Trade Court Upholds, Sends Back Parts of Chinese Solar Cell Antidumping Review
The Court of International Trade, in an April 4 opinion made public April 12, sustained parts and sent back parts of the Commerce Department's final results in the 2017-2018 administrative review of the antidumping duty order on solar cells from China. Judge Claire Kelly upheld Commerce's pick of Malaysia as the primary surrogate country and the calculation of surrogate financial ratios. However, the judge remanded Commerce's decision to value silver paste using Malaysian import data, value mandatory respondent Risen Energy Co.'s ethyl vinyl acetate and backsheet, and use partial adverse facts available to value missing factor of production data, as well as the conduct of its separate rate calculation.
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The case was brought by a total of 21 plaintiffs, consolidated plaintiffs and plaintiff-intervenors, led by Risen, one of the review's mandatory respondents, along with Trina Energy Co. The plaintiffs challenged a host of elements in the review, the first of which addressed by the court was Commerce's surrogate country pick. The agency tapped Malaysia as the surrogate country over the plaintiffs' preferred picks of Bulgaria or Romania.
In the opinion, Kelly held that Commerce reasonably explained that Malaysia has the best data to be a surrogate country since it is the only country that makes both solar cells and solar modules and has a complete financial statement from a producer of both of these types of merchandise. The judge also ruled against the Bulgaria and Romania picks, siding with Commerce that neither country is a significant producer of solar cells.
However, Kelly did pick out a few issues with the surrogate pick that did lead to a remand: the surrogate values for silver paste, backsheet and EVA. Where the silver paste -- an input of solar cells -- are concerned, the judge found that the plaintiffs were correct in arguing that the surrogate data for this input is aberrant and doesn't reflect the commercial reality of solar cell and module production in China and that its Malaysian Harmonized Tariff Schedule classification is not specific to silver paste. Kelly said that Commerce "failed to provide a sufficient justification" for the conclusion that the Malaysian data for silver paste is reliable in light of detracting evidence.
As for backsheet and EVA, Kelly ruled that Commerce's decision to use the Malaysian data for these two inputs is arbitrary and departs from past agency practice without explanation. In the review, Commerce used Malaysian tariff schedule subheading 3920.62.1000, which covers "Poly(Ethylene Terephthalate): Plates and Sheets" to value the backsheet, while it has historically used subheading 3920.62.9000, which covers "Poly(Ethylene Terephthalate): Other Than Plates And Sheets." The judge ruled that "absent an explanation for Commerce’s deviation from its historical treatment of backsheet, Commerce’s determination is arbitrary." While the judge took issue with the specific surrogate data points, she still sustained the choice of Malaysia as the primary surrogate country.
Kelly then sustained Commerce's surrogate financial ratios, ruling, however, that Commerce's reasoning "could be clearer." The plaintiffs argued that a portion of the surrogate company's cost of sales currently allocated to materials, labor and energy (MLE) only includes costs for raw materials, inflating overhead expenses by failing to allocate any line item costs for labor and energy to the MLE costs. However, since Commerce believes the financial statement is compliant with International Financial Reporting Standards, it must include labor and energy costs in inventories cost.
"Plaintiffs’ argument assumes that Commerce did not isolate the labor and energy costs and account for them in the MLE denominator when calculating the surrogate financial ratios," the opinion said. "However, Commerce explains that it isolates the labor and energy costs using the notes in Hanwha’s Financial Statement and includes those costs in the surrogate ratios’ denominator."
Lastly, Kelly touched on Commerce's use of AFA over Risen and Trina's unaffiliated suppliers' failure to respond to Commerce's inquiries. The judge ruled that commerce failed to show that the respondents didn't cooperate to hte best of their ability and that the respondents had the leverage to induce the suppliers' cooperation. Commerce said Trina and Risen could threaten to stop doing business with the suppliers to induce their cooperation. But, Kelly pointed out that record evidence shows that such threats were made and that they failed to induce cooperation.
Commerce also said that AFA was warranted since there was a chance the unaffiliated suppliers could evade the duties through the respondents by withholding information. "The record does not support Commerce’s speculation," the opinion said. "None of the non-cooperative unaffiliated suppliers are mandatory respondents or named Chinese exporters of subject merchandise; therefore, there is no rate for the non-cooperative unaffiliated suppliers to evade."
(Risen Energy Co. Ltd. v. United States, Slip Op. 22-33, CIT Consol. #20-03743, dated 04/04/22, Judge Claire Kelly. Attorneys: Gregory Menegaz of DeKieffer & Horgan for plaintiff Risen Energy; Ronald Wisla of Fox Rothschild for plaintiff-intervenor Anji DaSol Solar Energy Science & Technology Co.; Jeffrey Grimson of Mowry & Grimson for consolidated plaintiffs and plaintiff-intervenors JA Solar Technology Yangzhou Co., Ltd., Shanghai JA Solar Technology Co., Ltd. and JingAo Solar Co., Ltd.; Jonathan Freed of Trade Pacific for consolidated plaintiffs Trina Solar Co., Ltd., Trina Solar (Changzhou) Science & Technology Co., Ltd., Yancheng Trina Guoneng Photovoltaic Technology Co., Ltd., et al.; William Perry of Harris Bricken for consolidated plaintiffs Shenzhen Sungold Solar Co., Ltd. and Wuxi Tianran Photovoltaic Co., Ltd.; Craig Lewis of Hogan Lovells for consolidated plaintiff and plaintiff-intervenor Shanghai BYD Co., Ltd., and plaintiff-intervenors Canadian Solar Inc., Canadian Solar International Limited, et al.; Joshua Kurland for defendant U.S. government)