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Key Takeaways | Commercial, Legal and Policy Responses to Commerce’s Anticircumvention Investigation

by , and | Apr 6, 2022 | , ,

The US Department of Commerce (Commerce) recently initiated a circumvention investigation against solar cell and module imports from Cambodia, Malaysia, Thailand and Vietnam. This decision has the potential to profoundly impact the companies that import or rely on imported crystalline silicon photovoltaic cells (CSPs) in the United States. To help companies navigate this investigation, McDermott’s Carl Fleming, Lynn Kamarck and Tyler Kimberly were joined by Brett White, vice president of regulatory affairs for Pine Gate Renewables, for a fireside chat that covered, among other things, the specific issues Commerce will investigate, how to assess the risk of this decision across developer portfolios and the opportunities presented for improving current renewables legislation.

Below are key takeaways from the discussion:

1. Commerce’s decision to initiate a circumvention investigation into whether CSPs imported from Cambodia, Malaysia, Thailand or Vietnam are circumventing antidumping and countervailing duty orders on CSPs from China has generated market uncertainty for companies that import or rely on imported CSPs.

2. Whether any assessment of duties or penalties that result from the investigation will have retroactive effect is currently unclear. Applicable regulations do not require Commerce to apply duties retroactively, providing an opportunity for “interested parties” to offer feedback to Commerce as to why retroactive application would be unfair. (In this context, domestically, importers of record, businesses and trade associations and industrial users are generally recognized as interested parties.)

3. Major legal and factual issues may sway Commerce’s ultimate determination, while certain factual discrepancies in Auxin Solar Inc.’s petition to Commerce may lead to a preliminary decision by Commerce. (The deadline for the preliminary decision is August 29, 2022, and it’s unlikely that Commerce will act before this deadline.) Additionally, certain “country of origin” legal analyses are implicated in any ultimate determination Commerce makes.

4. Auxin’s petition and Commerce’s investigation have given more attention to the issue of importing CSPs and to the Build Back Better Plan (BBB), so there is optimism that this may push US Congress to act more quickly on the adoption of certain tax credits, domestic content credits and other incentives under the BBB.

To access past webinars in the Energy Transition series and to begin receiving Energy updates, including invitations to the webinar series, please click here.



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Solar Energy Industries Association Proposes Compromise Plan for U.S. – China Solar Conflict

by | Oct 4, 2013 | ,

by Raymond Paretzky and Melissa Dorn

The Solar Energy Industries Association (SEIA) has announced a proposal to address the trade dispute between the United States and China regarding solar generating equipment.  Both China and the U.S. have imposed duties on imports of solar equipment: (i) the U.S. Commerce Department found that certain Chinese solar companies had benefited from government subsidies and “dumped” their products into the U.S. market at prices below fair value, and (ii) in July, China began imposing duties as high as 57 percent on imports of polysilicon, a main ingredient in solar cells, from the U.S.  SEIA’s proposal would result in the termination of current disputes, a prohibition on new trade actions, and the establishment of funds to support the U.S. solar industry.

The U.S. trade remedy orders on Chinese solar cells and modules have resulted in Chinese manufacturers attempting to circumvent the antidumping and countervailing duty (AD/CVD) orders by assembling third-country cells into modules in China and then legally importing those modules into the U.S. free of AD/CVD duties.  (See McDermott’s Energy Business Law blog post on the AD/CVD orders.)  SEIA contends that the U.S. and Chinese trade remedy orders currently in place are causing adverse effects in the global solar industry without ultimately addressing the causes of unfair trade competition.

