(b)(iii) ("The US industry chose to focus on the residential and
commercial segments, giving up the more profitable utility segment"); first written submission,
paras. 134-137.
181 China's second written submission, paras. 97-101. See also China's first written submission,
paras. 138-139.
182 See fns 180-181 above.
183 United States' first written submission, para. 119. See also United States' second written submission,
paras. 31-36.
184 United States' first written submission, paras. 121-125; second written submission, paras. 31-50.
185 United States' first written submission, para. 119; second written submission, paras. 51-65.
186 USITC final report, (Exhibit CHN-2), fn 261; USITC final staff report, (Exhibit CHN-3),
pp. III-10-III-13.
187 USITC final report, (Exhibit CHN-2), pp. 60-61.
188 USITC final staff report, (Exhibit CHN-3), p. V-1 and figure V-1; USITC final report, (Exhibit CHN-2),
p. 58.

demonstrated that the USITC erred in finding that domestic and imported CSPV products competed
in the residential, commercial, and utility segments and were "highly substitutable". As such, we do
not consider that China has established that, as a general matter, the USITC's causation
determination was deficient as a result of failing to account for these conditions of competition.
7.3.3.2.1.1 Segmentation in the US market for CSPV products
7.92. In its final report, the USITC found that CSPV products are sold into three main segments in
the US market, i.e. the residential, commercial, and utility segments:
The vast majority of CSPV modules sold in the U.S. market are connected to the
electricity grid, although some CSPV products are sold for off -grid applications. There
are three grid -connected market segments – residential, non-residential/commercial,
and utility – although the segments overlap somewhat. Installation sizes vary by
segment, but the size of installations generally has grown over time in each segment
due to a combination of greater cell efficiency (more kW/cell) and/or larger installations
(more modules/installation).
Annual U.S. installations of on -grid photovoltaic systems increase d from 3,373 MW
in 2012 to 14,762 MW in 2016, an increase of 338 percent. All three on-grid segments
experienced considerable growth in both the number of installations and the total
wattage of installation projects during the POI. By December 2016, more
than 19,770 MW of utility photovoltaic generating capacity was in operation across the
United States, representing 60 percent of total U.S. solar photovoltaic installations
(including thin film).
Since 2009 – the first year of the period examined in the CSPV I antidumping and
countervailing duty investigations – there has been a shift in the distribution of sales
among the three market segments. In 2009, the commercial segment accounted for
the largest share of the market, followed by the residential and ut ilities segments,
whereas throughout the 2012 to 2016 POI in the instant safeguard investigation, utilities
were the largest segment of the U.S. market, followed by the residential and commercial
segments. During the POI, the domestic industry and importer s each sold CSPV
products in the U.S. market to distributors, residential and commercial installers, and
utility customers. The vast majority of the domestic industry's shipments served
residential and commercial installers in 2016, whereas a majority of i mports were
shipped to the utility segment.189
7.93. In the final staff report, the USITC further explained:
CSPV products are generally sold in the United States to distributors, residential and
commercial installers, and utility/developers. Domestic producers sold CSPV products
to all channels of distribution during the period of investigation, but sold a majority of
their products to distributors (a majority of which were then sold to residential
installers) and a substantial amount to commercial installers. … A majority of sales of
imported products by U.S. importers were to utility/developers, with a substantial
amount going to commercial and residential installers.190
7.94. China challenges the USITC's finding that domestic and imported CSPV products competed in
the residential, commercial, and utility segments in the US market.
7.95. With respect to the residential and commercial segments, China argues that the USITC failed
to precisely analyse both the extent to which domestic and imported products competed in the
residential and commercial segments, and record evidence that showed that non -price factors
limited competition between domestic and imported products. 191 Yet, in line with the

189 USITC final report, (Exhibit CHN-2), pp. 27-28. (fns omitted)
190 USITC final staff report, (Exhibit CHN-3), p. I-28. (fns omitted)
191 China's response to Panel question No. 3 of the second set, paras. 14-21; response to Panel question
No. 4 of the second set, paras. 22-30. See also China's response to Panel question No. 38 of the third set,
paras. 36-38; second written submission, para. 98. China points to the difference in technological requirements

United States' response to China's arguments192, we do not consider that record evidence supports
the view that only "limited" competition existed between domestic and imported products in the
residential and commercial market segments. 193 To the contrary, based on evidence provided by
US producers and import ers concerning their commercial shipments, the USITC found that a
majority of domestic products were sold to residential and commercial segments where a substantial
amount of imports were also sold.194
7.96. With respect to the utility segment, China contends that the USITC improperly focused on the
"limited instances in competition in the small utility segment", which was not sufficient to support a
finding that the domestic industry competed in the utility segment as a whole. 195 China further
argues that the USI TC's analysis of competition in the "small utility" segment was "absolutely
insufficient" in light of the record evidence that showed that the domestic industry was not
competitive even in this part of the market for reasons unrelated to imports.196 In response to these
arguments, the United States submits that China fails to discredit the appropriateness of the
USITC's findings.197

between the residential and commercial segments, which typically required 60-cell modules, and the utility
segment, which typically used 72-cell modules.
192 United States' second written submission, paras. 37-38; response to Panel question No. 4 of the
second set, paras. 6-7; and comments on China's response to Panel question No. 38 of the third set,
paras. 25-26. See also United States' first written submission, para. 122.
193 In particular, China does not explain why the relatively small size of the domestic industry and the
increase in demand in the residential and commercial market segments show that domestic and imported
products did not meaningfully compete. As support for its position, China relies on the domestic
industry's limited capacity and inability to supply the full extent of the market during the POI as well as the
technological differences between the CSPV products typically demanded in the different segments. (See,
e.g. China's response to Panel question No. 3 of the second set, paras. 16-19; response to Panel question
No. 38 of the third set, paras. 36-38; and second written submission, para. 98). However, in our view, this
evidence does not demonstrate that domestic and imported products did not compete in the residential and
commercial segments.
In addition, we do not think that it was necessary for the USITC to delineate more precisely the extent
to which domestic and imported products competed in the residential and commercial market segments. As
already noted, the USITC found that domestic and imported CSPV products were sold to overlapping market
segments through overlapping channels of distribution, particularly to residential and commercial installers,
which was supported by questionnaire responses it received from domestic producers and importers. Based on
this evidence, we do not consider that it was inappropriate for the USITC to find that domestic and imported
products both competed in the residential and commercial market segments. (USITC final report,
(Exhibit CHN-2), pp. 29-30; USITC final staff report, (Exhibit CHN-3), p. I-28).
Furthermore, China fails to explain why the non-price factors to which it refers establish that imported
products had a clear competitive advantage over domestic products, such that domestic and imported products
did not compete for sales to residential and commercial installers. While China refers to evidence that generally
establishes that non-price factors were relevant to US purchasers of CSPV products, we do not consider that
this establishes that domestic and imported products did not compete for sales in the residential and
commercial segments of the US market. (China's response to Panel question No. 7 of the second set; response
to Panel question No. 38(1) of the third set).
194 USITC final staff report, (Exhibit CHN-3), p. I-28.
195 China's response to Panel question No. 5 of the second set, paras. 46-49. See also China's second
written submission, para. 115.
196 China's response to Panel question No. 5 of the second set, para. 49; response to Panel question
No. 38 of the third set, paras. 40-43. See also China's second written submission, para. 112. We further note
that, as part of its non-attribution claim that "[t]he USITC conducted an insufficient and contradictory analysis
of the participation of the domestic industry in the utility segment", China alleges that the domestic industry
only participated "to a limited degree in the smaller projects" of less than 10 MW, which represented
"about 15-20% of the market". (China's second written submission, para. 151).
197 United States' second written submission, paras. 46-49 and 54; first written submission,
paras. 124-125. In particular, the United States contends that China is wrong to assert that the USITC failed to
assess competition in the utility market segment as a whole, as the USITC "examined the effect of imports on
sales that domestic producers could supply and also on sales that they could not supply, including sales for
high-volume projects. In so doing, it accounted for the prevailing conditions of competition in the market and
fully explained how, in that context, increased imports caused serious injury throughout the utility segment".
(United States' second written submission, para. 46). In this connection, the United States contends that China
ignores or fails to discredit the record evidence demonstrating that the domestic industry in fact competed in
the utility segment.

7.97. In line with the United States' position, we are not convinced by China's claim that it was
inappropriate for the USITC to find that the domestic industry competed in the utility segment. 198
While the USITC found that a majority of imports were shipped to the utility segment, it also found
that domestic CSPV products were sold to utility customers.199 As noted by the United States200, this
finding is supported by record evidence that indicates (a) that the utility segment covered projects
of a capacity of 1 MW or above201 and that these projects had a median size of 4.9 MW during the
POI202; and (b) that the domestic industry was capable of supplying, and did in fact participate in,
utility projects that were larger than 1 MW.203
7.98. In addition, when rejecting respondents' argument that the domestic industry focused on the
residential and commercial segments and decided not to compete for utility sales until late in the
POI, the USITC found that the domestic industry had participated in bids in the utility segment. 204
The USITC also found that, throughout the POI, the domestic industry produced the types of CSPV
modules that the utility installations typically required (in particular 72-cell modules, which became
the standard for utility installations by 2013 -2014).205 These findings informed the
USITC's conclusion that the domestic industry "sold or tried to sell CSPV products to utiliti es
throughout the POI" and "clearly sought to compete" in the utility segment.206
7.99. We are also not convinced by the allegedly contrary evidence to which China refers. Most
notably, China argues that the USITC failed to properly account for the domestic industry's smaller
size207 and for complaints from market participants that identify instances where the domestic
industry was allegedly unable to fulfil specific orders or otherwise did not satisfy customer
requirements or expectations.208 In our view, however, the alleged inability of the domestic industry
to supply large-scale projects in the utility segment does not render inappropriate the USITC's finding
that the domestic industry nevertheless competed in the utility segment based on the capacity that
it had.209 Moreover, certain of the complaints to which China refers show that the domestic industry
made sales to customers in the utility segment. 210 As a result, we do not consider that these
statements support China's view that the domestic industry did not participate in the utility segment
or otherwise undermine the appropriateness of the USITC's finding on this point.211

198 As a result, we reject China's argument that the USITC failed to explain why "its unitary analysis was
valid for the three market segments described in its determination which were not subject to the same
conditions of competition". (China's response to Panel question No. 37 of the third set, paras. 28-33).
199 USITC final report, (Exhibit CHN-2), pp. 27-28.
200 United States' second written submission, para. 47.
201 USITC final report, (Exhibit CHN-2), fn 334 (indicating that, pursuant to the US Energy Information
Administration, "utility projects are defined as those having a capacity of 1 MW and above"); SEIA prehearing
brief, (Exhibit CHN-20), p. 19 and fn 49.
202 USITC final report, (Exhibit CHN-2), fn 334; USITC final staff report, (Exhibit CHN-3), p. I-27.
203 Transcript of the USITC injury hearing, (Exhibit CHN-9), pp. 163-165.
204 USITC final report, (Exhibit CHN-2), p. 59; USITC final staff report, p. V-3 and fn 13. See also
Suniva's posthearing injury brief, (Exhibit USA-17), exhibit 9, pp. 1-2; SolarWorld's posthearing injury brief,
(Exhibit USA-16), exhibit 1, p. 23. We further note that Suniva referred to the portion of the utility segment
where it competed as the "small utility" market. (USITC final report, (Exhibit CHN-2), pp. 59-60; Transcript of
the USITC injury hearing, (Exhibit CHN-9), p. 101).
205 USITC final report, (Exhibit CHN-2), p. 60.
206 USITC final report, (Exhibit CHN-2), pp. 58-61. In this regard, we note that the USITC found that,
regardless of the domestic industry's presence in the utility segment, "the large volume of imports at low and
declining prices adversely impacted the domestic industry's financial performance, making it difficult for the
domestic industry to increase capacity to a scale that made it more competitive in this segment, even if it
managed to develop and even pioneer innovative products that utilities and others sought". (USITC final
report, (Exhibit CHN-2), pp. 60-61). These findings show that the USITC's analysis of the conditions of
competition was not confined to the "small utility" segment, contrary to China's view. (China's response to
Panel question No. 5 of the second set, para. 46).
207 China's response to Panel question No. 5 of the second set, paras. 35, 41, and 48.
208 China's response to Panel question No. 5 of the second set, para. 49; response to Panel question
No. 38 of the third set, paras. 40-43.
209 China appears to concede this point when it notes, in the context of its non-attribution claim, that
the domestic industry participated in projects of less than 10 MW, "about 15-20% of the market".
(China's second written submission, para. 151).
210 China's response to Panel question No. 5 of the second set, para. 49; response to Panel question
No. 38 of the third set, paras. 40-43.
211 In this regard, we agree with the United States' observation that the evidence to which China refers
does not "cast doubt on the reasonableness of the Commission's finding that the domestic industry was

7.100. Finally, regarding China's argument that it was improper for the USITC to rely on the "limited
instances in competition in the small utility segment" as support for its finding that the domestic
industry competed in the utility segment as a whole, we note the following . Article 4.1(c) of
the Agreement on Safeguards requires that serious in jury be demonstrated in respect of the
domestic industry as a whole, while Article 2.1 stipulates that safeguard measures may be applied
with respect to a "product" when "such product is being imported into its territory in such increased
quantities, absolute or relative to domestic production, and under such conditions as to cause or
threaten to cause serious injury to the domestic industry that produces like or directly competitive
products". Thus, when a singular "product" is under investigation, the com petent authorities are
only required to conduct a single causation analysis; they are not required to conduct disaggregated
analyses in which serious injury and causation must be demonstrated with respect to individual
market segments.212 In this context, we do not consider that it is necessary to analyse or find
competition in specific market sub -segments, provided that the conditions of competition, overall,
are properly accounted for in the analysis.213
7.101. In the present case, the USITC ado pted a single product definition, which China does not
challenge in these proceedings. Moreover, as we have found above, China has not demonstrated
that it was inappropriate for the USITC to find that domestic and imported CSPV products competed
for sales in the residential and commercial segments of the US market, as well as in a portion of the
utility segment. 214 We further note that, during the POI, all three market segments grew
considerably215 and the domestic industry had significant unused production c apacity.216 Based on
these circumstances, we do not consider that the limited participation of the domestic industry in a
portion of the utility segment would undermine the ability of increased imports to adversely impact
the domestic industry as a whole. A s a result, we do not consider that the USITC's analysis of the
conditions of competition, or causation more generally, is flawed in this regard, contrary to
China's view.
7.3.3.2.1.2 Substitutability of domestic and imported CSPV products
7.102. The USITC also found that domestic and imported CSPV products were "highly substitutable"
based on the following considerations:
Throughout the POI, U.S. producers and importers made commercial shipments of a
wide variety of CSPV products, predominantly in the form of modules. Impor ted and
U.S.-manufactured CSPV products were sold in a range of wattages and conversion
efficiencies, and modules were sold in both 60 -cell and 72 -cell forms. Imported and
U.S.-manufactured CSPV products also were sold to overlapping market segments
through overlapping channels of distribution, particularly to residential and commercial
installers. In the U.S. market for CSPV products, purchasers consider a variety of factors
in their purchasing decisions, but price continues to be an important factor. Additionally,

competitive in the portion of the utility segment it was able to supply". (United States' comments on
China's response to Panel question No. 38 of the third set, para. 28).
212 This approach has been adopted in previous dispute settlement proceedings involving
safeguard measures. (Panel Reports, Argentina – Footwear (EC), para. 8.137; Korea – Dairy, para. 7.58).
We further note that China agrees with this general approach, although it contends that the causation analysis
"needs to take into account the existence and factual relevance of different market segments".
(China's response to Panel question No. 36 of the third set, paras. 24-26).
213 In this regard, we recall that Article 2.1 of the Agreement on Safeguards stipulates that a Member
may only apply a safeguard measure if it has determined that imports increased "under such conditions as to
cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive
products" (emphasis added). As such, we do not consider that the Agreement on Safeguards establishes an
independent requirement to precisely delineate the competitive conditions between domestic and imported
products. Rather, it requires that the conditions of competition be properly accounted for in the analysis of the
causal link between increased imports and serious injury. (Panel Report, Ukraine – Passenger Cars, para. 7.190
(noting that conditions of competition "must be such as to make it possible for those increased quantities to
cause serious injury or threat thereof")). More generally, we note that the phrase "and under such conditions"
has been previously interpreted to "not provide for an additional criterion or analytical requirement to be
performed before imposing a safeguard measure", but rather refers to the substance of the causation analysis
that must be performed under Articles 4.2(a) and 4.2(b) of the Agreement on Safeguards. (Panel Reports,
214 USITC final staff report, (Exhibit CHN-3), p. I-28.
215 USITC final staff report, (Exhibit CHN-3), p. V-1 and figure V-1.
216 USITC final report, (Exhibit CHN-2), pp. 32 and 47 and fns 261 and 262.

most U.S. producers, importers, and purchasers reported that U.S. -produced CSPV
products were interchangeable with imported CSPV products. Accordingly, we find that
imported CSPV products are highly substitutable for U.S.-manufactured CSPV products
and price is an important consideration in purchasing decisions.217
7.103. China advances a series of arguments contending that the USITC's finding on substitutability
is deficient. In particular, China argues that the USITC ignored or failed to properly analys e (a) the
distinction between 60- and 72-cell modules218 as well as other technological differences between
domestic and imported products 219; and (b) evidence demonstrating that market participants did
not consider domestic and imported products to be interchangeable220, and that customers preferred
imported over domestic CSPV products irrespective of their similar physical properties. 221 For its
part, the United States contends that the USITC's analysis appropriately accounted for all relevant
evidence and that China's claims do not withstand scrutiny.222
7.104. Here also we agree with the United States. The USITC found that domestic and imported
products were "highly substitutable" based on questionnaire responses that indicated that 10 of 11
domestic producers, 33 of 47 importers, and 78 of 102 purchasers considered CSPV products
produced in the United States and in other countries to be interchangeable. 223 Although
questionnaire responses also indicated that product differentiation existed within the market, and
that non-price factors were relevant to purchasing decisions, they indicated that price was still an
important factor in competition between domestic and imported CSPV products.224 As we see it, this
price competition confirms the USITC's finding that CSPV products from domestic and imported
sources were substitutable.
7.105. The USITC also found that the domestic industry sold both 60 -cell and 72 -cell modules
throughout the POI and lost market share to imports for both types of modules.225 It observed that
SolarWorld added a 72-cell module assembly line to its facilities in 2016 due to increasing demand
in the utility market, and that Suniva devoted 45% of its c ell manufacturing capacity to 72 -cell
modules.226 As such, although China may be correct in asserting 227 that 60 -cell modules were
typically used in the residential and commercial segments of the US market, whereas 72 -cell
modules were typically used in the utility segment (particularly as of 2013-2014), we consider that
the USITC appropriately accounted for this distinction by finding that the domestic industry sold both
types of modules and competed in all three market segments.228
7.106. Relatedly, we are not convinced by China's claim that the USITC ignored technological
differentiation between domestic and imported products. While the USITC found that the domestic
industry focused on the production of more efficient monocrystalline cell modules, it also found that
purchasers did not generally specify whether they wanted monocrystalline or less efficient
multicrystalline CSPV products.229 The USITC further found that, since both technologies were sold
in all segments of the US market, price s of multicrystalline CSPV products affected prices of
monocrystalline products and vice versa.230 These findings, which China has not challenged, serve
to disprove China's claim. The same findings also align with certain of the statements from the USITC
injury hearing cited by China, which indicate that differences in technology between domestic and

217 USITC final report, (Exhibit CHN-2), pp. 29-30. (fns omitted)
218 China's second written submission, para. 98; comment on the United States' response to Panel
question No. 36 of the third set, para. 15.
219 See, e.g. China's response to Panel question No. 6 of the second set, paras. 59-60 and 76-77; and
response to Panel question No. 13 of the second set, para. 152.
220 See, e.g. China's response to Panel question No. 6 of the second set, paras. 59-60 and 73-78.
221 See, e.g. China's response to Panel question No. 13 of the second set, paras. 151-155.
222 United States' second written submission, paras. 51-65. See also United States' response to
Panel question No. 4 of the first set, para. 7; response to Panel question No. 20 of the first set, para. 49;
comments on China's response to Panel question No. 38 of the first set, para. 27; and comments on
China's response to Panel question No. 40 of the first set, paras. 37-42.
223 USITC final staff report, (Exhibit CHN-3), table V-8.
224 USITC final report, (Exhibit CHN-2), pp. 29-30; USITC final staff report, (Exhibit CHN-3),
pp. V-13-V-15 and tables V-4-V-6.
225 USITC final report, (Exhibit CHN-2), p. 60.
226 USITC final report, (Exhibit CHN-2), p. 60.
227 China's second written submission, para. 98.
228 USITC final report, (Exhibit CHN-2), p. 60.
229 USITC final report, (Exhibit CHN-2), p. 60.
230 USITC final report, (Exhibit CHN-2), p. 60.

imported products could have been accounted for by price.231 In our view, this dynamic corroborates
the USITC's finding that domestic and imported products were substitutable, despite any
technological differences that may have existed. Moreover, while the USITC recognized that certain
types of products were only available from foreign sources, it found that this was only a small share
of all product offerings.232
7.107. China more generally contends that the USITC's finding that the domestic and imported
CSPV products were interchangeable failed to account for the segmentation in the US market and
for any capacity limitations of the domestic industry. 233 However, as we have already found in the
section above, we do not consider that China has established that the USITC erred in finding that
domestic and imported CSPV products competed in each of the residential, commercial, and utility
market segments. Moreover, China fail s to explain why any capacity limitations that may have
prevented the domestic industry from producing certain types and quantities of CSPV modules would
vitiate the USITC's more general finding that domestic and imported products were interchangeable.
Again, the USITC based this finding on the clear majority view among producers, importers, and
purchasers.234
7.108. China also argues that the role of non-price factors in sales competition demonstrates that
customers did not actually consider domestic and imported CSPV products to be interchangeable.235
Yet, in our view, the simple fact that non -price factors were relevant in CSPV market competition
does not show that it was inappropriate for the USITC to find that domestic and imported products
were interchangeable. China further advances that "the Final Staff Report also showed that reasons
reported [by purchasers] for not purchasing the domestic product included 'limited availability' and
no possibility to send 'stand -alone CSPV products'". 236 However, we note that only seven of the
35 responding purchasers that reported that they did not purchase US -origin CSPV produc ts
provided these reasons. 237 In addition, China observes that "[r]easons adduced for decreasing
purchases of U.S.-origin products included 'lack of availability' as well as 'longer-lead times'".238 But
purchasers also cited "lower import prices" as a reason for decreasing purchases of US-origin CSPV
products, which supports the USITC's finding that domestic and imported products were
interchangeable.239
7.109. Finally, we are not convinced by China's assertion that the USITC based its determination of
substitutability "fundamentally … on similarities in the physical properties" and ign ored
customers' preferences with respect to other product features.240 Indeed, it appears that the USITC
accounted for such features when it assessed the interchangeability between domestic and imported
products. For example, the USITC noted that "[t]hree i mporters stated that performance data and
bankability of the CSPV products can limit the degree of interchangeability".241 The USITC also noted
that certain importers reported that technological differences affected interchangeability. 242 These
views, however, were ultimately in the minority, as only 14 of 47 reporting importers indicated that

231 China's response to Panel question No. 6 of the second set, para. 60: "Affidavit Craig Cornelius
(NRG Energy): 'By end of the POI, Suniva's modules has only increased to 340W while conventional 72-cell
mono PERC [i.e. passivated emitter and rear contact] modules had improved to 360W; this 20W deficit for
Suniva panels would require a $0.02/W price discount to yield equivalent project returns on utility-scale
projects, and higher discounting for commercial rooftop projects. Thus, in order to remain competitive due to
the deterioration in the competitiveness of its technology, Suniva would have had to decrease its pricing during
the POI by as much as $0.07/W or more than other suppliers'". (emphasis added)
232 USITC final report, (Exhibit CHN-2), p. 52.
233 China's response to Panel question No. 8 of the first set, paras. 56-60; response to Panel question
No. 6 of the second set, paras. 52-61.
234 Based on these views, we disagree with China's contention that the USITC's conclusion was
"overbroad" and that the evidence on this issue was "mixed". (China's response to Panel question No. 6 of the
second set, para. 52; response to Panel question No. 13 of the second set, para. 152).
235 China's response to Panel question No. 8 of the first set, paras. 60-61; response to Panel question
No. 13 of the second set, paras. 153-154.
236 China's response to Panel question No. 13 of the second set, para. 155.
237 USITC final staff report, (Exhibit CHN-3), pp. V-15-V-16.
238 China's response to Panel question No. 13 of the second set, para. 155.
239 USITC final staff report, (Exhibit CHN-3), p. V-16.
240 China's response to Panel question No. 13 of the second set, paras. 151-155; second written
submission, para. 159.
241 USITC final staff report, (Exhibit CHN-3), p. V-16.
242 USITC final staff report, (Exhibit CHN-3), p. V-16.

domestic and imported products were not interchangeable in addition to 1 of 11 reporting producers
and 24 of 102 reporting purchasers.243
7.110. Based on the foregoing, we do not consider that China has established that the USITC erred
in finding that domestic and imported CSPV products were "highly substitutable". As such, we do
not consider that China has demonstrated that the USITC's causation determination is deficient on
this basis.
7.3.3.2.2 Adverse price conditions
7.3.3.2.2.1 Factual background
7.111. As part of its causation determination, the USITC found that the domestic industry
experienced adverse price conditions as a result of increased low-priced imports.244 According to the
USITC, these adverse price conditions led to several other aspects of serious injury experienced by
the domestic industry during the POI, such as the overall financial deterioration of the domestic
industry; the inability of a significant number of domestic producers to finance plant and equipment
modernization and maintain R&D expenditure levels; and the inability of the domestic industry to
increase its capacity to achieve economies of scale.245
7.112. In its final report, the USITC found that the domestic industry experienced adverse price
conditions as a result of increased low-priced imports, based on the following subsidiary findings:
a. Domestic and imported products were highly substitutable, and price was an important
factor in purchasing decisions.246
b. Imports were priced lower than domestic products.247
c. Prices for surveyed types of CSPV cells and modules declined over the POI.248

243 USITC final staff report, (Exhibit CHN-3), table V-8.
244 USITC final report, (Exhibit CHN-2), pp. 45-46. See also ibid. pp. 41-43.
245 USITC final report, (Exhibit CHN-2), p. 47.
246 USITC final report, (Exhibit CHN-2), pp. 29-30, 41, and 45. In particular, the USITC found that
imported and US-manufactured CSPV products were sold in a range of wattages and conversion efficiencies,
and modules were sold in both 60-cell and 72-cell forms. It also found that imported and US-manufactured
CSPV products were sold to overlapping market segments through overlapping channels of distribution,
particularly to residential and commercial installers. In addition, although purchasers consider a variety of
factors in their purchasing decisions, price was an important factor. Further, most US producers, importers,
and purchasers reported that US-produced CSPV products were interchangeable with imported CSPV products.
(USITC final report, (Exhibit CHN-2), pp. 29-30).
247 USITC final report, (Exhibit CHN-2), p. 42. In particular, the USITC found that imported CSPV
products were priced lower than US-manufactured products in 33 of 52 instances involving approximately
two-thirds of the total volume in the pricing data and were priced higher in 19 instances. Seven domestic
producers reported that they had lost sales to imported CSPV products since 2012. The majority of purchasers
reported that they had increased their purchases of imported CSPV products, and they identified lower price
most often as the reason for increasing their purchases of imported CSPV products. Purchasers reported that
imported CSPV modules as a share of their total purchases of CSPV products increased by 15.6% points from
75.6% of total CSPV purchases in 2012 to 91.2% of total CSPV purchases in 2016.
248 USITC final report, (Exhibit CHN-2), pp. 41-42 and 45; USITC final staff report, (Exhibit CHN-3),
pp. V-21 and V-26. In particular, the USITC found that quarterly prices for all five products declined between
January 2012 and December 2016, with prices of US-manufactured products declining between 48.5% and
73.2% and imported CSPV products declining between 45.7% and 51.0%. (USITC final report,
(Exhibit CHN-2), p. 42; USITC final staff report, (Exhibit CHN-3), p. V-26). The USITC based this finding on the
following five product types: (a) Monocrystalline cells with an efficiency between 17.0% and 22.0%; (b) 60 cell
Multicrystalline silicon module, with a peak power wattage between 240w to 290w, inclusive, P-max or Wp;
(c) 60 cell Monocrystalline silicon module, with a peak power wattage between 250w to 300w, inclusive, P-max
or Wp; (d) 72 cell Multicrystalline silicon module, with a peak power wattage between 290w to 340w, inclusive,
P-max or Wp; and (e) 72 cell Monocrystalline silicon module, with a peak power wattage between 300w to
350w, inclusive, P-max or Wp. (USITC final staff report, (Exhibit CHN-3), p. V-21).

