SE

SECRETARfA DE ECONOMfA

REPRESENTACION DE LA SECRETARiA DE ECONOMiA

EN WASHINGTON, D.C.

September 27, 2017

lnv. No. TA-201-75

Total Number of Pages: 12

VIA ELECTRONIC DELIVERY (EDIS)

PUBLIC DOCUMENT
The Honorable Lisa R. Barton
Secretary to the Commission
U.S. International Trade Commission
500 E Street, SW, Room 112
Washington, DC 20436

Re: Government of Mexico Pre-Hearing Brief for

Investigation No. TA-201-75 Crystalline Silicon
Photovoltaic Cells (Whether or Not Partially Or
Fully Assembled into Other Products).

Dear Secretary Barton:

On behalf of the Ministry of Economy's Unit of International Trade Practices of Mexico, enclosed
please find a pre-hearing brief in the above referenced investigation.

Also on behalf of the Government of Mexico, we hereby respectfully request the Commission
to allocate time to appear as a diplomatic witness at the hearing scheduled for October 3,
2017, to be held at the U.S. International Trade Commission regarding the above referenced
investigation.

Please contact us if you have any questions regarding this submission, or require additional
information.

Sincerely,

/.tC.ja~
Economic Counsellor
Embassy of Mexico

1911 Pennyslvania Ave. N.W., Washington, D.C., 20006 {202) 728-1707, Fax {202) 264-4904
 U.S. INTERNATIONAL TRADE COMMISSION
PUBLIC CERTIFICATE OF SERVICE

I hereby certify on September 27, 2017 that a copy of the foregoing submission is
being served via U.S. first class mail, by hand or international mail, upon the following
parties:

Matthew J. McConkey, Esq. Gregory Brabec, Esq.

Mayer Brown LLP Wacker Polysilicon North America LLC
1999 K Street., NW 553 Wacker Boulevard, NW
Washington, DC 20006 Charleston, TN 37310

H. Deen Kaplan, Esq. Stephen S. Kho, Esq.

Hogan Lovells US LLP Akin Gump Strauss Hauer & Feld LLP
Columbia Square 1333 New Hampshire Avenue, NW
555 Thirteenth Street, NW Washington, DC 20036
Washington, DC 20004
Kenneth G. Weigel,
Timothy C. Brightbill, Esq. Esq. Alston Bird LLP
950 F Street, NW
Wiley Rein LLP
Washington, DC 20004
1776 K Street, NW
Washington, DC 20006
Kristin H. Mowry, Esq.
Mowry & Grimson, PLLC
Diana Dimitriuc-Quaia, Esq.
5335 Wisconsin Ave., NW
Nancy A. Noonan, Esq
John Gurley, Esq. Suite 810
Arent Fox LLP Washington, DC 20015
1717 K Street, NW
Kristen Smith, Esq.
Washington, DC 20006
Sandier, Travis & Rosenberg, P.A.
1300 Pennsylvania Ave., NW
Kelly A. Slater, Esq. Suite 400
Appleton Luff PTE LTD Washington, DC 20004
1025 Connecticut Avenue, NW Suite 1000
Washington, DC 20036 Neil Ellis, Esq.
Sidley Austin LLP
Robert G. Gosselink, Esq. 1501 K Street, NW
Washington, DC 20005
Trade Pacific PLLC
660 Pennsylvania Avenue, S.W. Suite 401
William J. Clinton, Esq.
Washington, DC 20003
Jay C. Campbell, Esq.
Walter J. Spak, Esq.
Matthew R. Nicely, Esq. White & Case LLP
Hughes Hubbard & Reed LLP 701 Thirteenth Street, NW
1775 I Street, NW Washington, DC 20005
Washington, DC 20006
Lindsay B. Meyer, Esq.
Daniel L. Porter, Esq. Wesley S. Sudduth, Esq.
Curtis, Mallet-Prevost, Colt & Mosie LLP
Venable LLP
1717 Pennsylvania, NW
600 Massachusetts Avenue, N.W
Washington, DC 20006
Washington, DC 20001
1911 Pennyslvania Ave. N.W., Washington, D.C., 20006 (202) 728-1707, Fax (202) 264-4904
 3006 Massachusetts Ave., N.W.
Daniel J. Gerkin, Esq. Washington, DC 20008
Vinson & Elkins LLP
2200 Pennsylvania Avenue, N.W. Fang Liu, First Secretary
Suite 500 West Embassy of the People's Republic of China
Washington, D.C. 20037 2133 Wisconsin Ave., NW
Washington, DC 20001

