CHANGZHOU TRINA SOLAR ENERGY CO., LTD., and TRINA SOLAR (CHANGZHOU) SCIENCE & TECHNOLOGY CO., LTD., Plaintiffs, CANADIAN SOLAR INC., CANADIAN SOLAR INTERNATIONAL, LTD., CANADIAN SOLAR MANUFACTURING (CHANGSHU), INC., CANADIAN SOLAR MANUFACTURING (LUOYANG), INC., CANADIAN SOLAR (USA) INC., CSI CELLS CO., LTD., CSI SOLAR POWER (CHINA) INC., CSI SOLARTRONICS (CHANGSHU) CO., LTD., CSI SOLAR TECHNOLOGIES INC., and CSI SOLAR MANUFACTURE INC., Plaintiff-Intervenors, v. UNITED STATES, Defendant. SOLARWORLD AMERICAS, INC., CHANGZHOU TRINA SOLAR ENERGY CO., LTD., and TRINA SOLAR (CHANGZHOU) SCIENCE & TECHNOLOGY CO., LTD., Defendant-Intervenors.
Consol. Court No. 17-00198
UNITED STATES COURT OF INTERNATIONAL TRADE
November 30, 2018
Slip Op. 18-166
Before: Jane A. Restani, Judge
PUBLIC VERSION
Robert Gosselink, and Jonathan Freed, Trade Pacific, PLLC, of Washington, D.C., for Plaintiffs and Defendants-Intervenors Changzhou Trina Solar Energy Co., Ltd. and Trina Solar (Changzhou) Science & Technology Co., Ltd.
Craig Lewis, Hogan Lovells US LLP, of Washington, D.C., for Consolidated Plaintiffs Shanghai BYD Co., Ltd. and BYD (Shangluo) Industrial Co., Ltd.
Jeffrey S. Grimson, Kristin H. Mowry, Jill A. Cramer, Sara M. Wyss, James C. Beaty, and Bryan P. Cenko, Mowry & Grimson, PLLC, of Washington, D.C., for Plaintiffs-Intervenors Canadian Solar Inc., Canadian Solar International, Ltd., Canadian Solar Manufacturing (Changshu), Inc., Canadian Solar Manufacturing (LUOYANG), Inc., Canadian Solar (USA) Inc., CSI Cells Co., Ltd., CSI Solar Power (China) Inc., CSI Solartronics (Changshu) Co., Ltd., CSI Solar Technologies Inc., and CSI Solar Manufacture Inc.
Chad A. Readler, Jeanne E. Davidson, Tara K. Hogan, and Justin R. Miller, International Trade Field Office, U.S. Department of Justice, of New York, NY. Of counsel on the brief was Paul Keith, Office of Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.
Timothy Brightbill, Laura El-Sabaawi, and Usha Neelakantan, Wiley Rein, LLP, of Washington, D.C., for Defendant-Intervenor SolarWorld Americas, Inc.
Restani, Judge: In this action challenging a final determination issued by the United States Department of Commerce (“Commerce”) in Commerce‘s Third Administrative Review of the countervailing duty order on crystalline silicon photovoltaic cells, whether or not assembled into modules (“solar cells”) from the People‘s Republic of China (“PRC”), covering the period from January 1, 2014, through December 31, 2014. See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People‘s Republic of China: Final Results of Countervailing Duty Administrative Review, and Partial Rescission of Countervailing Duty Administrative Review; 2014, 82 Fed. Reg. 32, 678 (Dep‘t Commerce July 17, 2017) (“Final Results“), amended by
The United States (“Defendant“) asks that the court sustain Commerce‘s Final Results of its third administrative review. SolarWorld Americas, Inc. (“SolarWorld”) requests the court to uphold other portions of Commerce‘s Final Results as supported by substantial evidence and otherwise consistent with law and asserts that other portions are not.
BACKGROUND
Commerce first published a countervailing duty order on solar cells from the People‘s Republic of China (“PRC”) on December 7, 2012. See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People‘s Republic of China: Countervailing Duty Order, 77 Fed. Reg. 73,017 (Dep‘t Commerce Dec. 7, 2012). In 2016, Commerce initiated its third administrative review of this countervailing duty, covering the period from January 1,
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to
DISCUSSION
Because the parties present a variety of fact-specific claims, the following opinion addresses the factual background for each in turn. Each section notes which parties are bringing a given claim.