d. Prices for domestic products were reduced or prevented from increasing due to imports.249
e. Movements in p rices of domestic CSPV products correlated with import trends and the
imposition of the CSPV I and CSPV II orders.250
7.3.3.2.2.2 Main arguments of the parties
7.113. China argues that the USITC improperly assumed that declining US prices were the result of
increased imports, and that low -priced imports injured the domestic industry. 251 Although China
concedes that "some" record evidence shows that price is one of several factors considered by
domestic purchasers for their purchasing decisions252, it advances that the USITC's analysis of price
is flawed for two primary reasons.
7.114. First, China argues that the USITC exaggerated the importance of price as the dominant
explanatory factor and failed to appropriately account for evidence that showed that factors other
than price were th e most important in purchasing decisions.253 In particular, China contends that
the USITC's finding that price was an important factor is flawed because only 38 of
103 US purchasers reported that US producers had reduced prices to compete with imports, while
other purchasers did not know if this was true. 254 Further, China notes that purchasers most
frequently cited "quality/performance", rather than price, as the first and second most important
factor.255 China also argues that the USITC's finding that price was an important factor in purchasing
decisions is problematic because: (a) a majority of purchasers chose higher priced products due to
non-price factors when a lower priced product was available 256; (b) a majority of purchasers chose
imported instead of domestic products for non-price reasons 257; and (c) a majority of domestic
producers did not announce price rollbacks to compete with imports.258
7.115. Second, China argues that the USITC failed to properly account for evidence demonstrating
that non-import factors better explained declining market prices for CSPV products.259 According to
China, price declines occurred because of decreasing costs, increasing efficiency, and technological
innovation, which benefitted the CSPV industry as a whole. 260 In this context, China argues that in
the CSPV II investigation the USITC correctly found that imports were not the cause of price
suppression or depression due to various other factors exerting downward pressure on US prices,

249 USITC final report, (Exhibit CHN-2), pp. 42 and 45-46. In particular, the USITC found that 8 of
12 responding domestic producers reported that they had to reduce prices, and three reported having to roll
back announced price increases in order to avoid losing sales to competitors selling imported CSPV products
during the POI. Of the 103 responding purchasers, 38 reported that US producers had reduced prices of their
CSPV products in order to compete with lower-priced imports, and 44 of them reported that they did not know
whether US producers had reduced their prices to compete with lower-priced imports. Several purchasers
reported steeper price reductions in 2016.
250 USITC final report, (Exhibit CHN-2), p. 46. In particular, the USITC found that:
"Prices declined substantially in 2012, but stabilized somewhat after imports from China became
subject to antidumping and countervailing duty orders in December 2012, additional investigations
on imports from China and Taiwan were commenced at the end of 2013, and imports grew at a
slower pace than apparent U.S. consumption between 2013 and 2014. As imports from additional
sources entered the U.S. market and rapidly increased to higher volumes, however, the domestic
industry's prices steadily fell throughout 2016. Several purchasers also reported steeper price
reductions in 2016, as the domestic industry's share of the market fell to its lowest level."
(USITC final report, (Exhibit CHN-2), p. 46 (fns omitted))
251 China's first written submission, paras. 149-150.
252 China's response to Panel question No. 7 of the second set, para. 79.
253 China's first written submission, para. 150; response to Panel question No. 7 of the second set,
paras. 79-88.
254 China's first written submission, para. 150.
255 China's response to Panel question No. 7 of the second set, para. 83. Relatedly, China also argues
that the USITC final report, particularly table V-5 of the USITC final staff report, is ambiguous regarding the
frequency with which purchasers cited decisions based on price. (China's response to Panel question No. 7 of
the second set, para. 84).
256 China's response to Panel question No. 7 of the second set, para. 85.
257 China's response to Panel question No. 7 of the second set, para. 86.
258 China's response to Panel question No. 7 of the second set, para. 87.
259 China's second written submission, paras. 104-109. See also China's response to Panel question
No. 7 of the second set, para. 79.
260 China's first written submission, paras. 151-153; second written submission, para. 104.

including declining raw mate rial costs. 261 Since the CSPV II investigation covered a period that
overlapped with the safeguard investigation, China argues that it was improper for the USITC to
ignore the role of the same factors in its analysis of price trends.262 Finally, China claims that due to
its higher costs, smaller scale, and inefficiency, the domestic industry was unable to capitalize on
the global decline in CSPV prices.263
7.116. For its part, the United States argues that the USITC provided a reasoned and adeq uate
explanation demonstrating that increased imports caused declines in domestic prices and that
China's claims do not withstand scrutiny.264
7.117. First, with respect to China's argument concerning the importance of price in purchasing
decisions, the United States advances that, given that 44 of the 103 US purchasers did not know
why domestic producers reduced prices, the 38 purchasers that blamed low-priced imports represent
two-thirds of the 59 purchasers expressing a view. 265 As such, it was appropriate for t he USITC to
rely upon this evidence for its finding that linked imports to declining prices. 266 The United States
also advances that, contrary to China's view, it was reasonable for the USITC to consider the
most-often cited top three factors – i.e. price, quality/performance, and availability – to conclude
that price was an important factor in market competition.267 Regarding China's other arguments, the
United States contends that China misrepresents the USITC's findings with respect to the
questionnaire responses of purchasers and domestic producers and that China's alternative
characterizations of the data ultimately fail to discredit the reasonableness of the USITC's finding.268
7.118. Second, with respect to China's argument that non-import factors better explained declining
market prices for CSPV products, the United States argues that the USITC found that the domestic
industry remained unprofitable as it continued to incur hundreds of millions of dollars in losses over
the POI, notwithstanding its declining costs, which should have been beneficial.269 The United States
further argues that China's reliance on the USITC's finding of no price depression in CSPV II is
unavailing because those proceedings concerned anti-dumping and countervailing measures, which
are subject to different WTO disciplines, and also concerned a different time period with different
data.270 Finally, the United States contends that China fails to properly substantiate or explain the

261 China's second written submission, paras. 107-108.
262 China's second written submission, paras. 107-108.
263 China's second written submission, paras. 105 and 109; response to Panel question No. 39 of the
third set, paras. 44-52.
264 United States' first written submission, section II(D)(2)(a)(ii); second written submission,
paras. 66-80.
265 United States' first written submission, para. 136.
266 United States' first written submission, para. 136.
267 United States' second written submission, para. 69. Contrary to China's argument that the USITC
was ambiguous regarding the frequency with which US purchasers made purchasing decisions based on price,
the United States argues that, pursuant to table V-5 of the USITC final staff report, it was not unreasonable for
the USITC to rely on the fact that only 23 of 105 responding purchasers reported that they never purchased
the lowest price product, while 79 reported that they sometimes or usually did. (United States' second written
submission, para. 70).
268 United States' second written submission, paras. 71-75. Specifically, with respect to the
USITC's finding that the majority of purchasers reported choosing higher priced products due to non-price
factors, the United States argues that the fact that 64 of the 105 responding purchasers reported an instance
of buying a product from a source despite the availability of a comparable product at a lower price from
another source does not say anything about the frequency with which purchasers would forego purchasing
comparable, but lower-priced CSPV products. Moreover, with respect to the USITC's finding that "the majority
of purchasers reported that they had increased their purchases of imported CSPV products, most often
identifying lower price as the reason for increasing their purchases of imported CSPV products", the
United States argues that the fact that 53 of 86 purchasers cited a variety of factors other than price as their
primary reason for purchasing imported products does not undermine the fact that price was the most-often
identified factor. Finally, with respect to the USITC's finding concerning the frequency in which domestic
producers rolled backed planned price increases, the United States argues China's statement that "only 3 of
8 domestic producers had to roll back planned increases" is misleading as it ignores the full context of the
USITC's finding: "[o]f the 12 responding U.S. producers, eight reported that they had to reduce prices and
three reported that they had to roll back announced price increases in order to avoid losing sales to
competitors selling imported CSPV products since 2012". (Ibid. paras. 72 and 75).
269 United States' first written submission, paras. 138-139; second written submission, para. 77;
response to Panel question No. 20 of the first set, para. 51; response to Panel question No. 18 of the
second set, para. 42; and comments on China's response to Panel question No. 47 of the third set, para. 63.
270 United States' second written submission, paras. 78-79.

relevance of its claim that any price differences between the domestic like product and lower-priced
imports were due to "the domestic industry's higher costs and efficiency issues".271
7.3.3.2.2.3 Evaluation of the Panel
7.119. As noted above, China contends that the USITC failed to appropriately account for evidence
demonstrating that: (a) factors other than price were the most important factors behind purchasing
decisions; and (b) non-price factors better explained declining prices for CSPV products. For the
reasons explained below, we are not persuaded by either of these arguments.
7.120. With respect to China's first argument, we are not persuaded that the USITC exaggerated
the importance of price as the dominant explanatory factor without giving sufficient consideration to
record evidence concerning the role of non-price factors.272 While the evidence to which China refers
shows that non-price factors were relevant to purchasers of CSPV products, it also shows that price
was an important factor.273 The USITC explicitly referred to this dynamic in its finding that domestic
and imported products were "highly substitutable" described in section 7.3.3.2.1.2 above274, which
the USITC subsequently relied upon as support for its finding that the domestic industry experienced
adverse price conditions as a result of increased low-priced imports.275 In addition, record evidence
relied upon by the USITC indicates that p rices of domestic products were lowered in response to
imports, which suggests that competition in the market was sensitive to price. 276 In line with the
United States' arguments, these fin dings and evidence serve to confirm that, contrary to
China's view, it was appropriate for the USITC to find that price was an important factor for
purchasing decisions. Accordingly, we do not consider that China has demonstrated that the USITC
inappropriately emphasized the importance of price or ignored the relevance of non-price factors.
7.121. With respect to China's second argument, we are not persuaded that the USITC failed to
account for the evidence allegedly demonstrating that non-import factors better explained declining
market prices for CSPV products.
7.122. As an initial matter, we do not consider that the existence of long-term market trends under
which costs for the CSPV industry as a whole declined demonstrates that it was inappropriate for
the USITC to f ind that the domestic industry experienced adverse price conditions as a result of
increased imports. Conceptually, multiple factors may be affecting price at the same time and certain
of those factors may not be injurious. In its final report, the USITC found increased imports to be an
injurious factor affecting price on the basis of record evidence that showed, inter alia, that prices of
imported CSPV products were regularly lower than domestic products277, and that prices of domestic
products were reduced and prevented from increasing as a result of imports.278 In our view, the fact

271 United States' second written submission, para. 80; comments on China's response to Panel question
No. 39 of the third set, paras. 29-32.
272 China's response to Panel question No. 7 of the second set, para. 79.
273 USITC final report, (Exhibit CHN-2), pp. 29-30 and fn 144.
274 USITC final report, (Exhibit CHN-2), pp. 29-30 ("[i]n the U.S. market for CSPV products, purchasers
consider a variety of factors in their purchasing decisions, but price continues to be an important factor").
275 USITC final report, (Exhibit CHN-2), p. 41 ("[a]s discussed above, imported CSPV products are highly
substitutable with U.S.-manufactured products, and price is an important consideration in purchasing decisions
in this industry") and p. 45 ("[a]s indicated above, these imports were highly substitutable for
U.S.-manufactured CSPV products and generally were lower priced.")
276 USITC final report, (Exhibit CHN-2), pp. 42 and 45-46.
277 USITC final report, (Exhibit CHN-2), p. 42 (reporting that imported CSPV products were priced lower
than US-manufactured products in 33 of 52 instances involving approximately two-thirds of the total volume in
the pricing data, and were priced higher in 19 instances. Seven domestic producers reported that they had lost
sales to imported CSPV products since 2012. The majority of purchasers reported that they had increased their
purchases of imported CSPV products, and they identified lower price most often as the reason for increasing
their purchases of imported CSPV products. Purchasers reported that imported CSPV modules as a share of
their total purchases of CSPV products increased by 15.6% points from 75.6% of total CSPV purchases in 2012
to 91.2% of total CSPV purchases in 2016).
278 USITC final report, (Exhibit CHN-2), pp. 42 and 45-46 (reporting that 8 of 12 responding domestic
producers reported that they had to reduce prices, and three reported having to roll back announced price
increases in order to avoid losing sales to competitors selling imported CSPV products during the POI. Of
the 103 responding purchasers, 38 reported that US producers had reduced prices of their CSPV products in
order to compete with lower-priced imports, and 44 of them reported that they did not know whether
US producers had reduced their prices to compete with lower-priced imports. Several purchasers reported
steeper price reductions in 2016). In this respect, we agree with the United States' argument that, given that

that other factors may have also been affecting price does not undermine the relevance or probative
value of this evidence.
7.123. Record evidence also casts doubt on China's contention that non -import factors (such as
decreasing costs, increased efficiencies, and technological innovation) "better explain" declining
market prices for CSPV products.279 In this regard, we note that the domestic industry's per unit net
sales value declined at a greater pace than its cost of goods sold in the 2015-2016 period.280 These
circumstances correspond with the overall price dynamic described by the USITC under which the
domestic industry's prices declined significantly when imports in creased from sources not covered
by the CSPV I and CSPV II orders, which also occurred in 2015 -2016.281 The same dynamic was
confirmed in a 2016 industry publication filed by respondents during the safeguard investigation,
which reported that "[i]n the past few years, U.S. module price trends were largely driven by
anti-dumping and countervailing duties on Chinese suppliers. But recently the main driver has
shifted; current module price trends are largely a result of supply-demand imbalance".282
7.124. We are also not persuaded by China's reference to the USITC's finding in the CSPV II
investigation. The United States correctly notes that the CSPV II proceedings covered a different
period of time and included different data sets and questionnaire respons es.283 However, even if it
did not, it is not clear to us why, having regard to our standard of review, the USITC would need to
reach the same conclusion in the safeguard investigation for us to consider that its finding was
reasoned and adequate.284
7.125. Finally, we are not convinced by China's claim that the domestic industry's higher costs,
small scale, and inefficiency prevented it from capitalizing on the global decline in CSPV prices. Even
if we were to accept that the domestic industry was unable to capital ize on the global decline in
CSPV prices to the same extent as foreign producers, we fail to see how this would undermine the
USITC's finding that linked the domestic industry's adverse price conditions to increased imports.
Moreover, in line with the United States' argument, we do not consider that China has explained
why this argument is relevant to its overall claim. Indeed, given that the USITC found that the
domestic industry experienced adverse price conditions as a result of increased lower-priced imports,
it is not clear to us why the premise of China's claim – which purports to establish why the domestic
industry's prices were higher – would undermine the USITC's finding.
7.126. Based on the foregoing, we reject China's argument that the USITC failed to a ppropriately
explain why the domestic industry experienced adverse price conditions as a result of increased
imports.
7.3.3.2.3 Lost market share
7.3.3.2.3.1 Factual background
7.127. The USITC found that the domestic industry lost market share to increased imports:
Although the domestic industry increased its U.S. shipments over the POI, this overall
increase was dwarfed by the *** percent growth in apparent U.S. consumption during
this period, meaning that the domestic industry lost market share to the consistently
growing low -priced imports. The domestic industry's share of apparent
U.S. consumption fell from *** percent in 2012 to *** percent in 2013, and increased
to *** percent in 2014, as prices stabilized somewhat while imports temporarily grew
at a slower pace than apparent U.S. consumption. The domestic industry's market share
declined anew to *** percent in 2015 and *** percent in 2016, as imports peaked.

44 of the 103 US purchasers did not know why domestic producers reduced prices, it was not inappropriate for
the USITC to rely on the fact that 38 purchasers blamed low-priced imports, as it represented two-thirds of the
59 purchasers expressing a view. (United States' first written submission, para. 136).
279 China's second written submission, para. 104.
280 USITC final staff report, (Exhibit CHN-3), table III-21.
281 USITC final report, (Exhibit CHN-2), pp. 45-46.
282 SEIA executive summary of US solar market on 2016, (Exhibit CHN-60), p. 16. See also USITC final
report, (Exhibit CHN-2), p. 46 and fn 252 (referring to USITC final staff report, (Exhibit CHN-3), p. V-27).
283 United States' second written submission, paras. 78-79.
284 See section 7.1.2 above.

Domestic producers reported losing sales to low -priced imports of CSPV products, and
the majority of purchasers reported that they had increased their purchases of imported
CSPV products, most often identifying lower price as the reason for increasing their
purchases of imported CSPV products.285
7.128. Relatedly, the USITC found that "the large volume of imports at low and declining prices
adversely impacted the domestic industry's financial performance, making it difficult for the
domestic industry to increase capacity to a scale that made it more competitive in [the utility]
segment, even if it managed to develop and even pioneer i nnovative products that utilities and
others sought."286
7.3.3.2.3.2 Main arguments of the parties
7.129. China argues that the USITC failed to appropriately explain why the domestic industry lost
market share as a result of increased imports.287 In its view, despite the fact there "may have been
a superficial coincidence between increasing imports and falling domestic market share during the
POI", the USITC failed to account for prevailing conditions of competition.288 In particular, consistent
with its argument concerning the prevailing conditions of competition described in section 7.3.3.2.1
above, China contends that the USITC's analysis of market share failed to account for (a) the
massive increase in demand and market growth during the POI, which the domestic industry was
unable to supply due its small size; (b) the domestic industry's lack of participation in the utility
segment; and (c) the deficiencies associated with the quality, performance, and availability of
domestic CSPV products.289 According to China, the USITC also failed to properly explain why the
domestic industry still lost sales to imports when its overall sales increased during the POI.290
7.130. With respect to the USITC's finding that increased imports prevented the domestic industry
from expanding its capacity, China advances that the USITC incorrectly relied on (a) the false
premise that the domestic industry had the right to g row in parallel with the market291; and (b) its
deficient findings that domestic and imported CSPV products competed in residential, commercial,
and utility market segments and were "highly substitutable". 292 China also claims that the
USITC's finding on this point is undermined by the fact that the domestic industry increased its
capacity and production during the POI.293
7.131. For its part, the United States argues that the USITC provided a reasoned and adequate
explanation demonstrating that increased imports caused decreases in the domestic
industry's market share. 294 In its view, the USITC properly demonstrated that changes in the
domestic industry's market share correlated with import volumes over the POI, which the USITC
situated in the broader context of the import trends that led to the imposition of the CSPV I and
CSPV II orders.295 In addition, the United States submits that (a) the USITC properly demonstrated
that domestic producers lost bids and sales to low-priced imports; and (b) China's arguments to the
contrary are based on the fallacy that the increase in the domestic industry's shipments during the
POI means that it did not lose sales.296
7.132. As explained in section 7.3.3.2.1 above, the United States responds to China's claim that
the domestic industry did not have the capacity to supply increasi ng demand by referring to the
USITC's findings that increased imports impeded the domestic industry's ability to compete with
increased low-priced imports.297 In this regard, the United States argues that the USITC properly
demonstrated that increased imports caused domestic prices to decline, which led to operating and

285 USITC final report, (Exhibit CHN-2), p. 49. (fns omitted; redacted original)
286 USITC final report, (Exhibit CHN-2), pp. 60-61.
288 China's first written submission, para. 129.
289 China's first written submission, paras. 130-139; second written submission, paras. 91-94.
290 China's second written submission, para. 95; response to Panel question No. 40 of the third set,
paras. 53-62.
291 China's second written submission, paras. 96-97.
292 China's second written submission, paras. 97-100.
293 China's second written submission, para. 96.
294 United States' first written submission, section II(D)(2)(a)(i).
295 United States' first written submission, para. 118; second written submission, paras. 91-95.
296 United States' first written submission, para. 118; second written submission, paras. 87-90.
297 United States' first written submission, para. 119.

financial losses that negatively impacted the domestic industry's ability to expand to capitalize on
increased US consumption.298 The United States further argues that China's attempt to discredit the
USITC's findings on market segmentation and product substitutability do not withstand scrutiny. 299
As such, these arguments fail to support China's claim that the USITC failed to demo nstrate that
increased imports impeded the domestic industry's expansion.300
7.3.3.2.3.3 Evaluation of the Panel
7.133. Although the parties agree that the domestic industry lost market share during the POI 301,
they disagree on whether the USITC appropriately accounted for prevailing conditions of competition
in finding that the domestic industry lost market share as a result of increased imports. Overall, we
are not persuaded by China's arguments that the USITC's analysis is deficient in this regard.
7.134. We begin by noting that, contrary to China's argument302, the USITC did not ignore or
overlook the significant increase in domestic consumption when it found that the domestic industry
lost market share to increased imports. In fact, the USITC recognized this dynamic when it found
that, in all but one year of the POI (2013-2014), imports increased at a greater rate than apparent
US consumption.303 This finding supported the USITC's conclusion noted above that increased
US shipments were "dwarfed" by the " growth in apparent U.S. consu mption during this period ,
meaning that the domestic industry lost market share to the consistently growing low -priced
imports".304
7.135. China further argues that the USITC ignored that the domestic industry lost market share to
increased imports because it did not have the capacity to supply the explosive growth in demand.305
To support its argument, China points to record evidence showing that US demand increased
by 338% during the POI, which meant that the "domestic industry could only supply 27 percent of
demand at the beginning of the POI, and … only supply 8 percent towards the end of the POI".306 As
explained in section 7.3.3.2.1.1 above, we are not persuaded by China's contention that the
relatively small size of the domestic industry meant that the domestic industry was not affected by
the significant increased imports. With respect to declining market share specifically, even if the
domestic industry lacked the capacity to supply the full extent of the US market demand during the
POI, we do not consider that this would demonstrate that it was inappropriate for the USITC to find
that import competition contributed to the domestic industry's declining market share based on the
capacity that it had.307
7.136. In this regard, we note that the USITC found that the domestic industry lost sales to
low-priced imports. The USITC based this finding on questionnaire responses reporting that a
majority of domestic prod ucers lost sales to imports, and that a majority of purchasers increased
their purchases of imported CSPV products (most often identifying lower price as the reason for
increasing their purchases of imported CSPV products ).308 Four of these producers estimated that

298 United States' first written submission, paras. 119-120; response to Panel question No. 41 of the
third set, paras. 18-21.
299 United States' first written submission, paras. 121-128; second written submission, paras. 51-65.
See also United States' response to Panel question No. 4 of the first set, para. 7; response to Panel question
No. 20 of the first set, para. 49; and comments on China's response to Panel question No. 2 of the first set,
paras. 27 and 37-42.
300 United States' first written submission, paras. 121-128.
301 China accepts that the domestic industry lost market share during the POI. (China's first written
submission, para. 129; second written submission, para. 95; and response to Panel question No. 40 of the
third set, para. 54).
302 China's first written submission, para. 130.
303 USITC final report, (Exhibit CHN-2), p. 48.
304 USITC final report, (Exhibit CHN-2), p. 49. (emphasis added; fn omitted)
305 See, e.g. China's first written submission, paras. 130-132 and 137; and second written submission,
para. 93.
306 China's second written submission, para. 93.
307 We note in this regard that record evidence indicates that the domestic industry had significant
unused capacity throughout the POI. (USITC final report, (Exhibit CHN-2), fn 261; USITC final staff report,
(Exhibit CHN-3), pp. III-10-III-13). Moreover, as noted below, the USITC also found that increased imports
impeded the domestic industry's ability to increase its capacity to achieve economies of scale.
308 USITC final report, (Exhibit CHN-2), p. 49; USITC final staff report, (Exhibit CHN-3), pp. V-16
and V-28.

their lost sales totalled 950,000 kW, while another domestic producer, which did not provide a
quantity estimate, estimated that its lost sales totalled USD 148.7 million.309
7.137. China claims that the USITC's finding concerning lost sales is flawed because the domestic
industry increased production and shipments during the POI. Yet, as a logical matter, we fail to see
why an increase in its production and shipments would mean that the domestic industry did not lose
sales to imports, particularly in the context of the market that was growing. Moreover, China has
not convincingly explained why this would be the case.310
7.138. China further argues that the USITC failed to explain why the domestic industry lost sales,
particularly in light of the importance of non -price factors to purchasers of CSPV products. We are
also not persuaded by this argument. As noted in section 7.3.3.2.1.2 above, the USITC assessed
the mix of price and non-price factors in its finding that domestic and imported CSPV products were
"highly substitutable", and that price was an important factor in market competition. As we have
rejected China's arguments that these findings were inappropriate, we do not consider that it was
inaccurate or otherwise inappropriate for the USITC to highlight that the domestic industry lost sales
to imports that were "low-priced".
7.139. Finally, we note that the USITC found that increased imports adversely impacted domestic
prices and, as a consequence, the financial condition of the domestic industry, thereby impeding its
ability to increase its capacity to achieve economies of scale. 311 China claims that the
USITC's conclusion was flawed because domestic producers targeted different market segments than
foreign producers , and consequently produced CSPV products that were not substitutable with
imports.312 Again, for the reasons discussed in sections 7.3.3.2.1.1 and 7.3.3.2.1.2 above, we reject
these arguments. China's other criticism is that the domestic industry increased its capacity and
production during the POI.313 However, this argument misses the point. The USITC specifically found
that increased imports prevented the domestic industry from increasing capacity at a scale that
would have made it more competitive, particularly in the utility segment. 314 As such, we do not
consider the fact that the domestic industry increased its capacity and production demonstrates that
the USITC's finding on this point was inappropriate.
7.140. Based on the foregoing, we reject China's argument that the USITC failed to appropriately
explain why the domestic industry lost market share as a result of increased imports.
7.3.3.2.4 Financial deterioration
7.3.3.2.4.1 Factual background
7.141. In its serious injury determination, the USITC found that the domestic industry incurred
"hundreds of millions of dollars in losses throughout the POI" and that its overall financial
performance was "dismal and declining".315 The USITC based this determination on various financial
indicators such as the value of net sales, cost of goods sold to net sales ratio, operating losses, net
losses, and net income margin.316 The USITC further noted that the domestic industry's poor overall
performance is illustrated by the closures and bankruptcies of domestic producers over the POI.317
7.142. Returning to these findings in its causation analysis, the USITC found that the financial
condition of the domestic industry deteriorated during the POI along a similar trend as the decline
in the domestic industry's prices and market share:

309 USITC final staff report, (Exhibit CHN-3), p. V-28 and fn 53.
310 China's response to Panel question No. 9 of the second set, paras. 101-106; second written
submission, para. 95; and response to Panel question No. 40 of the third set, paras. 57-62.
311 USITC final report, (Exhibit CHN-2), pp. 47 and 60-61. These findings directly disprove China's claim
that the USITC relied on the false premise that the domestic industry had the right to grow in parallel with the
market. (China's second written submission, paras. 96-97).
312 China's first written submission, paras. 137-138; second written submission, paras. 96-101.
313 China's second written submission, para. 96.
314 USITC final report, (Exhibit CHN-2), pp. 60-61.
315 USITC final report, (Exhibit CHN-2), p. 35.
316 USITC final report, (Exhibit CHN-2), pp. 34-35.
317 USITC final report, (Exhibit CHN-2), p. 35.

