EC to cut two more Chinese producers from minimum price agreement

The European Commission looks set to boot out another two Chinese PV manufacturers from the EU minimum price (MIP) agreement.

The Commission on Thursday unveiled detailed findings that could result in the exclusion of Chint Solar and Sunny Energy from the minimum price undertaking.

The MIP allows Chinese manufacturers to avoid antidumping and countervailing duties on solar module exported to Europe as long as they are not sold below a minimum price determined by the European Commission. Companies participating in the agreement must meet a number of obligations.

According to documents published by the European Commission and obtained by pv magazine, Chint Solar failed to report European Union sales in 2013 and 2014 within the specified period mandated by the agreement. As a result, the EC concluded that “Chint Solar breached its reporting obligatgions.”

European Commission findings, alleged violations

Chint allegedly also sold modules in the EU that were manufactured by a related company that is not part of the undertaking. As an official party of the MIP agreement, Chint may only sell modules it itself produces. Furthermore, the Commission maintains that a related Chint company sold the modules at prices below the MIP, further breaching the agreement’s requirements. The EC also took issue with Chint’s original equipment manufacturer (OEM) agreements and the lack of information it provided the Commission on OEM sales.

The EC similarly accused Sunny Energy of violations related to the sale of products not covered in the undertaking. Specifically, the Commission said Sunny Energy invoices submitted to Chinese VAT authorities revealed that sales transactions also included products not covered by the undertaking, such as inverters and cables defined in the MIP as “other products,” which were not reported. “These are breaches of reporting obligations and of the limit for sales of ‘other products,” the EC determined.

The Commission accused Sunny Energy of additional violations, including what it said was evidence of inaccurate invoices. The EC found that the sales price of solar modules on invoices Sunny Energy submitted to the Chinese VAT authorities was lower than the price on invoices submitted to the Commission. The EC concluded as a result that the company “breached the undertaking by issuing commercial invoices for which the underlying financial transactions were not in conformity with their face value.”

Sunny Energy has also been exporting ‘other products’ over a substantial period of time into a bonded warehouse in the Union. The customs clearance of those products takes place once the customer orders those products. These sales fall outside the scope of the monitoring by the Commission.

The Commission analysed the implications of this pattern of trade and concluded that there is a high risk of cross-compensation of the MIP, namely if products covered and products not covered are sold from the bonded warehouse to the same customers. The Commission concluded that the identified pattern of trade renders the monitoring of Sunny Energy’s undertaking impracticable.

In addition, the transaction records inspected on spot revealed that one customer had not paid the entire amount for the sales transaction in question. Further analysis established that this partial payment led to sales price below the MIP. Selling at a price below the MIP constitutes a breach of the undertaking.

The EC Directorate-General for Trade, Directorate H – Trade Defense, which made the determination, said it had assessed the impact of the breaches by Chint Solar and Sunny Energy and found that responsibility for the violations lay alone with the exporting producers in question, adding that the findings had not revealed “any systematic breaches by a major number of exporting producers or the CCCME [China Chamber of Commerce for Import and Export of Machinery and Electronic Products]."

The Commission has granted Chint Solar, Sunny Energy and the CCCME the opportunity to comment on its findings.

In July, the EC removed Znshine from the MIP arrangement after it found the company had similarly violated agreement terms.