The solar industry is reeling from an announcement made by the US Department of Commerce (“DOC”) this week that the agency has decided to initiate country-wide anti-circumvention inquiries regarding crystalline silicon photovoltaic cells from Cambodia, Malaysia, Thailand and Vietnam, to determine whether imports into the US from those countries using parts and components from China are circumventing the antidumping and countervailing duty orders on solar cells and modules from China.
The issue under the statute is whether the process of assembly or completion in the named countries is minor or insignificant. The main factors to be considered under the statute are (A) the level of investment in the foreign countries being investigated; (B) the level of research and development in the investigated countries; (C) the nature of the production process in the investigated countries, (D) the extent of production facilities in the investigated countries, and (E) whether the value of processing performed in the investigated countries represents a small proportion of value of the merchandise exported to the US. Other factors also are considered, including whether the plants in the investigated countries are affiliated with a producer of merchandise subject to the orders and whether the operations in the investigated countries began after the imposition of the antidumping and countervailing duty orders.
DOC has announced that it will determine which companies to investigate fully in each of the countries by sending out quantity and value questionnaires to determine which companies have the highest value and volume of exports to the US. The preliminary determination in this case is to be issued within 150 days of the publication of the notice of initiation in the Federal Register. Publication is likely on March 31 or April 1 so this would make the preliminary determination around August 29.
The preliminary determination in this case is a critical date for importers of record, and indirectly, also for purchasers from those importers. If the preliminary determination is affirmative with regard to circumvention from a country, DOC will order US Customs and Border Protection (“CBP”) to collect dumping duty deposits (often at a very high rate, which likely to be as high as 250% for the antidumping case and 15% fpr the countervailing duty case, based on prior findings of adverse inferences) from, at minimum, the date of the publication of the initiation notice (March 31 or April 1). In addition, it is possible (and may even be likely) that DOC will find that there was sufficient knowledge of the circumvention to make the collection of those duties retroactive from the initiation date to include all unliquidated entries. Because liquidation usually occurs within 314 days of entry this retroactive application of the duties could reach back to September 2021 in some instances.
Companies – including developers, panel producers, and investors – who are affected may be able to take certain actions to mitigate their risks, but these actions will be specific to the circumstances for each company. Our team at HB can discuss your particular situation to determine the best strategy going forward.
Contact Jeffrey Neeley, Ben Kass, or another member of our Energy and Natural Resources team for more information and assistance.