John P. Smirnow, Esq. Ratheesh Malottu

Smirnow Law M.S. Pothal & Associates
1717 K Street, NW F-12/4, 1st Floor
Suite 1120 Malviyanagar
Washington, DC 20006 New Delhi-110017
India
Stephen J. Orava, Esq.
King & Spalding Jim Won Choi, Counsellor
1700 Pennsylvania Avenue, N.W. Embassy of the Republic of Korea
Washington, DC 20006 2450 Massachusetts Ave., NW
Washington,
Kevin M. O'Brien, Esq. DC 20008
Baker McKenzie LLP
815 Connecticut Ave., N.W. Deep Patel, Founder & CEO
Washington, DC 20006 GigaWatt, Inc.
310 E Orangethorpe Ave.
Donald B. Cameron, Esq. SuiteD
Morris, Manning & Martin, LLP Placentia, CA 92870
1401 Eye Street, NW
Suite 600 Nguyen Phuong Nam, Deputy Director
Washington, DC 20005 General Vietnam Competition Authority
No. 25, Ngo Quyen Str.
Colin Bird, Minister Counsellor Hoan Kiem Dis!.
Embassy of Canada Ha Noi, Vietnam
501 Pennsylvania Avenue, NW
Washington, DC 20001 Dr. Sibylle Zitko, Esq.
The European Commission Delegation of
Mohd Zahid Bin Abdullah, Director the European Union to the United States of
Ministry of International Trade and Industry America
Menara Perdagangan Antarabangsa dan 2175 K Street, NW
lndustri No.7, Jalan Sultan Haji Ahmad Washington, DC 20037
Shah 50480 Kuala Lumpur
Malaysia Chien Chi CHAO, Economic Officer
Taipei Economic and Cultural
Reza Pehlevi Chairul Representative Office In The United
Embassy of Indonesia States
2020 Massachusetts Ave., NW 4301 Connecticut Avenue, NW
Washington, DC 20036 Washington, DC 20008

Jeannie Kao Brian L Eftink, Esq.

Solartech Energy Corp. Wacker Polysilicon North America
8F., No. 760, Sec. 4, Bade Rd., LLC 553 Wacker Boulevard, NW
Songshan Dis!., Taipei 105, Taiwan Charleston, TN 37310

Aluisio Gomien de Lima Campos Prayoth Benyasut, Minister(Commercial)

Embassy of Brazil Office of Commerical Affairs
1911 Pennyslvania Ave. N.W., Washington, D.C., 20006 (202) 728-1707, Fax (202) 264-4904
Royal Thai Embassy
1024 Wisconsin Avenue, NW
Suite 202 H. R. Gupta, Managing Director
Washington, DC 20007 INDOSOLAR Limited
M/s M.S. Pothal & Associates
Mardjoko, Act. Director of Trade Defense F-12/4, 1st Floor
Jalan M.1 Ridwan Rais N0.5 Malvyanagar, New Delhi-110017
Jakarta 10110 India
Indonesia
Thomas M. Beline, Lead Attorney
Hsiao-Chun, Lu Cassidy Levy Kent (USA) LLP
LOF Solar Corp. 2000 Pennsylvania Avenue, NW
2F, No.6, Prosperity Rd. 2 Suite 3000
Hsinchu Science Park Hsinchu 30078 Washington, DC 20006
Taiwan, R.O.C.

/.{C.oj::
Economic Counsellor
Embassy of Mexico

1911 Pennyslvania Ave. N.W., Washington, D.C., 20006 (202) 728-1707, Fax (202) 264-4904
 SE
SECRETA RiA DE ECONO,\\i;\

COMMENTS TO THE SERIOUS INJURY OR THREAT OF SERIOUS INJURY

DETERMINATION AND TO THE INITIATION OF REMEDY PHASE ON THE SAFEGUARD

INVESTIGATION ON CRYSTALLINE SILICON PHOTOVOLTAlC CELLS

(WHETHER OR NOT PARTIALLY OR FULLY ASSEMBLED INTO OTHER PRODUCTS)

The Government of Mexico appreciates the opportunity to submit the following comments

concerning the serious injury or threat of serious injury determination and the initiation of the

remedy phase on the safeguard investigation on crystalline silicon photovoltaic cells (whether or

not partially or fully assembled into other products) published on September 9, 2017 by the

International Trade Commission (the Commission).

In general terms, we consider that according with the information contained in the case file, there

was no sufficient evidence to justify the initiation of the investigation and to conclude that the

U.S. industry is suffering serious injury, or threat of serious injury as we already mentioned in

our previous letters submitted to this Commission.

Unforeseen development of circumstances

As we described in our previous letters, both the Article XIX of GATT 1994 (GATT) and the SA

establish the requirements that must be fulfilled to impose a safeguard measure. In this regard,

paragraph 1 a) of Article XIX of GATT states that WTO Members may only impose a safeguard

measure if as a result of unforeseen developments and the effect of obligations, including tariff

concessions, established in the GATT, the imports of a product in the territory of that Member

have increased in such quantities and under such conditions as to cause or threaten to cause

serious injury to the producers of like or directly competitive products in that territory.

