European companies buying products from Chinese manufacturers that flout new trade rules will face heavy penalties and even jail, a German law firm has warned.

Rödl & Partner has urged importers to be highly vigilant and ensure that the products they are buying are either covered by the price undertaking or have paid the punitive anti-dumping duties, which average 47.7%.

“Companies need to look carefully at imported solar products and whether their supplier is covered by the agreement. If the anti-dumping duties are not paid, they can be claimed up to three years retroactively,” said Isabel Ludwig, a customs expert with Rödl & Partner in Stuttgart.

The price undertaking agreed to by around 100 Chinese manufacturers applies a minimum price of €0.56 per watt for products entering the EU with an annual quota of 7GW for modules and 2GW for cells. Companies not part of the undertaking or who do not comply with the terms of the undertaking, will be liable for the punitive tariffs.

The European Council approved a two-year period for the rules last week.

One of the anticipated work-arounds for Chinese firms looking to avoid the duties is to claim that manufacture actually took place outside of China.

“If it can be demonstrated that the company has been involved in fraudulent behaviour, there is the threat of criminal tax proceedings and resulting in fines and in severe cases prison,” added Ludwig.

Rödl & Partner expects the European Commission to closely monitor the import of solar modules, cells and wafers from other Asian countries such as Malaysia and Singapore. If these import volumes balloon suspiciously, the European Anti-Fraud Office (OLAF) will investigate.

Importers who purchase cheap panels purportedly from Malaysia, that are revealed to have been made in China, will face 65% tariffs.

“Importers of solar products should analyse their supply relationships very carefully, identify the origin of their products and, where appropriate, be able to prove it,” said Ludwig adding that the liability falls with the importer, even if they knew nothing about a product being mislabelled.

AFASE disbanded

In related news, one of the instrumental groups in opposing strict limitations on Chinese products has today disbanded. The Alliance for Affordable Solar Energy (AFASE), whose members were largely downstream solar operators concerned that limits on Chinese imports would increase prices, has been absorbed by the Sustainable Energy Trade Initiative (SETI).

In a statement AFASE said it was redirecting its focus “with the end of the trade investigations in sight”. 

Last week EU ProSun, which made the initial complaint against Chinese manufacturers said it expected the deal brokered between China and the EU to be torn up by the European Court.

The EU has also announced provisional anti-dumping duties of 42.1% of Chinese solar glass.

This story originally appeared on PV Tech, Solar Power Portal's sister site.