EU trade case FAQs
Where can I find the statutory order?
On March 1, 2013, the European Commission issued Commission Regulation (EU) No 182/2013 of 1 March 2013, making imports of crystalline silicon photovoltaic modules and key components (i.e. cells and wafers) originating in or consigned from the People’s Republic of China, subject to registration.
Which goods are affected by customs registration?
Photovoltaic wafers, cells, modules and panels made from crystalline silicon that are manufactured or consigned from China and incorporated under the following KN codes: ex 3818 00 10, ex 8501 31 00, ex 8501 32 00, ex 8501 33 00, ex 8501 34 00, ex 8501 61 20, ex 8501 61 80, ex 8501 62 00, ex 8501 63 00, ex 8501 64 00 and ex 8541 40 90. The thickness of the cells and wafers may amount to 400 μm at the most.
Which goods are not affected by such registration?
- Solar charging devices that consist of less than six cells, are portable and supply power for devices or charge batteries
- Thin film photovoltaic products
- Photovoltaic products made of crystalline silicon that are permanently integrated into electrical appliances that have a function other than the generation of electricity and which use the electricity produced by the integrated photovoltaic cell(s)
How long do the customs authorities register the imported goods?
What does a possible retroactive payment entail?
Effective as of March 6 onward, all of the product categories concerned (see above) must be registered upon import. If penalty duties are imposed the European Commission thus makes it possible to also collect them retroactively.
Who is responsible for registration?
All of the companies that import the commodity are responsible; often these are pure logistics companies. They are responsible for bearing the administration costs.
What precisely does the importer have to do?
The importer must register the commodity with customs. As a rule, there are various possibilities in order to do this, via EDP or by using a form. See:
Can the importer pass on the customs debt?
That depends on the agreement between the importer and his or her trading partner. According to the German Federal Ministry of Finance, what is important for the customs administration is only that the importer must register the commodity.
What happens if the importer fails to register the commodity?
Then this may constitute the smuggling of imported goods in accordance with Article 202 of the German Customs Code (ZK). This is the case when goods subject to registration are not registered at the border crossing.
Who has to pay in the case of retroactive duties?
The importer must pay the customs debt on the commodity.
What does compulsory registration mean for the solar trade?
The legal risk lies with the importer. However, the importer will attempt to pass this on to wholesalers and specialized dealers through commercial agreements. Solar traders who purchase imported commodities subject to registration with the customs authorities as of March 6, therefore, have to make certain that there is no threat of any possible additional payments required by the importer should customs duties be retroactively determined. Thus, any corresponding clauses in the respective contracts should be examined. Furthermore, the trader should require that the importer submit the customs registration, because otherwise the trader could also become guilty of smuggling imports in extreme cases.
Another variant is that Chinese companies only offer sales ex China. Any purchaser who accepts these terms then bears the risk of having to pay retroactive duties.
In the abbreviations of the International Commercial Terms it says that only commodities traded with “DDP” (Delivered Duty Paid) does not entail a risk of retroactive customs.
What is the risk for project developers and system companies that rely on Chinese solar products?
If the products were imported from China before March 6, then there are no risks. Otherwise it is a question of the price. If the importers should still offer the commodity at a favorable current price, then nothing stands in the way of a purchase – because the importer bears the legal risk. However, the local trading partner must make certain that he or she is not contractually obliged to additional payment anywhere in the agreement. In addition, the importer must be able to verify that the goods have been registered with the customs authorities.
What does this mean for goods imported before March 6?
No retroactive duties can be imposed on these products.
Will there be uniform duties?
That is unlikely. The duties will probably differ depending on the manufacturer.
How are the duties calculated?
A standard value for the commodity is calculated on the basis of a third country or the detailed information of the company charged. The difference between this value and the actual export price is compensated with the customs duty.
Why is this based on third countries and not China?
Because China is considered to be a country with a non-market economy in which quasi-subsidies and government aid constitute an immanent part of the economy. Therefore, a market-oriented comparison country is used. In the case of China, this is often Brazil, which is also a newly industrialized country that is experiencing very strong growth. In plain terms, this means that investigators look at what this module would cost if it were produced in Brazil. However, because there is no large-scale production there, the European Union could also look toward Asian countries such as Korea, Taiwan or India.
Will there be both anti-dumping and anti-subsidy duties?
Both are possible. However, an anti-subsidy decision might only then result in even higher penalty duties, if the subsidies in question have not already been clarified in the antidumping proceedings. This often happens in comparable cases. That is why an allocation of the penalty duties to both proceedings is conceivable, but probably not an extra charge.
How much more expensive can products become as a result?
That depends on the concrete decision on the part of the European Commission. In the regulation with regard to customs registration the Commission makes reference to the fact that the plaintiffs in the proceedings specify a dumping margin of 60 to 70% and a subsidy margin of 10 to 15% on the average for the commodities concerned. This means that a duty of up to 85% (dumping and subsidy margin added together) on the CIF import value of the commodity concerned is possible. That is, the Chinese modules could become up to 85% more expensive on the average. That is probably a maximum value.
What about modules or cells manufactured outside of China that contain Chinese cells or wafers?
That depends on the concrete decision of the Commission. However, since the three products are separately considered in the proceedings, it must also be assumed that customs duties will be imposed on a Chinese wafer in a German module once they are imported into the European Union.
How long do duties remain in force?
A maximum of five years. They can be rescinded earlier on request.
When is a decision expected?
The European Commission will decide on provisional duties by June 6. By the end of the year it will determine the final duties and then also decide on possible retroactive imposition.
What is the difference between provisional and final duties?
According to the German Federal Ministry of Finance, provisional antidumping duties are paid as security. When the final amount has been publicized with a Commission regulation, then the security is either collected or, if the final duties are lower than the provisional ones, assessed pro rata and the difference is returned.
Are there currently comparable cases of antidumping proceedings and compulsory registration of imported goods?
At present, there are very similar proceedings pending before the European Commission against imported bio-diesel from Indonesia and Argentina. These products have been subject to compulsory registration since January 30, 2013. The European Union wants to “ensure the possibility that – should the investigation result in the imposition of antidumping charges – that these may also be applied retroactively.”
What are the consequences for the markets concerned?
In response to the decision to introduce the antidumping proceedings in 2012, importers have reduced their purchases of bio-diesel from the countries concerned. At the same time, the prices for rape seed oil are increasing. Argentina provides an example.
The effects have increased with compulsory registration as of February 2013. And production of European bio-diesel has also increased, according to information provided by market participants. At the same time the prices for glycerin – a by-product of bio-diesel production from vegetable oils – have declined because there is more glycerin due to greater production in Europe.
According to information provided by of the Association of the German Biofuels Industry (VDB), a not inconsiderable risk is waiting in the wings for dealers – through whom “the greater share of imports are handled.” After all, if the European Commission should impose penalty duties, then they would be responsible for their retroactive payment – even if the commodity has long since been delivered to the customer or is at the gasoline pump. According to the VDB this cannot be retrieved “from the mineral oil companies.”
Is there already an observable increase in module prices?
Yes. Directly after the introduction of compulsory registration dealers reported that the purchase prices for goods, where the risk is borne by the importer, rose in part by more than 10%. A typical price for Chinese modules before the introduction of compulsory registration was €0.45 cents/W.