Circumvention Inquiry into Solar Imports

On April 1, 2022, the Commerce Department initiated an inquiry into whether Chinese manufacturers of #crystalline #silicon #photovoltaic (CSPV) cells and panels are circumventing U.S. measures intended to counteract unfair #trade practices. Commerce initiated the inquiry in response to a petition by Auxin Solar Inc., a U.S. manufacturer, alleging that solar cells and panels imported from Cambodia, Malaysia, Thailand, and Vietnam use Chinese-made parts and components to avoid high U.S. #tariffs on solar equipment imported directly from China. The investigation has been controversial, including among Members of Congress. Some stakeholders assert that uncertainty about the tariffs could slow deployment of solar #energy in the United States while others insist that action is needed to protect U.S. solar #manufacturing. While the Biden Administration recently used emergency authorities in effort to support U.S. #solar deployment, a final decision in this circumvention inquiry is expected no later than April 2023.

Background
In 2012, the Commerce Department and the U.S. International Trade Commission (ITC) determined that imports of solar cells and panels from China were being sold below cost (“dumped”) or unfairly subsidized and were injuring or threatened to injure the U.S. solar manufacturing industry. #Commerce imposed two remedial orders. The antidumping (AD) order imposed duties ranging from 18%-25% on goods produced by specific Chinese firms and 250% on imports from all other Chinese firms. The countervailing duty (CVD) order, which counteract subsidies, imposed duties of 14%-15% on all solar products from China. In its petition, Auxin contended that certain producers in Southeast Asia have manufacturing operations that involve minimal capital investments and technical research and rely on Chinese inputs (e.g., solar glass, aluminum frames, and silver paste) to make CSPV cells and panels that are then exported to the United States.

How Commerce Conducts Circumvention Inquiries.
Circumvention inquiries determine whether a good imported from a country not subject to an AD or CVD order should be included in the scope of an existing order.
Any interested party (e.g., relevant domestic and foreign manufacturers, importers, unions, and trade associations) may submit a request for a circumvention inquiry. The Secretary of Commerce may also self-initiate an inquiry. Once the Secretary receives a request, federal law and regulations establish deadlines for further action:

Within 30 days of receiving a request containing the required information, the Secretary is to initiate an inquiry, publish a notice in the Federal Register, and instruct customs to suspend liquidation (i.e., the final calculation of duties) and require any firm under investigation to deposit duties.

Within 150 days of the notice, the Secretary is to issue a preliminary determination.

Within 300 days of the notice, law and regulations require that the Secretary issue a final determination.

If the investigation is “extraordinarily complicated,” the Secretary may extend the final determination deadline by up to 65 days.

As part of its inquiry, Commerce considers whether “the process of assembly or completion in the foreign country … is minor or insignificant.” In making that determination, Commerce takes into account the level of #investment, #research, and #development undertaken in the foreign country, the nature of the production process, the extent of the production facilities, and the value added to the final product.

If Commerce determines that the goods in question should be included within the scope of the existing order(s) (an “affirmative determination”), duties could be applied to goods that entered the United States after publication of the notice. In certain circumstances, the Secretary may collect duties on goods entered prior to publication, back to the date of the original order(s). Commerce could apply duties to covered goods specific to particular producers, exporters, or importers, and on a country-wide basis (i.e., against solar imports from #Cambodia, #Malaysia, #Thailand, and/or #Vietnam).

Domestic Solar Industry,...