I. Export Buyer‘s Credit Program
a. Commerce‘s decision to apply adverse facts available to cooperating parties
i. Background
In the course of the third administrative review, Commerce requested information about the Exports Buyer‘s Credit Program (“EBCP‘) from the GOC. Canadian Solar, and Trina. See
Unlike in the second administrative review,5 in which Commerce declined to apply an adverse inference with regard to facts otherwise available (“AFA”) against otherwise cooperating respondents based on the GOC‘s refusal to provide requested EBCP information,
Trina and Canadian Solar argue that Commerce disregarded record evidence showing that they did not receive support from the EBCP. Trina Compl. at ¶ 10; Trina Br. at 7–9; Canadian Solar Br. at 8–14. Canadian Solar further argued that it was improper to use AFA against a cooperating party and that Commerce‘s decision is arbitrary as it contradicts Commerce‘s previous rulings in similar situations. Canadian Solar Br. at 9, 12–13. Trina disputes Commerce‘s assertion that the non-use of third party banks was unverifiable and contends that Commerce could have requested further documentation on Trina‘s loans in order to verify non-use. Trina Br. at 14; Reply Brief of Plaintiffs Changzhou Trina Solar Energy Co., and Trina Solar (Changzhou) Science and Technology Co., Doc No. 79 (“Trina Reply Br.”) at 11–13
(Sept. 21, 2018). Canadian Solar argues that the affidavits of non-use were sufficient and no other documentation was necessary. Canadian Solar Br. at 10–12. Defendant claims that Commerce was correct in finding that respondents used the EBCP based on an adverse inference given the GOC‘s failure to cooperate fully, and that Commerce was under no obligation to attempt to verify Canadian Solar or Trina‘s submissions. Def. Br. at 10–20.
ii. Discussion
When an interested party “withholds information that has been requested” by Commerce, Commerce may need to “use the facts otherwise available” to reach a decision.
The court recently issued two opinions regarding the Export Buyer‘s Credit Program Changzhou Trina Solar Energy Co. v. United States, 195 F. Supp. 3d 1334 (CIT 2016) (“Changzhou I”) and Guizhou Tyre Co. v. United States, Slip Op. 18-140, 2018 WL 5307676 (CIT Oct. 17, 2018) that at least facially seem to conflict. In Changzhou I, 195 F. Supp. 3d at 1355, the court upheld Commerce‘s use of AFA in determining that respondents used the program. The court based its decision on Commerce‘s reasonable explanation that an understanding of how an exporter would be involved in the program was necessary to determine usage and that the GOC failed to cooperate in providing this information. Id. In contrast, in Guizhou, 2018 WL 5307676, at *4, the court found Commerce‘s explanation regarding the use of the EBCP by respondents unavailing. In that case, Commerce found non-use submissions by respondents unverifiable because the GOC refused to provide documents regarding the functioning of the EBCP under the GOC‘s new regulations.7 Id. The court found that Commerce failed to show there was a gap in the record warranting the use of AFA and that Commerce was “conflat[ing] the program‘s operation with its use,” and thus remanded for reconsideration. Id. at *4, *12. Although both opinions share some factual similarities to this case, neither is fully dispositive given the record before the court.
