United states – safeguard measure on imports of
crystalline silicon photovoltaic products

REPORT of the panel

TABLE OF CONTENTS

1   Introduction.. 12

1.1   Complaint by China. 12

1.2   Panel establishment and composition. 12

1.3   Panel proceedings. 12

2   Factual aspects. 13

2.1   The measures at issue. 13

2.2   Other factual aspects. 14

3   Parties' requests for findings and recommendations. 14

4   Arguments of the parties. 15

5   Arguments of the third parties. 15

6   Interim review.. 15

7   Findings. 15

7.1   General principles regarding treaty interpretation, standard of review, and
burden of proof 15

7.1.1   Treaty interpretation. 15

7.1.2   Standard of review. 16

7.1.3   Burden of proof 16

7.2   "Unforeseen developments" and "the effect of the obligations incurred" under
the GATT 1994. 16

7.2.1   Introduction. 16

7.2.2   Applicable legal requirements of Article XIX:1(a) of the GATT 1994. 17

7.2.3   Whether the USITC's published report demonstrated compliance with the
requirements of Article XIX:1(a) of the GATT 1994. 19

7.2.3.1   The existence of "unforeseen developments" 19

7.2.3.1.1   Factual background. 19

7.2.3.1.2   Main arguments of the parties. 20

7.2.3.1.3   Evaluation of the Panel 21

7.2.3.2   The relationship between increased imports and "unforeseen developments" 22

7.2.3.2.1   Factual background. 22

7.2.3.2.2   Main arguments of the parties. 22

7.2.3.2.3   Evaluation of the Panel 24

7.2.3.3   The relationship between increased imports and "obligations incurred" by the United States. 26

7.2.3.3.1   Factual background. 26

7.2.3.3.2   Main arguments of the parties. 27

7.2.3.3.3   Evaluation of the Panel 28

7.2.4   Whether the Agreement on Safeguards obligates the competent authorities of a
Member to demonstrate in their published report that imports increased "as a result of
unforeseen developments and of the effect of the obligations incurred" 30

7.3   The causal link between increased imports and serious injury. 30

7.3.1   General factual background. 30

7.3.2   Applicable legal requirements concerning the causal link between increased imports
and serious injury under Articles 2.1, 3.1, and 4.2(b) of the Agreement on Safeguards. 32

7.3.3   Whether the USITC acted inconsistently with Articles 2.1, 3.1, and 4.2(b) of
the Agreement on Safeguards in respect of its determination of a causal link between the increased imports of CSPV products and serious injury of the domestic industry. 33

7.3.3.1   Introduction. 33

7.3.3.2   The USITC's findings concerning the relationship between increased imports
and negative factors of serious injury. 35

7.3.3.2.1   Key conditions of competition. 36

7.3.3.2.1.1   Segmentation in the US market for CSPV products. 37

7.3.3.2.1.2   Substitutability of domestic and imported CSPV products. 40

7.3.3.2.2   Adverse price conditions. 43

7.3.3.2.2.1   Factual background. 43

7.3.3.2.2.2   Main arguments of the parties. 44

7.3.3.2.2.3   Evaluation of the Panel 46

7.3.3.2.3   Lost market share. 47

7.3.3.2.3.1   Factual background. 47

7.3.3.2.3.2   Main arguments of the parties. 48

7.3.3.2.3.3   Evaluation of the Panel 49

7.3.3.2.4   Financial deterioration. 50

7.3.3.2.4.1   Factual background. 50

7.3.3.2.4.2   Main arguments of the parties. 51

7.3.3.2.4.3   Evaluation of the Panel 52

7.3.3.2.5   Plant closures. 53

7.3.3.2.5.1   Factual background. 53

7.3.3.2.5.2   Main arguments of the parties. 53

7.3.3.2.5.3   Evaluation of the Panel 54

7.3.3.3   The USITC's findings concerning the relationship between increased imports and
the seemingly positive factors of serious injury. 56