1
 SE
SECRETARiA Dl: ECONOMiA

Consequently, to comply with that Article, the investigating authority (lA) must provide

explanations on the existence and development of those elements and how negotiators could

not foresee or expect them at the moment of their admission to the WTO, as provided by WTO

jurisprudence.'

Now that the Commission has determined that subject imports are a substantial cause of injury,

or threat thereof, we observe that there is still no explanation in the Commission's News Release

on whether this analysis was conducted and if so, the results obtained. 2 We understand that

such requirements are directly applicable to the imposition of a safeguards measure but that

does not mean that the lA is exempted of providing any explanation at all regarding the existence

of those elements and the consequences that they originate during the investigation. That is, an

investigation is a process that somehow constitutes a single unit in which the only difference

between the analysis performed to determine if the proceeding will initiate, during the

investigation itself and for the imposition of a measure is the depth of such analysis. Therefore,

the explanations we referred to previously should have been present during all those phases.

Furthermore, in terms of due process it is essential that the authorities are sufficiently transparent

about the elements that will be considered during the safeguards investigation, in order to give

the interested parties the opportunity to comment on those elements. Notwithstanding, so far

there is no mention and neither an explanation, of which unforeseen circumstances caused the

increase of imports, or when that occurred; at the same time, the ID, the Prehearing Staff Report

and the News Release do not explain what are the obligations assumed by the U.S. through the

1 Reports of the Working Party in the case U.S.A. - Fur felt hats (under the 1947 GATT); report of the WfO
Appellate Body in Korea- Certain Dairy Products.
2 News Release 17-133, published on the Commission's website on September 22, 2017

2
 SE
SECRETA !tit\ DE ECONO~IiA

GATT that, in addition to an unforeseen development of circumstances, would have caused the

imports increase.

The only elements that we could identify in that regard are two allegations submitted by Petitioner

that were completely unrelated to the unforeseen developments and the effect of obligations

incurred under the GATT and for that reason, we believe that by initiating the investigation and

now initiating the remedy phase on that basis, the Commission did not act in conformity with the

U.S. international obligations.

Now, assuming that Petitioner's allegations had something to do with the standard defined in the

WTO Agreement on Safeguards (AS), we believe that his assertions would still have no merit.

Petitioner only alleges that "[t]he surge in imports and the attendant injurious impact of such

imports was clearly unforeseen by the U.S. industry" and makes the two allegations referred in

the prior paragraph characterizing them as those unforeseen circumstances 3 :

a. " ... the completely uneconomic decision by foreign producers to add additional production

capacity and increase production to such a degree that the supply of CSPV cells and

modules would drastically exceed demand ... "

b. The U.S. industry could not have foreseen that the foreign producers, in response to the

existing antidumping and countervailing measures would open production facilities in

third-countries resulting in no relief for the U.S. industry from the application of those

measures.

Petition at 42
3
 SE
SECRF.TARIA DE ECONO:\t[A

As we already mentioned in our previous submissions, in respect of the first assertion, we

observe that silicon solar cells have been around since the early days of the space program and

now dominate the industry After a big success in the space field, in the early 70's the

establishment of large photovoltaic companies began 5 and by the 80's the solar industry was

growing consistently. 6 Obviously, companies saw in solar cells a great business while generating

clean energy and the industry was growing accordingly. Therefore, it cannot be argued that in

the presence of a growing market, companies were not going to increase their production

capacity as it happens in any business. Thus, Petitioner argues that it was unforeseen that

foreign companies were going to add production capacity, but that cannot be unforeseen when

the U.S. domestic producers did exactly the same thing. In fact, in the presence of a good

business opportunity (on fair trade terms), it is normal that different companies will enter into the

market and that the previously existing companies will increase their production capacity while

developing better technologies in order to continue gaining market presence. This is a normal

business cycle in any sector and for that reason, it cannot be argued that it was unforeseen that

the solar industry would increase its production capacity over the years while demand was

growing.

In regards to the second assertion, as we also mentioned in our previous submissions, again, it

cannot be argued that in a growing market of that size, it was not foreseeable that the market

share lost by the imports subject to antidumping and countervailing measures would not be

4 https://www. bloom berg .com/news/articles/2017 -03-21/the-wonder-material-that-may-make-spray-on-solar-cells-a-

reality
5 http://www.pvresources.com/en/introduction/history.php
6 https://www1.eere.energy.gov/solar/pdfs/solar_timeline.pdf

4
 SE
SECRETA RIA DE ECONOMiA

attractive for exporters of other countries, and especially if we consider that, as mentioned

before, that constituted a good business opportunity (on fair trade terms).

