Solar Importers/Purchasers Respond in AD/CVD Anti-Circumvention Case

Simon Lester -

Last month, we reported on anti-circumvention ruling requests filed by a group of solar manufacturers called the American Solar Manufacturers Against Chinese Circumvention (A-SMACC) related to AD/CVD orders that had been imposed in December 2012 on photovoltaic cells/modules from China. The requests were related to imports from Malaysia, Thailand, and Viet Nam, and alleged that Chinese producers shifted production to these countries for subsequent export to the United States in order to circumvent the AD/CVD duties. Two domestic companies, NextEra Energy Constructors and Florida Power & Light, both part of NextEra Energy, that have imported photovoltaic cells/modules have now responded. Their response is summarized below, based on the submission related to the AD/CVD order against Thailand (with exhibits removed in order to reduce file size).

In broad terms, in the view of the two companies, the anti-circumvention requests "are not supported by [the Commerce Department’s] previous determinations, are factually deficient in several key respects, and mischaracterize the solar supply chain." Accordingly, they argue, "Commerce should exercise its discretion under the statute and decline to initiate the anticircumvention inquiries with respect to CSPV cells and modules from China."

They begin their submission by noting a general concern related to policy and politics. They argue that "imposing substantial AD/CVD duties on imports from Southeast Asia would only drive up the cost of solar projects in the United States dramatically, threatening an industry that is already heavily reliant on stable supplies from Malaysia, Vietnam, and Thailand, and must depend on imports even more so in the future in order to meet the Biden Administration’s ambitious goals for expanded solar deployment in the United States."

Next, they set out a couple more specific points in this regard that, in their view, indicate that Commerce should not initiate this case.

First, they argue, "action is not appropriate because the U.S. domestic industry itself relies—and must rely—on solar cells produced with Chinese wafers," as "95 percent of the solar wafer capacity is located in China and zero percent is in the United States." Thus, "any CSPV cells or modules produced in the United States—or really anywhere else in the world—are likely using Chinese wafers," which means "the domestic industry and/or their cell suppliers, regardless of where those suppliers are located, are engaging in the same type of processing of Chinese polysilicon wafers that A-SMACC alleges is circumventing the Solar I orders." In addition, "U.S. CSPV producers, or their affiliates, are also sourcing cells and modules from the three countries specifically listed in the circumvention ruling requests."

Second, they say, "the value and volume of trade at issue is so substantial that it would not be appropriate to apply AD/CVD duties to these imports through an anti-circumvention proceeding." Given that imports from these three countries represent about three quarters of all imports, they contend, "it would not be surprising if the circumvention ruling requests cover at least half of all CSPV imports into the United States," which "would have significant adverse economic and environmental effects."

And finally, they argue that the circumvention ruling requests seek to avoid "an investigation into whether the CSPV cells and modules produced in Malaysia, Thailand, and Vietnam are actually subsidized or sold to the United States at less than fair value," with no USITC investigation on injury. They conclude: "Commerce should not extend the duties on China to Malaysia, Thailand, and Vietnam on the basis of anticircumvention requests made by a handful of companies seeking to obtain a quick competitive advantage for themselves, particularly when the domestic CSPV manufacturing industry has waited years to bring their allegations of circumvention and rely on Chinese wafers themselves."

The two companies then made specific legal arguments as follows:

  • The initiation is not warranted based on well-established facts and precedent from prior CSPV proceedings, as the anti-circumvention ruling requests ask Commerce "to ignore its own previous determinations regarding the scope of the Solar I Orders, as well as fundamental facts with respect to the CSPV supply chain."
  • Commerce should decline to initiate because the ruling requests are factually deficient. According to the two companies, the facts contained in the ruling requests "show that the requirements for finding circumvention are not, and cannot be met."
  • Commerce should consider the timeliness of the ruling requests. In their view, "[t]he domestic industry has known for years about the lawful reorientation of supply chains to Southeast Asia for cells and modules," and yet "did not allege circumvention during the initial period when capacity was being added in Southeast Asia, leading to increased imports."

The response from A-SMACC is here.

The Commerce Department has 45 days from the date of filing of the petition, which was August 16, to make a final ruling or initiate an investigation, but it can give itself an extension if it needs more information.