TRADE SOLAR CELLS AND ANTIDUMPING POINTS

There have been some developments in Trade area, especially in the Solar Cells case.

TRADE

SOLAR CELLS CASE

In the Solar Cells from China case, yesterday we were able to win a significant victory because the ITC in a 4-3 vote, 4 Commissioners to 3 Commissioners, decided that there were no critical circumstances.  See ITC news release below.  If the vote had been a tie, 3-3 vote, that would could have led to an affirmative determination.

The decision of my client, Upsolar, to testify at the ITC hearing, I believe, was critical.  At the hearing, the lawyer for the Chinese respndents made a very formalistic legal argument as to why critical circumstances was not appropriate.  My client, Upsolar, was the only company to frame the issue as an impact on US small business.  Based on conversations with US importers, I firmly believed that the minimum liability for critical circumstances was $100 million, much of it incurred by small US importers, some of which are subsidiaries of Chinese companies.

The only chance of winning a case at the ITC is to make the trade fight a fight between two US groups.  If the fight at the ITC is a fight between the United States and China, the United States will win every time.  So it is critical to change the perspective.

Only Upsolar made this argument at the ITC and I firmly believe that with a 4-2 decision at the ITC, this was a critical point.

As a result of this decision, the liability for US iimporters will begin on the dates of the Commerce Department’s preliminary determinations.

LINKING ANTIDUMPING RATES

In a civil litigation context, a US law firm argued that a Chinese company with a 0% antidumping rate was trying to evade US antidumping laws because it was exporting the product from other producers.  The US law firm making the argument did not realize that the Commerce Department gives antidumping rates to Chinese exporters, not manufacturers.  Morevoer, especially in review investigations, the Commerce Department does not link the Chinese producer to the exporter, so the US law firm failed to read the Federal Register notice.  If they had read the Federal Register notice, they would have realized that the 0% rate had been given to the Chinese exporter and, therefore, it could export products from other Chinese companies at the 0% rate.

Two points to keep in mind, however, is that in initial investigations and some review investigations, Commerce does link the Chinese exporter to the Chinese producer so the exporter can get the low rate only if it exported product produced by a specific producer.  Therefore, it is very important look at the specific words of the Federal Register notice to know whether the dumping rate is linked or not.

Also if a Chinese company does export products produced by numerous companies, it must be prepared in future review investigations to report factors of production, consumption factors, from every factory that supplied merchandise, which was sold to the US during the review period.  Thus, several years ago I talked to a Shanghai Trading company that was involved in the Wooden Bedroom Furniture case.  It was exporting wooden bedroom furniture at very low antidumping rates from almost 40 Chinese producers.  At the meeting, I asked how the Shanghai Trading Company was going to respond in a future review investigation and provide production factors for all of its Chinese suppliers.  The Shanghai Trading Company blew me off and said that they would not have to report the factors.  Two years later, the same Shanghai trading company was named a mandatory respondent in the Wooden Bedroom Furniture review invesitgation.  Because it could not report the factors of production from all of its suppliers, it blew up receiving an antidumping rate of over 200%, creating millions of dollars in liability for US importers.

REVIEW INVESTIGATIONS

On November 5th in the Federal Register, the Commerce Department stated that review investigations can be requested in the following cases against China:

THE PEOPLE’S REPUBLIC OF CHINA:

Certain Cut-To-Length  Carbon Steel, A-570-849,  11/1/11-10/31/12
Certain Hot-Rolled Carbon Steel Flat Products,  A-570-865, 11/1/11-10/31/12
Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses, A-570-958, 11/1/11-10/31/12
Diamond Sawblades and Parts Thereof, A-570-900, 11/1/11-10/31/12
Fresh Garlic, A-570-831, 11/1/11-10/31/12
Lightweight Thermal Paper, A-570-920, 11/1/11-10/31/12
Paper Clips, A-570-826, 11/1/11-10/31/12
Polyethylene Terephthalate Film, Sheet and Strip, A-570-924, 11/1/11-10/31/12

Pure Magnesium in Granular Form, A-570-864, 11/1/11-10/31/12
Refined Brown Aluminum Oxide, A-570-882, 11/1/11-10/31/12
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe, A-570-956, 11/1/11-10/31/12
Seamless Refined Copper Pipe and Tube, A-570-964.   11/1/11-10/31/12

I am presently in Beijing.  If anyone wants to discuss these developments, please feel free to contact me.

ITC PRESS RELEASE

ITC Vote: Crystalline Silicon Photovoltaic Cells and Modules from China; November 7, 2012 November 7, 2012  News Release 12-113  Inv. Nos. 701-TA-481 and 731-TA-1190 (Final)  Contact: Peg O’Laughlin, 202-205-1819

CRYSTALLINE SILICON PHOTOVOLTAIC CELLS AND MODULES FROM CHINA INJURE U.S. INDUSTRY, SAYS USITC

The United States International Trade Commission (USITC) today determined that a U.S. industry is materially injured by reason of imports of crystalline silicon photovoltaic cells and modules from China that the U.S. Department of Commerce (Commerce) has determined are subsidized and sold in the United States at less than fair value.