The domestic industry's net sales fell overall between 2012 and 2016, and its cost of
goods sold declined by a greater amount. The domestic industry's cost of goods sold to
net sales ratio was high, near or exceeding *** percent throughout this period,
decreasing from *** percent in 2012 to *** percent in 2013, *** percent in 2014, and
*** percent in 2015, and increasing to *** percent in 2016. Accordingly, the domestic
industry's financial condition, which was at its worst at the beginning of the POI before
the antidumping and countervailing duty orders were imposed on imports from China
in December 2012, improved marginally after imposition of the orders and the filing of
new antidumping and countervailing duty cases, but remained poor and deteriorated
further in 2016, as imports peaked in terms of volume and market share and prices
dropped anew.318
7.3.3.2.4.2 Main arguments of the parties
7.143. China argues that the USITC failed to appropriately explain why the domestic
industry's financial performance deteriorated as a result of increased imports.319 According to China,
the USITC ignored that the domestic industry's financial performance improved over the POI and
relied upon evidence concerning financial losses "divorced from their proper context". 320 China
contends that the USITC recognized "this fundamental weakness in its theory of causation" and
"tried to explain away the improvement as due to the imposition of anti-dumping and countervailing
duty orders".321 In its view, this was improper because, "if the conditions already improved because
of the anti-dumping and countervailing duty orders, that shows the increasing imports … were no
longer the problem".322 Finally, China argues that the USITC improperly tried to shift the focus away
from overall changes over the POI and year -over-year trends to cumulative losses over the entire
period; those losses, however, "say[] nothing about the causal link to increased imports".323
7.144. For its part, the United States submits that the USITC provided a reasoned and adequate
explanation demonstrating that increased imports caused the poor and deteriorating financial
performance of the domestic industry. 324 According to the United States, the USITC reasonably
demonstrated that the financial condition of the domestic industry was adversely affected by unfairly
traded imports from China and Chinese Taipei at the start of the POI, then improved marginally as
a result of the imposition of the CSPV I and CSPV II orders. Thereafter, in 2016, the financial
condition of the domestic industry declined anew when prices dropped and imports surged from
countries not covered by the CSPV I and CSPV II orders.325 Based on these fi ndings, the
United States argues that China ignores the explosive growth in demand and the early, but
ineffective, imposition of trade remedy orders.326 In addition, the United States argues that, contrary
to China's suggestion, when the domestic industry's hundreds of millions of dollars in net and
operating losses throughout the POI are viewed in the context of the booming demand, the marginal

318 USITC final report, (Exhibit CHN-2), p. 47 (fns omitted; redacted original). See also USITC final
report, (Exhibit CHN-2), fn 257 where the USITC observed:
The domestic industry's operating loss improved from $*** in 2012 to operating losses of $*** in
2013, $*** in 2014, and $*** in 2015 but deteriorated to an operating loss of $*** in 2016. The
domestic industry's net losses improved from a net loss of $*** in 2012 to net losses of $*** in
2013, $*** in 2014, and $*** in 2015 and deteriorated to a net loss of $*** in 2016. The domestic
industry's net income margin improved from a loss of *** percent in 2012 to losses of *** percent
in 2013, *** percent in 2014, and *** percent in 2015, but deteriorated to a loss of *** percent
in 2016.
Redacted original.
319 China's first written submission, paras. 140-148.
320 China's first written submission, paras. 140-148; second written submission, paras. 120-123;
and response to Panel question No. 5 of the first set, para. 44.
321 China's first written submission, para. 144.
322 China's first written submission, para. 144. Relatedly, China contends that the USITC's focus on the
effectiveness of the trade remedies orders was flawed as it "ignores the simple truth that there could be other
factors at work affecting pricing, volume of imports, and other competitive dynamics in the CSPV market".
(China's response to Panel question No. 6 of the first set, para. 53).
323 China's first written submission, para. 146.
324 United States' first written submission, section II(D)(2)(a)(iii).
325 United States' first written submission, paras. 144-149.
326 United States' comments on China's response to Panel question No. 5 of the first set, paras. 63-64;
second written submission, paras. 29-30.

and temporary improvements of the domestic industry's financial performance are not indicative of
good performance.327
7.3.3.2.4.3 Evaluation of the Panel
7.145. As an initial matter, we note that the USITC's finding that the domestic industry's financial
condition deteriorated as a result of increased imports largely flowed from its findings concerning
the domestic industry's declining prices and lost market share. In sections 7.3.3.2.2.3
and 7.3.3.2.3.3 above we have already rejected China's arguments that the USITC erred in respect
of its findings concerning the relationship between increased imports and the domestic
industry's declining prices and lost market share. As such, we consider that the USITC's findings
concerning the relationship between increased imports and the domestic industry's declining prices
and lost market share support the appropriateness of its finding concerning the domestic
industry's financial performance.328
7.146. We are also not convinced by China's argument that the USITC failed to appropriately
account for the fact that the domestic industry's financial condition improved during the POI.
As noted above, the USITC found that the domestic industry's financial situation improved when the
CSPV I and CSPV II orders were imposed and prices stabilized, and deteriorated when imports
surged from countries not covered by those orders and prices declined.329 In our view, these findings
suggest that increased imports negatively impacted the financial condition of the domestic industry,
particularly in the 2015 -2016 period. Thus, by ignoring these year -over-year developments,
China's claims concerning the i mprovement of the financial condition of the domestic industry are
premised on a static – and ultimately misleading – comparison of the situation of the domestic
industry at the start and at the end of the POI.330
7.147. Relatedly, we recall that China does not challenge the USITC's serious injury determination
in these proceedings. 331 As a result, we accept as uncontested the USITC's assessment that the
overall financial condition of the domestic industry was "dismal and declining" and indicative of
serious injury .332 With respect to the USITC's causation determination, these findings further
diminish the significance of any improvements to the domestic industry's financial condition, as the
causal link required under the Agreement on Safeguards is between increased imports and the
serious injury found to exist during the investigation.333
7.148. For these reasons, we reject China's argument that the USITC failed to appropriately explain
why the domestic industry's financial performance deteriorated as a result of increased imports.

327 United States' comments on China's response to Panel question No. 5 of the first set, para. 65. See
also United States' second written submission, para. 26.
328 China's response to Panel question No. 6 of the first set, para. 53.
329 USITC final report, (Exhibit CHN-2), p. 47 and fn 257.
330 China's second written submission, para. 123. China argues that, by focusing on the cumulative
financial losses incurred by the domestic industry over the POI, the USITC failed to "consider the changes in a
domestic industry over time". However, this seems to be the very approach taken by China in its argument
that the financial condition of the domestic industry improved over the POI. In this respect, we agree with
previous DSB reports that have found that end-to-end comparisons do not adequately explain the relationship
between imports and indicators of serious injury. (See, e.g. Appellate Body Reports, US – Steel Safeguards,
331 See section 7.3.1 above. We recall that, regardless of its lack of challenge, China maintains that it
does not accept the USITC's serious injury determination. (China's comments on the United States' response to
Panel question No. 33 of the third set, para. 4; response to Panel question No. 33 of the third set, paras. 9-10;
second written submission, para. 17 and fn 25; and responses to Panel question Nos. 1(a) and 1(b) of the
second set).
332 USITC final report, (Exhibit CHN-2), p. 35.
333 As noted above, in its safeguard investigation the USITC found that, regardless of the overall
improvement of the financial condition of the domestic industry over the POI, the financial condition of the
domestic industry was still indicative of serious injury due to that fact that it was "dismal and declining",
particularly in 2015-2016. Accordingly, the relevant question with respect to causation is whether this situation
occurred as a result of increased imports, and not whether the financial condition of the domestic industry
improved over the 2012-2016 period.

7.3.3.2.5 Plant closures
7.3.3.2.5.1 Factual background
7.149. In its serious injury determination, the USITC found that 33 CSPV cell or CSPV module
facilities operated in the United States as of 1 January 2012, but only 13 of those facilities remained
open by 31 December 2016. Moreover, of the 16 additional facilitie s that opened during the POI,
5 had closed, and although 2 firms announced plans for new facilities, those facilities were not
commercially operational by July 2017.334
7.150. When returning to this issue in its analysis of causation, the USITC explained:
[D]espite the need in this industry to increase capacity in order to achieve economies
of scale, the domestic industry's capacity and production levels did not increase
commensurately with demand growth, and its capacity utilization levels remained low
and dropped at the end of the POI, as imports reached their summit. A substantial
number of domestic CSPV cell and CSPV module facilities closed during the POI,
resulting in numerous layoffs and the need for trade adjustment assistance for the
highly trained, skilled workers affected by these closures.335
7.151. In a related finding, the USITC further noted that "[a]lthough many U.S. producers entered
the U.S. market seeking to take advantage of this demand growth, the consistent inability of the
domestic industry to compete with low-priced imports forced many of these firms, as well as others,
to shut down their facilities".336 The USITC also found that this dynamic continued after the POI on
the basis that, by July 2017, two additional US production facilities had closed.337
7.3.3.2.5.2 Main arguments of the parties
7.152. China contends that the USITC failed to appropriately explain why the domestic
industry's plant closures were a result of increased imports.338 According to China, the USITC (a) did
not address why plant closures were caused b y increased imports; (b) ignored the fact that plants
opened throughout the POI; (c) did not address year -over-year trends, which showed that most
plant closures occurred at the start of the POI when imports were at their lowest; and (d) improperly
relied upon closures that took place after the POI. 339 With respect to the USITC's reliance on
developments after the POI, China contends that the determinations of serious injury should focus
on the "recent past, 'up to and including the very end' of the POI".340 Based on this principle, China
argues that it would only have been appropriate for the USITC to take this evidence into account if
it explained why doing so was necessary and ensured that the evidence was considered in a balanced
manner.341 However, in its view, the USITC failed to do so.342
7.153. The United States responds by arguing that the USITC appropriately considered plant
closures to be the natural result of the domestic industry's poor operational and financial
performance.343 With respect to the USITC's reliance on evidence from after the POI, the
United States contends that the only limitation set forth in the Agreement on Safeguards is that the
evidence be part of the competent authorities' record.344 In the safeguard investigation, the record

334 USITC final report, (Exhibit CHN-2), pp. 31-32.
335 USITC final report, (Exhibit CHN-2), pp. 47-48. (fns omitted; emphasis added)
336 USITC final report, (Exhibit CHN-2), pp. 48-49.
337 USITC final report, (Exhibit CHN-2), p. 49.
339 China's first written submission, paras. 154-155; response to Panel question No. 5 of the first set,
paras. 46-47; comments on the United States' response to Panel question No. 4(b) of the first set, paras. 33
and 35; and second written submission, paras. 117-118.
340 China's response to Panel question No. 35 of the third set, para. 21.
341 China's response to Panel question No. 35 of the third set, paras. 17-23; comments on the
United States' response to Panel question No. 35 of the third set, para. 10.
342 China's response to Panel question No. 35 of the third set, paras. 22-23; comments on the
United States' response to Panel question No. 35 of the third set, paras. 11-12.
343 United States' first written submission, para. 152; comments on China's response to Panel question
No. 5 of the first set, paras. 66-67; and response to Panel question No. 5 of the second set, para. 11.
344 United States' response to Panel question No. 35 of the third set, paras. 9-10; comments on
China's response to Panel question No. 35 of the third set, paras. 9-11.

included testimony regarding the failing operations of two of the largest domestic produc ers,
i.e. petitioners Suniva and SolarWorld. 345 This testimony specifically informed the USITC of
Suniva's April 2017 suspension of its cell and module operations as part of its chapter 11 bankruptcy
filing, and SolarWorld's June 2017 issuance of Worker Adjustment and Retraining Notification
(WARN) Act notifications and layoff of 360 employees in mid -July 2017.346 Thus, the United States
submits that it was appropriate for the USITC to consider this evidence in its finding of the causal
link between increased imports and serious injury and that China's arguments to the contrary do
not withstand scrutiny.347
7.3.3.2.5.3 Evaluation of the Panel
7.154. We are not persuaded by China's argument that the USITC failed to properly explain how
plant closures were linked to increased imports. To the contrary, the USITC appears to have found
that plant (facility) closures were connected to the domestic industry's poor financial circumstances
and its inability to increase its capacity to achieve economies of scale that would have allowed it to
compete more effectively against low -priced imports. 348 As we have already rejected
China's arguments that it was inappropriate for the USITC to link these developments to increased
imports, we do not consider that it was inappropriate to also link these same developments to plant
closures.
7.155. In addition, we are not persuaded by China's argument concerning the coincidence between
increased imports and plant closures. As an initial matter, we do not consider that the
appropriateness of the USITC's findings on this issue turns on whether the USITC demonstrated a
perfect correlation between increased imports and plant closures. Given that pla nt closures would
be expected to follow from the more direct effects of the increased imports – here, adverse price
conditions and their financial consequences – it would be logical to expect a lag between the
increased imports and plant closures.349
7.156. In th is context, we do not consider that the USITC's finding concerning the relationship
between increased imports and plant closures is vitiated by the fact that a number of plant closures
occurred early in the POI.350 The USITC found that the financial conditi on of the domestic industry
was at its lowest point at the start of the POI 351, which coincided with the import competition from
China that culminated in the imposition of the CSPV I order.352 As such, it seems reasonable that
plant closures would occur around this point in time. Moreover, the fact that plant closures declined

345 United States' response to Panel question No. 35 of the third set, para. 11.
346 United States' response to Panel question No. 35 of the third set, para. 11.
347 United States' response to Panel question No. 35 of the third set, para. 11.
348 USITC final report, (Exhibit CHN-2), pp. 47-49.
349 In this respect, we note that previous DSB reports have similarly found that there may be instances
where there is a lag between the influx of imports and the manifestation of the injurious effects on the
domestic industry. (See, e.g. Panel Reports, US – Steel Safeguards, paras. 10.310-10.312). In that case, the
panel explicitly noted that lags concerning certain factors such as employment may be expected.
(See ibid. para. 10.312).
350 USITC final report, (Exhibit CHN-2), fn 263; USITC final staff report, (Exhibit CHN-3), table III-3.
351 USITC final report, (Exhibit CHN-2), p. 47.
352 USITC final report, (Exhibit CHN-2), p. 44:
In 2009, the beginning of the period of investigation in the CSPV I investigations, the domestic
industry held the largest share of apparent U.S. consumption (*** per cent), followed by imports
from China corresponding to the scope of those investigations (*** percent), and imports from all
other sources (*** percent). Imports from China overtook the domestic industry's U.S. shipments
by 2010, and by the end of 2011, imports from China had nearly doubled from their 2009 level.
Fns omitted; redacted original.
See also USITC CSPV I final report, (Exhibit USA-11), p. 38:
Consequently, the picture emerges of a domestic industry: (1) with a steadily declining market
share despite phenomenal demand growth, (2) that has lost market share due primarily to the
significant and increasing volume of subject imports from China, (3) that has faced significant
underselling by subject imports from China and depr essed and suppressed prices, (4) that
consistently lost money throughout the POI despite the tremendous demand growth and significant
cost reductions, (5) that by the end of the POI experienced declines even in many of the
performance indicators that previ ously had shown some improvement, and (6) that reported
recognizing asset write -offs and/or costs related to the closure of production facilities, revalued
inventories, and/or asset impairments. Based on the foregoing trends, we find that there is a causal
nexus between subject imports and the poor condition of the domestic industry and that the
domestic industry is materially injured by reason of subject imports.

and that new firms entered the market after the start of the POI corresponds with the improving
financial condition of the domestic industry that followed the imposition of the CSPV I and CSPV II
orders and the growth in the US market. However, as noted above, these improvements were
short-lived; the financial condition of the domestic industry deteriorated further in 2016, as import
volumes increased from sources not covered by the CSPV I and CSPV II orders, and the domestic
industry's market share and prices dropped anew.353 As the USITC found that plant closures followed
these developments354, we do not consider that the USITC failed to address year-over-year trends,
contrary to China's view.355
7.157. This brings us to whether it was appropriate for the USITC to take into account plant closures
that occurred immediately after the POI, i.e. following the significant increase in imports. While the
parties agree that the Agreement on Safeguards does not prescribe explicit rules for considering
evidence from outside of the POI 356, they disagree on when it is appropriate to do so and also on
whether the USITC considered post-POI evidence concerning plant closures in a balanced manner.
7.158. As noted above, China argues that it is only appropriate for the competent authorities of a
Member to consider developments following the POI in limited circumstances, specifically where the
competent authorities explain why doing so is "necessary". 357 However, in line with the
United States' argument, we consider this understanding to be overly restrictive. 358 The
Agreement on Safeguards does not discipline the temporal scope of the evidence that the competent
authorities may consider, so long as the evidence is on the competent authorities' record and the
procedural rights of interested parties are respected. Moreover, contrary to China's reference to the
principle that the determinations of serious injury should focus on the "recent past", we think that
the principle to which China refers favour s taking into account post -POI developments.359 Indeed,
those developments would reflect the most recent circumstances of the domestic industry, including
any injurious effects of increased imports.
7.159. Finally, we do not consider that China has demonstrated that the USITC failed to evaluate
post-POI evidence in a balanced manner. The USITC recognized that "[t]wo firms announced plans
for new facilities, but those facilities were not commercially operational by July 2017" in its
assessment of whether there was significant idling of US productive facilities.360 The USITC also
relied upon table III-3 in the final staff report, which shows that a limited number of cell and module
facilities opened in the 2016-2017 period.361 Importantly, however, this evidence contrasts with the
larger number of closures that occ urred in the same period. 362 The USITC also relied on evidence
from Suniva – one of the largest domestic producers and one of the petitioners in the safeguard
investigation – regarding the April 2017 suspension of operations at its cell and module facilities as

353 USITC final report, (Exhibit CHN-2), p. 49.
354 USITC final report, (Exhibit CHN-2), p. 49.
355 Relatedly, we also reject China's contention that the USITC ignored the fact that plants opened
throughout the POI. Indeed, as noted by the United States, the USITC addressed this dynamic explicitly when
it found that of the 16 additional facilities that opened during the POI, 5 had closed, and that, although 2 firms
had announced plans for new facilities, those facilities were not commercially operational by July 2017.
(United States' comments on China's response to Panel question No. 5 of the first set, para. 66). As noted
above, the USITC also found that "[a]though many U.S. producers entered the U.S. market seeking to take
advantage of this demand growth, the consistent inability of the domestic industry to compete with low-priced
imports forced many of these firms, as well as others, to shut down". (USITC final report, (Exhibit CHN-2),
pp. 48-49).
356 China's response to Panel question No. 35 of the third set, para. 17; United States' response to Panel
question No. 35 of the third set, para. 9.
357 China's response to Panel question No. 35 of the third set, paras. 17-23; comments on the
United States' response to Panel question No. 35 of the third set, para. 10.
358 United States' response to Panel question No. 35 of the third set, paras. 9-10; comments on
China's response to Panel question No. 35 of the third set, paras. 9-11.
359 China's response to Panel question No. 35 of the third set, paras. 20-21; Panel Report,
US – Wheat Gluten, para. 8.81.
360 USITC final report, (Exhibit CHN-2), pp. 31-32.
361 USITC final report, (Exhibit CHN-2), pp. 31-32 and fns 155-158.
362 USITC final report, (Exhibit CHN-2), pp. 31-33, 38, and 49; USITC final staff report, (Exhibit CHN-3),
table III-3; and Transcript of the USITC injury hearing, (Exhibit CHN-9), pp. 95-96. Although China claims that
"[w]hen imports were at their highest level, the number of firm closures were at their lowest", it fails to
demonstrate that this was the case, particularly in light of the documented closures in the 2016-2017 period.
(China's second written submission, para. 118).

part of its chapter 11 bankruptcy filing. 363 As the balance of this evidence appears to support the
USITC's finding that the domestic industry's plant closures worsened after the POI, we disagree with
China's claim that the USITC cherry-picked facts in isolation or failed to consider the evidence as a
whole.364
7.160. Based on the foregoing, we reject China's argument that the USITC failed to appropriately
explain why the domestic industry's plant closures were a result of increased imports.
7.3.3.3 The USITC's findings concerning the relationship between increased imports and
the seemingly positive factors of serious injury
7.161. The parties also disagree on whether the USITC properly addressed the seemingly positive
factors of serious injury that were present during the POI, i.e. increases in the domestic
industry's capacity, prod uction, and shipments; employment; and capital expenditures,
R&D expenses, and value of production assets.
7.162. China contends that the USITC largely dismissed the existence of these factors, which, in
China's view, cast doubt on the USITC's finding that increased imports caused serious injury to the
domestic industry.365 In opposition, the United States argues that China disregards that the USITC
addressed these factors in its serious injury analysis and found that they did not detract from its
finding that the totality of the evidence demonstrated a significant overall impairment in the position
of the domestic industry. Thus, the existence of the seemingly positive factors of serious injury does
not undermine the USITC's finding of a causal link.366
7.163. At the outset, we note that the parties' disagreement directly implicates the legal status of
the USITC's serious injury determination in these proceedings. The fact that China has not
challenged the USITC's serious injury determination means that it is un contested for the purposes
of our evaluation. Moreover, because the requisite "causal link" under the Agreement on Safeguards
is between increased imports and the serious injury found to exist , the underlying serious injury
determination establishes the factual parameters of the causal link that must be demonstrated. This
has direct implications for our assessment of the USITC's analysis of the seemingly positive factors
in its causation determination. Since the USITC found that the seemingly positive facto rs either
supported, or did not undermine, its determination that the domestic industry was seriously injured,
we consider that these factors are necessarily less relevant to the causal link between increased
imports and serious injury.367

363 USITC final report, (Exhibit CHN-2), pp. 33-34; Transcript of the USITC injury hearing,
(Exhibit CHN-9), pp. 95-96; and USITC final staff report, (Exhibit CHN-3), p. III-8.
364 China's comments on the United States' response to Panel question No. 4(b) of the first set,
para. 36.
365 China's second written submission, para. 56.
366 See also United States' first written submission, paras. 157-159; and second written submission,
para. 27.
367 In this regard, we disagree with China's contention that the Panel is required to review the
reasonableness and adequacy of the USITC's factual findings in its serious injury determination on the basis
that they are relevant to the Panel's assessment of the causation determination. (China's response to Panel
question No. 1(b) of the second set, paras. 3-4). In our view, doing so would effectively amount to reviewing
the serious injury determination, which is outside of our terms of reference.
Based on the legal distinction between "serious injury" and "causal link" in the
Agreement on Safeguards, China further claims that the serious injury determination is "context for, but does
not dictate, the 'causal link' determination, even though both of these legal determinations will draw on the
same underlying facts". China also argues that "the overall determination about 'serious injury' does not
extinguish the relevance of the individual injury factors for which there is evidence on the record. Those facts
are themselves still highly relevant for the assessment of the alleged 'causal link'". In this context, China notes
the analysis of the "causal link" must focus on how the injury factors have changed over time.
(China's response to Panel question No. 33 of the third set, paras. 3-9).
While we agree with China that serious injury and causation are legally distinct requirements under
the Agreement on Safeguards and that movement in individual injury factors must be accounted for in the
causation analysis, we disagree with China to the extent it argues that the serious injury determination does
not establish the factual parameters of the causal link that must be demonstrated. In this regard, we recall
that Article 4.2(b) of the Agreement on Safeguards stipulates that the requisite "causal link" is "between
increased imports and serious injury". Thus, in our view, the underlying serious injury determination
establishes the factual parameters of the overall causal link that must be demonstrated, and therefore
establishes the relevance of specific injury factors to the competent authorities' analysis.

7.164. In this context, we now turn to the parties' arguments concerning each of the seemingly
positive injury factors.
7.3.3.3.1 Capacity, production, and shipments
7.3.3.3.1.1 Factual background
7.165. As part of its serious injury determination, the USITC found that, although the domestic
industry's capacity, production, and shipments increased during the POI, those increases were
dwarfed by the increase in US consumption and the domestic industry lost market share as a
result.368 On this basis, the USITC considered that the inability of the domestic indus try to
meaningfully increase its capacity, production, and shipments during a period of favourable market
conditions was indicative of serious injury, regardless of whether these factors improved during
the POI.369
7.166. In its examination of whether increased imports were a substantial cause of serious injury
to the domestic industry, t he USITC found that the domestic industry lost sales and market share
as a result of increased low-priced imports, despite the fact that it increased its shipments over the
POI.370 The USITC also found that increased imports prevented the domestic industry from increasing
its capacity and production levels commensurately with demand growth.371 In particular, the USITC
linked the inability of the domestic industry to increa se its capacity "in order to achieve economies
of scale" to "the hundreds of millions of dollars in net and operating losses throughout the POI",
which meant that "a significant number of domestic producers were unable to generate adequate
capital to finan ce the modernization of their domestic plants and equipment, and a significant
number of them were unable to maintain existing research and development expenditure levels".372
7.3.3.3.1.2 Main arguments of the parties
7.167. China argues that the USITC failed to appropriately explain why increased imports caused
serious injury to the domestic industry, notwithstanding the increases in the domestic
industry's capacity, production, and shipments.373 For each of these factors, China claims that it was
insufficient for the USITC to recognize the existence of the trend and dismiss it on the basis that the
domestic industry did not increase its performance commensurately with demand growth.374 In this
regard, China contends that the USITC's analysis contained an "implicit false premise " that the
domestic industry had the right to grow in line with the expansion of the US market.375
7.168. For its part, the United States contends that the USITC addressed these trends in its serious
injury analysis and found that they did not detract from the con clusion that the totality of the
evidence demonstrated "a significant overall impairment in the position of the domestic industry".376
The United States further contends that, contrary to China's assertion that the USITC relied upon an
"implicit false premise" that the domestic industry had a right to grow as the market expanded, the
USITC appropriately found that increased imports prevented the domestic industry from being able
to meaningfully improve its performance.377

368 USITC final report, (Exhibit CHN-2), pp. 37-38. Relatedly, as part of its serious injury determination,
the USITC found that, while the domestic industry increased capacity and production for both CSPV cells and
CSPV modules during the POI, these increases did not approach the magnitude of the explosive growth in
apparent US consumption during this period. (USITC final report, (Exhibit CHN-2), p. 33).
369 USITC final report, (Exhibit CHN-2), pp. 37-38. The USITC linked this dynamic to other aspects of
the serious injury it found to exist, e.g. the closure of domestic production facilities, increased inventories at
facilities that remained open, and the inability for a significant number of firms to generate reasonable levels of
profit.
370 USITC final report, (Exhibit CHN-2), p. 49.
371 USITC final report, (Exhibit CHN-2), p. 47.
372 USITC final report, (Exhibit CHN-2), p. 47.
373 China's first written submission, paras. 118-121; second written submission, paras. 58-66.
374 China's first written submission, paras. 120-121; second written submission, paras. 60, 63, and 66.
375 China's first written submission, paras. 120-121; second written submission, paras. 60, 63, and 66.
376 United States' second written submission, para. 27. See also United States' first written submission,
paras. 157-159.
377 United States' first written submission, paras. 157 and 161-163; second written submission,
paras. 34-36; and comments on China's response to Panel question No. 2 of the first set, para. 33.

