On December 8, 2022, the U.S. Department of Commerce (“USDOC”) published its preliminary determination that certain manufacturers of solar energy products1 in Malaysia, Vietnam, Thailand, and Cambodia that rely on Chinese-origin inputs are circumventing U.S. antidumping and countervailing duties relating to crystalline silicon photovoltaic cells and modules of Chinese origin.2 If this preliminary determination is affirmed in the final determination, many solar energy panel manufacturers that use these Chinese-origin components may have to re-evaluate their supply chains and how they supply the U.S. market.
The preliminary determination imposes important certification obligations. To avoid collection of AD/CVD cash deposits on covered imports from Malaysia, Vietnam, Thailand, or Cambodia, importers and exporters must certify that the covered imports (i) qualify for the two-year duty waiver implemented by the Biden Administration, (ii) are not covered by the circumvention determination, or (iii) are not within the scope of the circumvention inquiry. For covered imports entered between April 1, 2022 and December 8, 2022, such certifications must be completed and signed no later than January 23, 2023. Certifications for covered imports entered after December 8, 2022 must be completed, signed, and dated by the time the entry summary is filed for the associated entry.3 Failure to complete the certifications can lead to the assumption that any uncertified goods are subject to the antidumping and countervailing duty orders.
The Department of Commerce determined in 2012 that China was unfairly subsidizing its solar energy product manufacturers, and that Chinese manufacturers were selling their products for less than fair value into the United States.4 In response, the United States enacted countervailing and antidumping duties on Chinese-made solar energy product imports.5 Since the imposition of the AD/CVD orders, approximately 80% of solar entered products subject to these orders have been imported from Malaysia, Vietnam, Thailand, and Cambodia, generally as downstream products that incorporate Chinese-origin inputs.6
In February 2022, a U.S. solar panel maker, Auxin Solar Inc., petitioned the Department of Commerce to investigate solar energy product manufacturers in Malaysia, Vietnam, Thailand, and Cambodia, alleging that Chinese manufacturers were using Southeast Asian manufacturers as pass-through entities in an attempt to evade U.S. tariffs.7 According to Auxin, Southeast Asian solar energy product manufacturers were adding relatively minor manufacturing value and making only minimal improvements to products that were mostly made in China and that would otherwise be subject to U.S. import duties.8
During the course of Commerce’s investigation of Auxin’s claims, the Biden Administration in June 2022 invoked the Defense Production Act to take several actions aimed at “accelerat[ing] [the] domestic production of clean energy technologies.”9 As part of this initiative, Biden announced a two-year tariff exemption period for solar energy imports from Malaysia, Vietnam, Thailand, and Cambodia.10 In the context of the Auxin inquiry, this meant that even if Commerce concluded that China was using the Southeast Asian manufacturers to evade U.S. trade regulations, entries of covered products from those Southeast Asian manufacturers would be eligible for a waiver of the otherwise applicable AD/CV duties until at least June 5, 2024.
Commerce’s Preliminary Determination
On December 2, 2022, the Department of Commerce announced the preliminary determinations of its investigations into Auxin’s claims.11 To begin, Commerce reached a general finding that “circumvention was occurring through each of the four Southeast Asian countries.”12 In addition, as part of its investigation, Commerce had selected two solar energy product manufacturers from each of the relevant countries – i……..