All six Commissioners voted in the affirmative.

As a result of the USITC’s affirmative determinations, Commerce will issue antidumping and countervailing duty orders on imports of these products from China.

The Commerce Department previously made affirmative critical circumstances determinations in its investigations. Therefore, the Commissioners who made affirmative determinations today are required to determine whether imports covered by the Commerce critical circumstances determinations are likely to  undermine seriously the remedial effect of the antidumping and countervailing duty orders Commerce will issue.

With respect to critical circumstances, Commissioners Daniel R. Pearson, Shara L. Aranoff, David S. Johanson, and Meredith M. Broadbent voted in the negative. Chairman Irving A. Williamson and Commissioner Dean A. Pinkert voted in the affirmative with respect to critical circumstances.

As a result of the Commission’s negative determinations regarding critical circumstances, the antidumping and countervailing duty orders concerning these imports will not apply retroactively to goods that entered the United States prior to the date of publication in the Federal Register of the Department of Commerce’s affirmative preliminary determinations.

The Commission’s public report Crystalline Silicon Photovoltaic Cells and Modules from China (Investigation Nos. 701-TA-481 and 731-TA-1190 (Final), USITC Publication 4360, November 2012) will contain the views of the Commissioners and information developed during the investigations.

Copies may be obtained after December 14, 2012, by emailing pubrequest@usitc.gov, calling 202-205-2000, or by writing the Office of the Secretary, 500 E Street SW, Washington, DC 20436. Requests may also be made by fax to 202-205-2104.

FACTUAL HIGHLIGHTS

Crystalline Silicon Photovoltaic Cells and Modules from China  Investigation Nos. 701-TA-481 and 731-TA-1190 (Final)

Product Description: The merchandise covered by this investigation are crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of 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. This investigation covers crystalline silicon photovoltaic cells of thickness equal to or greater than 20 micrometers, having a p/n junction formed by any means, whether or not the cell  has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell. Subject merchandise may be described at the time of importation as parts for final finished products that are assembled after importation, including, but not limited to, modules, laminates, panels, building-integrated modules, building integrated panels, or other finished goods kits. Such parts that otherwise meet the definition of merchandise under consideration are included in the scope of this investigation. Excluded from the scope of this investigation are thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS). Also excluded from the scope of this investigation are crystalline silicon photovoltaic cells, not exceeding 10,000mm2 in surface area, that are permanently integrated into a consumer good whose function is other  than power generation and that consumes the electricity generated by the integrated crystalline silicon photovoltaic cell. Where more than one cell is permanently integrated into a consumer good, the surface area for purposes of this exclusion shall be the total combined surface area of all cells that are integrated into the consumer good. Modules, laminates, and panels produced in a third-country from cells produced in the People’s Republic of China are covered by this investigation; however, modules, laminates, and panels produced in China from cells produced in a third country are not covered by this investigation. Merchandise covered by this investigation is currently classified in the Harmonized Tariff System of the United States ( HTSUS”) under subheadings 8501.61.0000, 8507.20.80, 8541.40.6020, 8541.40.6030, and 8501.31.8000. These HTSUS subheadings are provided for convenience and customs purposes; the written description of the scope of this investigation is dispositive.

Status of Proceedings: 1. Type of investigations:  Final antidumping and countervailing duty. 2. Petitioner:  SolarWorld Industries America, Inc., Hillsboro, OR. 3. Investigations instituted by USITC:  October 19, 2011. 4. USITC hearing:  October 3, 2012. 5. USITC vote:  November 7, 2012. 6. USITC notification of Department of Commerce:  November 30, 2012.

U.S. Industry: 1. Number of U.S. producers: 14. 2. Location of producers’ cell and module plants:  Arizona, California, Delaware, Florida, Georgia,        Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Tennessee,        Washington, and Wisconsin. 3. Employment of production and related workers of crystalline silicon photovoltaic modules in 2011:        1,856. 4. U.S. producers’ U.S. shipments of crystalline silicon photovoltaic modules in 2011: $790.5 million. 5. Apparent U.S. consumption of crystalline silicon photovoltaic modules in 2011:  $3.01 billion.   6. Ratio of subject imports from China to apparent U.S. consumption of crystalline silicon        photovoltaic modules in 2011:  57.4 percent.

U.S. Imports in 2011: 1. Quantity of imports of crystalline silicon photovoltaic cells and modules from China:  1.5 million    kilowatts. 2. Value of imports of crystalline silicon photovoltaic modules from China:  $1.9 billion.