7.3.3.3.1.3 Evaluation of the Panel
7.169. In our view, the United States correctly notes that China fails to situate its claim in the
context of the USITC's serious injury determination, which it does not challenge in these
proceedings. As indicated above, the absence of such a challenge means tha t the USITC's serious
injury determination is uncontested for the purposes of our evaluation. As part of its serious injury
determination, the USITC found that the extent of the improvements in the domestic
industry's capacity, production, and shipments during the POI, when viewed in the context of the
growth in the US market, supported its finding that the domestic industry was seriously injured. 378
Therefore, with respect to the USITC's causation determination, the relevant issue is not whether
the domestic industry's performance improved, but rather whether the domestic industry's inability
to meaningfully improve its performance occurred as a result of increased imports. By focu sing
narrowly on the fact that certain of the domestic industry's performance indicators improved over
the POI, China's arguments ignore the nature of the serious injury found to exist, and thus are not
calibrated to the relevant issue.
7.170. China also overlooks the linkages drawn by the USITC between increased imports and the
inability of the domestic industry to improve its performance in light of increasing demand in the
US market. As noted above, the USITC found that, irrespective of the fact that the domestic industry
increased its shipments during the POI, it still lost sales to low-priced imports, which contributed to
its declining market share. 379 The USITC also found that the inability of the domestic industry to
achieve economies of scale by increasing its capacity and production was linked to the "the hundreds
of millions of dollars in net and operating losses throughout the POI", which the USITC attributed to
increased imports. 380 As we have already rejected China's claims that these findings were not
appropriately explained, we consider that the same findings demonstrate that the USITC properly
accounted for seemingly favourable increases in the domestic industry's capacity, production, and
shipments in its causation analysis. These findings also demonstrate that, contrary to China's view,
the USITC did not rely on an "implicit false premise" that the domestic industry had the right to grow
commensurately with the expansion of the US market.
7.171. Based on the foregoing, we reject China's claim that the USITC failed to appropriately explain
why increased imports caused serious injury to the domestic industry, notwithstanding the domestic
industry's increases in its capacity, production, and shipments.
7.3.3.3.2 Employment
7.3.3.3.2.1 Factual background
7.172. As part of its serious injury determination, the USITC found that the substantial number of
facility closures resulted in extensive layoffs and the award of US Trade Adjustment Assistance Act
benefits to many workers during the POI. In addition, workers at some facilities experienced
temporary shutdowns or production slowdowns, which led to layoffs and underemployment. 381
Specifically, with respect to CSPV cell operations, the USITC noted that:
[T]he overall number of production and related workers ("PRWs") engaged in U.S. CSPV
cell operations declined from *** PRWs in 2012 to *** PRWs in 2013 and *** PRWs
in 2014, and increased to *** PRWs in 2015 and *** PRWs in 2016, an overall increase
of *** percent. Although the overall increase in employment over the POI appears
consistent with the *** percent increase in U.S. production of CSPV cells, the increase
at the end of the POI is primarily explained by ***.382
7.173. Moreover, with respect to CSPV module operations:
For U.S. CSPV module operations, overall employment declined from 1,293 PRWs
in 2012 to 1,080 PRWs in 2013 and 956 PRWs in 2014, and increased to 1,038 PRWs
in 2015 and 1,253 PRWs in 2016, an overall decrease of 3.1 percent despite dramatic

378 USITC final report, (Exhibit CHN-2), pp. 37-38.
379 USITC final report, (Exhibit CHN-2), p. 47.
380 USITC final report, (Exhibit CHN-2), pp. 47 and 60-61.
381 USITC final report, (Exhibit CHN-2), p. 33.
382 USITC final report, (Exhibit CHN-2), p. 33. (fns omitted; redacted original)

growth in apparent U.S. consumption of CSPV products. These employment data do not
reflect post-POI developments, such as Suniva's April 2017 suspension of operations
for its cell and module factories as part of its chapter 11 bankruptcy filing or
SolarWorld's June 2017 issuance of WARN Act notifications to ***, layoff
of 360 employees in mid-July 2017, and ***.383
7.174. Returning to these findings in its causation analysis, the USITC found that the domestic
industry's poor operational and financial performance over the POI resulted in a substantial number
of facility closures, which in turn resulted in "numerous layoffs and the need for tra de adjustment
assistance for the highly trained, skilled workers affected by these closures".384
7.3.3.3.2.2 Main arguments of the parties
7.175. China contends that the USITC failed to appropriately explain why the increased imports
caused injury to the domestic industry, no twithstanding the improvements in the domestic
industry's employment indicators.385 In particular, China argues that the USITC downplayed the fact
that employment of cell production related workers increased "year -on-year" throughout the POI,
and that employment for module production related workers recovered towards the end of the POI
when imports peaked. 386 China further argues that the USITC erred in its consideration of data
concerning employment from after the POI for its determination of causation within the POI.387
7.176. In response, the United States advances that China does not deny the USITC's observation
that dozens of domestic facilities closed over the POI, which logically resulted in layoffs. 388
In addition, contrary to China's argument, the United States argues that the USITC appropriately
relied upon post-POI evidence concerning SolarWorld's issuance of WARN Act notices and
Suniva's bankruptcy because that evidence was highly relevant and interested parties had the
opportunity to address it during the investigation.389
7.3.3.3.2.3 Evaluation of the Panel
7.177. The USITC found that, regardless of certain increases in the domestic industry's cell and
module employment during the POI, the overall employment data supported its finding of "significant
unemployment and underemployment".390 As China does not challenge the serious injury
determination in these proceedings, we accept these findings as uncontested. In our view, the same
findings also diminish the significance of any improvements to the domestic industry's employment
indicators to the USITC's causation analysis, as the causal link required under the
Agreement on Safeguards is between increased imports and the serious injury found to exist. Thus,
the simple fact that certain of these factors improved over the POI does not demonstrate the absence
of a causal link between increased imports and serious injury.
7.178. In addition, we note that the USITC connected the movement in the domestic
industry's employment indicators to the domestic industry's poor operational and
financial performance, which resulted in a substantial number of plant closures.391
In sections 7.3.3.2.4.3 and 7.3.3.2.5 above, we have already rejected China's arguments that the
USITC failed to appropriately explain why the domestic industry's financial deterioration and plant
closures occurred as a result of increased imports. Thus, the USITC's findings with respect to these
factors – which worsened at the end of the POI – disprove China's contention that the USITC failed
to appropriately address the relationship between increased imports and the m ovement in the
domestic industry's employment indicators.392

383 USITC final report, (Exhibit CHN-2), pp. 33-34. (fns omitted; redacted original)
384 USITC final report, (Exhibit CHN-2), pp. 47-48.
385 China's first written submission, para. 122; second written submission, paras. 67-70.
386 China's second written submission, para. 68.
388 United States' first written submission, para. 165.
389 United States' first written submission, para. 165.
390 USITC final report, (Exhibit CHN-2), pp. 33-34.
391 USITC final report, (Exhibit CHN-2), pp. 47-48.
392 We note in particular that certain of the domestic industry's employment indicators worsened
in 2017, which aligns temporally with the rise in the domestic industry's plant closures. (USITC final report,
(Exhibit CHN-2), pp. 33-34).

7.179. In this connection , we reject China's argument that it was inappropriate for the USITC to
consider evidence concerning the domestic industry's employment indicators from after the POI.
As noted i n section 7.3.3.2.5.3 above, the Agreement on Safeguards does not discipline the
temporal scope of the evidence that may be considered so long as that evidence is on the competent
authorities' record, and provided that the procedural rights of interested parties are respected. Thus,
we agree with the United States that it was appropriate for the USITC to consider record evidence
concerning Suniva's April 2017 suspension of operations and SolarWorld's June 2017 issuance of
WARN Act notifications and laying off 360 employees. In our view, this evidence shows that, contrary
to China's claims, it was not inappropriate for the USITC to find that the domestic
industry's employment indicators were adversely impacted by the increase in imports at the end of
the POI.
7.180. Based on the foregoing, we reject China's claim that the USITC failed to appropriately explain
why increased imports caused injury to the domestic i ndustry, notwithstanding the improvements
in the domestic industry's employment indicators during the POI.
7.3.3.3.3 Capital expenditures, R&D expenses, and value of production assets
7.3.3.3.3.1 Factual background
7.181. As part of its serious injury determination, the USITC found that:
The domestic industry's capital expenditures increased overall between 2012 and 2016,
reaching their highest level in 2015, but the largest share of these expenditures was
related to expenditures by one firm (***) on new CSPV cell operations th at have not
yet become commercially operational. The domestic industry's research and
development expenses generally declined between 2012 and 2015, but increased
in 2016, largely due to ***. The value of the domestic industry's production assets
increased overall, again largely due to ***. Other domestic producers recognized asset
impairments, reserved or wrote off production equipment, ***, ***, and otherwise
slowed or shut down production.
Domestic producers also identified a series of actual negative ef fects on their
investment, growth, and development due to imports. These included tabling,
postponing, and deferring projects; rejection of investment proposals; reduction in the
size of capital investments; negative returns on investments; inability to ge nerate
adequate capital to finance modernization of domestic plants and equipment; increased
costs for debt financing; inability to maintain existing levels of research and
development expenditures; rejection of bank loans; lowering of credit ratings; inability
to issue stocks or bonds; inability to service debt; lowered bankability; and other such
difficulties. Domestic producers also anticipated additional negative effects from
imports. Based on this evidence, we find that a significant number of domestic producers
were unable to generate adequate capital to finance the modernization of their domestic
plants and equipment, and a significant number of domestic producers were unable to
maintain existing levels of expenditures for research and development, de spite
explosive demand growth during the POI.393
7.182. When returning to these findings in its analysis of causation, the USITC observed:
Consistent with the hundreds of millions of dollars in net and operating losses
throughout the POI, a significant number of domestic producers were unable to generate
adequate capital to finance the modernization of their domestic plants and equipment,
and a significant number of them were unable to maintain existing research and
development expenditure levels. This inability to generate adequate capital for
investments and research and development impaired the domestic industry's ability to
develop next -generation products in this highly capital -intensive and technologically
sophisticated market.394

393 USITC final report, (Exhibit CHN-2), pp. 35-37. (fns omitted; redacted original)
394 USITC final report, (Exhibit CHN-2), p. 47. (fns omitted)

7.3.3.3.3.2 Main arguments of the parties
7.183. China contends that the USITC failed to appropriately explain why increased imports caused
injury to the domestic industry, notwithstanding the increases in the domestic industry's capital
expenditures, R&D expenses, and value of its production assets.395 Regarding capital expenditures,
China argues that it was inadequate for the USITC to recognize the existence of increased capital
expenditures, but dismiss the significance of that increase on the basis that it was carried out by a
single firm, particularly when the non-confidential version of the USITC final report is so heavily
redacted on this point that the explanation is deficient and ambiguous.396 Regarding R&D expenses,
China argues that it was inappropriate for the USITC to find a causal link between increased imports
and serious injury when at least one domestic firm increased its R&D expenses in 2016, when
imports were at their highest. According to China, the USITC's finding that some firms "were unable
to maintain existing research and development expenditure levels" did not sufficiently represent the
state of the domestic industry as a whole. 397 Finally, regarding the value of the domestic
industry's production assets, China argues that the USITC relied on conclusory statements and did
not appropria tely address how improvements in the value of the domestic industry's production
assets were consistent with its finding of causality.398
7.184. For its part, the United States takes the position that the USITC appropriately explained that
the largest share of capital expenditures was "related to expenditures by one firm on new CSPV cell
operations that had not yet become operational by the end of the POI".399 The United States further
advances that the USITC appropriately explained that the financial losses incurred by the domestic
industry throughout the POI meant that "a significant number of domestic producers were unable to
generate adequate capital to finance the moderniza tion of their domestic plants and equipment or
maintain existing research and development expenditure levels", which in turn impaired the
domestic industry's ability to develop next-generation products.400
7.3.3.3.3.3 Evaluation of the Panel
7.185. As part of its serious injury determination, the USITC found that the improvements in the
domestic industry's capital expenditures, R&D expenses, and value of its production assets were not
representative of the domestic industry as a whole. 401 This finding supported its conclusion that
"a significant number of domestic producers were unable to generate adequate capital to finance
the modernization of their domestic plants and equipment, and a significant number of domestic
producers were unable to maintain existing levels of expenditures for research and development,
despite explosive demand growth during the POI".402
7.186. Since China does not challenge the serious injury determination in these proceedings, we
accept these findings as uncontested. In our view, the se findings also diminish the significance of
any improvements to the domestic industry's capital expenditures, R&D expenses, and value of
production assets to the USITC's causation analysis. As explained above, the causal link required
under the Agreement on Safeguards is between increased imports and the serious injury found to
exist. The simple fact that the domestic industry's capital expenditures, R&D expenses, and value of
production assets improved does not demonstrate the absence of a causal link be tween increased
imports and serious injury. This is particularly the case because the USITC found in its serious injury
determination that these improvements were not representative of the domestic industry as a whole.
7.187. Accordingly, by overlooking the conte xt of the USITC's serious injury determination,
China's arguments fail to demonstrate that the USITC's causation analysis inadequately accounted
for the improvements to the domestic industry's capital expenditures, R&D expenses, and value of
production assets. In this regard, we note that several of China's arguments improperly seek to
challenge (either directly or indirectly) various aspects of the underlying serious injury

395 China's first written submission, paras. 123-124; second written submission, paras. 71-79.
396 China's second written submission, paras. 73-76.
397 China's second written submission, paras. 76-78.
398 China's second written submission, para. 79.
399 United States' first written submission, para. 166.
400 United States' first written submission, para. 166.
401 USITC final report, (Exhibit CHN-2), pp. 35-36.
402 USITC final report, (Exhibit CHN-2), pp. 36-37. (emphasis added)

determination, which is not part of the matter under review in this dispute. 403 We further note that
China's arguments do not address the USITC's central finding that the "hundreds of millions of
dollars in net and operating losses throughout the POI" adversely impacted the domestic
industry's ability to generate capital or maintain exist ing R&D expenditure levels, which in turn
"impaired the domestic industry's ability to develop next -generation products in this highly
capital-intensive and technologically sophisticated market".404
7.188. Based on these shortcomings, we reject China's claim that the USITC failed to appropriately
explain why increased imports caused injury to the domestic industry, notwithstanding the increases
in the domestic industry's capital expenditures, R&D expenses, and value of its production assets.
7.3.3.4 Overall conclusion regarding the USITC's determination of a causal link between
increased imports of CSPV products and serious injury of the domestic industry
7.189. In the foregoing sections we have found that China has failed to establish that the USITC
erred in respect of its analysis of the relationship between increased imports and the negative and
seemingly positive factors of serious injury that existed during the POI. Based on these findings, we
reject China's argument that the USITC failed to demonstrate an "overall coincidence" between
increased imports and serious injury. 405 Accordingly, we reject China's overall claim that the
United States failed to evaluate whether increased imports were a cause of serious injury in
accordance with Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards.
7.4 "Other" factors allegedly causing injury to the domestic industry
7.4.1 General factual background
7.190. US domestic law requires the USITC to find whether the product under investigation is being
imported in such increased quantities as to be a "substantial cause" of serious injury or threat
thereof, i.e. "a cause which is important and not less than any oth er cause".406 This requirement
directs the USITC to, inter alia, "examine factors other than imports" that may be a cause of serious
injury or threat thereof and include the results of its examination in its report.407
7.191. In the safeguard investigation, respond ents argued that causes other than imports were
more important and explain any injury to the domestic industry, identifying two such causes:
(a) alleged missteps by the domestic industry and (b) factors other than imports that allegedly led
to declines in domestic prices. More specifically, respondents referred to:
a. Alleged missteps by the domestic industry:
i. the alleged decision of the domestic industry to focus on the commercial and residential
segments and to avoid competing in the utility segment;
ii. alleged quality and product-type issues; and

403 See, e.g. China's second written submission, paras. 73-76 (challenging the USITC's finding that
increased capital expenditures were not representative of the domestic industry as a whole); para. 77
(claiming that the USITC's finding that a significant number of firms "were unable to maintain existing research
and development expenditure levels" was inadequate); para. 78 (advancing that "[t]he inability for individual
firms to maintain existing research and development expenditures is not indicative of injury, especially in light
of the absence of coincidence between the increase in research and development expenditures and the
increase in imports for the overall industry in 2016" (emphasis added)); and para. 79 (arguing that "the USITC
again failed to provide an explanation why it found causality even when the value of the domestic
industry's total assets 'increased overall' by the end of the POI" (emphasis added)).
404 USITC final report, (Exhibit CHN-2), p. 47.
405 Relatedly, we also reject China's argument that the USITC failed to examine the "combined weight"
of positive and negative factors in its analysis of causality. In particular, we note that China's argument is
premised on its claim that the USITC failed to provide a sufficient explanation with respect to serious injury
factors that showed a positive trend. However, as we have found in section 7.3.3.3 above, we do not consider
that China has demonstrated that the USITC's report is deficient in this regard. (China's second written
submission, paras. 125-131).
406 USITC final report, (Exhibit CHN-2), p. 23.
407 USITC final report, (Exhibit CHN-2), p. 23.

iii. alleged service and delivery issues.408
b. Factors other than imports that allegedly led to declines in domestic prices:
i. declining government incentive programmes;
ii. declining raw material costs; and
iii. the need to attain "grid parity" with other sources of electricity.409
7.192. In its final report, the USITC examined these factors but found that respondents' arguments
were not supported by the facts.410
7.4.2 Applicable legal requirements concerning the assessment of "other" factors
allegedly causing injury to the domestic industry under Article 4.2(b) of the
Agreement on Safeguards
7.193. Article 4.2(b), second sentence, of the Agreement on Safeguards reads as follows:
When factors other than increased imports are causing injury to the domestic industry
at the same time, such injury shall not be attributed to increased imports.
7.194. As such, the second sentence of Article 4.2(b) envisages that the competent authorities of
a Member are required to conduct a non -attribution analysis when factors other than increased
imports are found to be causing injury to the domestic industry simultaneously with increased
imports. Conversely, if the competent authorities determine that the "other" factors are not causing
injury at the same time as increased imports, there is no requirement to conduct a non-attribution
analysis. However, because such a determination is subject to review, it should be supported by an
explanation that is reasoned and adequate.411
7.4.3 Whether the USITC failed to ensure that the injurious effects of "other" factors were
not attributed to increased imports
7.4.3.1 Introduction
7.195. The parties disagree on whether the USITC's assessment of the allegedly injurious effects of
factors other than increased imports complied with Article 4.2(b), second sentence, of
the Agreement on Safeguards. China claims that the USITC (i) improperly dismissed the alleged
missteps by the domestic industry412; and (ii) improperly dismissed non-import factors that allegedly
caused prices of CSPV products to decline, and failed to satisfy the non -attribution requirement in
respect of the injurious effects of those factors.413 The United States asks us to reject China's claims.
The United States submits that the USITC properly found that the alleged missteps by the domestic
industry were not a cause of injury. The United States also denies that the USITC found th at
non-import factors that allegedly caused prices of CSPV products to decline were a cause of injury
to the domestic industry.414
7.196. In their arguments concerning the USITC's compliance with Article 4.2(b), second sentence,
the parties also disagree on (i) the degree of discretion the competent authorities enjoy in
discharging their non -attribution obligation under Article 4.2(b)415; (ii) whether the

408 USITC final report, (Exhibit CHN-2), pp. 50-61.
409 USITC final report, (Exhibit CHN-2), pp. 50 and 61-65.
410 USITC final report, (Exhibit CHN-2), p. 50.
411 We agree in this regard with the approach taken by the panel in Ukraine – Passenger Cars.
(Panel Report, Ukraine – Passenger Cars, para. 7.334).
412 China's first written submission, para. 182.
413 China's first written submission, heading of section III(B)(2)(b) and para. 197.
414 Unites States' first written submission, paras. 107 and 170-171.
415 While China recognizes that Article 4.2(b) does not dictate a specific methodology for conducting a
non-attribution analysis, it also refers to previous DSB reports that, according to China, clarify what the
competent authorities are required to do to comply with this obligation. (China's first written submission,

USITC's application of the "substantial cause" test sufficiently discharged the
United States' obligations under Article 4.2(b)416; and (iii) whether the USITC was required to
conduct a cumulative assessment of factors other than the increased imports that allegedly caused
injury to the domestic industry.417
7.197. We begin by considering China's claims against the USITC's analysis of the alleged missteps
by the domestic industry ( section 7.4.3.2). We then consider China's claims against the
USITC's analysis of the non-import factors that allegedly caused prices of CSPV products to decline
(section 7.4.3.3). Finally, we address any outstanding issues and conclude whether China has
established that the USITC's assessment of "other" factors allegedly causing injury to the domestic
industry did not comply with t he requirements of Article 4.2(b) of the Agreement on Safeguards
(section 7.4.3.4).
7.4.3.2 Alleged missteps by the domestic industry
7.198. During the safeguard investigation, respondents argued that missteps by the domestic
industry were a cause other than imports that explained any inj ury to the domestic industry.418 As
noted above, respondents identified three alleged missteps: (a) the alleged decision of the domestic
industry to focus on the commercial and residential segments and to avoid competing in the utility
segment; (b) alleged quality and product-type issues; and (c) alleged service and delivery issues.419
The USITC examined respondents' allegations and found that they were not supported by the facts
on the record.420
7.199. China claims that the USITC failed to adequately assess the nature and the extent of the
injurious effects of the alleged missteps by the domestic industry, and improperly dismissed these
factors.421 The United States disagrees.422
7.200. At the outset, we note that several of China's arguments criticize the manner in which the
USITC weighed evidence that conflicted with its findings concerning the alleged missteps by the
domestic industry. In a number of instances, China claims that the US ITC erred by not analysing

paras. 163-166 and 174). For its part, the United States submits that Article 4.2(b) does not specify how the
competent authorities may comply with this non-attribution obligation. (United States' first written submission,
para. 100; see also ibid. paras. 101-105; and comments on China's response to Panel question No. 10 of the
first set, para. 85). Nevertheless, the United States maintains that the USITC fully complied with its
non-attribution obligation in the present case, because the USITC correctly found that "other" factors did not
cause injury to the domestic industry, such that the non-attribution requirement under Article 4.2(b) did not
come into play. (United States' first written submission, para. 107; comments on China's response to Panel
question No. 10 of the first set, para. 85).
416 China argues that the USITC's "substantial cause" test, as applied in this case, fails to comply with
the requirement of "separating and distinguishing" the injurious effects of all "other" factors. (China's first
written submission, para. 178; see also ibid. para. 177). In response, the United States submits that "[e]ven
setting aside China's erroneous understanding of Article 4.2(b), China's argument fails because the
Commission looked individually at each of the alleged 'other factors,' and determined that it did not cause
injury to the domestic industry. Article 4.2(b) [of the Agreement on Safeguards] does not require anything
more". (United States' first written submission, para. 169 (fn omitted)).
417 China argues that the USITC was required to cumulatively assess the non-import factors that
allegedly caused prices of CSPV products to decline considering the complex interrelation between those
factors, but failed to do so. (China's first written submission, paras. 218-226; second written submission,
paras. 218-222). For its part, the United States argues that the USITC was not required to conduct a
cumulative analysis since it found that "other" factors did not cause injury to the domestic industry.
(United States' response to Panel question No. 22 of the first set, para. 62; closing statement at the
first meeting of the Panel, para. 18).
418 USITC final report, (Exhibit CHN-2), p. 50.
419 USITC final report, (Exhibit CHN-2), p. 50.
420 USITC final report, (Exhibit CHN-2), p. 61.
421 China's first written submission, para. 181.
422 Unites States' first written submission, paras. 176 and 196.

allegedly contrary evidence.423 In other instances, China claims that the USITC erred by not affording
more probative weight to allegedly contrary evidence.424
7.201. As noted in section 7.1.2 above, the Panel's role in these proceedings is to objectively assess
whether China has established that the USITC failed to provide reasoned and adequate explanations
that demonstrated complian ce with the relevant obligations under the Agreement on Safeguards.
Our role is not to conduct a de novo review of the evidence, or to substitute our judgment for that
of the USITC.425 Therefore, with respect to China's claim under Article 4.2(b), second sentence, the
relevant question is whether China has established that the USITC failed to provide reasoned and
adequate explanations demonstrating that alleged missteps by the domestic industry did not cause
injury to the domestic industry.
7.202. In this context, the simple fact that the USITC did not explicitly address certain evidence or
afford more probative weight to certain evidence does not mean that it acted inconsistently with
these principles, as any such omissions would not dispositively establish that the USITC's findings
and conclusions were unreasoned or inadequate. This is particularly the case because, when
conducting safeguard inves tigations, the competent authorities are expected to accumulate an
extensive record comprising arguments, data, and evidence from different sources, including from
parties with conflicting interests in the outcome of the investigation.426 Accordingly, to demonstrate
that the USITC's treatment of certain evidence was improper, China must explain why the treatment
of such evidence, when viewed in the context of the overall evidentiary record, demonstrates that
the USITC's findings and conclusions were unreasoned or inadequate.
7.203. We now turn to China's claims concerning the alleged missteps committed by the domestic
industry.
7.4.3.2.1 The alleged decision of the domestic industry to focus on the commercial and
residential segments and to avoid competing in the utility segment
7.4.3.2.1.1 Factual background
7.204. During the safeguard investigation, respondents argued that domestic producers focused on
the residential and commercial segments and did not seek to compete for utility sales until late in
the POI, even though the utility segment was the largest and fastest -growing segment. 427
Respondents also reported being unaware of any domestic producer that was able "to provide the
required combination of product type and demonstrated product performance" demanded by the
utility segment. 428 Respondents further alleged that the domestic industry was eithe r unable to
produce or lacked sufficient capacity to produce 72 -cell modules, which became the standard for
utility installations by 2013-2014.429
7.205. In response, the USITC observed that since 2009 there has been a shift in the distribution
of sales among the three market segments.430 In 2009, the commercial segment accounted for the
largest share of the market, followed by the residential and utility segments, whereas throughout
the POI, utilities were the largest market segment, followed by the residential and commercial

423 See, e.g. China's second written submission, paras. 161-162; response to Panel question No. 15 of
the first set, para. 122; comments on the United States' response to Panel question No. 14 of the first set,
paras. 82 and 87-89; and response to Panel question No. 13 of the second set, para. 149.
424 See, e.g. China's second written submission, paras. 163 and 173; comments on the
United States' response to Panel question No. 14 of the first set, para. 86; and response to Panel question
No. 13 of the second set, para. 145.
425 Our approach is consistent with that taken in previous dispute settlement proceedings. (See, e.g.
Appellate Body Report, US – Steel Safeguards, para. 299).
426 Indeed, Article 3.1 of the Agreement on Safeguards envisages that the investigation "shall include
reasonable public notice to all interested parties and public hearings or other appropriate means in which
importers, exporters and other interested parties could present evidence and their views, including the
opportunity to respond to the presentations of other parties and to submit their views, inter alia, as to whether
or not the application of a safeguard measure would be in the public interest".
427 USITC final report, (Exhibit CHN-2), p. 56.
428 USITC final report, (Exhibit CHN-2), pp. 56-57.
429 USITC final report, (Exhibit CHN-2), p. 60.
430 USITC final report, (Exhibit CHN-2), p. 57.

segments.431 The USITC also noted that all three market segments experienced considerable growth
during the POI.432
7.206. In this context, the USITC rejected respondents' arguments and found that:
[T]he domestic industry sold or tried to sell CSPV products to utilities throughout the
POI in addition to the residential and commercial segments, but was frequently unable
to win large bids in this segment. Moreover, the domestic industry lost market share to
imports regardless of the segment.433
[T]he evidence indicates that the domestic industry clearly sought to compete in the
large, concentrated, and price-sensitive utility market, but the large volume of imports
at low and declining prices adversely i mpacted the domestic industry's financial
performance, making it difficult for the domestic industry to increase capacity to a scale
that made it more competitive in this segment, even if it managed to develop and even
pioneer innovative products that utilities and others sought.434
7.207. As support for its finding, the USITC relied on evidence demonstrating that the domestic
industry and importers each sold CSPV products to all three market segments during the POI.435 The
USITC further explained that, although most of the domestic industry's shipments went to residential
and commercial segments, SolarWorld and Suniva demonstrated that they competed for and shipped
to the utility segment. 436 In addition, the USITC noted that the record showed that the domestic
industry sold both 60-cell and 72-cell modules throughout the POI and lost market share to imports
for both types of modules.437 It observed that SolarWorld added a 72 -cell module assembly line to
its facilities in 2016 due to increasing demand in the utility market and that Suniva devoted 45% of
its cell manufacturing capacity to 72 -cell modules to serve the commercial and "small utility "
market.438
7.4.3.2.1.2 Main arguments of the parties
7.208. China submits that the USITC failed to address the effect of the domestic industry's decision
to focus on the commercial and residential segments, rather than the utility segment. 439 According
to China, this "deliberate business choice" 440 "influenced the limited participation of the do mestic
industry in the utility segment" where demand was booming .441 China acknowledges that the
domestic industry had some capacity to supply small-scale projects in the utility segment, but states
that, as a result of its "deliberate business choice", it had no capacity to compete for the large-scale
projects, which accounted for the bulk of that segment. 442 China further argues that the lack of
competitiveness of the domestic industry in the utility segment is evidenced by the domestic
industry's importation of CSPV products to meet demand, its late investment in 72-cell module lines
(in the case of SolarWorld), and its decision not to produce cost-competitive 72-cell modules (in the
case of Suniva).443
7.209. The United States responds by arguing that the factual premise for China's claim is flawed,
since there was no decision by the domestic industry not to compete in the utility segment.444 To the
contrary, the United States argues that the USITC considered this possibility bu t found, based on
record evidence, that the domestic industry did in fact compete in the utility segment.445 In addition,

431 USITC final report, (Exhibit CHN-2), pp. 57-58.
432 USITC final report, (Exhibit CHN-2), p. 58.
433 USITC final report, (Exhibit CHN-2), p. 59.
434 USITC final report, (Exhibit CHN-2), pp. 60-61.
435 USITC final report, (Exhibit CHN-2), p. 58.
436 USITC final report, (Exhibit CHN-2), p. 59.
437 USITC final report, (Exhibit CHN-2), p. 60.
438 USITC final report, (Exhibit CHN-2), p. 60.
439 China's first written submission, para. 184.
440 China's second written submission, para. 158.
441 China's second written submission, para. 158.
442 China's first written submission, para. 186; second written submission, paras. 150-151.
443 China's second written submission, paras. 152 and 156.
444 United States' first written submission, para. 178.
445 United States' first written submission, paras. 177-179; response to Panel question No. 12 of the
first set, paras. 26-30.

the United States claims that China's argument that the domestic industry did not have capacity for
the large -scale projects fails to p roperly account for the USITC's finding that the domestic
industry's lack of capacity was a result of increased imports, rather than an independent cause of
injury.446
7.4.3.2.1.3 Evaluation of the Panel
7.210. For the reasons explained below, we are not persuaded by China's arguments.
7.211. The USITC found that the domestic industry " clearly sought to compete in the large,
concentrated, and price-sensitive utility market" based on record evidence indicating that: (a) "the
domestic industry and importers each sold CSPV products in the U.S. market to distributors ,
residential and commercial installers, and the utility segment "447; (b) the domestic industry
participated in bids in the utility segment 448; and (c) the domestic producers produced 72 -cell
modules, which became the standard for the utility installations by 2013 -2014.449 As noted above,
the USITC also situated its finding in the context of the distribution of sales among the three market
segments that had changed since 2009. 450 As we have already found in section 7.3.3.2.1.1 above,
China has not established that it was inappropriate for the USITC to rely on any of this evidence as
support for its finding that the domestic industry competed in the utility segment.
7.212. Since record evidence supported the USITC's finding that the domestic industry was present
in the utility segment, we see no reason why the USITC was required to conclude that the domestic
industry made a "deliberate business choice" to avoid competing in that segment. Accordingly, the
USITC was not obligated to consider that the domestic industry's "deliberate business choice"
constituted an "other" factor of injury.
7.213. Further, although China asserts that , due to its focus on the residential and commercial
segments, the domestic industry was not able to meaningfully compete in the utility segment, we
recall that in section 7.3.3.2.1.1 we have rejected Chi na's argument that it was inappropriate for
the USITC to find that the domestic industry competed more generally in the utility segment based
on the capacity that it had. In these circumstances, we are also not persuaded by China's argument
that the reason the domestic industry did not have sufficient capacity to compete for large-scale
projects in the utility segment was because of its business decision not to focus on that segment. In
this regard, we recall our finding in section 7.3.3.2.3.3 above that China has not demonstrated that
it was inappropriate for the USITC to find that increased imports prevented the domestic industry
from increasing capacity at a scale that would have made it more competitive in the utility segment.
Moreover, we do not consider that China has demonstrated why we should arrive at a different
conclusion in respect of its non-attribution claim on the same point.451