In Changzhou I, unlike here, the respondents did not submit customer certifications of non-use, so that issue was not before the court. See Countervailing Duty Investigation of Certain Crystalline Silicon Photovoltaic Products From the People‘s Republic of China: Final Affirmative Countervailing Duty Determination, 79 Fed. Reg. 76,962 (Dep‘t Commerce Dec. 23, 2014), accompanying Issues and Decision Memorandum at 93 (“Changzhou I I&D Memo”). In addition to the lack of complete documentation of non-use, in that review Commerce supplied
In Guizhou, as here, Commerce found that the GOC‘s refusal to explain if and how third-party banks were involved in the EBCP made respondent‘s claims of non-use unverifiable. Certain New Pneumatic Off-the-Road Tires From the People‘s Republic of China: Final Results of Countervailing Duty Administrative Review; 2014, 82 Fed. Reg. 18,285 (Dep‘t Commerce Apr. 18, 2017) accompanying Issues and Decision Memorandum at 23–24 (“Guizhou I&D Memo“). In the Guizhou court‘s review of that determination, it found that the GOC‘s lack of response was “rendered immaterial by responses from [respondents].” 2018 WL 5307676, at * 3. The court here does not resolve the materiality issue at this juncture, rather it finds that Commerce simply failed to provide reasoning sufficient for this court to find that its determination was supported by substantial evidence. In this case, Commerce claims its ability to verify the certifications was stymied by a lack of understanding of if and how third party banks were involved in the distribution of loans. I&D Memo at 13. Commerce, however, did not explain why the GOC‘s failure to explain this program was necessary to assess claims of non-use and why other information accessible to respondents was insufficient to fill whatever gap was left by the GOC‘s refusal to provide internal bank records. Further, Commerce did not explain how an adverse inference regarding the operation of the EBCP logically leads to a finding that respondents used the program. The use of facts available allows Commerce to render
Under
Accordingly, the court remands this matter and instructs Commerce to explain what information specifically the GOC failed to provide that led it to resort to facts available and the facts as to which it drew an adverse inference in arriving at the conclusion that Respondents benefited from the EBCP. Commerce should further explain if and how certifications of non-use are unverifiable in the absence of the GOC‘s cooperation. If Commerce determines that it is able to verify non-use by not unreasonably onerous means, the court instructs it to do so.
b. Adverse rate selected for Export Buyer‘s Credit Program
i. Background
If Commerce continues to find that respondents used the EBCP, and the court sustains that determination, then the court must assess whether the rate selected for the EBCP is
Canadian Solar challenges the use of the Lightway Program rate, arguing that it is not an appropriately similar program. Canadian Solar Br. at 15. China‘s Ex-Im Bank is the administrator of the EBCP, a program that provides credit to foreign importers of Chinese products and loans. See I&D Memo at 12–13. Canadian Solar argues the record contains evidence of a more similar program, the Export Seller‘s Credit Program, which provides a more directly comparable rate than the Lightway Program. Canadian Solar Br. at 15–17. Canadian Solar argues that the Lightway Program is not a similar program in that, although it calls for financial institutions to offer loans to renewable energy, these loans are not specifically related to exports. Canadian Br at 16. They argue that Commerce should have further explained why it chose the Lightway Program over the Export Seller‘s Credit Program. Canadian Solar Br. at 15,
ii. Discussion
Commerce has discretion when calculating the appropriate AFA rate, as neither the relevant statute nor regulations limit how Commerce must select programs that are “similar,” or if no similar program exists, one “from a proceeding that the administrating authority considers reasonable to use.”
Here, Commerce was unable to satisfy step one of the methodology as there was no alternative rate for the EBCP in the Third Administrative Review. See Prelim. I&D Memo at 30–32; I&D Memo at 18–21. Thus, Commerce turned to step two and found a sufficiently similar program from an earlier administrative review, the Lightway Program. Prelim. I&D Memo at 31–32; I&D Memo at 19. Commerce predicated this finding of similarity on both the EBCP‘s and the Lightway Program‘s distribution of loans. I&D Memo at 19. With this finding, Commerce applied the rate from the Lightway Program to calculate an AFA rate for the EВСР. Id. Canadian Solar‘s argument that Commerce needed to compare the Lightway Program to Canadian Solar‘s proffered Export Seller‘s Credit Program fails. See Canadian Solar Br. at 15. Under Commerce‘s established methodology and consistent with the plain text of the statute, Commerce selects a similar program, not necessarily the most similar program. See
II. Provision of Aluminum for LTAR
a. Specificity determination of aluminum program
i. Background
Canadian Solar claims that the provision of aluminum extrusions for less than adequate remuneration (LTAR) is not properly classified as a specific subsidy. Canadian Solar Br. at 26. Commerce found, as it did in the second administrative review, that the provision of aluminum extrusions for less than adequate remuneration was a de facto specific subsidy because the industries that used aluminum extrusions were “limited in number” and no new information disturbed that finding. I&D Memo at 22.10 Both Commerce and Canadian Solar agree that the six categories of industries that use aluminum extrusions are: “(1) building and construction, (2) transportation, (3) electrical, (4) machinery and equipment, (5) consumer durables, and (6) other industries.” I&D Memo at 21; Canadian Solar Br. at 27.
