On Wednesday 28 February, the Court of Justice of the EU (CJEU) overturned the judgment of the General Court of the EU (EGC) of March 2016, which itself overturned anti-dumping measures imposed by the EU on imports of solar panels produced in China by the company Xinyi (case C-301/16 P) (see EUROPE 11513).
In 2013, Xinyi asked the European Commission to recognise that it operates under market conditions, although China as a whole is not recognised as a market economy. On this basis, individual anti-dumping duty was allegedly imposed upon it on the basis of its turnover. The Commission rejected this request. It argued that it could not be ruled out that there was a considerable distortion caused by the old Chinese planned economy system, following income tax breaks granted to Xinyi.
In March 2016, the EGC found in favour of the company, taking the view that the existence of the tax measures in question was not enough to conclude that they had been caused by a planned economy. The Commission, which was dissatisfied with the General Court's verdict, appealed to the Court of Justice to have it overturned.
In its judgment, the Court cancels the General Court judgment and refers the case back for re-examination. It believes the EGC incorrectly interpreted the expression 'old planned economy system', as it referred only to a state economic trading system. It concludes that EU law requires foreign producers to establish that their production costs and financial situation are not the subject of any significant distortion due to an economic system with no market economy, whether this is a state trading system or one that is transitioning into a market economy.
Unlike the General Court, the Court also considers that the existence of a tax measure like the one in question is enough to presume that this measure constitutes a distortion brought about by the old planned economy system. This means that if the tax breaks in question implemented in a five-year plan, a characteristic element of planned economies and one that is vital to the economic organisation of China, it was reasonable for the Commission to presume that these measures had been caused by the old planned economy system. (Original version in French by Mathieu Bion)