446 United States' first written submission, para. 181; comments on China's response to Panel question
No. 13 of the first set, para. 101.
447 USITC final report, (Exhibit CHN-2), p. 58. (fns omitted)
448 USITC final report, (Exhibit CHN-2), p. 59. In this context, we note that China has not substantiated
its argument that the USITC did not explore whether the domestic industry had submitted realistic bids.
(China's response to Panel question No. 13 of the first set, para. 100).
449 USITC final report, (Exhibit CHN-2), p. 60.
450 USITC final report, (Exhibit CHN-2), pp. 57-58.
451 We are unpersuaded by China's arguments that challenge the appropriateness of the USITC's finding
that increased imports impeded the expansion of the domestic industry in the utility segment. In particular,
contrary to China's argument, we fail to see how the fact that the domestic industry was not a major
participant of the utility segment before the POI would demonstrate that imports did not impede its expansion
in this segment, especially considering that the utility segment only grew to be the largest market segment
during the POI. (See, e.g. China's response to Panel question No. 13 of the first set, paras. 101 and 107;
and second written submission, para. 155). Relatedly, we fail to see why the fact that, at the beginning of the
POI, "the domestic industry could supply only a small fraction of total U.S. demand" would demonstrate that
the increased imports did not contribute to the domestic industry's insufficient capacity and its inability to
serve the "booming demand in the utility segment". (China's response to Panel question No. 11 of the second
set, para. 126; see also second written submission, para. 154). In addition, contrary to China's argument, we
do not consider that the USITC was required to find that imports impeded expansion planned by the domestic
industry in order to reasonably demonstrate that imports impeded the domestic industry's ability to increase its
capacity to a scale that would have made it more competitive in the utility segment. (China's response to Panel
question No. 11 of the second set, paras. 127-128). Finally, we are unpersuaded by China's contention that the

7.214. Based on the foregoing, we reject China's claim that the USITC did not appropriately address
the effect of the alleged decision of the domestic industry to focus on the commercial and residential
segments, rather than the utility segment.
7.4.3.2.2 The alleged quality and product-type issues
7.4.3.2.2.1 Factual background
7.215. During the safeguard investigation, respondents advanced that the domestically produced
CSPV products suffered from various quality and product -type issues that amounted to a separate
cause of injury. 452 In response, the USITC examined evidence concerning these issues, and
ultimately concluded that the record did not support respondents' contentions.453 The USITC made
the following subsidiary findings in this regard:
a. Regarding the range of CSPV products available from domestic sources, the USITC found
that d omestic producers pioneered certain CSPV technologies and continued to
manufacture leading -edge products. 454 While certain foreign producers may have
produced CSPV products that were unavailable from domestic sources 455, these products
accounted for only a small share of the US market and there was more overlap between
domestic and imported specialized CSPV products than acknowledged by respondents. 456
The domestic industry supplied a wide variety of monocrystalline and multicrystalline CSPV
products that overlapped with imports. 457 Moreover, despite the existence of some
variations in product offerings, all CSPV products converted sunlight into electricity, and
CSPV products made from different technologies competed based on electrical output and
cost.458
b. Regarding the quality of domestic CSPV products, the USITC found that (a) SolarWorld
reported that it was the first to offer a 25 -year warranty, a 30-year warranty, and a
20-year workmanship warranty, which it was able to do because of its low warranty claim
rate459; ( b) most interested parties reported that domestic CSPV products were
interchangeable with imports; ( c) independent research firm EuPD Rese arch ranked
SolarWorld as the most purchased brand by US installers; and ( d) most purchasers

USITC should have assessed the domestic industry's "sudden decision to increase capacity in the utility
segment in light of increased demand at the end of the POI" and whether this decision was "commensurate
and adequate in light of the start-up costs, and different technology involved". While China claims that its
argument "is based on the facts set forth in the USITC Final Staff Report showing that the financial
performance of the domestic industry decreased at the same time it decided to expand its capacities", it does
not cite that report in this context. As a result, we do not consider China's argument to be sufficiently
substantiated. (China's response to Panel question No. 11 of the second set, para. 128; request for interim
review, para. 50).
452 USITC final report, (Exhibit CHN-2), p. 50.
453 USITC final report, (Exhibit CHN-2), p. 61.
454 USITC final report, (Exhibit CHN-2), pp. 51-52 and fns 290-291.
455 In particular, the USITC noted that (a) several purchasers stated that the higher efficiency modules
are manufactured primarily in Asia and are not available from any US producers; (b) six purchasers reported
that multicrystalline PERC CSPV products are primarily only available in Chinese Taipei, Korea, Japan, China,
and Malaysia; (c) two purchasers stated that n-type monocrystalline CSPV products are only available from LG
Electronics in Korea; and (d) three importers and one purchaser reported that interdigitated back contact solar
CSPV products are not manufactured in the United States and are not interchangeable with front-contact CSPV
products. (USITC final report, (Exhibit CHN-2), fn 295).
456 USITC final report, (Exhibit CHN-2), p. 52. For example, the USITC indicated that as of 2016, n-type
monocrystalline cells accounted for less than 5% of the global CSPV cell production and there was a relatively
small number of manufacturers of these products, including LG, Panasonic, SunPower, and Yingli. (USITC final
report, (Exhibit CHN-2), pp. 52-53). In addition, the USITC noted that, contrary to respondents' assertion,
there was domestic production of n-type monocrystalline CSPV products in the United States during the POI.
(USITC final report, (Exhibit CHN-2), p. 53).
457 USITC final report, (Exhibit CHN-2), pp. 53-54.
458 USITC final report, (Exhibit CHN-2), pp. 54-55.
459 The USITC also found that Suniva reported that its warranty claim rate was below 0.05%. (USITC
final report, (Exhibit CHN-2), fn 308).

reported that no domestic or foreign supplier had failed in its attempt to qualify product
or lost its approved status since 2012.460
c. Regarding the "bankability" of domestic producers461, the USITC found that (a) purchasers
of CSPV products did not attach great importance to bankability 462; and
(b) petitioners' bankability problems further confirmed that the serious injury was
substantially caused by increased imports.463
7.4.3.2.2.2 Main arguments of the parties
7.216. China submits that the USITC failed to adequately assess the domestic industry's quality and
product-type issues and their effect on the domestic industry.
7.217. First, China claims that, despite the arguments, facts, and data p resented by respondents,
the USITC failed to adequately explain whether the domestic industry's lack of prioritization of
technological development and scale adversely impacted its financial performance.464 In this context,
China contends that the USITC uncritically "cited information provided and arguments made by the
domestic producers" .465 China also argues that, although the availability of innovative products
offered only by foreign suppliers was an important factor in purchasing decisions, the USITC did not
specify which products were unavailable from domestic sources and did not assess the impact of the
lack of availability of those products.466
7.218. Second, China submits that the USITC failed to appropriately analyse product quality. As
support for its argument, China refers to documented complaints that allegedly show that domestic
CSPV products had quality issues. 467 China further contends that, while the USITC acknowledged
that "19 US purchasers reported that a domestic supplier had failed in its attempt to provide a quality
product or had lost its approved status", it failed to analyse this issue in sufficient detail. 468 China
claims that the USITC provided no analysis of the relative size of the 19 purchasers that reported
domestic products having quality issues. 469 China posits that these 19 purchasers may have
accounted "for the majority of purchased CSPV products during the POI".470 In addition, China refers
to record evidence that, in its view, shows that certain domestic producers failed to qualify some of
their products, and that one domestic producer was disqualified by one purchaser . China stresses

460 USITC final report, (Exhibit CHN-2), p. 55 and fns 308-311. In addition, the USITC found that 19 of
the 95 responding purchasers reported that a domestic or foreign supplier had failed in its attempt to qualify
product or had lost its approved status since 2012 for reasons such as customer service, financial strength,
broken commitments, cell cracks, use of thinner frame, quality control, bankability, failed audit, efficiency,
delivery rates, and prefer a local manufacturer. Three purchasers stated that both SolarWorld and Yingli had
lost their approved status due to financial distress. (USITC final report, (Exhibit CHN-2), p. 55 and fn 311).
461 The USITC noted that the industry does not have a standard definition of bankability but "[a]t a
minimum, bankability encompasses both the financial viability of a supplier and the product's performance
reliability, especially in the CSPV industry where manufacturers provide warranties of 25 years or longer on
their products; bankability also allows installing firms to apply for non-recourse loans for their solar
development projects". (USITC final report, (Exhibit CHN-2), p. 55 and fn 313).
462 The USITC explained that (a) purchasers did not identify "bankability" as one of their "top three"
purchasing factors (bankability was rather a "distant fourth" factor in purchasing decisions); (b) only three of
56 responding importers indicated that purchasers chose module suppliers with high bankability that are listed
as Tier 1 suppliers; and (c) Bloomberg cautioned banks and module producers against relying heavily on its
list. (USITC final report, (Exhibit CHN-2), pp. 55-56 and fn 315).
463 The USITC explained that (a) SolarWorld qualified as a Bloomberg Tier 1 supplier in 2014-2016, and
through February 2017; its subsequent loss of bankability was a result of serious injury caused by increased
imports; (b) Suniva reported that "the unrelenting pressure of low-priced imports" forced it out of the utility
segment and necessitated that the firm shift its focus to projects that did not rely on non-recourse loan
funding, which implicated the firm's ability to achieve Tier 1 status. (USITC final report, (Exhibit CHN-2), p. 56
and fn 319).
464 China's first written submission, paras. 189-190. See also China's second written submission,
para. 164.
465 China's first written submission, paras. 189-190.
466 China's response to Panel question No. 15 of the first set, paras. 116-117.
467 China's first written submission, para 192; response to Panel question No. 15 of the first set,
para. 125.
468 China's first written submission, para. 193; second written submission, paras. 162-163.
469 China's first written submission, para. 193.
470 China's first written submission, para. 193.

that these facts were not sufficiently accounted for by the USITC .471 More generally, China argues
that the USITC's analysis of product quality was deficient because questionnaire responses reported
that this factor was important in purchasing decisions.472
7.219. Third, China submits that the USITC's analysis of bankability was insufficient because it
ignored petitioners' issues with bankability and unreasonably characterized "bankability " as a
"distant fourth" factor in purchasing decisions. 473 China stresses the importance of bankability in
obtaining funding for large-scale projects, since some of the purchasers would not work with vendors
that were not categorized as Tier 1 suppliers. Ch ina further contends that the poor bankability of
domestic producers negatively impacted their competitiveness in the utility segment.474
7.220. In response to these claims, the United States submits that the USITC reasonably found that
record evidence does not support respondents' allegations.
7.221. First, the United States argues that the USITC evaluated respondents' arguments concerning
the alleged failure of the domestic industry to adopt technological improvements and innovations,
and found that record evidence did not support these allegations. 475 Relatedly, the United States
submits that the USITC explained that the types of products only available from non -US sources
accounted for only a small share of the US market and that, in any event, there was more overlap
between domestic and imported specialized CSPV products than acknowledged by respondents.476
7.222. Second, regarding China's reliance on the fact that 19 responding purchasers referred to
producers having quality issues, the United States notes that the USITC found that those purchasers
actually reported that a "domestic or foreign" supplier had failed in its attempt to qualify product or
had lost its approved status. 477 In its view, since this finding concerns both foreign and domestic
producers of CSPV products, it does not support China's assertion that domestic CSPV products were
inferior.478 Further, the United States argues that the domestic industry's ability to provide quality
products is corroborated by (a) the USITC's finding concerning interchangeability between domestic
and imported CSPV products479; and (b) the evidence indicating that SolarWorld was ranked by EuPD
Research as the most purchased brand by US installers and that petitioners' warranty claims were
low.480
7.223. Third, contrary to China's claims, the United States argues that the USITC adequately
rejected respondents' argument concerning bankability, on the basis that bankability was a "distant"
fourth factor in purchasing decisions, and that SolarWorld's loss of bankability resulted from serious
injury caused by increased imports.481
7.4.3.2.2.3 Evaluation of the Panel
7.224. For the reasons explained below, we do not consider that China has established that the
USITC inappropriately rejected respondents' arguments that domestically produced CSPV products
suffered from quality and product-type issues that amounted to a separate cause of injury.
7.225. First, we do not consider that China has demonstrated that the USITC failed to adequately
analyse the alleged effect of the domestic industry's failure to prioritize technological development
and scale.482 To the contrary, the USITC considered respondents' arguments on this point and, based

471 China's second written submission, para. 163.
472 China's second written submission, para 160.
473 China's response to Panel question No. 15 of the first set, paras. 125-126; second written
submission, paras. 165-166.
474 China's second written submission, para. 165.
475 United States' first written submission, paras. 183-187.
476 United States' first written submission, paras. 183-186; comments on China's response to Panel
question No. 15 of the first set, paras. 109 and 111-112.
477 United States' first written submission, para. 195.
478 United States' first written submission, para. 195.
479 United States' first written submission, para. 192.
480 United States' first written submission, para. 193; comments on China's response to Panel question
No. 15 of the first set, para. 117.
481 United States' comments on China's response to Panel question No. 15 of the first set,
paras. 127-130 and fn 236.
482 China's first written submission, paras. 189-190.

on record evidence, found that the range of products that the domestic industry could manufacture
did not constitute an "other" factor of injury. 483 Moreover, even if China were correct that the
respondents submitted evidence to the USITC suggesting that certain domestic CSPV producers did
not adopt particular technological innovations 484, we do not consider that this would d emonstrate
that the USITC was precluded from relying on evidence submitted by domestic producers to find
that the domestic industry " continued to innovate, develop, and manufacture leading -edge
products".485
7.226. Relatedly, contrary to China's position, the USITC explicitly recognized that certain types of
products were only available from foreign sources. 486 However, it also found that these products
accounted only for a small share of all product offerings487, and that there was more overlap between
domestic and imported specialized products than acknowledged by respondents. 488 The USITC
further explained that, notwithstanding the existence of some variations in domestic and imported
product types, all CSPV products converted sunlight into electricity, and CSPV products made from
different technologies competed with each other on the basis of electrical output and cost. 489
In addition, as we have already observed, only a few purchasers reported that they did not purchase
US-origin CSPV products because o f reasons that included "limited availability". 490 Moreover, we
recall that the USITC found domestic and imported products were "highly substitutable", and we
have rejected China's claim against this finding.491 Based on this evidence, we do not consider that
China has demonstrated that it was inappropriate for the USITC to find that any limitation in the
range of products offered by the domestic industry was not an "other" cause of injury.
7.227. Second, on quality, Ch ina asserts that the USITC's finding was flawed because it failed to
properly analyse the fact that 19 (out of 95) US purchasers reported that a domestic supplier failed
"to provide a quality product" or lost their approved status.492 China's characterization of the record
is inaccurate. As observed by the United States, the USITC actually found that 19 of 95 responding
purchasers reported that "a domestic or foreign supplier had failed in its attempt to qualify product
or had lost its approved status since 2012".493 Thus, this statement does not demonstrate that
qualification issues were limited to domestic producers, or that domestic products were of an inferior
quality to imported products. In these circumstances, we see no need for the USITC to have analysed
this issue in greater detail. Similarly, contrary to China's argument, we do not consider evidence
demonstrating the general importance of product quality to purchasers of CSPV products establishes
that the USITC was required to conduct a more detailed assessment of whether domestic CSPV
products were inferior in terms of their quality.
7.228. China also argues that the USITC failed to test the statements concerning (a) the low
warranty claim rates of petitioners, and (b) the ranking of SolarWorld by the independent research
firm EuPD Research against contrary record evidence.494 In our view, however, the contrary evidence
to which China refers does not undermine the probative weight of the evidence that supported the

483 USITC final report, (Exhibit CHN-2), pp. 50-55.
484 In particular, China refers to the affidavit of Craig Cornelius of NRG (one of the largest power
producers in the United States), which claimed that Suniva failed to adopt certain technological innovations
(improvement in mono wafer pulling, the transition to diamond wire saws, and the change to PERC cell
architectures). According to Mr Cornelius, these innovations were relevant for achieving competitiveness in the
utility segment, which was particularly cost-sensitive. (Affidavit of Craig Cornelius, NRG, (Exhibit CHN-157),
para. 12).
485 USITC final report, (Exhibit CHN-2), fns 290-291.
486 USITC final report, (Exhibit CHN-2), pp. 52-53 and fn 295. According to the USITC, only one-third of
purchasers (29 of 97) reported that certain types of products were only available from a single source. For
example, several purchasers stated that the higher efficiency modules are manufactured primarily in Asia and
are not available from any US producers. Six purchasers reported that multicrystalline PERC cells are primarily
only available in Chinese Taipei, Korea, Japan, China, and Malaysia. Two purchasers stated that N-type
monocrystalline cells are only available from LG in Korea. (USITC final staff report, (Exhibit CHN-3), p. V-14).
487 USITC final report, (Exhibit CHN-2), p. 52.
488 USITC final report, (Exhibit CHN-2), p. 52.
489 USITC final report, (Exhibit CHN-2), pp. 54-55.
490 See section 7.3.3.2.1.2 above.
491 See section 7.3.3.2.1.2 above.
492 China's first written submission, para. 193.
493 USITC final report, (Exhibit CHN-2), fn 311; USITC final staff report, (Exhibit CHN-3), p. V-15.
(emphasis added)
494 China's comments on the United States' response to Panel question No. 14 of the first set,
paras. 88-89.

USITC's finding.495 Furthermore, even if certain record evidence were to indicate that the domestic
industry did not have a perfect track record in terms of quality, we are not persuaded that any
limited evidence to this effect would undermine the evidence relied upon by the USITC to find that
the domestic industry was able to supply quality products. We recall again that the USITC found that
domestic and imported products were "highly substitutable" and have rejected China's claim against
this finding.496 The fact that any quality issues were not sufficient to prevent domestic and imported
products from being substitutable supports the USITC's view that such quality issues were not a
separate cause of injury.
7.229. As a final point on quality, we are unpersuaded by China's argument that evidence
demonstrating instances where domestic producers relied on imported products to fulfil orders shows
that the domestic industry's products, overall, had "technical and quality shortcomings". 497 In our
view, s uch evidence does not demonstrate that it was inappropriate for the USITC to reject
respondents' argument that the domestic industry was unable to provide quality products – a finding
that it based on extensive record evidence, as noted above.498
7.230. Third, with r espect to bankability, we are not persuaded by China's claim that the USITC
failed to sufficiently assess respondents' claims. As an initial matter, we agree with the United States
that it was not inappropriate for the USITC to find that bankability was no t a significant feature in
the competition between domestic and imported CSPV products. The record indicates that
purchasers did not report bankability to be of significant importance in their purchasing decisions499
and only a few importers reported the im portance of this factor. 500 In any event, the USITC
accounted for bankability in determining that domestic and imported CSPV products were
interchangeable501, which supported its finding that domestic and imported products were "highly
substitutable".502 The USITC also considered bankability problems experienced by the domestic

495 Specifically, China's argument that the USITC failed to test the evidence concerning the ranking of
SolarWorld against contrary evidence is mainly based on evidence that Suniva's products performed poorly.
(China's comments on the United States' response to Panel question No. 14 of the first set, para. 88 (referring
to SEIA prehearing brief, (Exhibit CHN-20), pp. 88 and 90; Affidavit of Richard Matsui, kWh Analytics,
(Exhibit CHN-101); and Affidavit of Laura E. Stern, Nautilus Solar, (Exhibit CHN-99))). In this regard, we are
not persuaded that this evidence necessarily vitiates the USITC's finding that SolarWorld was ranked by the
independent research firm EuPD Research as the most purchased brand by US installers. In addition, China
argues that since "[i]nstallers are not active in the utility segment, which is served instead by developers",
EuPD Research "does not provide any information about the perception of the domestic CSPV products in the
wider market". (China's opening statement at the second meeting of the Panel, para. 44). We disagree.
Considering that installers represented one of the channels of distribution for CSPV products, we do not
consider that it was inappropriate for the USITC to rely on the ranking of SolarWorld by the independent
research firm EuPD Research (which ranked SolarWorld as the brand most purchased by US installers) as
further support for its finding that quality was not an "other" factor of injury. (USITC final staff report,
(Exhibit CHN-3), pp. I-28-I-30).
China also submits that the USITC's reference to the warranties offered by the petitioners was not
tested against contrary evidence demonstrating that: (a) Suniva's warranties had multiple constraints;
(b) purchasers reported "warranty backstop protection" as a non-price reason for purchasing imported
products; (c) one purchaser reported that the petitioners were unable to meet its criteria (one of which was
warranty); and (d) since some purchasers in the utility segment did not buy the domestic products, there was
no need to enforce warranty for domestic products. (China's comments on the United States' response to Panel
question No. 14 of the first set, para. 89). In our view, this evidence does not conflict with the USITC's finding
that petitioners' warranty claim rates were low and that SolarWorld was first to offer long-term warranties.
Moreover, we do not consider that the record evidence suggesting that the domestic industry did not have a
perfect track record in terms of product quality dispositively establishes that the domestic industry had quality
problems that the USITC was required to treat as an "other" cause of injury.
496 See section 7.3.3.2.1.2 above.
497 China's second written submission, para. 161.
498 See section 7.4.3.2.2.1 above. See also USITC final report, (Exhibit CHN-2), p. 55.
499 According to the USITC final staff report, only 15 purchasers reported that bankability was an
important factor in purchasing decisions, while 81 purchasers identified price as an important factor,
77 purchasers – quality/performance, and 42 purchasers – availability. (USITC final staff report,
(Exhibit CHN-3), table V-4).
500 According to the USITC final staff report, only three importers stated that (a) developers, installers,
and project owners chose module suppliers with high bankability that are listed as Tier 1 by Bloomberg and
that funding for projects using low Tier modules are often rejected by financiers; and (b) performance data and
bankability of the CSPV products can limit the degree of interchangeability. (USITC final staff report,
(Exhibit CHN-3), pp. V-16-V-17).
501 See section 7.3.3.2.1.2 above.
502 See section 7.3.3.2.1.2 above.

industry and linked those problems to the injurious effects of increased imports, particularly the
negative financial consequences of the adverse price conditions that the domestic indu stry
experienced over the POI.503
7.231. For the above reasons, we reject China's claim that the USITC failed to properly assess the
alleged quality and product-type issues of the domestic industry.
7.4.3.2.3 The alleged service and delivery issues of the domestic industry
7.4.3.2.3.1 Factual background
7.232. During the safeguard investigation, respondents argued that "the domestic industry had
delivery and service issues or failed to compete for certain sales".504 Rejecting this claim, the USITC
noted that "[p]etitioners responded to these allegations, often with detailed explanations", and found
that "[t]he evidence simply does not support the sort of widespread problems alleged by
respondents".505 As support for its finding , the USITC referred to arguments of both respondents
and petitioners and also described certain purchaser complaints and petitioner responses.506
7.4.3.2.3.2 Main arguments of the parties
7.233. China argues that the USITC dismissed serious service and delivery problems of the domestic
industry on the basis of the petitioners' rebuttals, without considering conflicting arguments. 507
In this regard, China contends that the USITC did not discuss multiple arguments made by
purchasers and only addressed a handful of them in a dismissive manner.508 In its view, the USITC
had to do more than to merely acknowledge certain arguments and cite counterarguments made by
the parties .509 China also contends that the USITC's reliance on the petitioners' rebuttals was
inadequate because (a) they contain significant portions of redacted information, and do not permit
a review of whether the USITC considered all the evidence presented and whether petitioners
rebutted each purchaser complaint510; and (b) they do not address the conflicting record evidence
demonstrating the widespread nature of the purchaser complaints against the domestic industry.511
Finally, China claims that the USITC's analysis is deficient because the references to the record in
the USITC final report are incomplete and they omit multiple complai nts and
petitioners' counterarguments.512
7.234. For its part, the United States submits that the USITC appropriately found that record
evidence does not support respondents' allegations that the domestic industry suffered from
widespread delivery and service prob lems.513 In particular, the United States argues that the
USITC (a) considered respondent arguments and petitioner counterarguments; (b) found that
petitioners provided credible documentation refuting respondents' allegations; and (c) by way of

503 The USITC noted that SolarWorld's "subsequent loss of bankability provides added confirmation of
the serious injury substantially caused by increased imports" and that "Suniva reported that 'the unrelenting
pressure of low-priced imports' forced it out of the utility segment and necessitated that the firm shift its focus
to projects that did not rely on such non-recourse loan funding, which implicated the firm's ability to achieve
Tier 1 status". (USITC final report, (Exhibit CHN-2), p. 56 and fn 319). In addition, in the context of its serious
injury determination, the USITC indicated that the domestic industry reported a rejection of bank loans,
lowering of credit ratings, inability to service debt, and lowered bankability due to imports. (USITC final report,
(Exhibit CHN-2), p. 36).
504 USITC final report, (Exhibit CHN-2), p. 61.
505 USITC final report, (Exhibit CHN-2), p. 61.
506 USITC final report, (Exhibit CHN-2), fns 354-356.
507 China's second written submission, heading to section III(B)(3), and para. 167.
508 China's response to Panel question No. 12 of the second set, para. 139.
509 China's first written submission, para. 191; comments on the United States' response to Panel
question No. 14 of the first set, para. 79.
510 China's second written submission, paras. 169-170; response to Panel question No. 12 of the second
set, para. 139.
511 China's second written submission, paras. 170-172 (referring to Supporting footnotes regarding
purchasers complaints on service and delivery issues, (Exhibit CHN-170)); response to Panel question No. 13
of the second set, paras. 145-149 and 165. See also China's second written submission, para. 173.
512 China's comments on the United States' response to Panel question No. 14 of the first set, para. 80.
513 United States' first written submission, paras. 188-191; comments on China's response to Panel
question No. 15 of the first set, paras. 121-126; and response to Panel question No. 13 of the second set,
paras. 24-28.

example, addressed the testimony of certain purchasers. 514 Further, the United States maintains
that, against the backdrop of other evidence on the record, respondents' allegations consisted of
criticisms from only a handful of purchasers. 515 Relatedly, the United States submits that
the Agreement on Safeguards does not require the competent authorities to address every assertion
made by every party 516, and that the mere presence of redacted information does not establish a
failure to provide findings and reasoned conclusions, as required under Article 3.1 of the Agreement
on Safeguards.517
7.4.3.2.3.3 Evaluation of the Panel
7.235. Overall, we do not consider that China has demonstrated that it was inappropriate for the
USITC to find that the domestic industry did not suffer from widespread service and delivery issues.
China has therefore failed to establish that the USITC was required to treat this factor as an "other"
cause of injury.
7.236. As an initial matter, we note , in line with the United States' argument, that the Agreement
on Safeguards does not obligate the competent authorities of a Member to explicitly address in their
report every assertion made by interested parties during the investigation. 518 We also agree with
the United States that the redaction of confidential information does not necessarily establish a
failure of the competent authorities to provide findings and reasoned conclusions within the meaning
of Article 3.1 of the Agreement on Safeguards. 519 In this context, the relevant question for our
purposes is whether China has established that the USITC failed to appropriately demo nstrate that
the domestic industry did not suffer from "widespread" service and delivery issues.
7.237. In its final report, when rejecting respondents' claim concerning the alleged service and
delivery issues of the domestic industry, the USITC noted that the petitioners responded to
respondents' allegations, "often with detailed explanations" 520, and concluded that "[t]he evidence
simply does not support the sort of widespread problems alleged by respondents". 521 As such, we
do not consider that China is correct to argue that the USITC simply accepted petitioner arguments
without considering conflicting evidence. To the contrary, it appears implicit in its finding that the
USITC weighed evidence and arguments of both respondents and petitioners and ultimately
determined petitioners' submissions to convincingly demonstrate that the domestic industry did not
suffer from "widespread" service and delivery issues.
7.238. We further observe that, although the petitioners addressed a significant number of
respondents' allegations concerning service and delivery issues 522, they did not address every
allegation.523 Moreover, in our view, at least one petitioner response does not persuasively address