Canadian Solar argues that the named industries listed as using aluminum extrusions are themselves diverse and also that Commerce failed to inquire as to whether the number of industries in the “other industries” category would render the subsidy non-specific. Canadian
ii. Discussion
Commerce is empowered to assess countervailing duties if, after investigating a subsidy, it finds that the subsidy “1) provides a financial contribution to a person, 2) a benefit is thereby conferred, and 3) the subsidy is specific.” Bethlehem Steel Corp. v. United States, 223 F. Supp. 2d 1372, 1378 (CIT 2002); see also
Thus, although Commerce was under no obligation pursuant to its regulations to compare the characteristics of the six industries listed by the GOC against one another, Commerce should have determined whether these six industries made up a significant enough portion of all Chinese industries to render the subsidy nonspecific despite the use of only six categories to describe
b. Challenge to Commerce‘s use of Comtrade and IHS datasets
i. Background
If, on remand, Commerce continues to find that the provision of aluminum amounts to a countervailable subsidy, it must additionally reconsider the data used to arrive at the appropriate benchmark. Canadian Solar and Trina challenge Commerce‘s decision to average data from IHS technology (“IHS”) and UN Comtrade (“Comtrade”) to determine the appropriate aluminum extrusion benchmark.
They contend that whereas IHS data specifically pertains to aluminum frames for solar modules, the type used by Trina and Canadian Solar, Comtrade data is broader and encompasses multiple broad Harmonized Tariff Schedule (“HTS”) subheadings at the six-digit level (7604.21, 7604.29, and 7610.10)16 which covers many products not used by Respondents. Trina Br. at 15; Canadian Solar Br. at 29–31. Trina and Canadian Solar argue that the annual average figure provided by IHS provides a more accurate benchmark for the POR because it pertains specifically to aluminum used in the production of solar panels, and thus accords with Commerce‘s preference for the “narrowest category of products encompassing the input product.” Trina Br. at 17; see also Canadian Solar at 29–31. Trina further argues that even if
SolarWorld counters that the inclusion of Comtrade data is necessary, given Commerce‘s preference for monthly over annual data in setting benchmark prices. SolarWorld Resp. at 31. SolarWorld argues that monthly data allows Commerce to match subsidy program pricing with world benchmark prices more accurately. Id. The Government argues that given the noncritical flaws in both datasets, averaging them was the appropriate course of action. Def. Br. at 26–31.
ii. Discussion
When goods are provided for LTAR, Commerce determines the amount of the subsidy by comparing remuneration actually paid with adequate remuneration. See
In this instance, Commerce combined two datasets, IHS Technology and UN Comtrade, the latter of which uses broad HTS categories. Balancing Commerce‘s preference for monthly data and its desire for data specific to the relevant input, Commerce averaged these two datasets. But, in doing so, Commerce failed to properly make allowance for “factors affecting comparability.” See
Commerce prefers monthly data points ostensibly to track potential market fluctuations over the period of review or investigation,18 but there is no statutory or regulatory basis for allowing this preference to overcome vital comparability concerns. This preference does not allow Commerce to include largely irrelevant data in its average of world market data sets. Put simply, not all flaws in data are equally problematic. Although some degree of nonspecificity is tolerable, when a dataset is vastly overinclusive of products not covered by the relevant CVD order, that flaw is not equivalent to the flaw in otherwise product-specific arising from its annual average. Here, Commerce made little effort to counter claims that Comtrade data was based on too broad a product category to provide an accurate world market price, stating only that Commerce was familiar with the data and that the HTS descriptions were suitable for constructing a world price for aluminum extrusions. I&D Memo at 23-24. Although Commerce
Thus, the court concludes that Commerce‘s decision to average the Comtrade and IHS datasets without properly considering whether the Comtrade data was too flawed to be probative of the world market price for the input at issue renders the decision unsupported by substantial evidence. Accordingly, the court remands this case to Commerce with instructions either to use solely the IHS dataset in its calculation of the appropriate benchmark or else explain why the inclusion of the Comtrade data does not produce a fatally inaccurate result.
