Solar Industry officials claim that a new tariff circumvention inquiry by the U.S. Department of Commerce will imperil the Biden administration’s clean energy and climate-change goals and result in the loss of nearly 70,000 U.S. solar industry jobs.
At issue is a request by Auxin Solar Inc., a U.S. solar panel manufacturer, for a Commerce Department inquiry into certain solar cells and modules assembled or completed in Cambodia, Malaysia, Thailand or Vietnam. Auxin alleges that solar modules assembled using parts and components manufactured in China and subsequently exported to the United States illegally circumvent U.S. trade tariffs imposed on solar cells and modules manufactured in China.
In 2008, Chinese-made solar cells accounted for only 22 percent of all solar cells imported into the United States. But by 2011, Chinese-made solar cells jumped to nearly 57 percent of imported products. However, those gains quickly faded after a 2011 investigation by the Obama administration discovered that a combination of illegal government subsidies to Chinese solar conglomerates and dumping of cheap, Chinese-made solar modules onto global markets fueled the growth of the Chinese solar sector. Consequently, the Commerce Department imposed stiff tariffs of up to 250 percent on the sales price of Chinese-made solar cells and modules imported into the U.S.
After the imposition of U.S. tariffs, Chinese producers continued to make solar cells and modules in China for exportation to world markets. However, Chinese solar conglomerates began building subsidiary facilities in Cambodia, Malaysia, Thailand, and Vietnam, to process silicon wafers into solar cells and modules for export to the United States. Consequently, between 2011 and 2020, the value of U.S. imports of solar cells and modules from China decreased 86 percent, from approximately $2.8 billion to approximately $392 million. And from January through May 2021, U.S. imports of solar cells and modules from China dropped to less than $7.5 million. Over the same period, U.S. imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam increased from $150 million in 2011 to $5.4 billion in 2020. In 2020, Malaysia alone supplied 42 percent of all solar cells and modules imported into the United States.
Biden’s clean energy agenda
Under federal law, the Commerce Department may determine that merchandise is circumventing U.S. trade tariffs when, before importation into the United States, such imported merchandise is completed or assembled in another foreign country (in this case, China) from merchandise which is subject to U.S. trade tariffs or is produced in the foreign country with respect to which such tariffs apply.
In making its anti-circumvention inquiry, the Commerce Department must determine whether the process of assembling or completing merchandise in another foreign country (in this case, Cambodia, Malaysia, Thailand, and Vietnam) is minor or insignificant. In determining whether assembly or competition is minor or insignificant, investigators must consider several factors, including:
- The level of Chinese investment in each of Cambodia, Malaysia, Thailand, or Vietnam
- The level of product research and development (R&D) taking place in each of the four countries
- The nature of the production process in each of the four countries
- The extent of production facilities in each of the four counties
- Whether the processing performed in each of Cambodia, Malaysia, Thailand, or Vietnam, represents a small or considerable proportion of the value of the solar modules from each country imported into the United States
Along with its …….