514 United States' first written submission, paras. 188-191; response to Panel question No. 14 of the
first set, paras. 31-35.
515 United States' response to Panel question No. 13 of the second set, paras. 27-28; second written
submission, paras. 122-123. In particular, the United States refers to record evidence that (a) domestic and
imported products were substitutable; (b) the vast majority of purchasers reported that no domestic supplier
had failed in its attempt to qualify product or had lost its approved status in 2012; and (c) the sheer number of
purchasers did not report having delivery or service issues with domestic producers.
516 United States' second written submission, paras. 103-104 and 106-107.
517 United States' second written submission, para. 105.
518 See, e.g. United States' second written submission, para. 103.
In this context, we do not agree with China that it was inappropriate for the USITC to summarize the
parties' arguments in its report and provide certain complains and rebuttals thereto as examples.
(China's comments on the United States' response to Panel question No. 14 of the first set, para. 80).
519 United States' second written submission, para. 105.
520 USITC final report, (Exhibit CHN-2), p. 61.
521 USITC final report, (Exhibit CHN-2), p. 61.
522 Although certain explanations and underlying evidence submitted by the petitioners are redacted,
certain of the petitioners' responses to purchasers' complaints are available in non-confidential versions of their
posthearing briefs. (SolarWorld's posthearing injury brief (Exhibit USA-16), exhibit 1, pp. 5-21; Suniva's
posthearing injury brief, (Exhibit USA-17), exhibit 9, pp. 4-8). As such, we do not agree with China's argument
that the confidentiality of this information demonstrates that the USITC's determination concerning alleged
service and delivery issues of the domestic industry is not reasoned and adequate. (China's second written
submission, para. 169).
523 For example, we agree with China that petitioners did not respond to purchaser complaints contained
in the following affidavits: Affidavit of Jay Miles, Russell Pacific, (Exhibit CHN-69); Affidavit of Kenny Hughes,
Radiance Solar, (Exhibit CHN-98); Affidavit of Laura E. Stern, Nautilus Solar, (Exhibit CHN-99); Affidavit of

the conflicting evidence submitted by respondents. 524 Nonetheless, regardless of these
shortcomings, we consider that petitioners' responses overall provided an appropriate basis for the
USITC to conclude that the domestic industry did not suffer from "widespread" service and delivery
issues.
7.239. In this regard, we agree with the United States that the number of purchasers that submitted
questionnaire responses without reporting service and delivery issues fa r exceeded the handful of
complaints to which China refers. 525 Moreover, while China advances a number of arguments
purporting to demonstrate that the complaints submitted were significant, we do not consider that
these arguments contradict the USITC's finding that service and delivery issues were not
"widespread".526 As such, even if the purchasers to which China refers had credible service and
delivery issues with domestic products, China has not demonstrated that the USITC was precluded
from relying on other record evidence to find that the domestic industry did not have widespread
service and delivery issues. 527 The mere presence of conflicting evidence on the record does not
demonstrate that the USITC's finding was unreasoned and inadequate, or that it should have treated
service and delivery issues as an "other" factor of injury.
7.240. Based on the foregoing, we reject China's claim that the USITC improperly dismissed
respondents' arguments concerning the alleged service and delivery issues of the domestic industry.
7.4.3.3 Non-import factors that allegedly caused prices of CSPV products to decline
7.241. During the safeguard investigation, respondents argued that factors other than imports,
namely declining government incentive programmes, declining raw material costs, and the need to

Zaid Ashai, Nexamp, (Exhibit CHN-100); and Affidavit of George W. Hershman, Swinerton Renewable Energy,
(Exhibit CHN-104).
524 In particular, we observe that Suniva's response to the complaint of California Solar Systems does
not appear convincing in light of the conflicting evidence on the record. While Suniva indicated that it "can find
no record of any of its distributors in Southern California issuing a warranty claim, or even a comment, on any
transaction with California Solar Systems", testimony from California Solar Systems suggests otherwise.
(Supporting footnotes regarding purchasers complaints on service and delivery issues, (Exhibit CHN-170)).
525 Specifically, we note that the USITC received questionnaire responses from 106 purchasers, most of
which did not report any service and delivery issues of the domestic industry during the safeguard
investigation. In addition, SolarWorld testified that it works with nearly 5,000 solar installers. Of those 349 are
authorized installers and 36 have been designated as platinum installers. (Transcript of the USITC injury
hearing, (Exhibit CHN-9), p. 107). Moreover, Suniva testified that it "had approximately 340 distinct customers
who placed thousands of purchase orders". (Suniva's posthearing injury brief, (Exhibit USA-17), exhibit 9,
p. 8).
526 In particular, we do not agree with China's arguments that the fact that complaining purchasers were
"some of the largest" and that the complaints addressed "different competitiveness aspects" suggests that the
domestic industry had "widespread" service and delivery issues. (China's response to Panel question No. 13 of
the second set, paras. 145-148). Moreover, we note that petitioners appear to have responded to the
complaints of the purchasers that China defines to be "some of the largest" (i.e. NEXTracker, DEPCOM,
California Solar Systems, Borrego, NRG Energy, and Sunrun). (SolarWorld's posthearing injury brief,
(Exhibit USA-16), exhibit 1, pp. 5-21; Suniva's posthearing injury brief, (Exhibit USA-17), exhibit 9, pp. 4-8).
Relatedly, we agree with the United States that China speculates by submitting that "the fact that 7 purchasers
explicitly complained during the course of the public hearing or in an affidavit serving as evidence to a written
submission, does not mean that other purchasers did not have similar concerns regarding quality and service
issues". (China's response to Panel question No. 13 of the second set, para. 148). China also argues that "the
fact that 42 out of these 106 purchasers reported availability concerns, 9 cited delivery time, 6 cited
relationship with supplier/contract, and 5 cited customer supports, was representative that over half of the
purchasers from different market segments expressed concerns on service and delivery issues".
(China's response to Panel question No. 13 of the second set, para. 165). We agree with the United States that
China's argument is misleading. In line with the United States' observation, we note that, while China did not
provide any support for this assertion, it appears to be referring to table V-4 of the USITC final staff report.
However, that table represents only purchasers' ranking of factors used in their purchasing decisions, and has
nothing to do with the alleged service and delivery issues of the domestic industry.
527 In addition, China refers to record evidence demonstrating that (a) four domestic producers reported
"labor problems or shortages" as a factor causing injury; and (b) two domestic producers reported "production
problems" as a factor causing injury as support to its argument that service and delivery issues was a factor of
injury. (China's second written submission, para. 173 (referring to USITC final staff report, (Exhibit CHN-3),
table F-2)). However, we do not think that this record evidence demonstrates that the domestic industry
suffered from service and delivery issues.

attain "grid parity" with other sources of electricity, "explain any declines in prices of CSPV products
and the condition of the domestic industry".528 The USITC rejected these arguments.529
7.242. In its first written submission, China asserts that the USITC acknowledged that these factors
had some injurious effect on the domestic industry, by causing price declines or negatively impacting
demand for CSPV products. China claims that th e USITC failed to ensure that the injurious effects
of those factors were not attributed to increased imports.530 The United States responds by arguing
that, contrary to China's characterization, the USITC found that these factors did not cause injury to
the domestic industry, and, therefore, there was no injury that the USITC might have erroneously
attributed to increased imports. 531 In its subsequent submissions, China clarifies that the USITC
improperly dismissed these factors, and maintains its position that the USITC failed to evaluate the
nature and extent of the injurious effect that the USITC accepted these factors to have.532
7.243. In this context, China's claims raise two primary issues: (a) whether the USITC improperly
dismissed the non -import factors that allegedly caused prices of CSPV products to decline; and
(b) whether the USITC failed to satisfy the non -attribution requirement in respect of any injurious
effect of these factors. For the reasons explained below, we do not consider that the USITC accepted
that these factors caused injury to the domestic industry. Nor do we consider that China has
demonstrated that the USITC improperly dismissed these factors. On this basis, we also disagree
with China that the USITC failed to ensure that the injurious effect of these factors was not attributed
to increased imports.
7.4.3.3.1 Changes in availability of government incentive programmes
7.4.3.3.1.1 Factual background
7.244. In the safeguard investigation, respondents argued that declin ing government incentive
programmes was one of the factors other than imports that explained "any declines in prices of CSPV
products and the condition of the domestic industry".533
7.245. In response, the USITC acknowledged that changes in the availability and the scope of
government incentives continued to affect the price of and demand for CSPV products, but found
that changes in government incentive programmes did not explain the condition of the domestic
industry.534 The USITC made the following subsidiary findings in this regard:
a. Government incentive pro grammes influence the price of renewable energy, thereby
stimulating its demand and assisting developers of renewable energy to achieve sufficient
economies of scale to become more competitive with conventional energy sources. These
programmes benefit systems owners, and are typically not directed at producers of CSPV
products. These incentives and their benefits were designed to decline over time, with the
expectation that the cost to generate solar electricity would also fall.535
b. Over the POI, some government incentives expired, while others continued.536
c. Most firms reported that the availability of these incentives led to a decrease in the price
of solar electricity. The existence of these incentive programmes made CSPV products
more cost-competitive with other sources of electricity.537

528 USITC final report, (Exhibit CHN-2), p. 61.
529 USITC final report, (Exhibit CHN-2), pp. 61-65.
530 China's first written submission, paras. 196-198.
531 Unites States' first written submission, paras. 171 and 174-175.
533 USITC final report, (Exhibit CHN-2), p. 61.
534 USITC final report, (Exhibit CHN-2), pp. 61-62.
535 USITC final report, (Exhibit CHN-2), p. 62.
536 USITC final report, (Exhibit CHN-2), p. 62. The USITC referred in its final report to the extension of
the Federal Investment Tax Credit (FITC), expirations of the Advanced Energy Manufacturing Tax credit, the
US Department of Energy's Section 1705 Loan Guarantee programme, the US Treasury Department's cash
grant programme under Section 1603 of the Recovery and Reinvestment Tax Act and continuation of the
US Department of Energy's SunShot Initiative. (USITC final report, (Exhibit CHN-2), fn 259 and pp. 62-63).
537 USITC final report, (Exhibit CHN-2), p. 63.

d. Any decline in government incentives did not result in a decline in US consumption of CSPV
products.538
i. According to most questionnaire respondents, changes to Federal incentive
programmes did not change the demand for CSPV products; those that reported an
increase in demand for CSPV products identified the level of Federal incentives as the
reason for the increase, noting the extension of the Federal Investment Tax Credit
(FITC). A plurality of firms reported that the demand for CSPV products increased due
to the availability of state and local incentives.539
ii. Between 2015 and 2016, US installation of on -grid photovoltaic systems (which
included thin film) increased 97%. This growth, primarily in the utility segment, was
driven by the anticipated expiration of the FITC at the end of 2016.540
iii. Demand for CSPV products continued to experience robust growth throughout the POI,
including in states most affected by changes in incentive programmes, such as
California. Indeed, in 2016, solar power was the largest source of new electric
generating capacity, accounting for 39% of all new electric generating capacity
installed in the United States.541
7.4.3.3.1.2 Main arguments of the parties
7.246. China argues that the USITC improperly dismissed the decline in government incentive
programmes and failed to satisfy the non-attribution requirement in respect of the injury caused by
this factor.542 In particular, China argues that the USITC failed to conduct a detailed analysis of the
government incentive programmes that were terminated or reduced , and the impact of such
terminations or decline on the domestic industry, and particularly, on prices of CSPV products.543 In
its view, the USITC's failure to conduct such analysis was problematic, since any decline in incentives
would affect the cost-sensitiveness of system users and would, as a result, force CSPV producers to
offer lower prices to remain competitive.544 In addition, China submits that the USITC's focus on the
growing demand for CSPV p roducts to dismiss the impact of declines in government incentive
programmes on the domestic industry was inadequate.545 Specifically, China argues that the USITC
failed to consider that (a) the major incentive programme (i.e . the FITC) contributed to growth in
demand primarily in the utility segment (where the domestic industry did not focus) , while other
incentives that were directed to the residential and commercial segments (where the domestic
industry focused) or targeted the domestic industry itself had expired; and (b) the USITC failed to
distinguish how much of this growth was for in -scope CSPV products compared with out-of-scope
thin film.546
7.247. The United States submits that the USITC properly found that changes in the availability of
government incentive programmes did not cause injury to the domestic industry.547 In its view, the
USITC considered respondents' argument that the alleged "decline" in such programmes explained
price declines of CSPV products, but found that "some programs expired while others continued",
and, more significantly, that any change in the overall mix of government incentive programmes did
not lead to any decrease in demand. 548 In this regard , the United States argues that
China's argument concerni ng the FITC (a) is based on the incorrect premise that the domestic
industry decided not to compete in the utility segment 549; and (b) fails to demonstrate that

538 USITC final report, (Exhibit CHN-2), p. 63.
539 USITC final report, (Exhibit CHN-2), p. 63.
540 USITC final report, (Exhibit CHN-2), p. 62.
541 USITC final report, (Exhibit CHN-2), p. 63.
542 China's first written submission, paras. 202 and 204; second written submission, heading to
section III(C)(1).
543 China's first written submission, para. 200; second written submission, paras. 179 and 186. In this
context, China claims the USITC admitted that incentives were designed to decline as the cost of generating
solar electricity was expected to decrease over time. (China's second written submission, para. 187).
544 China's first written submission, para. 202; second written submission, paras. 187 and 190.
546 China's first written submission, para. 201; second written submission, paras. 182, 185, and 188.
547 United States' first written submission, heading to section II(E)(3)(a).
548 United States' first written submission, para. 199.
549 United States' first written submission, para. 203.

fluctuations in demand for in-scope CSPV products as compared with out-of-scope thin film moved
independently, or that the incentive programmes affected demand for them differently. 550 Finally,
the United States submits that China has failed to substantiate its argument that any decline in
incentives would result in decline of CSPV product prices.551
7.4.3.3.1.3 Evaluation of the Panel
7.248. For the reasons explained below, we are not persuaded by China's claim.
7.249. As an initial matter, we observe that the USITC found that "some" incentive programmes
had expired and "others continue"552 and referred to specific government incentive programmes that
either remained in force, changed, or expired. 553 The USITC also took into account questionnaire
respondents' views on whether the overall level or availability of Federal and state and local
incentives had changed since 2012. 554 As noted in the USITC's final staff report, "most U.S.
producers, importers, and purchasers indicated that the level or availability of Federal incentive
programs has not changed since January 1, 2012"555, while "[f]irms' responses varied regarding how
the level or availability of state and local incentives has changed since 2012".556 Moreover, the USITC
assessed how such changes in government incentive programmes affected the demand for CSPV
products and the prices for solar electricity during the POI.557
7.250. In our view, China fails to demonstrate why the constellation of facts before the USITC
necessitated a more detailed analysis concerning the impact of the expiry of specific government
incentive programmes on the domestic industry. China reasons that more d etailed analysis was
necessary because any decline in incentives would affect the cost-sensitiveness of system users and
would, as a result, force CSPV producers to offer lower prices to remain competitive. 558 However,
the facts before the USITC do not indicate that this dynamic occurred over the POI.
7.251. In particular, the USITC found that the aim of the government incentive programmes was
to offset the cost of generating solar energy 559 and that most questionnaire respondents reported
that overall changes in t he availability of government incentives led to a decrease in the price of
solar electricity during the POI.560 This dynamic indicates that solar producers continued to benefit

550 United States' first written submission, para. 202.
551 United States' first written submission, para. 204; second written submission, para. 140; and
comments on China's response to Panel question No. 18 of the first set, para. 141. In its view, the USITC, by
finding that changes in government incentive programmes did not have negative impact on the demand for
CSPV products and prices of solar electricity, reasonably concluded that any changes in government incentive
programmes did not cause prices of CSPV products to decline. (United States' second written submission,
paras. 134 and 137). In particular, the United States argues that incentives sought to increase demand of solar
electricity, and this goal was achieved during the POI. According to the United States, any effect on prices for
solar generators' inputs would be secondary, resulting from increased demand for solar energy.
(United States' response to Panel question No. 15 of the second set, para. 33; response to Panel question
No. 17 of the first set, paras. 42-43). Moreover, the United States submits that, since the changes in
government incentives caused prices of solar electricity to decrease over the POI, solar producers continued to
benefit from the incentive programmes and this development did not translate automatically into declining
prices of CSPV products. (United States' second written submission, para. 141; comments on China's response
to Panel question No. 18 of the first set, para. 143).
552 USITC final report, (Exhibit CHN-2), p. 62.
553 For example, the USITC explicitly noted the extension of the FITC and the expiration of the
US Treasury Department's cash grant programme under Section 1603 of the Recovery and Reinvestment Tax
Act, the Advanced Energy Manufacturing Tax credit and the US Department of Energy's section 1705 Loan
Guarantee programme. In addition, according to the USITC final staff report, 29 states plus the District of
Columbia had renewable portfolio standards policies in place in 2016 and the Public Utility Regulatory Policies
Act of 1978 emerged as a significant driver of utility-scale solar installations in certain states. (USITC final
report, (Exhibit CHN-2), pp. 62-63 and fn 359); USITC final staff report, (Exhibit CHN-3), pp. V-32-V-36).
554 USITC final report, (Exhibit CHN-2), p. 63; USITC final staff report, (Exhibit CHN-3), table V-22.
555 USITC final staff report, (Exhibit CHN-3), p. V-35.
556 USITC final staff report, (Exhibit CHN-3), p. V-36.
557 USITC final report, (Exhibit CHN-2), pp. 62-63.
558 China's first written submission, para. 202; second written submission, paras. 187 and 190.
559 USITC final report, (Exhibit CHN-2), p. 62.
560 USITC final report, (Exhibit CHN-2), p. 63; USITC final staff report, (Exhibit CHN-3), p. V-37 and
table V-24.

from the availability of government incentive programmes during the POI and cast s doubt on
China's assertion that " any decline in incentives would affect the cost -sensitiveness of system
users".561
7.252. In addition, the USITC found that "any decline in incentives has not led to declines in
apparent U.S. consumption" and "demand continued to experience robust growth throughout the
POI, including in states most affected by changes in incentive programs, such as California". 562 In
our v iew, these findings demonstrate that changes in the availability of government incentive
programmes did not negatively impact demand for CSPV products and further serve to disprove
China's argument.563 Since increased demand for CSPV products would ordinari ly be expected to
result in a price increase, it is unclear on what basis China suggests that declines in government
incentive programmes, in light of this positive dynamic, contributed to a decline in CSPV prices.564
7.253. In this connection, we are also unconvinced by China's arguments that the USITC's focus on
demand to dismiss the impact of declines in government incentive programmes was inadequate.
7.254. China argues that the USITC failed to distinguish how much of the growth in demand that
resulted from the contin uation of the FITC was for in -scope CSPV products compared with
out-of-scope thin film .565 However, this argument ignores that, while the USITC found that
"[b]etween 2015 and 2016, U.S. installations of on -grid photovoltaic systems (which include thin
film) increased 97 percent", it also found that interested parties reported that the continuation of
the FITC led to increase in demand specifically for CSPV products.566
7.255. China further argues that the USITC ignored that the domestic industry did not benefit from
the continuation of the FITC because it primarily supported the growth in demand for CSPV products
in the utility segment.567 However, this argument is based on the incorrect premise that the domestic
industry did not participate in the utility segme nt, which we have already rejected. 568 Moreover,
China ignores that the FITC applied to all market segments.569 As such, the domestic industry would
have benefitted from the extension of this programme, as well as other programmes targeting the
utility segment, regardless of its varying degrees of participation in the different segments of the
US market.570
7.256. We are also unpersuaded by China's argument that the USITC's assessment of the impact
of declining incentive programmes on demand for CSPV products did not account for the termination
of incentive programmes directly linked with the residential and commercial segments (where the

China argues that table V-24 of the USITC final staff report demonstrates that "when incentive
programs were available during the period, these incentives lowered the price of solar generated energy" but
"this dynamic does not negate the fact that, as subsidies declined, domestic producers had to incrementally
introduce price reductions". (China's response to Panel question No. 15 of the second set, para. 193). Contrary
to China's understanding, table V-24 of the USITC final staff report depicts firms' questionnaire responses
regarding how changes in the availability of government incentive programmes affected the price of solar
electricity since 2012.
561 See, e.g. China's first written submission, para. 202. (emphasis added). Moreover, questionnaire
respondents indicate that "most U.S. producers (7 of 10), importers (24 of 44), and purchasers (53 of
95) reported that changes in the price of solar generated electricity did not affect the prices of CSPV products".
(USITC final staff report, (Exhibit CHN-3), p. V-37).
562 USITC final report, (Exhibit CHN-2), p. 63. The USITC also found that the increased demand for
CSPV products resulted from, inter alia, the existence of federal, state, and local incentive programmes.
(USITC final report, (Exhibit CHN-2), p. 26).
563 Even the Solar Energy Industries Association (SEIA) – one of the respondents in the safeguard
investigation – acknowledged that there is normally a direct relationship between demand and prices, stating
that "it is only logical that these incentives drive demand, and therefore prices, to such a significant degree".
(SEIA prehearing brief, (Exhibit CHN-20), p. 107 (emphasis added)).
564 China's comments on the United States' response to Panel question No. 17 of the first set,
para. 110; response to Panel question No. 15 of the second set, paras. 182 and 184; and second written
submission, para. 190.
565 China's first written submission, para. 201.
566 USITC final report, (Exhibit CHN-2), p. 63; USITC final staff report, (Exhibit CHN-3), p. V-36.
567 See, e.g. China's first written submission, para. 201; and second written submission, para. 183.
568 See sections 7.3.3.2.1.1 and 7.4.3.2.1.3 above.
569 USITC final report, (Exhibit CHN-2), fn 361; USITC final staff report, (Exhibit CHN-3), p. V-32.
570 Moreover, China itself submitted evidence suggesting that the FITC led to increased demand in
residential and commercial segments. (China's response to Panel question No. 43 of the third set,
paras. 81-84).

domestic industry focused).571 In this regard, we observe that China is correct to note that certain
of these programmes (such as the US Treasury Department's cash grant programme under
section 1603 of the Recovery and Reinvestment Tax Act 572, and various state -level net metering
programmes573) expired during the POI. However, China overlooks that the USITC based its finding
that "any decline in incentives has not led to declines in apparent U.S. consumption" on the
overwhelming majority of questionnaire respondents reporting that any changes in government
incentives did not have a negative impact on the demand for CSPV products.574 As such, the specific
evidence to which China refers does not undermine the evidence supporting the USITC's conclusion
that overall demand for CSPV products did not decline as a result of those changes.
7.257. Accordingly, because record evidence indicates that overall changes in the availability of
government incentive programmes (a) caused solar electricity prices to decline, and (b) did not lead
to decline in demand for CSPV products, it does not appear that those changes would have reduced
the cost-competitiveness of solar energy. As a result, we do not consider that the USITC was required
to conduct a more detailed analysis of whether the expiry of specific incentive programmes would
have increased the burden associated with maintaining the cost-competitiveness of solar energy and
thus resulted in downward price pressure on CSPV products (as an input in producing solar energy).
Therefore, we disagree with China's claim that the USITC erred by not explicitly addressing whether
any decline in government incentive programmes would have forced CSPV producers to offer lower
prices to remain competitive. Indeed, China's claim seems to be premised on a hypothetical scenario
for which China has provided no valid suppo rt, and which is not borne out by the evidence on the
USITC's record.575 In these circumstances, we do not consider that it was necessary for the USITC

571 China's second written submission, para. 182.
572 USITC final staff report, (Exhibit CHN-3), p. V-35.
573 The USITC final staff report, (Exhibit CHN-3), p. V-35. Of the firms that had indicated a decline in
state and local incentives, most attributed the decrease to changes in net metering policies. (USITC final staff
report, (Exhibit CHN-3), p. V-36).
574 USITC final staff report, (Exhibit CHN-3), p. V-36. With respect to China's argument that the USITC
overlooked termination of incentive programmes directly benefitting producers of CSPV products, we observe
that the USITC's finding that "any decline in incentives has not led to declines in apparent U.S. consumption"
would also cover incentive programmes directly benefitting producers of CSPV products during the POI (such
as the Advanced Energy Manufacturing Tax credit and the US Department of Energy's section 1705 Loan
Guarantee programme). In any event, China has not explained why termination of these incentive programmes
would have negatively affected demand for CSPV products. (China's response to Panel question No. 18 of the
first set, para. 133; opening statement at the first meeting of the Panel, para. 53).
575 For example, China relies on the USITC's general finding that incentives were designed to decline as
the cost of generating solar was expected to decrease over time. According to China, this evidence suggests
that domestic producers were under the pressure "to escalate their technological innovation" to compensate for
the decline in incentives. (China's second written submission, para. 187). Contrary to China's argument, the
USITC recognized the interconnection between declines in incentive programmes and declines in the cost of
generating solar energy. While we recognize that this dynamic might also suggest a general connection
between declines in incentive programmes and cost reductions and efficiency enhancements of CSPV products
(as an input in producing solar energy), we do not consider that this demonstrates that the domestic industry
was pressured to lower prices of CSPV products in response to any decline in incentive programmes. Similarly,
we fail to see how China's reliance on the USITC's finding that "existence of these incentive programs has
made CSPV products more cost-competitive with other sources of electricity" would support its assumption that
any decline in incentive programs necessarily had a negative impact on prices of CSPV products. (USITC final
report, (Exhibit CHN-2), p. 63. See, e.g. China's first written submission, para. 202).
We also do not agree with China that the econometric report submitted by respondents to the USITC
showed that changes in government incentive programmes "was a way more important factor in explaining the
evolution of prices over the period". (See, e.g. China's response to Panel question No. 15 of the second set,
para. 195; response to Panel question No. 14 of the second set, para. 181; and response to Panel question
No. 18 of the first set, para. 143). The econometric report more generally described incentive programmes,
their impact on demand for CSPV products, and their interrelation with "grid parity" and CSPV costs.
(Econometric report, (Exhibit CHN-19), pp. 14-16, 18, and 23). While the econometric report accounted in its
assessment for the impact of state-level subsidies on CSPV demand, it did not directly assess the impact of
changes in government incentive programmes on prices of CSPV products. (Econometric report,
(Exhibit CHN-19), pp. i and 3).
In addition, China argues that domestic producers admitted themselves that declining government
support had a "negative" impact in prices. (China's second written submission, para. 189 (referring to USITC
final staff report, (Exhibit CHN-3), table F-2)). In this context, we observe that out of 16 domestic producers
that provided questionnaire responses to the USITC, only seven producers reported "changes in government
incentive programs" as a factor causing injury; three of them ranked the importance of this factor as one out of
five (the lowest degree of importance), one producer ranked it as two out of five, one producer ranked it as
three out of five, and two producers ranked it as five out of five ("an extremely important cause of injury"). We

to explicitly consider such a scenario to reasonably conclude that changes in the availability of
government incentive programmes did not cause injury to the domestic industry.576
7.258. For these reasons, we reject China's claim that the USITC improperly dismissed decline in
government incentive programmes as an "other" cause of injury. As a consequence, we also rej ect
China's claim that the USITC failed to ensure that the injury caused by this factor was not attributed
to increased imports.
7.4.3.3.2 Declining raw material costs and increased production efficiencies
7.4.3.3.2.1 Factual background
7.259. In the safeguard investigation, respondents argued that declining raw material costs, rather
than increased imports, explained "any declines in prices of CSPV products and the condition of the
domestic industry".577
7.260. In response, the USITC noted that polysilicon is a key raw material used in the production
of the wafers that are used to manufacture CSPV cells, and that raw material costs account for the
largest component of the total cost of goods sold for CSPV products. During the POI, the price of
polysilicon ingots and wafers (key inputs in the production of CSPV products) fluctuated, but declined
overall.578 Based on this, the USITC found:
Despite declining polysilicon costs, which would help make CSPV products more cost
competitive with other sources of electricity, decli nes in the domestic industry's net
sales values kept pace with declines in its costs, leading to substantial losses throughout
the POI.579
7.4.3.3.2.2 Main arguments of the parties
7.261. China submits that the USITC improperly dismissed decreasing raw material costs and
increased production efficiencies and failed to satisfy the non -attribution requirement in respect of
these factors.580 In particular, China argues that, although the USITC acknowledged that it had
considered the role of raw material costs in the decline of CSPV prices581, it failed to clarify to what
extent declines in CSPV prices were attributed to declining raw material costs , as opposed to price
competition from imports.582 Moreover, China contends that the USITC failed to address the evidence