III. Provision of Solar Glass for LTAR
a. Background
Canadian Solar and Trina similarly challenge Commerce‘s benchmark determination with regard to solar glass. Commerce found the GOC‘s solar glass market distorted, and so used world market indicators to calculate a benchmark for adequate remuneration. I&D Memo at 29. In its final calculation, Commerce averaged monthly data points from Comtrade19 with annually reported data from IHS. I&D Memo at 29-30. Commerce defends this amalgam arguing that, although neither set was perfect, neither was so deficient as to merit rejection. Def. Br. at 31-36. Like the data used in setting the benchmark for aluminum extrusions, the Comtrade data in question contains monthly data points, but is less specific to solar glass, whereas the IHS data is an average annual figure, but one specific to solar glass. Id. at 32.
Canadian Solar and Trina contend that Commerce should not include the Comtrade data
Further, Canadian Solar argues that Comtrade‘s monthly benchmarks project a distorted picture of the solar market, showing price variability unsupported by the record and disputed by party submissions.21 See Canadian Solar Br. at 19-20. Canadian Solar acknowledges that including only Comtrade data from solar glass-producing nations makes the data less-flawed, but they further note that the Comtrade data does not contain data from certain major solar glass producing countries, including the United States, which is one of the top three solar glass producing countries globally. Canadian Solar Br. at 22-23. Finally, Trina contends that although the record indicates that there is a difference between broadly-defined tempered glass and the more specific solar glass, Commerce depended on the description of the headings referencing tempered glass as justification for its position that the headings included solar glass. Trina Br. at 23.
SolarWorld disagrees. It argues that the inclusion of the Comtrade data was correct given
b. Discussion
As with the above discussion of the proper datasets for calculating a benchmark for aluminum extrusions, Commerce similarly calculated its solar glass benchmark by averaging two tier-two datasets. Also as with the aluminum extrusions data, Commerce did not sufficiently determine the adequacy of these datasets or explicate their comparability.
Solar glass is a type of flat glass, which in turn is one of the [[ ]] main types of glass on the global market. Letter on Behalf of Canadian Solar to the Dep‘t Commerce re: Benchmark Submission at Ex. 5 C.R. 101-102 (No. 30, 2016). Flat glass represents about [[ ]]% of the global glass market, but of that [[ ]]% less than [[ ]]% is solar photovoltaics. Id. Thus the vast majority of flat glass is not suitable for solar panels, but is used in the production of other merchandise such as windows, glass doors, windshields, etc. See id. Comtrade data includes
In its brief, Defendant cited the court‘s earlier decision in Changzhou Trina Solar Energy Co., Ltd., v. United States, regarding the averaging of IHS data and Global Trade Atlas (GTA) data in a prior administrative review to arrive at the proper benchmark for solar glass. Slip. Op. 18-31, 2018 WL 1649629 (CIT Mar. 27, 2018) (“Changzhou II“); Def. Resp. Br. at 28. In that case, the court upheld Commerce‘s decision on remand to average IHS and GTA to arrive at a benchmark price for solar glass for reasons similar to those given in this case. See Changzhou II, 2018 WL 1649629 at *7. The court notes that plaintiffs challenge the use of the Comtrade data in this case, but there was no challenge to the use of GTA data in the previous case, and thus the court had neither the appropriate record nor any reason to inspect the adequacy of the GTA data. Id. at *6. Thus, the court finds the previous decision unhelpful.
Finally, the court finds Commerce‘s reliance on potential price fluctuations in the solar glass industry as a reason for including the Comtrade data unpersuasive. The only indication on the record before the court showing price fluctuations in solar glass is from the Comtrade data itself. In contrast, submissions by respondents during the administrative review show minimal solar glass price fluctuations. Canadian Solar Br. at 19-20. Commerce did not inquire into
Although averaging datasets is appropriate in certain circumstances, when one dataset is far more specific to the product at issue, that data may be more probative even if it is based on a yearly average rather than a monthly one. See
In finding the Comtrade data to be a sufficient world market price metric without adequate evaluation, Commerce made a decision unsupported by substantial evidence or
IV. Provision of Polysilicon for LTAR
a. Background
In its original investigation, Commerce determined that the provision of polysilicon at LTAR in the PRC was a countervailable subsidy based on AFA. Prelim. I&D Memo at 33-35. Commerce determined that a benefit was being conferred based on the provision of polysilicon for LTAR, and thus sought to determine adequate remuneration in order to assess the appropriate countervailing duty.24
It is Commerce‘s practice to determine remuneration by comparing the government price to a “market-determined price for the good or service resulting from actual transactions in the country in question,” which it refers to as a tier-one metric. See
Canadian Solar challenges this determination, arguing that because all of its polysilicon purchases were imported from market-economy suppliers outside the PRC, rather than domestically-purchased, they would not be distorted by the GOC‘s market interference. Canadian Solar Br. at 41-42. Canadian Solar thus contends that Commerce should have used Canadian Solar‘s purchases as a first-tier metric.
