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A New Anti-Circumvention Investigation into Solar Imports

Executive Summary

  • In March, the Department of Commerce began an investigation to determine if imports of solar cells and modules from Cambodia, Malaysia, Thailand and Vietnam (CMTV) are circumventing existing antidumping and countervailing tariffs on imports of solar cells and modules from China.
  • Based on statutory rules, if anti-circumventing tariffs are imposed, they would retroactively apply to imports of solar cells and modules from the CMTV countries from April 1, 2022, to as far back as November 2021, meaning U.S. importers of such products do not currently know their exact costs.
  • The installation and utilization of solar panels in the United States has been sharply curtailed due to the uncertainty the U.S. solar industry faces from the anti-circumvention tariffs.
  • The United States’ comparative advantage is in the downstream portion of the solar supply chain and hence most of the U.S. solar industry specializes in value-adding activities such as using imports of cells and modules to assemble full panels and installing those panels in residential and commercial projects.
  • If the tariffs are imposed, they would presumably help the few U.S. manufacturers of solar cells and modules but punish the United States’ value-adding solar firms further along the supply chain.

Introduction

On March 28, 2022, the Department of Commerce (DOC) initiated an investigation to determine if the United States should impose additional antidumping/countervailing (AD/CV) duties on imports of solar cell and modules coming from Cambodia, Malaysia, Thailand, and Vietnam (CMTV). The investigation stems from a petition from a single U.S.-based manufacturer that claims Chinese companies circumvent current U.S. AD/CV tariffs by performing a minor production step in the CMTV countries so that the origin of the products is changed and thus avoid the AD/CV tariffs. The petition was heavily based on a BloombergNEF (BNEF) report that supposedly found that circumvention of current AD/CV tariffs was occurring. In May, the authors of that report stated the U.S. manufacturer misinterpreted the findings and that they did not support the conclusion that circumvention was occurring, which suggests the circumvention petition is without merit.[1]

A preliminary decision on whether to impose anti-circumvention duties is due by August 29, 2022. Due to statutory rules, if the tariffs are imposed, they would retroactively apply to imports of solar cells and modules from the CMTV countries from April 1, 2022, to as far back as November 4, 2021; DOC has the discretion to decide which date will apply.[2] With just the announcement of the investigation, U.S. companies have already halted most of their imports of solar cells and modules from the CMTV countries, which provide 80 percent of foreign solar cells and modules to the United States, due to uncertainty over the exact prices and costs of their imports.

As with many other industries and products, the United States’ comparative advantage is in the downstream portion of the supply chain, e.g., using solar cells and modules to assemble solar panels or providing a service such as installing such panels in residential and commercial projects. In 2015, there were about 209,000 workers in the U.S. solar industry, and more than half of these jobs were in the installation of panels.[3] In 2020, there were more than 230,000 workers with an even higher portion – 66 percent – working in solar panel installation[4] Since the investigation has led to a significant decrease in the importation of foreign solar cells and modules, the supply of such inputs for the …….

Source: https://www.americanactionforum.org/insight/a-new-anti-circumvention-investigation-into-solar-imports/

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