do not consider that the fact that only a few domestic producers reported "changes in government incentive
programs" as "an extremely important cause of injury" demonstrates that the USITC was required to treat this
factor as an "other" cause of injury (which pertains to the domestic industry overall). At any rate, the USITC
analysed whether the changes in government incentive programmes caused injury to the domestic industry
and found that this factor did not explain the condition of the domestic industry. In our view, the fact that
certain interested parties expressed contrary views does not render the USITC's determination unreasoned and
inadequate.
576 Relatedly, we note that China also refers to the expiry of government incentive programmes that
directly benefitted domestic producers of CSPV products when arguing that the USITC failed to properly
analyse whether changes in government incentive programmes adversely impacted prices of CSPV products.
(China's second written submission, para. 188). However, China fails to explain why the expiry of such
programmes would have resulted in the decline of domestic prices or otherwise amounted to a separate cause
of injury to the domestic industry. As a result, we do not consider that China has established that the USITC
was required to assess these programmes in greater detail.
577 USITC final report, (Exhibit CHN-2), p. 61.
578 USITC final report, (Exhibit CHN-2), p. 64.
579 USITC final report, (Exhibit CHN-2), p. 64.
580 China's first written submission, paras. 206-207; second written submission, heading to
section III(C)(2).
581 China's first written submission, para. 205.
582 China's first written submission, para. 206. In this context, China argues that the USITC disregarded
record evidence demonstrating that (a) the high level of transparency in the market for solar energy impeded
the domestic producers from increasing their profit; (b) the whole market worked under the assumption that
declines in raw material costs and enhanced efficiencies would allow for greater price competitiveness of solar
energy; (c) seven domestic producers reported the decrease in raw material costs as a factor of injury, with
two of them ranking this factor as "being an extremely important cause of injury"; and (d) price declines for
CSPV products and raw material followed the same trends with very similar magnitudes. China also argues that

regarding the increased production efficiencies that also contributed to decreases in CSPV prices.583
7.262. For its part, the United States submits that China neither provides support for its
presumption that declining raw material prices cause the price of a finished product to decrease, nor
points to anything to detract from the USITC's determination.584 For the United States, even if
declining costs resulted in the domestic industry's ability to lower prices, that still would not show
that this factor caused injury to the domestic industry. 585 According to the United States, this is
because declining input costs would normally allow a firm to (a) increase profit margins, or (b) lower
prices and sell more product. 586 In the present case, according to the United States, the domestic
industry was not able to benefit from declining costs in either way because of the increased
low-priced imports.587
7.4.3.3.2.3 Evaluation of the Panel
7.263. As described above, China advances a series of arguments contending that the USITC failed
to appropriatel y analyse the impact of declining raw material costs and increased production
efficiencies on prices for CSPV products.588 China further contends that the USITC disregarded record
evidence demonstrating that declining raw material costs and increased produc tion efficiencies
should have led to declines in prices for domestic CSPV products. 589 Yet, in our view, these
arguments ultimately fail to explain why declining raw material costs and increased production
efficiencies would have caused injury to the domestic industry, even if they did contribute to
declining prices of CSPV products.590 Indeed, China itself concedes that it is not arguing "that falling

the econometric report submitted by respondents during the investigation demonstrates that declines in raw
material costs contributed to price decline of CSPV products. (China's response to Panel question No. 19 of the
first set, paras. 150-151; comments on the United States' response to Panel question No. 20 of the first set,
paras. 121-122 and 126; response to Panel question No. 18 of the second set, paras. 212-213; and second
written submission, paras. 195-199).
In addition to these arguments, China contends that the USITC attributed the high costs of goods sold
to net sales value ratio to increased imports, without prior consideration of alternative plausible explanations:
(a) domestic producers were obliged to pass on any decrease of raw material costs to purchasers in order to
remain competitive with foreign producers that enjoyed greater economies of scale; and (b) domestic
producers were facing high factory costs at the beginning of the POI, and therefore could not enjoy higher
profitability margins caused by any decrease raw material costs. (China's response to Panel question No. 47 of
the third set, paras. 112-118).
583 China's first written submission, para. 208; second written submission, para. 199; and comments on
the United States' response to Panel question No. 20 of the first set, paras. 125-127. In particular, China
claims that the USITC should have assessed the possibility that "[d]ifferent producers might have exploited
increased efficiencies to a different extent, depending on their market focus and production system, resulting
in competitive disadvantages". (China's second written submission, para. 199).
584 United States' first written submission, para. 206.
585 United States' first written submission, para. 207.
586 United States' first written submission, para. 207.
588 See section 7.4.3.3.2.2 above.
589 See section 7.4.3.3.2.2 above.
590 Even if China were correct that, because of the underlying market dynamic the domestic industry
reduced its prices in line with declines in raw material costs and increased production efficiencies, such price
decline should have helped the domestic industry to increase cost-competitiveness of domestic CSPV products.
China has not demonstrated that this type of price decline would have caused injury to the domestic industry.
(China's comments on the United States' response to Panel question No. 20 of the first set, paras. 121 and
126; response to Panel question No. 18 of the second set, para. 212; and second written submission,
paras. 196-197 and 199).
In a similar vein, the econometric study to which China refers does not demonstrate that the domestic
industry was injured as a result of declining raw material costs and increased production efficiencies.
(China's response to Panel question No. 19 of the first set, para. 151; response to Panel question No. 18 of the
second set, para. 213).
With respect to China's argument that seven domestic producers reported the decrease in raw material
costs was a factor of injury, we note that, contrary to China's submission, seven domestic producers reported
"[c]hange in raw material costs" was a factor of injury, rather than "decrease in raw material costs".
(China's comments on the United States' response to Panel question No. 20 of the first set, para. 122; second
written submission, para. 197 (referring to USITC final staff report, (Exhibit CHN-3), table F-2) (emphasis
added)). In our view, "[c]hange in raw material costs" is ambiguous as it would encompass both increases and
decreases in raw material costs. In addition, only two domestic producers reported "[c]hange in raw material
costs" as "being an extremely important cause of injury". (USITC final staff report, (Exhibit CHN-3), table F-2).
As such, we do not consider that this evidence demonstrates that declining raw material costs caused injury to
the domestic industry.

costs per se are injurious, but rather that falling costs explain the declining prices that the USITC
sought to blame on increasing imports".591
7.264. In this context, we recall that the non -attribution obligation in Article 4.2(b) of
the Agreement on Safeguards pertains to "other" factors that are causing injury to the domestic
industry at the same time as increased imports.592 Since China does not argue, let alone establish,
that declining raw material costs and increased production efficiencies were themselves "other"
causes of injury to the domestic industry, China has failed to prima facie establish that the USITC
was required to treat declining raw material costs and increased production efficiencies as "other "
factors causing injury. As a consequence, we reject China's claims that the USITC improperly
dismissed these factors, and that the USITC failed to ensure that the injury caused by these factors
was not attributed to increased imports.593
7.265. In making this finding, we further observe that the USITC found that "[d]espite declining
polysilicon costs, which would help make CSPV products more cost -competitive with other sources
of electricity, declines in the domestic industry's net sales values kept pace with declines in its costs,
leading to substantial losses throughout the POI". 594 As such, we agree with the
United States' observation that the USITC effectively treated declining costs as a positive factor that
should have improved the situation of the domestic industry (which ultimately did not occur because
of declining net sales values).595 In our view, this approach was not inappropriate, as declining costs
would ordinarily be expected to help an industry either to increase cost -competitiveness of its

591 China's response to Panel question No. 47 of the third set, para. 108. Moreover, in response to the
Panel's question concerning whether record evidence directly demonstrated that the domestic industry was
injured as a result of declining raw material costs and increased production efficiencies, China fails to refer to
any record evidence demonstrating that declining costs caused injury to the domestic industry.
(China's response to Panel question No. 47 of the third set, paras. 110-118). In addition, we note that China
acknowledges that "[t]he increasing cost competitiveness depends on the net effect of falling costs in light of
those other factors affecting price" and that "there is no general rule that decreases in raw material costs are
themselves necessarily a benefit or a 'positive factor'. The key issue is the relationship of costs and prices, and
how they translate into increased or decreased profit margins". (China's response to Panel question No. 18 of
the second set, paras. 210-211 (emphasis added)).
In this context, we are not persuaded by China's argument that the USITC attributed the high cost of
goods sold to net sales value ratio to increased imports, without considering other factors. While China claims
that "producers with larger capacities enjoyed greater economies of scale and could leverage from raw material
reductions to a greater extent" and that "the domestic industry faced very elevated factory costs which it
needed to reduce", we do not consider that these arguments establish that the declining raw material costs
themselves were a cause of injury to the domestic industry. (China's response to Panel question No. 47 of the
third set, paras. 110-114). We further recall that the USITC found that increased imports prevented the
domestic industry from increasing its capacity to achieve economies of scale, which it linked to "the hundreds
of millions of dollars in net and operating losses throughout the POI". Consistent with these losses, the USITC
found that "a significant number of domestic producers were unable to generate adequate capital to finance
the modernization of their domestic plants and equipment, and a significant number of them were unable to
maintain existing research and development expenditure levels". (USITC final report, (Exhibit CHN-2), p. 47).
In light of these findings (which China has not established were inappropriate), we do not consider that the
USITC was required to assess, as "other" causes of injury, the domestic industry's lack of scale or higher cost
structure. For the same reasons, we are not persuaded by China's claim that the USITC erred by not assessing
the possibility that "[d]ifferent producers might have exploited increased efficiencies to a different extent,
depending on their market focus and production system, resulting in competitive disadvantages".
(China's second written submission, para. 199).
592 As a result, we disagree with China that, under Article 4.2(b), second sentence, the USITC was
required to "quantitatively or qualitatively address and distinguish price changes associated with changing raw
material cost and price changes occurring for other reasons". (China's first written submission, para. 206. See
also China's second written submission, para. 194).
593 In this respect, we recall that China, in the context of its causation claim, similarly advances that
price declines occurred because of decreasing costs, increasing efficiency, and technological innovation, which
benefitted the CSPV industry as a whole. (China's first written submission, paras. 151-153; second written
submission, para. 104). While we recognize that China's argument is conceptually relevant in the context of its
causation claim, we fail to see the relevance of such argument in the context of the non-attribution claim
considering that Article 4.2(b), second sentence, only requires determining whether "other" factors are causing
injury to the domestic industry.
594 USITC final report, (Exhibit CHN-2), p. 64.
595 See, e.g. United States' first written submission, para. 207; second written submission,
para. 151; response to Panel question No. 20 of the first set, para. 52; response to Panel question No. 18 of
the second set, para. 42; and comments on China's response to Panel question No. 47 of the third set,
para. 63.

product (by allowing to lower the price of the finished product, while maintaining the same level of
profit margin) or to increase its profit margin, rather than impair its position.
7.4.3.3.3 The need to attain "grid parity" with other sources of electricity
7.4.3.3.3.1 Factual background
7.266. During the safeguard investigation, respondents argued that the need to attain "grid parity"
with other sources of electricity – i.e. the point at which the cost of energy generated from renewable
sources equals the cost from conventional energy sources on the grid – also explained "any declines
in prices of CSPV products and the condition of the domestic industry".596
7.267. The USITC rejected respondents' argument based on the following explanation:
A plurality of importers and purchasers reported that changes in the price of
conventional energy have decreased the price of solar-generated electricity. In addition,
firms reporting that changes in the price of U.S. conventional energy have increased
demand cited a positive relationship between electricity rates and the demand for
[photovoltaic] systems and modules. While conventional energy prices may account for
some of the decrease in the prices of CSPV products in some years, they do not explain
the consistent observed price declines over the 2012-2016 period. The price of natural
gas for electricity generation increased in the latter half of 2012 and 2013, peaked in
February 2014, and declined to its lowest level in March 2016 after which it rose and is
projected to increase. The domestic prices of CSPV products, on the other hand,
decreased throughout the POI.597
7.4.3.3.3.2 Main arguments of the parties
7.268. China argues that the USITC improperly dismissed the need to achieve price competitiveness
on the electrical grid (i.e . "grid parity") and failed to satisfy the non -attribution requirement in
respect of the injury caused by this factor. 598 First, China argues that the USITC's statement that
conventional energy prices "may account for some of the decrease" "does not sufficiently explain
the nature and extent of the harm caused by competing energy sources".599 China argues that the
USITC should have conducted a deeper analysis on the impact of any desire of electricity providers
to achieve grid parity on prices for solar energy.600 Second, China claims that the USITC considered
price trends of natural gas only, without addressing respondents' argument that other energy
sources also exerted downward pressure on solar energy prices. 601 Third, China submits that the
USITC's conclusion concerning the lack of correlation between natural gas and CSPV product prices
"is grossly inadequate considering the data presented to the USITC during its investigation" 602 and
fails to account for other evidence concerning the historical relationship between price trends .603
Fourth, China sub mits that the USITC failed to address the econometric report that respondents
presented, which provided a quantitative analysis of the impact of the need for solar energy to attain
"grid parity" on the domestic industry.604 Finally, China contends that the USITC did not address the

596 USITC final report, (Exhibit CHN-2), pp. 61 and 64.
597 USITC final report, (Exhibit CHN-2), pp. 64-65. (fns omitted)
598 China's first written submission, heading to section III(B)(2)(b)(iii); second written submission,
heading to section III(C)(3).
599 China's first written submission, para. 211. See also China's second written submission, para. 200.
600 China’s response to Panel question No. 51 of the third set, paras. 129-130.
602 China's first written submission, para. 213.
603 China's first written submission, paras. 213-214; second written submission,
paras. 201-204; comments on the United States' response to Panel question No. 21 of the first set,
paras. 150-153. In particular, China submits that the USITC ignored (a) the constant gap between prices of
natural gas and solar energy, which created "enormous pressure on CSPV products to become more efficient,
less costly to produce, and less expensive for the consumer to buy"; (b) its own admissions that conventional
energy prices acted as a target price for renewable energy to become competitive; and (c) that the price of
natural gas fell significantly over the POI regardless of fluctuations in certain years.
604 China's first written submission, para. 215. See also China's second written submission,
paras. 209-217.

contrasting evidence showing that multiple domestic producers reported "grid parity with natural
gas" as a key factor of injury.605
7.269. For its part, the United States submits that the USITC properly demonstrated that the need
to attain "grid parity" was not responsible for the decrease in CSPV prices, and did not cause injury
to the domestic industry.606 First, the United States argues that, contrary to China's contention, the
use of word "may" in the USITC's statement that conventional energy prices "may account for some
of the decrease" signals that the USITC was addressing a hypothetical possibility . However, upon
evaluation, the USITC definitively found that convention al energy prices did not explain the
consistent price declines. 607 Second, the United States contends that the USITC did not err in
focusing on the prices of natural gas, because those prices generally set the target price that CSPV
and other renewable ener gy systems sought to meet. 608 Third, the United States submits that
China's arguments fail to demonstrate any inadequacy with the USITC's finding concerning the lack
of correlation between natural gas prices and domestic CSPV prices. 609 Fourth, the United States
maintains that the USITC addressed the relevant points made by the econometric report, but rather
than relying on respondents' theoretical approach, it based its determination on the actual facts
gathered in the extensive record.610 Finally, the United States submits that the objective of attaining
"grid parity" would not explain producers' acceptance of continual losses during the POI.611
7.4.3.3.3.3 Evaluation of the Panel
7.270. Our analysis proceeds by first considering the USITC's factual findin gs concerning the
conceptual nature of "grid parity". We then turn to China's specific claim that the USITC's rejection
of the respondents' arguments concerning the need to attain "grid parity" was inconsistent with the
non-attribution requirement in Article 4.2(b), second sentence, of the Agreement on Safeguards.
We proceed in this manner to facilitate our analysis of the parties' disagreement concerning this
issue.
7.271. As the USITC explained, electricity providers using renewable energy sources seek to achieve
"grid parity" with other sources of electricity. 612 Although "grid parity" is a relevant condition of
competition in the market affecting demand for CSPV products 613, we agree with the United States
that it is not a monolithic concept.614
7.272. In this regard, we note that record evidence relied upon by the USITC suggests that the
average prices of conventional energy sources did not determine a single absolute target price for
CSPV products. As the USITC found, "grid parity" prices varied by region, time of day, and availability
of other electricity sources; and even varied widely for a given energy source. 615 The same

605 China's comments on the United States' response to Panel question No. 21 of the first set,
606 United States' first written submission, para. 208.
607 United States' first written submission, para. 209.
608 United States' first written submission, para. 210.
609 United States' first written submission, para. 211. In its view, the purported "gap" between price
trends of solar energy and natural gas relied upon by China is based upon the false premise that there is one
single levelized cost of energy that solar generators seek to meet. The United States further submits that the
USITC, however, explained that "grid parity" was not a monolithic concept, as prices of conventional energy
varied by region, time of the day, and availability of other electricity sources. Thus, according to the
United States, it is not the case that the average prices of other energy sources determine the price for CSPV
products.
610 United States' first written submission, paras. 213-215. According to the United States,
the Agreement on Safeguards does not require quantification to analyse causation.
611 United States' first written submission, para. 212.
612 USITC final report, (Exhibit CHN-2), p. 25; USITC final staff report, (Exhibit CHN-3), p. V-37. "Grid
parity" is based on the levelized cost of electricity (LCOE) which during peak periods of demand is set by
natural gas generated electricity. (USITC final report, (Exhibit CHN-2), fn 378; USITC final staff report,
(Exhibit CHN-3), pp. V-37-V-38). LCOE represents the per-kilowatt hour cost of building and operating a
generating plant over an assumed financial life. (USITC final staff report, (Exhibit CHN-3), p. V-37).
613 USITC final report, (Exhibit CHN-2), pp. 25-26.
614 See, e.g. United States' first written submission, para. 211; and response to Panel question No. 21 of
the first set, para. 57.
615 USITC final report, (Exhibit CHN-2), pp. 25-26; USITC final staff report, (Exhibit CHN-3), p. V-38. In
the safeguard investigation, one of the respondents (Solar Energy Industries Association) also submitted
evidence suggesting that the "grid parity" was not a monolithic imperative. (Econometric report,
(Exhibit CHN-19), pp. 12-13).

understanding can be discerned in the USITC's finding that "during periods of peak electricity
demand, even generators with somewhat higher costs ma y be able to sell electricity into the
transmission or distribution grid".616
7.273. In addition, record evidence indicates that the need to attain "grid parity" affected individual
CSPV market segments (i.e . the commercial, residential, and utility segments) differently. As
indicated above, "grid parity" concerns the competition between energy sources on the grid .
However, it is only the utility segment that competes directly with other types of electricity b eing
sold to the grid617; the residential and commercial segments generate electricity for use in individual
homes and commercial, and industrial, government buildings and sites, respectively, and only feed
energy back into the grid when it is not consumed onsite.618 In this context, solar electricity from
the utility segment appears to compete more directly against conventional electricity sold to the
grid. This understanding is generally consistent with the USITC's factual findings that (a) "[f]or peak
periods, natural-gas generated electricity generally sets the [levelized cost of electricity (LCOE)] that
CSPV and other renewable energy systems seek to meet, especially for utility sales "619; and
(b) "[t]he LCOE for a new combined -cycle natural gas-fired power plant … has set the benchmark
for low-cost energy within the utility segment of the market".620
7.274. Record evidence also suggests that "[s]olar energy is … essentially cost -competitive with
other forms of electricity generation, which has supported robust gro wth in utility installations".621
In particular, while the LCOE for a new combined-cycle natural gas-fired power plant was at about
4-5 cents per kW/hour, the LCOE for solar photovoltaic systems (incorporating tax credits) was just
over 5 cents per kW/hour, and was lower in many locations.622 By contrast, because the residential
and commercial segments do not benefit from the same efficiencies and economies of scale as in
the utility segment, they have higher LCOE.623
7.275. Finally, we observe that record evidence indicates that "grid parity" functions in combination
with, or through, various market trends and instruments. For example, record evidence
demonstrates that government incentive programmes were aimed at offsetting the cost of
generating solar energy, thereby stimulating demand for renewable energy and assisting developers
of solar power to become more competitive with conventional energy sources.624
7.276. With these facts in mind, we now turn to China's specific claim against the USITC's rejection
of respondents' arguments concerning the impact on CSPV prices of the need for solar energy to
attain "grid parity" with conventional energy sources.
7.277. We begin by noting that the USITC focused its determination concerning the need to attain
"grid parity" with conventional energy sources on natural gas price trends. It did so based on record
evidence demonstrating that, for peak demand periods, natural gas generated electricity generally
sets the LCOE that CSPV systems must seek to meet. 625 Since China does not dispute the
USITC's use of natural gas prices as a proxy for assessing "grid parity" as an alleged "other" factor

616 USITC final report, (Exhibit CHN-2), p. 26.
617 USITC final staff report, (Exhibit CHN-3), p. I-27.
618 According to the USITC final staff report, residential systems are installed at individual homes, and
the electricity generated by the system is used for power therein. Homeowners use grid energy when solar
electricity generation is not sufficient to meet demand and often feed energy back into the grid when solar
electricity generation exceeds home use. Non-residential systems are installed at commercial, industrial,
government, and similar buildings and sites. They function similar to residential installations, providing
electricity to meet onsite need, pulling additional electricity from the grid when needed, and feeding excess
electricity back into the grid when it is not needed. (USITC final staff report, (Exhibit CHN-3), pp. I-25-I-26).
619 USITC final report, (Exhibit CHN-2), p. 26; USITC final staff report, (Exhibit CHN-3), p. V-38.
(emphasis added)
620 USITC final report, (Exhibit CHN-2), p. 109. (emphasis added)
621 USITC final report, (Exhibit CHN-2), p. 110.
622 USITC final report, (Exhibit CHN-2), pp. 109-110.
623 USITC final report, (Exhibit CHN-2), p. 110.
624 USITC final report, (Exhibit CHN-2), p. 62. The USITC also found that incentive programmes made
solar CSPV products more cost-competitive with other sources of electricity. (USITC final report,
(Exhibit CHN-2), p. 63).
625 USITC final report, (Exhibit CHN-2), fn 378; USITC final staff report, (Exhibit CHN-3), p. V-38.

of injury626, our analysis focuses on whether China has established that the USITC's assessment of
the impact of natural gas prices on CSPV products was inappropriate.627
7.278. As we see it, the USITC rejected the need to attain "grid parity" as an "other" factor of injury
primarily because prices of natural gas did not correlate with prices of CSPV products during the
POI.628 In this regard, we note that prices of natural gas increased in the latter half of 2012 and
throughout 2013, peaked in February 2014, and then declined to their lowest level in March 2016,
after which they rose and were projected to increase. 629 By contras t, prices for CSPV products
declined steeply in 2012, then began to increase through the fourth quarter of 2013, and continued
to increase through 2014. By the first quarter of 2016 prices of CSPV products began to fall.630 In our
view and in line with the United States' position, the lack of correlation between price trends of
natural gas and CSPV products casts reasonable doubt as to whether the prices of natural gas directly
exerted downward price pressure on CSPV products during the POI. Based on this ev idence, we do
not consider that it was inappropriate for the USITC to find that the need for solar energy to attain
"grid parity" with conventional energy prices did not explain the consistent observed price declines
during the POI, and, on this basis, rej ect such need to attain "grid parity" as an "other" factor of
injury.
7.279. While China advances that the USITC's analysis of need to attain "grid parity" was
inadequate, we do not consider that China's arguments withstand scrutiny.
7.280. In particular, China argues that, although the USITC acknowledged that "conventional
energy prices may account for some of the decrease in the prices of CSPV products in some years",
it failed to "sufficiently explain the nature and extent of the harm caused by competing energy
sources".631 While China views specific language used by the USITC in isolation, we consider that
the remainder of the relevant paragraph in the USITC's final report provides meaningful clarification
of its finding:
While conventional energy prices may account for some of the decrease in the prices of
CSPV products in some years, they do not explain the consistent observed price declines
over the 2012-2016 period. The price of natural gas for electricity generation increased
in the latter half of 2012 and 2013, peaked in February 2014, and declined to its lowest
level in March 2016 after which it rose and is projected to increase. The domestic prices
of CSPV products, on the other hand, decreased throughout the POI.632
7.281. Viewed in this context, we are not persuaded by China's argument that the
USITC's observation that "conventional energy prices may account for some of the decrease in the
prices of CSPV products in some years" amounts to an acknowledg ement of the injurious effect on
the domestic industry of the need for solar energy to attain "grid parity" with conventional energy
sources. To the contrary, the USITC found that the need to attain "grid parity" was not a cause of
injury because conventional energy prices – specifically for natural gas – did "not explain the
consistent observed price declines over the 2012-2016 period".633
7.282. Further, we disagree with China that the USITC's finding of a lack of correlation between
price trends of natural gas and CSPV products (a) conflicted with its own admissions tha t

626 "China does not dispute the finding of using gas natural prices to assess the grid parity factor".
(China's response to Panel question No. 51 of the third set, para. 129).
627 Contrary to China's arguments, we do not consider that the fact that the USITC did not explicitly
address respondents' arguments that other energy sources also exerted downward pressure on solar energy
prices demonstrates that the USITC's determination was inappropriate. (China's first written submission,
para. 212; second written submission, para. 206). Because record evidence demonstrates that natural gas
generated electricity generally sets the LCOE during peak periods of demand, we do not consider that it was
inappropriate for the USITC to focus its analysis on natural gas prices.
628 "[Conventional energy prices] do not explain the consistent observed price declines over the
2012-2016 period". (USITC final report, (Exhibit CHN-2), p. 64).
629 USITC final report, (Exhibit CHN-2), pp. 64-65.
630 USITC final report, (Exhibit CHN-2), p. 46.
631 China's first written submission, para. 211. See also China's second written submission, para. 200.
632 USITC final report, (Exhibit CHN-2), pp. 64-65. (fn omitted)
633 USITC final report, (Exhibit CHN-2), p. 64. The USITC further referred in support of this finding to
the lack of correlation between price trends of natural gas and CSPV products. (USITC final report,
(Exhibit CHN-2), pp. 64-65).

conventional energy prices acted as a target price for renewable energy to become competitive;
(b) ignored the constant gap between prices of solar energy and natural gas; and (c) ignored that
prices of natural gas significantly fell during the POI , regardless of fluctuations in certain years. 634
In this regard, we agree with the United States that China's arguments are based on an incorrect
factual premise that the need to attain "grid parity" with conventional energy sources was a
monolithic concept. As described above, record evidence suggests that there was no one single
absolute target price set by natural gas that CSPV producers sought to meet. As such, we do not
consider that the mere existence of a price gap between natural gas and solar energy nece ssarily
demonstrates that natural gas exerted downward price pressure on CSPV products. Moreover, the
fact that prices of CSPV products stabilized between 2013 -2015, irrespective of the price gap with
natural gas during the same period, casts reasonable do ubt as to whether natural gas exerted
downward price pressure on prices of CSPV products. Furthermore, contrary to China's argument,
we consider that , in finding a lack of correlation between price trends of natural gas and
CSPV products, the USITC's analysis also accounted for the fact that natural gas prices fell during
the POI.
7.283. Relatedly, we do not agree with China that the USITC was required to assess the constant
price gap between natural gas and solar energy that existed prior to the POI. The non -attribution
requirement in Article 4.2(b) of the Agreement on Safeguards calls for an examination of whether
"factors other than increased imports are causing injury to the domestic industry at the same
time".635 Since the USITC made its serious injury and cau sation determinations based on
developments that generally occurred during the 2012 -2016 POI, we do not agree with China that
it was inappropriate for the USITC to focus its analysis on the relationship between prices of natural
gas and CSPV products over the same period, rather than on the historical price gap.
7.284. China also contends that the USITC failed to address the econometric report submitted by
respondents, which allegedly provided quantitative analysis of, among other things, the impact of
"grid parity" on prices of CSPV products. 636 As an initial matter, we note that the Agreement on
Safeguards does not require that the competent authorities of a Member address explicitly in their
report every argument and element of evidence raised by interested part ies, so long as their
conclusions on the relevant issues are supported by reasoned and adequate explanations. The USITC
explicitly recognized and addressed respondents' claim that the need to attain "grid parity" led to
price decline of CSPV products. This is precisely the point that was made in the econometric report.637
Having addressed the issue raised by respondents on the basis of the record evidence noted above,
we do not consider that the USITC was required to explicitly address the quantitative "esti mation
approach" set forth in the respondents' econometric report.
7.285. Finally, China argues that the USITC failed to address the questionnaire evidence indicating
that multiple domestic producers reported "grid parity with natural gas" as a factor causing injury.638
In this regard, we note that out of the 16 domestic producers that provided questionnaire responses
to the USITC639, only 5 domestic producers reported "grid parity with natural gas" as a factor causing
injury: 4 of them ranked the importance of this factor as 1 out of 5 (the lowest degree of
importance); and 1 domestic producer ranked it 4 out of 5 (the second highest degree of
importance).640 We do not consider that the fact that only one domestic producer reporte d "grid
parity with natural gas" as a relatively important factor causing injury demonstrates that the USITC
was required to treat the need to attain "grid parity" as an "other" cause of injury (which pertains
to the domestic industry overall). Moreover, C hina has not explained why the USITC should have
preferred this evidence over other record evidence that supported its finding that conventional
energy prices did not "explain the consistent observed price declines over the 2012-2016 period".