As mentioned above, Commerce‘s determination that the polysilicon program was countervailable was based on the use of AFA. Prelim. I&D Memo at 18. As indicated previously, when a party refuses to cooperate and withholds requested information necessary to a determination, Commerce may need to rely on “facts otherwise available” in making a determination.
Here, Canadian Solar did not take issue with Commerce‘s calculation of the world market price, but rather they argue that Commerce should not have resorted to this tier-two metric in the
Rather than address Canadian Solar‘s submissions, which Canadian Solar claims show that all polysilicon purchases involved “arms-length import transactions with market economy suppliers,” Commerce dismissed the evidence without consideration, stating simply that Commerce had already found actual transactions in China distorted. Canadian Solar Br. at 42; I&D Memo at 31. This is circular. Commerce‘s determination that the actual transactions were distorted presupposed the appropriateness of applying a subsidy rate to these cooperating parties derived from application of AFA in finding there was a subsidy program. Simply stating that the market was distorted fails to give cooperating parties a meaningful chance to rebut that they benefitted from any subsidy resulting in market distortion. Commerce should have considered Canadian Solar‘s proffered evidence and either accepted it as a tier-one metric or explained how these imports may have been distorted by GOC interference in the market. Only if the latter occurred would it be appropriate to resort to a tier-two metric. In sum, Commerce must first explain why Canadian Solar‘s submission, a potential tier-one benchmark, is not usable. Such an explanation should not be based entirely on the adverse inference used to determine that the GOC‘s influence in polysilicon distorted the market. Although SolarWorld‘s claim regarding import price depression in order for importers to compete in the PRC‘s national market may certainly be the case, without any such determination on the record, or even sufficient information about polysilicon‘s fungibility or the dynamics of the market, the court cannot
Accordingly, with respect to Commerce‘s decision to resort to a tier-two benchmark with regards to polysilicon, the court finds that Commerce‘s decision was unsupported by substantial evidence and remands this issue. On remand Commerce should either use Canadian Solar‘s import data as a tier-one benchmark or else explain how the GOC‘s purported interference with the polysilicon market would distort arms-length import transactions in a way that makes this data unreliable.
V. Inclusion of International Freight Charges
a. Use in calculating polysilicon, aluminum, and solar glass benchmarks
i. Background
In calculating the appropriate benchmark Commerce added international freight charges to the calculations for polysilicon, aluminum, and solar glass. I&D Memo at 33. Canadian Solar argues that [[ ]] Commerce should not include international freight charges. Canadian Solar Br. at 32-34. Commerce rejected this argument in its final determination. See I&D Memo at 33. SolarWorld and the Government contend that the statute only requires that the benchmark be adjusted based on market conditions and does not concern the character of purchases by specific respondents during the period of review. SolarWorld Resp. at 34-36; Def. Br. at 38-39.
ii. Discussion
The statute at issue requires Commerce to determine a world market price based on “prevailing market conditions.”
Canadian Solar mistakenly asserts that Commerce‘s calculations should be based on the specific circumstances of the Respondents.30 As the court has indicated, however, Commerce has determined that benchmark calculations are assessed based on a hypothetical importer making a market-price purchase, not the specific parties in a proceeding. See Beijing, 52 F.
b. Calculation of International Freight Charges for Benchmarking
i. Background
In determining the proper freight charge to be added for each benchmark calculation, Commerce averaged two data sets from Maersk and Xenata. I&D Memo at 33. The Xenata data was calculated based on actual prices while the Maersk data was based on price quotes.
ii. Discussion
Commerce did not err in averaging the two datasets in determining the proper international freight benchmark. The regulation requires only that the price calculated reflect what a firm paid or would pay. This determination can properly be made on generally-available price quotes, so long as the source of those price quotes is a reputable source. Given Maersk‘s prominent position in the shipping market, Commerce properly considered the Maersk data to be a reliable world market price and averaged it with the Xenata data. As long as Commerce adequately justified why it chose to average the given datasets, as it did here, a set will not be excluded simply because it is based on a price estimate rather than completed contracts. See I&D Memo at 33-34. The benchmark calculation is sustained.