SEIA has been actively involved in the trade proceedings both in the U.S. and in China, and through its proposal hopes to provide a solution that is a “win-win” for both countries, the industry and consumers.  The SEIA proposal would:

  • Establish a U.S. Solar Manufacturing Settlement Fund (Fund) and a U.S. Solar Development Institute (Institute), both funded by Chinese solar manufacturers.  The Fund would help finance the production of solar equipment in the U.S. through investments in capital equipment, facilities, research and development, worker training and other areas.  The Institute would work to expand the U.S. solar market and grow the U.S. solar manufacturing base. Money for the Fund and the Institute would come from Chinese companies contributing a percentage of the price premium they currently pay to third-country cell producers to avoid the U.S. AD/CVD orders.  The U.S. entered into a similar settlement arrangement regarding the Brazilian cotton industry.
  • Require both the U.S. and China to revoke all AD/CVD orders and terminate all regulatory and judicial proceedings related to U.S. imports of solar cells and modules from China and Chinese imports of polysilicon from the U.S.
  • Prohibit the initiation of any new trade remedy investigations or other actions between the U.S. and China regarding imports of polysilicon, solar cells, or modules for the five-year term of the proposed agreement plus 12 additional months thereafter.

While the proposal has not met with an entirely positive response from the U.S. solar manufacturing industry, certain U.S. Senators, including Senators Patty Murray and Maria Cantwell, have expressed support for the proposal.   In the meantime, China recently announced additional tax breaks, in the form of refunds of 50 percent [...]

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International Trade Actions Complicate Global Market For Renewable Energy Businesses, Particularly Solar Sector

by | Mar 8, 2013 | ,

by David J. Levine and Pamela D. Walther

The flurry of international trade disputes in the renewable energy field, particularly the solar sector, is complicating the business landscape for the renewable energy industry.  In their BloombergBNA analysis piece, McDermott international trade lawyers David Levine and Pamela Walther provide a detailed account of renewable energy trade actions in the domestic and international arenas.  As the long-term implications of these disputes raise serious strategic issues for providers, consumers and governments, those involved are well-advised to monitor developments and take an active role in proceedings to protect their interests.

To read the full article, click here.



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Commerce Department Announces New Duties on Chinese Solar Panel Imports

by | Oct 19, 2012 | ,

by Raymond Paretzky and William Friedman

The U.S. Department of Commerce (Commerce) published its final affirmative antidumping (AD) and countervailing duty (CVD) determinations on October 17, 2012, imposing new duties on Chinese solar panel producers and exporters.  Commerce determined that Chinese producers/exporters sold solar photovoltaic cells in the United States at dumping margins ranging from 18.32 to 249.96 percent, and that Chinese producers/exporters have received countervailable subsidies of 14.78 to 15.97 percent. 

Dumping occurs when a foreign company sells a product into the United States at less than fair value prices.  Countervailable subsidization occurs when a governmental authority directly or indirectly conveys benefits that support production by specific companies or sectors, or are contingent upon export performance or the use of domestic goods over imported goods.

As a result of its determinations, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits or bonds equal to these margins on imports.  The cash deposit rates, however, will be reduced by 10.54 percent, the export subsidy rate.  Additionally, Commerce found that “critical circumstances” exist in the CVD investigation for all companies and in the AD investigation for all companies except one, Wuxi Suntech.  As a result, provisional duty deposits, which are normally collected as of the date of publication of Commerce’s preliminary determinations, will be collected 90 days prior to that date (except in the case of AD duty deposits for Wuxi Suntech).

For the early duty deposit collection to be maintained and the AD/CVD duties to stand, the International Trade Commission (ITC) must make an affirmative final determination that dumped and subsidized imports of solar cells from China “materially injure, or threaten material injury to,” the domestic solar panel industry.  If the ITC makes a negative final injury determination, the investigations will be terminated and the duties will not be imposed.  The ITC has tentatively scheduled its final determination vote for November 7, 2012.



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McDermott Webinar: U.S.-China Trade Actions Affecting the Solar and Wind Energy Industries

by | Jun 29, 2012 |

On Wednesday, June 27, 2012, McDermott conducted the web seminar "U.S.-China Trade Actions Affecting the Solar and Wind Energy Industries."  Leading the discussion were McDermott International Trade partners David Levine and Raymond Paretzky, with insightful industry commentary from Francine Sullivan of REC Silicon.  The slides and an audio recording of the seminar can be accessed here.