634 See section 7.4.3.3.3.2 above.
635 Emphasis added.
636 China's first written submission, para. 215. See also China's second written submission,
paras. 209-217.
637 Econometric report, (Exhibit CHN-19), p. 31.
638 China's second written submission, para. 205; comments on the United States' response to Panel
question No. 21 of the first set, para. 137; and comments on the United States' response to Panel question
No. 50 of the third set, para. 74.
639 The USITC received questionnaire responses from 16 firms that are estimated to have accounted for
all known US production of CSPV cells and 63.9% of US production of CSPV modules in 2015. (USITC final
report, (Exhibit CHN-2), p. 9).
640 USITC final staff report, (Exhibit CHN-3), table F-2.

7.286. For the abov e reasons, we reject China's claim that the USITC improperly dismissed the
need to attain "grid parity" as an "other" cause of injury. As a consequence, we also reject
China's claim that the USITC failed to ensure that the injury caused by this factor was not attributed
to increased imports.
7.4.3.4 Overall conclusion regarding the USITC's assessment of "other" factors allegedly
causing injury to the domestic industry
7.287. For all of the above reasons, we reject China's claims that the USITC acted inconsistently
with Article 4.2(b), second sentence, of the Agreement on Safeguards by (i) improperly dismissing
alleged missteps by the domestic industry, and ( ii) improperly dismissing non -import factors that
allegedly caused prices of CSPV products to decline and failing to satisfy the non -attribution
requirement in respect of the injury caused by these factors.
7.288. Since we reject China's claim that the USITC improperly dismissed non -import factors that
allegedly caused prices of CSPV products to decline as "other" factors causing injury to the domestic
industry, we also reject China's claim that the USITC was required to conduct a cumulative
assessment of these factors.
7.289. Relatedly, since China has not demonstrated that the USITC improperly dismissed "other"
factors allegedly causing injury to the domestic industry, we do not consider it necessary to resolve
the disagreements between the parties as to (i) the degree of discretion the competent authorities
enjoy in discharging their non -attribution obligation under Article 4.2(b), second sentence, of
the Agreement on Safeguards; and ( ii) whether the USITC's application of the "substantial cause"
test sufficiently discharged the United States' obligations under Article 4.2(b), second sentence, of
the Agreement on Safeguards.
7.5 The USITC's treatment of confidential information
7.5.1 Applicable legal requirements of Article 3 of the Agreement on Safeguards
7.290. Article 3 of the Agreement on Safeguards ("Investigation") provides for the following:
1. A Member may apply a safeguard measure only following an investigation by the
competent authorities of that Member pursuant to procedures previously established
and made public in consonance with Article X of GATT 1994. This investigation shall
include reasonable public notice to all interested parties and public hearings or other
appropriate means in which importers, exporters and other interested parties could
present evidence and their views, including th e opportunity to respond to the
presentations of other parties and to submit their views, inter alia, as to whether or not
the application of a safeguard measure would be in the public interest. The competent
authorities shall publish a report setting fort h their findings and reasoned conclusions
reached on all pertinent issues of fact and law.
2. Any information which is by nature confidential or which is provided on a confidential
basis shall, upon cause being shown, be treated as such by the competent a uthorities.
Such information shall not be disclosed without permission of the party submitting it.
Parties providing confidential information may be requested to furnish non-confidential
summaries thereof or, if such parties indicate that such information cannot be
summarized, the reasons why a summary cannot be provided. However, if the
competent authorities find that a request for confidentiality is not warranted and if the
party concerned is either unwilling to make the information public or to authorize its
disclosure in generalized or summary form, the authorities may disregard such
information unless it can be demonstrated to their satisfaction from appropriate sources
that the information is correct.
7.291. Accordingly, Article 3 establishes certain procedur al rules that must be followed before
applying a safeguard measure. Specifically, Article 3.1, first sentence, establishes that a Member
may only apply a safeguard measure following an investigation conducted by the competent
authorities of that Member. Th at investigation must include , according to Article 3.1, second
sentence, "reasonable public notice to all interested parties and public hearings or other appropriate

means in which importers, exporters and other interested parties could present evidence a nd their
views". Moreover, Article 3.1, third sentence, requires the competent authorities to publish a report
that sets forth "findings and reasoned conclusions reached on all pertinent issues of fact and law".
7.292. Article 3.2 mandates the protection of confidential information received by the competent
authorities during the investigation. Article 3.2, third sentence, also permits the competent
authorities to request non -confidential summaries from the parties providing con fidential
information.
7.5.2 Whether the USITC failed to provide sufficient non-confidential summaries of
confidential information to allow for interested parties to present a meaningful defence
7.5.2.1 Introduction
7.293. China contends that the USITC failed to provide sufficient non-confidential summaries of
confidential information to allow for interested parties to present a meaningful defence , and
therefore acted inconsistently with Article 3 of the Agreement on Safeguards. In this regard, China
argues that both the procedure followed by the USITC in providing non -confidential summaries of
confidential information to interested parties , and the actual content of the non -confidential
summaries in the USITC final report and USITC final staff report were inconsistent with Article 3 of
the Agreement on Safeguards.641
7.294. For its part, the United States argues that China bases its claim on an incorrect
understanding of relevant obligations under Article 3 of the Agreement on Safeguards.642 In addition,
the United States submits that the USITC went beyond the obligations under Articles 3.1 and 3.2
and provided interested parties with ample opportunity to present their evidence and views.643
7.295. Our analysis in the sections below first addresses whether China has demonstrated that the
procedure followed by the USITC in providing non-confidential summaries of confidential information
to interested parties was inconsistent with Article 3 of the Agreement on Safeguards
(section 7.5.2.2). We then address whether China has demonstrated that the USITC, in violation of
Article 3 of the Agreement on Safeguards, failed to provide sufficient non-confidential summaries of
confidential information in its final report and final staff report (section 7.5.2.3).
7.5.2.2 The procedure followed by the USITC in providing non-confidential summaries of
confidential information to interested parties
7.5.2.2.1 Factual background
7.296. As envisaged under US law, the USITC made available all confidential information contained
in the USITC prehearing and final reports and in written submissions of interested parties to
authorized counsel under an administrative protective order (APO). Access to the APO is limited to
attorneys who do not participate in competitive decision-making and who agree to be bound by the
USITC's rules, forbidding disclosure of such information outside of the proceeding in which it is
submitted.644 When requested by the USITC, counsel recei ving confidential information under an
APO are required to "return or destroy all copies of materials released to authorized applicants
pursuant to this section and all other materials containing confidential business information
[(CBI)]".645
7.297. During the safeguard investigation, the USITC issued prehearing injury and remedy reports
in both confidential and non-confidential versions. The confidential versions were issued to counsel
under the APO. Thereafter, the non-confidential version of the prehearing injury report was publicly
issued one business day before the deadline for submitting pre hearing briefs to the USITC. The

641 China's first written submission, para. 302, heading to section III(D)(2)(a), and heading to
section III(D)(2)(b).
642 See, e.g. United States' first written submission, para. 297.
643 United States' first written submission, para. 303.
644 Application for disclosure of CBI under administrative protective order, (Exhibit USA-7).
645 19 C.F.R. § 206.17, (Exhibit USA-1), p. 4.

non-confidential version of the prehearing remedy report was publicly issued two business days
before the deadline for submitting prehearing briefs to the USITC.646
7.298. At the conclusion of its investigation, the USITC issued confidential versions of its final report
and final staff report on 13 November 2017, and transmitted them to the President on the same
day. The next day ( 14 November 2017), the USITC issued a notification indicating that
"[a]ll authorized applicants shall return or destroy all copies of all CBI disclosed under protective
order within 14 days after the completi on of this investigation (e.g. after publication in the Federal
Register of the Commission 's determination) and all other materials containing such CBI such as
charts or notes based on such CBI ".647 The USITC issued the non -confidential versions of its final
report and final staff report on 20 November 2017.648 This was also the deadline for parties to submit
their comments on the USITC final report and final staff report to the Trade Policy Staff Committee
(TPSC), which advises the President on whether to impose any safeguard measure.
7.5.2.2.2 Main arguments of the parties
7.299. China argues that the USITC failed to comply with the requirements of Article 3 of
the Agreement on Safeguards because it "provided non-confidential summaries to interested parties
with such delay that the parties were not provided with an adequate opportunity to exercise their
right to present a defence".649
7.300. First, China submits that the USITC provided non-confidential summaries of its prehearing
reports to the interested parties with such de lay650 that they were deprived of an adequate
opportunity to present a defence.651
7.301. Second, China submits that the timing of the publication of the non-confidential versions of
the USITC final report and final staff report652 effectively negated the interested parties' right to
present evidence and views before the TPSC.653 In China's view, the sequence of events surrounding
the issuance of the confidential and non-confidential versions of the USITC final report and final staff
report, and the deadline for submitting comments to the TPSC, effectively resulted in the interested

646 China's first written submission, paras. 305-306; United States' first written submission,
paras. 306-307. The USITC issued a confidential version of its prehearing injury report on 1 August 2017 and
the non-confidential version on 4 August 2017; prehearing briefs for the USITC injury hearing were due on
8 August 2017. The USITC issued a confidential version of its prehearing remedy report on 11 September 2017
and the non-confidential version on 22 September 2017; prehearing briefs for the USITC remedy hearing were
due on 27 September 2017.
647 Notification of final date for compliance with APO CBI requirements, (Exhibit USA-9).
648 China's first written submission, para. 307; United States' first written submission, para. 308.
649 China's first written submission, para. 302.
650 China submits that the non-confidential versions of the USITC prehearing injury and remedy reports
were issued 3-10 days later than the confidential version, and only 1-2 business days prior to the deadline for
prehearing briefs. (China's first written submission, paras. 305-306).
651 China's second written submission, paras. 321 and 323; response to Panel question No. 29 of the
first set, para. 184; and response to Panel question No. 29 of the second set, para. 298. In this regard, China
submits that the obligation to publish a non-confidential summary of the competent authorities' report logically
entails that the competent authorities are also required to publish non-confidential versions of intermediate
documents, to the extent that they form part of their final report or are themselves documents in respect of
which the interested parties have a right to present evidence and their views. (China's second written
submission, paras. 310, 313, and 316. See also China's response to Panel question No. 30 of the first set,
para. 188).
652 China submits that the non-confidential version of the USITC final report and final staff report was
published (a) a week later than the confidential version; and (b) on the same date when the interested parties
were required to submit their comments on these reports to the TPSC. (China's first written submission,
paras. 307-308).
653 China's first written submission, paras. 307-308; second written submission, paras. 314, 321, and
323; response to Panel question No. 29 of the first set, para. 185; and response to Panel question No. 29 of
the second set, para. 298. In this regard, China submits that, if sufficient time is not provided to comment on
the competent authorities' report, interested parties' right to "present evidence and their views" under
Article 3.1 of the Agreement on Safeguards would be rendered meaningless. China contends that its
interpretation is further supported by Article 4.2(c), which requires that the competent authorities publish their
report "promptly". (China's response to Panel question No. 31 of the first set, paras. 192-193; comments on
the United States' response to Panel question No. 31 of the first set, para. 217).

parties not being able to reliably refer to the USITC final report and final staff report given the risk
of referring to confidential information.654
7.302. Third, China submits that "[t]he USITC exacerbated its unfairness" by requiring counsel for
interested parties to destroy confidential information received under the APO, including the
confidential versions of the USITC final report and final staff report, before making arguments or
comments to the TPSC.655 For China, this requirement to destroy confidential information "effectively
negated the ability of the interested parties to rely on information that could support their arguments
that no measure was needed".656
7.303. In response, the United States submits that China's claims are legally and factually incorrect.
7.304. According to the United States, Article 3.1 of the Agreement on Safeguards does not require
the competent authorities to prepare prehearing reports. Therefore, there can be no obligation for
the competent authorities to publish a non -confidential version of such documents, let alone to do
so within a specific timeframe. 657 For the United States, the USITC went beyond the requirements
prescribed in Article 3 by providing interested parties with prehearing injury and remedy reports.658
7.305. The United States further contends that, contrary to China's view, Article 3 of the Agreement
on Safeguards does not require that the competent authorities provide interested parties with an
opportunity to comment on their report .659 As a result, the United States takes the view that the
publication of the USITC final report and final staff report marked the end of the investigation, and
that commenting on these reports for the purposes of the TPSC's evaluation was a separate process
not subject to the requirements of Article 3.1.660 In any event, the United States maintains that
China has failed to demonstrate why and how the timing of the publication of the USITC final report
and final staff report interfered with the right of interested parties to properly present their "evidence
and … views".661
7.306. Finally, with respect to China's argument concerning the termination of access to confidential
information, the United States submits that Article 3 neither obligates the competent authorities to
provide confidential information to interested parties, nor dictates when the competent authorities

654 China's first written submission, para. 308.
655 See, e.g. China's first written submission, paras. 309-310; second written submission,
para. 319; and response to Panel question No. 29 of the first set, para. 187.
656 China's first written submission, para. 310.
657 United States' first written submission, paras. 309 and 311; response to Panel question No. 30 of the
first set, para. 83; comments on China's response to Panel question No. 29 of the first set, para. 169;
comments on China's response to Panel question No. 30 of the first set, paras. 177-178; and second written
submission, para. 191. More generally, the United States submits that the Agreement on Safeguards is not
concerned with how the competent authorities reach their determinations in applying safeguard measure.
(United States' response to Panel question No. 30 of the first set, para. 84 (referring to Appellate Body Report,
US – Line Pipe, para. 158)).
658 United States' first written submission, paras. 305-307 and 313; response to Panel question No. 30
659 United States' response to Panel question No. 31 of the first set, paras. 86-87; comments on
China's response to Panel question No. 31 of the first set, para. 182; and second written submission,
para. 197. According to the United States, Article 3.1, second sentence, only requires that interested parties
are afforded the right "to present evidence and their views" (a) prior to the publication of the final report, and
(b) in response to the evidence and arguments provided by the parties (rather that the competent authorities).
(United States' response to Panel question No. 31 of the first set, para. 87; comments on China's response to
Panel question No. 31 of the first set, para. 182). Moreover, the United States argues the obligation under
Article 4.2(c) to publish the final report "promptly" only concerns the right of interested parties to receive a
detailed analysis from the competent authorities. (United States' comments on China's response to Panel
question No. 31 of the first set, para. 183).
660 United States' first written submission, para. 315; comments on China's response to Panel question
No. 29 of the first set, para. 171.
661 United States' first written submission, para. 317. In this regard, the United States further submits
that while the USITC published the non-confidential versions of its final report and final staff report on the date
for initial submissions to the TPSC, interested persons also had an opportunity to make rebuttal submissions
and raise issues at the TPSC hearing. In addition, the United States notes that Members had the option of
referring to the non-confidential version of the USITC report during consultations under Article 12.3 of
the Agreement on Safeguards. (Ibid. para. 317).

should grant or terminate such access. 662 The United States further argues that China h as not
demonstrated that the termination of access to confidential information negated the ability of the
interested parties to defend their interests.663
7.5.2.2.3 Evaluation of the Panel
7.307. We agree with the United States that China's claims concerning the procedure followed by
the USITC in providing non-confidential summaries of confidential information to interested parties
are premised on an incorrect interpretation of Article 3 of the Agreement on Safeguards.
7.308. First, China's claim concerning the timing of publication of the non -confidential versions of
USITC prehearing injury and remedy reports is premised on an obligation for the competent
authorities to provide such intermediate decisional documents to interested part ies. However, the
Agreement on Safeguards does not contain any such obligation. While the third sentence of
Article 3.1 envisages the publication of a report, that report need only contain "findings and reasoned
conclusions reached on all pertinent issues of fact and law".664 There is no requirement to publish a
report containing intermediate findings or conclusions. Nor does any other part of Article 3 address
this issue. Because Article 3 does not require publication of intermediate decisional documents, w e
reject China's claim that the timing of the publication of the non -confidential versions of the
USITC's prehearing injury and remedy reports was inconsistent with Article 3.665
7.309. Second, China's claim concerning the timing of the publication of the non -confidential
versions of USITC final report and final staff report is premised on an obligation that the competent
authorities provide interested parties with an opportunity to comment on their published report.
Again, we do not consider that any such obligation exists. As China clarified, its claim is based on
the second sentence of Article 3.1, which provides that interested parties should have an opportunity
to present "evidence" and "views". 666 As an initial matter, we note that the structure of Article 3.1
suggests that interested parties should be afforded these procedural rights before publication of the
report envisaged in the third sentence of Article 3.1. However, even if this were not the ca se,
Article 3.1, second sentence, requires that the competent authorities hold public hearings " or"
provide other appropriate means for interested parties to present evidence and views . The use of
the disjunctive conjunction "or" signifies that when public hearings are held, as was the case in the
USITC's safeguard investigation, there is no obligation to provide "other appropriate means" for
interested parties to provide further input.667 Accordingly, we reject China's claim that the timing of
the publication of the non-confidential versions of the USITC final report and final staff report was
inconsistent with Article 3.
7.310. Third, China's claim concerning the termination of access to confidential information is
similarly flawed as it is premised on the existence of a requirement that the competent authorities
must provide interested parties with a right to comment on the final report. However, as we have

662 United States' first written submission, para. 316; second written submission, para. 203; and
comments on China's response to Panel question No. 29 of the first set, para. 172.
663 United States' first written submission, para. 317; comments on China's response to Panel question
No. 29 of the first set, para. 173. In this context, the United States submits that the USITC released the
confidential versions of its final report and final staff report to the parties' counsel one week before comments
to the TPSC were due and thereafter requested to return or destroy confidential information no later than
14 days after the completion of this investigation. According to the United States, interested parties who
received confidential information under the APO had an opportunity to review the final report and final staff
report and direct the TPSC to certain confidential information that they considered relevant.
(United States' first written submission, paras. 317-318; comments on China's response to Panel question
No. 29 of the first set, paras. 173-174). The United States notes that SEIA in fact did so. (United States' first
written submission, fn 421 (referring to SEIA's posthearing remedy brief, Appendix A, (Exhibit USA-10), p. 17
and fn 14)).
664 Emphasis added.
665 We note that our finding on this issue generally aligns with how previous panels have addressed
similar claims. For example, in Ukraine – Passenger Cars, the panel found that the Agreement on Safeguards
does not require the competent authorities to provide substantive information to the interested parties in
advance of a public hearing. (Panel Report, Ukraine – Passenger Cars, para. 7.423). Moreover, in US – Steel
Safeguards, the panel found that Article 3 does not require the competent authorities to send to interested
parties "draft findings" of their determination for comments prior to the publication of their report. (Panel
Reports, US – Steel Safeguards, paras. 10.64-10.65).
666 China's response to Panel question No. 29 of the first set, para. 185.
667 We agree in this regard with the Panel Report, Ukraine – Passenger Cars, para. 7.422.

just explained, no such obligation exists. We therefore reject China's argument that the USITC acted
inconsistently with Article 3 by requiring APO -authorized counsel to destroy or return confidential
information.
7.311. Based on the above, we reject China's claim that the procedure followed by the USITC in
providing non -confidential summ aries of confidential information to interested parties was
inconsistent with Article 3 of the Agreement on Safeguards.
7.5.2.3 The substance of non-confidential summaries of confidential information in the
USITC final report and final staff report
7.5.2.3.1 Factual background
7.312. The USITC issued both confidential and non-confidential versions of its final report and final
staff report. In the non-confidential versions of its final report and final staff report , the USITC
redacted or modified information that it considered "would reveal confidential operations of individual
concerns".668
7.5.2.3.2 Main arguments of the parties
7.313. Relying on previous DSB reports, China argues that a harmonious interpretation of
Articles 3.1 and 3.2 of the Agreement on Safeguards requires that the competent authorities publish
non-confidential summaries of the confidential data relied upon in their report so that interested
parties can exercise their right to present a defence. 669 China also submits that, when relying on
confidential information in their findings, the competent authorities are required to "characterize[]
the confidential information as much as possible without compromising the confidential nature of
the information , ideally being as creative as possible in trying to provide the essence of the
confidential information".670 Based on this standard, China argues that the actual non-confidential
summaries produced by the USITC did not satisfy the requirements of Article 3 because they did not
permit the interested parties to reasonably present a defence. 671 As support for its position, China
refers to certain pages in the USITC final staff report672 and the USITC's serious injury determination
in its final report673, as examples of the substantive deficiencies of the non -confidential versions of
these reports.674
7.314. The United States advances that China's arguments fail for several reasons. As a matter of
law, the United States contends that (a) Article 3 does not require the comp etent authorities to
provide non-confidential summaries of confidential information relied upon in their final report 675;
and (b) the alleged "harmonious interpretation" of Articles 3.1 and 3.2 does not establish any such
obligation.676 In the United States' view, "the relevant obligation is for the competent
authorities' report to 'set[] forth their findings and reasoned conclusions reached on all pertinent

668 USITC final report, (Exhibit CHN-2), p. i; USITC final staff report, (Exhibit CHN-3), para. iv.
669 China's first written submission, paras. 297-301 (referring to Panel Reports, US – Steel Safeguards,
paras. 10.274-10.276; and US – Wheat Gluten, para. 8.23); second written submission, para. 308; and
response to Panel question No. 31 of the second set, para. 304. China also argues that a harmonious
interpretation of Articles 3.1, 3.2, and 4.2(c) of the Agreement on Safeguards required the USITC to publish a
non-confidential summary of the USITC final report. (China's second written submission, para. 315; response
to Panel question No. 32 of the first set, para. 194, comments on the United States' response to Panel question
No. 33 of the first set, para. 222; and response to Panel question No. 31 of the second set, para. 307). In
addition, China argues that (i) Article 3.1 and (ii) Article 3.2 of the Agreement on Safeguards contain such an
obligation. (China's first written submission, paras. 294 and 312).
670 China's second written submission, para. 317; first written submission, paras. 297-300; and opening
statement at the first meeting of the Panel, para. 99.
671 China's first written submission, para. 302; second written submission, paras. 318 and 320.
672 China's first written submission, para. 314; opening statement at the first meeting of the Panel,
para. 100.
673 China's first written submission, para. 315.
674 China's first written submission, para. 316; response to Panel question No. 59 of the third set,
para. 168.
675 United States' first written submission, paras. 297 and 319; second written submission,
para. 201; response to Panel question No. 33 of the first set, para. 88; and comments on China's response to
Panel question No. 59 of the third set, para. 94.
676 United States' comments on China's response to Panel question No. 32 of the first set, para. 184.

issues of fact and law'". 677 As a matter of fact, the United States argues that the non -confidential
versions of the USITC final report and final staff report contain the USITC's findings and reasoned
conclusions.678 It further submits that China's examples of redacted or omitted confidential
information do not demonstrate that the USITC final report and final staff report fail to "set[] forth
their findings and reasoned conclusions reached on all pertinent issues of fact and law".679
7.5.2.3.3 Evaluation of the Panel
7.315. As a preliminary matter, we note that a measure of ambiguity exists concerning the legal
basis of China's claim. As support for its claim, China has inconsistently referred to Article 3.1680,
Article 3.2681, a harmonious reading of Articles 3.1 and 3.2 682, an d a harmonious reading of
Articles 3.1, 3.2, and 4.2(c).683 Regardless of this ambiguity, we do not agree with China that the
USITC was required to provide "non-confidential summaries" of the confidential information relied
upon in its final report and final staff report.
7.316. In this regard, we recall that Article 3.1 of the Agreement on Safeguards requires that the
competent authorities "publish a report setting forth their findings and reasoned conclusions reached
on all pertinent issues of fact and law". Moreover, Article 3.2 prohibits the competent authorities
from disclosing confidential information submitted by the interested parties without their permission.
Article 3.2 also allows – but does not require – the competent authorities to request that the
interested parties furnish "non-confidential summaries" of confidential information. In cases where
the competent authorities are required to redact certain confide ntial information from the
non-confidential version of their report to meet their obligations under Article 3.2, they may elect to
include "non-confidential summaries" of the confidential information when presenting their "findings
and reasoned conclusions". However, the text of Article 3 does not require them to do so. Nor does
the mere absence of "non-confidential summaries" in the report mean that the competent authorities
failed to publish a report "setting forth their findings and reasoned conclusions reached on all
pertinent issues of fact and law".684
7.317. In this context, we agree with the United States that China 's claim is premised on an
incorrect interpretation of Article 3 of the Agreement on Safeguards . We also agree with the
United States that China has not demonstrated that the non-confidential versions of the USITC final
report and final staff report suffer from any inadequacy resulting from the redaction of confidential
information. While China complains that certain of the USITC 's redactions were overbroad or

677 United States' first written submission, paras. 297 and 319. According to the United States, the
presence or absence of summarized confidential information is not dispositive, as the competent
authorities' compliance with the obligation to provide "findings and reasoned conclusions" is a substantive
question. (United States' comments on China's response to Panel question No. 32 of the first set, para. 184).
678 United States' first written submission, para. 319.
679 United States' first written submission, paras. 297 and 319.
680 See, e.g. China's first written submission, para. 294.
681 See, e.g. China's first written submission, para. 312; and response to Panel question No. 29 of the
first set, para. 183.
682 See, e.g. China's first written submission, paras. 297-300; second written submission,
para. 308; and response to Panel question No. 31 of the second set, para. 304.
683 See, e.g. China's second written submission, para. 315; response to Panel question No. 32 of the
first set, para. 194; comments on the United States' response to Panel question No. 33 of the first set,
para. 222; and response to Panel question No. 31 of the second set, para. 307.
684 In this context, we do not find China's references to the panel reports in US – Steel Safeguards
persuasive to the extent they promulgate a general rule that the competent authorities must, to the fullest
extent possible, provide non-confidential summaries of all confidential information referenced in their final
report. (Panel Reports, US – Steel Safeguards, paras. 10.274-10.275). In particular, we do not consider that
the text of Article 3.1 supports an affirmative requirement for the competent authorities to explain their
findings "to the fullest extent possible without disclosing confidential information" or an affirmative requirement
to present confidential data in a modified form (e.g. aggregation or indexing) that protects confidentiality. We
similarly do not consider that, in order to withhold (and not summarize or index) confidential data, Article 3.1
affirmatively requires the competent authorities to explain "why there was no possibility of presenting any facts
in a manner consistent with the obligation of protecting confidential information". (Ibid. para. 10.275
(emphasis original)).
In addition, we do not agree with China to the extent it argues that the panel in US – Wheat Gluten
interpreted Article 3.1, third sentence, to require that the competent authorities provide a non-confidential
summary of confidential information in their report. (China's first written submission, paras. 300-301; second
written submission, para. 317; and comments on the United States' response to Panel question No. 30 of the
first set, para. 213 (referring to Panel Report, US – Wheat Gluten, para. 8.23)).

inadequately summarized with non -confidential information 685, it does not explain how these
redactions meant that the USITC final report and final staff report failed to set forth "findings and
reasoned conclusions reached on all pertinent issues of fact and law".
7.318. Based on the above, we reject China's claim that the USITC, in violation of Article 3 of
the Agreement on Safeguards, failed to provide sufficient non-confidential summaries of confidential
information in its final report and final staff report.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, the Panel finds that China has failed to demonstrate
that the United States acted inconsistently with:
a. Article XIX:1(a) of the GATT 1994 and Article 3.1 of th e Agreement on Safeguards by
failing to establish, prior to the application of the measures, that the increases in imports
were the result of "unforeseen developments" and were the "effect of obligations incurred"
under the GATT 1994 by the United States;
b. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing to establish the
required "causal link" between the increased imports and the serious injury found to exist;
c. Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards by failing to ensure that
injury caused by other factors was not attributed to increased imports; and
d. Articles 3.1 and 3.2 of the Agreement on Safeguards by providing non -confidential
summaries to interested parties with such delay that the parties were not provided wi th
an adequate opportunity to exercise their right to present a defence , and because the
actual public summaries were not sufficient so as to permit an interested party to
reasonably present a defence.
8.2. In light of these findings, the Panel makes no recomme ndation to the DSB pursuant to
Article 19.1 of the DSU.