VI. Use of Value-Added Tax in calculating LTAR
i. Background
In its final determination, Commerce included value-added tax (VAT) in determining the appropriate benchmark prices. I&D Memo at 38-39. Canadian Solar claims that the addition of VAT is not an allowable adjustment under the regulation. Canadian Solar Br. at 36-38. They claim that VAT cannot be properly categorized as a delivery charge or import duty, but is rather
SolarWorld counters that failing to include the VAT would distort the benefit calculated. SolarWorld Resp. at 39-40. The Government argues that the mandate of the statute is to calculate what an importer would pay at the time of import—which includes VAT—and that in calculating this figure, Commerce does not account for potential reimbursement after import. Def. Br. at 42-43.
ii. Discussion
Under the relevant regulation, Commerce adjusts benchmark prices to include delivery charges and import duties that an importer would pay in order to arrive at the “delivered price.” See
Here, Canadian Solar‘s contention that the inclusion of VAT is not allowable under the regulation fails. The relevant regulation states that the benchmark should be adjusted to reflect the “delivered price” meaning the “price that a firm actually paid or would pay if it imported the
VII. Electricity Subsidy
a. Background
After finding that the GOC failed to fully cooperate in responding to questions regarding the alleged provision of electricity for LTAR, Commerce applied AFA to determine that there was a specific subsidy and subsequently to calculate the benefit conferred.32 I&D Memo at 40-41; Prelim. I&D Memo at 27-28. When a party fails to respond to “the best of its ability” with
Canadian Solar argues that Commerce failed to adequately determine that the electricity subsidy was specific. Canadian Solar Br. at 39-41. According to Canadian Solar, it could qualify only as a domestic subsidy under
i. Discussion
The court has upheld the application of AFA in determining that a given subsidy was specific when a party has failed to cooperate. See RZBC Grp. Shareholding Co. Ltd. v. United States, 100 F. Supp. 3d 1288, 1296-97 (CIT 2015) (sustaining an application of AFA to determine that a calcium carbonate subsidy was specific). In previous cases involving electricity subsides from China, the court has found an adverse inference appropriate when a party did not provide enough information to determine whether the rate was set according to market principles. See Fine Furniture, 865 F. Supp. 2d at 1262-63.
In this instance, Commerce characterized the GOC‘s refusal “to answer questions related to regional electrical differences, including differences between industries” as preventing it from determining from direct evidence whether the subsidy was specific. I&D Memo at 41. It decided solely on this failure to answer some questions that the subsidy was specific. Commerce, however, failed to explain the particular facts as to which it was it was drawing an adverse inference and how that analysis subsequently results in a finding of specificity under one of the
AFA is not a magic phrase that permits Commerce to skip an analysis of the record. Here, the Government states that the GOC failed to adequately respond with information necessary for Commerce to understand whether the electricity prices were set in accordance with market principles. In response to Commerce‘s questions, the PRC supplied numerous documents detailing the provision of electricity in China. See Conf. Joint App‘x 1 at 35-520. Rather than explain what information was missing, or how these submissions were deficient, Commerce makes the conclusory statement that the GOC failed to comply and thus Commerce can rightly determine that there is a subsidy, that it confers a benefit, and that it is specific such that the subsidy is countervailable. Prelim. I&D Memo at 27-28. Without combing through the submissions and guessing as to why Commerce found these submissions inadequate, the court is unable to ascertain how Commerce made its decision. The record is simply unclear.
Although Commerce does mention that the electricity program was found countervailable in an earlier administrative review, that earlier decision based on a different record does not clarify how Commerce found for this review period that the provision of electricity continued to provide a financial contribution, whether the subsidy conferred a benefit, and, most relevant here, whether this provision was specific within the meaning of the statute. See
This is not to say that Commerce cannot reference the reasoning of a previous administrative review. But Commerce must give respondents a meaningful opportunity to dispute earlier findings and offer evidence of changes. If respondents fail to do so, then Commerce might state that no new evidence merits a reconsideration of a decision made in a previous administrative review, but Commerce must at the very least explain why a decision made in an earlier review should control.