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ITC Will Decide on Duties for Solar Imports

by | Jun 14, 2012 | , ,

by Raymond Paretzky and David J. Levine

The U.S. International Trade Commission (ITC) is now beginning its final phase “injury investigation,” which will result in a determination in November as to whether U.S. producers are harmed by imports of allegedly dumped and/or subsidized imports of Crystalline Silicon Photovoltaic Cells and Modules from China.

The parallel dumping and subsidy actions began with the filing of a petition by Solar World Industries America Inc., the U.S. subsidiary of a German parent company, in October 2011. In December, the ITC issued a unanimous affirmative preliminary injury determination, rejecting arguments by companies opposed to the action that price declines in the industry resulted not from Chinese imports but rather from plummeting silicon prices, reduced U.S. government incentives for the housing industry to use solar cells/panels, and limited U.S. demand. The ITC will revisit these arguments in its more expansive final phase investigation, in which importers, U.S. producers, purchasers and Chinese producers will be required to answer ITC questionnaires. All parties with interests at stake are well advised to make their positions and relevant facts known to the ITC.

If the ITC finds that the U.S. industry making these products is in fact injured (or threatened with injury) by the imports, the United States will impose tariffs on imports of these products. The amount of the tariffs will be determined by the U.S. Department of Commerce (DOC) in separate proceedings. DOC preliminarily found that subsidization was occurring in the range of 2.90 to 4.73 percent and dumping in the range of 31.14 to 249.96 percent, but DOC could change these rates in its final investigations, which are currently ongoing.

Key dates in the ITC investigation’s final phase are:

 Questionnaire Responses Due  Aug. 13  Confidential Staff Report Released  Sept. 13  Requests to Appear at Hearing Due  Sept. 19  Prehearing Briefs Due  Sept. 20  Hearing  Oct. 3  Posthearing Briefs Due  Oct. 11  Final Comments on New Info. Due  Nov. 1  ITC Vote (Proposed)  Nov. 7

 



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U.S. Department of Commerce Preliminarily Finds Chinese Solar Panel Manufacturers Received Subsidies from the Chinese Government

by | Mar 27, 2012 | , ,

by David Levine, Raymond Paretzky and Melissa Dorn

The United States Department of Commerce (DOC) released its preliminary determination in the countervailing duty investigation on imports of silicon photovoltaic (PV) cells from China last week.  The DOC preliminarily found subsidy rates for Chinese producers and exporters of PV cells ranging between 2.9 to 4.73 percent—rates that were lower than some industry members reportedly expected, and lower than the rates alleged by the Solar World Industries America Inc., the U.S. producer that petitioned for this countervailing duty investigation and the companion antidumping investigation.  The DOC affirmed Solar World’s allegation of “critical circumstances,” resulting in retroactive application of the countervailing duty deposit requirement on imports of Chinese PV cells beginning in December 2011.

The DOC also clarified that the scope of the ongoing antidumping/countervailing duty investigations covers PV cells and modules produced in China as well as modules produced elsewhere with Chinese PV cells, but does not include modules produced in China from PV cells produced elsewhere.

Countervailable subsidies are receipts of financial assistance by producers and/or exporters from their local or national government that benefit the production or exportation of goods where such benefits are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods. 

U.S. imports of Chinese solar panels in 2011 were valued at over $2.5 billion – a significant and growing share of the total U.S. market.  The rapid growth of Chinese imports in fact supporting the “critical circumstances” finding noted above as well as the earlier preliminary determination by the U.S. International Trade Commission (ITC) that the U.S. industry is being injured by imports of PV cells from China. 

Interested members of the solar industry will continue to watch these proceedings closely.  The DOC is expected to announce its preliminary determination in the companion antidumping investigation in May.  The final countervailing duty determination is due to be issued in June, and the ITC will issue its final injury determination in July, though these dates could be postponed.  Interested parties also are closely monitoring the U.S. and global market implications of these investigations, including in the large solar market in Europe, where reports indicate similar trade relief actions against Chinese exports might be under consideration. 



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