Accordingly, we reiterate that there is no evidence that there are unforeseen developments and

that because of the effect of the obligations acquired by the U.S. under the GATT, imports of

CSPV cells and modules increased in such quantities and under such conditions as to cause or

threaten to cause serious injury to the domestic industry (in fact, as can be easily observed from

the petition, none of the arguments provided by Petitioner comply with the legal requirements

set forth in paragraph 1 a) of Article XIX of GATT and the SA). Of course that is enough to

consider that the initiation is not appropriate, but in addition, even assuming that Petitioner's

allegations were related to the AS standard, we believe that his assertions would still have no

merit, as explained before.

Consequently, we insist that the eventual adoption of any safeguard measure would also entail

a violation of the applicable provisions of the WTO because, by not meeting the minimum

requirements necessary to initiate, those flaws constitute deficiencies that cannot be fixed during

the procedure.

Adjustment plans

According to article 5.1 of the AS and to the statute7 , the safeguards measures are aimed at

"facilitate the adjustment" of the domestic industry. In this case, as described in our previous

submissions, from our point of view Petitioner can hardly be considered as representative of the

U.S. domestic industry at the time of filing the petition. Therefore, any safeguards measure

derived from this investigation cannot, by definition, facilitate the adjustment of any U.S. domestic

7
19 U.S. Code $2252(a)(1)and (2)(A)
5
 SE
SECRETA RiA DE ECONOMiA

industry. Even more, as it is mentioned by different companies in this investigation, "the petition

is being driven by [. . .] an equipment leasing company that loaned [a considerable amount of

money] to petitioner for some of its equipment." This background is clarified in publicly available

information set forth in the May 18th, 20171etter that a company submitted to the Commission .a

According to that letter, we observe that the only motivation for Petitioner to file the petition is to

restore value to the equipment concerned so the leasing company can recover its investment. 9

Thus, while filing the petition there is arguably no intention to facilitate the adjustment of the U.S.

industry. Therefore, the ultimate goal of imposing any safeguards measure arguably cannot be

met, and thus this investigation should have concluded without the imposition of such measures.

Prior written notice and consultations before the imposition of any trade restriction and

right to compensation according to NAFTA

According to the North American Free Trade Agreement (NAFTA) obligations, in the event that

the United States finalize its investigation with the imposition of a safeguard measure and

determines that Mexico is included in the application of the safeguard measure, prior to the

imposition of any restriction, we would like to remark that the United States shall comply with the

requirements stablished on Article 802.5 of that Agreement:

"Article 802. Global Actions

5. No Party may impose restrictions on a good in an action under paragraph

1 or 3:

8Letter from Tracker, Inc. to Honorable Lisa R. Barton, Secretary U.S. International Trade Commission, May 22, 2017,
USITC ID Document 612344.
9 Letter from Swinerton Renewable Energy to Honorable Lisa R. Barton, Secretary U.S. International Trade

Commission, May 18,2017, USITC ID Document 612104

6
 SE
SECRETA RiA DE F.CONOML\

(a) without delivery of prior written notice to the Commission, and without adequate

opportunity for consultation with the Party or Parties against whose good the action

is proposed to be taken, as far in advance of taking the action as practicable; and

(b) that would have the effect of reducing imports of such good from a Party below

the trend of imports of the good from that Party over a recent representative base

period with allowance for reasonable growth."

In that sense, the Commission shall comply with the following:

To deliver a "prior written notice to the Commission ... ";

To grant an adequate opportunity for consultation to Mexico as far in advance of taking

the action as practicable; and

Not to impose restrictions that would have the effect of reducing imports below the trend

of imports from Mexico over a recent representative base period with allowance for

reasonable growth.

Finally, the United States shall provide a mutually agreed trade liberalizing compensation in

accordance with NAFTA Article 802.6., which establishes the following:

"6. The Party taking an action pursuant to this Article shall provide to the Party or

Parties against whose good the action is taken mutually agreed trade liberalizing

compensation in the form of concessions having substantially equivalent trade

effects or equivalent to the value of the additional duties expected to result from the

action. If the Parties concerned are unable to agree on compensation, the Party

against whose good the action is taken may take action having trade effects

substantially equivalent to the action taken under paragraph 1 or 3."

7
 SE
SliCRETJ\RiA DE ECONOAli:\

Conclusion

As a result of the above, we believe that both the initiation of the investigation and the subsequent

determinations do not comply with the applicable legal framework, since there is not enough

information, objective evidence and relevant reasoning to justify them and in addition, to our

knowledge, our Government was never notified on the initiation. In particular, we consider that

the elements contained in the ID and in the case file, far from being an adequate basis for

initiating an investigation constitute clear evidence that the state of the industry cannot in any

case justify such initiation (and even less to impose a safeguards measure).

Accordingly, we respectfully request that no imposition of safeguards measures takes place.

/.~~Economic Counsellor
Embassy of Mexico