Simply stating that the GOC did not fully comply is insufficient, Commerce must actually engage in an analysis of the information on the record and explain how adverse inferences lead to the conclusion that the provision of electricity in China is a countervailable subsidy. Otherwise stated, Commerce must connect the dots: how does the GOC‘s partial response—or failure to respond fully—reasonably lead to a finding of a specific subsidy even with use of AFA?
If, on remand, Commerce properly concludes that the provision of electricity in the PRC amounts to a countervailable subsidy, Commerce‘s benchmark determination based on record evidence with appropriate adverse inferences is consistent with its regulations for calculating benchmarks. See
Finally, although Trina provided potential alternative modes of calculating the benchmark, it has not shown that these calculation methods result in a better estimate of the market rate for electricity. It is not this court‘s place to substitute its judgment for that of Commerce by selecting a different method of calculation where Commerce has acted within its lawful discretion and made a reasonable decision. See Inland Steel Indus., Inc. v. United States, 188 F.3d 1349, 1360-61 (Fed. Cir. 1999). In sum, assuming a countervailable subsidy exists, Commerce acted in accordance with the law in using the highest of all provincial rates on the record to calculate the benchmark.
Accordingly, the issue regarding the provision of electricity is remanded for Commerce to explain how it arrived at its conclusion that such provision was a countervailable subsidy. Commerce should cite specific information on the record, noting any allowable adverse inferences, in making its decision.
i. Background
During the original investigation, Commerce found the Golden Sun Demonstration Program (“GSDP“) to be countervailable. See 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, 77 Fed. Reg. 63,788 (October 17, 2012) and accompanying issues and decision memorandum at 10-11 (“I&D Memo 2012“). The GSDP was created in 2009 to assist in the construction of photovoltaic electricity-generation projects. See Prelim. I&D at 43. In its final determination, Commerce found no new information warranting a reexamination of the program and concluded that the subsidy was untied and attributable to Canadian Solar‘s total sales. I&D Memo at 47. The Government argues that it must only look at the grant when it was bestowed and need not inquire as to how the grant was used specifically. Def. Br. at 48-50.
Canadian Solar contends that GSDP was meant to subsidize the generation of electricity and not the production of solar cells. Canadian Solar Br. at 44. Although Canadian Solar admits that it received GSDP funds, it asserts that Commerce has mischaracterized the program‘s purpose as providing assistance in the production of solar cells.
In the 2012 Final Determination from the initial investigation, Commerce found that the Golden Sun program subsidized “solar-powered projects.” I&D Memo 2012 at 12 (October 17, 2012). Based on submissions by the GOC, in its preliminary determination Commerce found that the program supported:
(1) The use of large-scale mining, commercial enterprises, and public welfare institutions to construct the user‘s side of the electrical grid for photovoltaic power generation demonstration projects; (2) increasing the power supply capacity in remote locations; and (3) construction of large-scale grid-connected photovoltaic power generation demonstration projects in solar energy rich regions.” Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People‘s Republic of China: Preliminary Affirmative Countervailing Duty Determination C-570-980 POI 01/01/2010- 12/31/2010 at 15-16 (Mar. 26, 2012) (“Prelim. I&D Memo 2012“)
Based on this information, Commerce determined that grants under this program constitute a subsidy of enterprises “involved in the construction of solar-powered projects.” Prelim. I&D Memo 2012 at 16.
Commerce‘s regulations mandate that “[i]f a subsidy is tied to the production or sale of a particular product; the Secretary will attribute the subsidy only to that product.”
CONCLUSION
For the foregoing reasons, the court remands Commerce‘s challenged determinations as regards to its determination on the Export Buyer‘s Credit Program, the inclusion of Comtrade data in calculating the world market rate for aluminum extrusions and solar glass, Commerce‘s decision to revert to a tier-two benchmark in determining the price for polysilicon without considering Respondent‘s proffered evidence, and the finding that provision of electricity constitutes a specific and thus countervailable subsidy. All other determinations are sustained. The court remands for proceedings consistent with this opinion. Remand results should be filed by January 29, 2019. Objections are due February 28, 2019 and Responses to Objections are due March 15, 2019.
Dated: November 30, 2018
New York, New York
/s/ Jane A Restani
Jane A. Restani, Judge