McGuireWoods’ international trade team has obtained before the EU Courts the annulment of the anti-dumping duties imposed by the European Commission against imports into the EU of solar glass made by our client XinYi PV Products (Anhui) Holdings Ltd (XinYi PV).
Having found that XinYi PV was not operating under market economy conditions, the European Commission had calculated the company’s dumping margin by comparing its export price with a benchmark calculated based on prices in an ‘analogue’ country (Turkey). This methodology was applied on the ground that XinYi PV was subject to “significant distortions carried over from the former non-market economy system,” in the form of two tax breaks, and as such was not eligible for Market Economy Treatment (MET). A high anti-dumping duty was imposed as a result.
Reviewing the history of the provision requiring the European Commission to review MET claims by Chinese producers, our team managed to convince the General Court of the European Union that the type of distortions contemplated by the EU anti-dumping laws (“distortions carried over from the former non-market economy system”) are distortions of a type that existed in China in the 1970s and the 1980s.
In a decision of 16 March 2016, the three judges of the Court’s chamber in charge of the case annulled the Commission Regulation entirely, as far as XinYi PV is concerned, because the tax incentives the company received satisfied specific purposes of attracting foreign investment in China and boosting the country’s high-tech sector, similar to state aid provided in several EU member states to satisfy the legitimate objectives of market economies. They could not therefore be described as being distortion carried over from the former state-trading system.
The ruling reversed a well-established practice of the European Commission concerning one of the criteria for assessing whether Chinese companies deserve MET in anti-dumping investigations. The European Commission has two months to appeal this ruling before the Court of Justice of the European Union, on points of law only.
Please click here for Law360’s coverage of the case.