Legal Expert with Interview Christian Tietje

c23bf3db5a_9e9a32a03dInterview with Christian Tietje, Professor for Commercial Law at the University of Halle

pv magazine: Prof. Tietje, the European Commission has decided on mandatory registration in the case of pending complaints against the dumping of Chinese solar products. Have antidumping duties become more likely as a result?

Tietje: Seen in purely legal terms that is not the case. There are no automatic mechanisms. The idea behind mandatory registration is to prevent importers from warehousing Chinese commodities during the term of the investigation procedure, in order to be able to then subsequently introduce them to the market without having to pay customs duties in the event of a decision in favor of antidumping duties.

Normally penalty duties are imposed starting from the point in time of the decision. With this registration the European Commission is attempting to reduce the attractiveness of such an evasive strategy. Seen from a political point of view, however, the Commission would hardly order such customs registration of imported goods if the suspicions that led to the introduction of the proceedings had not been confirmed by the investigation up to now.

pv magazine: If the European Union should impose antidumping duties, then they would apply retroactively. Is that always so in comparable cases?

Tietje: It is not the rule, but it has occurred frequently in the past.

pv magazine: What conditions have to be satisfied for the European Union to impose antidumping duties?

Tietje: There are three conditions that all have to be fulfilled. First of all, dumping must be verifiably involved. That is, the export price of a product is lower than the normal value of the commodity. Secondly, damage to European industry must be determined; and thirdly, both have to be connected with each other. This corresponds to the WTO law, which the European Union applies one to one.

pv magazine: Can the European Union deviate from this?

Tietje: Yes, there are provisions in EU law according to which antidumping measures are waived or reduced despite fulfillment of the three criteria specified when it is in the exceptional interest of the Union; for example, if domestic jobs are at risk and substantial economic burdens are to be expected.

pv magazine: Are there past examples?

Tietje: In the nineties there were antidumping proceedings against Japan in connection with the export of fax devices. Although the accusations were confirmed, the European Commission decided not to impose penalty duties. The reason that was given was that domestic fax devices were so expensive that Europe’s consumers would be exposed to too great a burden as a result.

pv magazine: Could the European Union decide against the duties out of general politico-economic interest; for example, in order to not jeopardize relations with China?

Tietje: Thus far such superordinate political criteria have not been regarded as worthy of consideration. That also applies to environmental and climate protection.

pv magazine: Why does the European Union have to look to a third country in order to calculate fair market prices for China?

Tietje: This is because China is considered as non-free market country. That is, price formation is not comparable with a free market region like the European Union. In such cases price formation in a comparable third country is employed, such as Brazil for instance, which is also a newly industrialized country experiencing strong growth.

pv magazine: But in China there are numerous listed solar companies that operate in accordance with international accounting standards.

Tietje: They in fact may request that they be consulted. However, these companies would then have to open up their books to the Commission. And then there would be an individual decision that affects only this one company. By the way, that is so in many comparative cases: the duties are imposed on an individual case basis.

pv magazine: Apart from the antidumping proceedings, there are also anti-subsidy proceedings pending before the European Commission. What could be the consequences?

Tietje: Should the Commission arrive at the conclusion that the accusations are valid, then duties would be imposed in this case as well.

pv magazine: Would that put a greater burden on imports?

Tietje: That is difficult to say. As a rule double penalties are prohibited, according to the World Trade Organization. That is, the same circumstances may not be used for both the antidumping and the anti-subsidy proceedings. In the case of the antidumping proceedings against China, subsidy sources such as, for instance, favorable government loans are as a rule already taken into consideration when it comes to calculating the penalty duties. To that extent it is conceivable that any penalty duties on Chinese solar products will remain the same in the final analysis and be divided into antidumping and anti-subsidy violations.

pv magazine: Then anti-subsidy proceedings do not automatically result in greater punishment?

Tietje: No, but the accusations in the case of the anti-subsidy proceedings are not directed against companies, but rather against the country. Thus the plaintiffs could damage a lot of political porcelain without achieving very much in material terms.

pv magazine: How long may penalty duties be imposed?

Tietje: For a maximum of five years.

pv magazine: And when can they be abolished?

Tietje: According to World Trade Organization, the duties are to be maintained for as long as the damage continues. After that the duties can be abolished earlier, for instance at the request of Chinese companies.

pv magazine: Apart from the current EU cases, there are a number of other international commercial disputes involving solar products. What is this all about?

Tietje: To our knowledge, there are in fact around 15 proceedings currently pending before the World Trade Organization, national courts and international arbitral tribunals with regard to every aspect of regenerative energies. This has to do with the fact that because of the subsidies renewable energies always involve provision of a kind of government advantage.

These types of disputes, that are usually negotiated before the World Trade Organization, may occur as soon as foreign suppliers are disadvantaged by, for example, local content regulations. And now there are also increasing cases of arbitration proceedings involving investments as well.

Interview by Oliver Ristau