7.3.3.3.1   Capacity, production, and shipments. 57

7.3.3.3.1.1   Factual background. 57

7.3.3.3.1.2   Main arguments of the parties. 57

7.3.3.3.1.3   Evaluation of the Panel 58

7.3.3.3.2   Employment 58

7.3.3.3.2.1   Factual background. 58

7.3.3.3.2.2   Main arguments of the parties. 59

7.3.3.3.2.3   Evaluation of the Panel 59

7.3.3.3.3   Capital expenditures, R&D expenses, and value of production assets. 60

7.3.3.3.3.1   Factual background. 60

7.3.3.3.3.2   Main arguments of the parties. 61

7.3.3.3.3.3   Evaluation of the Panel 61

7.3.3.4   Overall conclusion regarding the USITC's determination of a causal link between increased imports of CSPV products and serious injury of the domestic industry. 62

7.4   "Other" factors allegedly causing injury to the domestic industry. 62

7.4.1   General factual background. 62

7.4.2   Applicable legal requirements concerning the assessment of "other" factors
allegedly causing injury to the domestic industry under Article 4.2(b) of the Agreement on Safeguards. 63

7.4.3   Whether the USITC failed to ensure that the injurious effects of "other" factors
were not attributed to increased imports. 63

7.4.3.1   Introduction. 63

7.4.3.2   Alleged missteps by the domestic industry. 64

7.4.3.2.1   The alleged decision of the domestic industry to focus on the commercial and residential segments and to avoid competing in the utility segment 65

7.4.3.2.1.1   Factual background. 65

7.4.3.2.1.2   Main arguments of the parties. 66

7.4.3.2.1.3   Evaluation of the Panel 67

7.4.3.2.2   The alleged quality and product‑type issues. 68

7.4.3.2.2.1   Factual background. 68

7.4.3.2.2.2   Main arguments of the parties. 69

7.4.3.2.2.3   Evaluation of the Panel 70

7.4.3.2.3   The alleged service and delivery issues of the domestic industry. 73

7.4.3.2.3.1   Factual background. 73

7.4.3.2.3.2   Main arguments of the parties. 73

7.4.3.2.3.3   Evaluation of the Panel 74

7.4.3.3   Non‑import factors that allegedly caused prices of CSPV products to decline. 75

7.4.3.3.1   Changes in availability of government incentive programmes. 76

7.4.3.3.1.1   Factual background. 76

7.4.3.3.1.2   Main arguments of the parties. 77

7.4.3.3.1.3   Evaluation of the Panel 78

7.4.3.3.2   Declining raw material costs and increased production efficiencies. 81

7.4.3.3.2.1   Factual background. 81

7.4.3.3.2.2   Main arguments of the parties. 81

7.4.3.3.2.3   Evaluation of the Panel 82

7.4.3.3.3   The need to attain "grid parity" with other sources of electricity. 84

7.4.3.3.3.1   Factual background. 84

7.4.3.3.3.2   Main arguments of the parties. 84

7.4.3.3.3.3   Evaluation of the Panel 85

7.4.3.4   Overall conclusion regarding the USITC's assessment of "other" factors allegedly
causing injury to the domestic industry. 89

7.5   The USITC's treatment of confidential information. 89

7.5.1   Applicable legal requirements of Article 3 of the Agreement on Safeguards. 89

7.5.2   Whether the USITC failed to provide sufficient non‑confidential summaries of
confidential information to allow for interested parties to present a meaningful defence. 90

7.5.2.1   Introduction. 90

7.5.2.2   The procedure followed by the USITC in providing non‑confidential summaries of confidential information to interested parties. 90

7.5.2.2.1   Factual background. 90

7.5.2.2.2   Main arguments of the parties. 91

7.5.2.2.3   Evaluation of the Panel 93

7.5.2.3   The substance of non‑confidential summaries of confidential information in
the USITC final report and final staff report 94

7.5.2.3.1   Factual background. 94

7.5.2.3.2   Main arguments of the parties. 94

7.5.2.3.3   Evaluation of the Panel 95

8   Conclusions and Recommendation.. 96