ITA Set to Issue Solar Cells AD/CV Orders After ITC Vote; SolarWorld Leaves Option Open for More Action

“Although this ruling was anticipated given the ITC’s low threshold for injury determinations, we are nevertheless disappointed that they have left in place the Commerce Department’s tariffs on solar cell imports,” said Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE), which represents solar companies opposed to imposition of the duties.

SolarWorld, which filed the underlying petitions for the investigations, said the decision validates its contention “that the government of China is staging an illegal, anticompetitive export drive at the expense of U.S. manufacturing and jobs.”

Ruling Comes ‘Too Late’ for Laid Off U.S. Workers; But Some Worry About Trade War

“The vote comes too late for hundreds of American workers laid off from more than two dozen U.S. factories that China’s state-sponsored export campaign drove into financial peril,” said Gordon Brinser, president of SolarWorld. “But the decision offers some hope to survivors that China might be held accountable to its legal obligations and that this U.S.-pioneered industry might see a fair chance to play a growing role in the nation’s energy independence.”

The company said China launched its export drive into the U.S. solar market as part of its central five-year planning process targeting emerging strategic industry. The push came just as the solar industry reached a tipping point into mainstream adoption, it said. The Chinese government is “bailing out individual companies, keeping afloat massive excesses of production capacity and otherwise continuing to intervene in the U.S. market by underwriting a no-holds-barred export drive,” said Brinser.

But CASE’s Shah is worried about the potential for the case to spark a trade war. “Unilateral tariffs and a trade war in today’s interconnected global marketplace are unnecessary and detrimental to effective and efficient business competition,” he said. “Going forward, we must avoid a repeat of the SolarWorld saga, as the growth of the solar industry here, in Europe, and around the world is too important to be upended by one company’s self-serving crusade.”

Scope of Orders Will Leave Loopholes for China Manufacturers

As a result of the ITC’s affirmative injury determination, the ITA will issue AD and CV duty orders on crystalline silicon photovoltaic cells, whether or not assembled into modules, from China (A-570-979). But despite calls from domestic petitioners to include them, solar panels produced in China from third-country solar cells will be excluded from the scope of the AD/CV duty orders. The scope creates a loophole for Chinese producers to get around duties, said SolarWorld. CASE agreed with that assessment. “Fortunately, the scope of the decision is unchanged and is limited to solar cells produced in China, thereby minimizing harm to the U.S. solar industry,” it said.

Tim Brightbill of Wiley Rein, who represents SolarWorld in the proceeding, told us he's not aware of any plans by Chinese companies to avail themselves of the loophole by moving solar cell production abroad. “These Chinese companies are losing large amounts of money, and they already have vast amounts of overcapacity,” he said. “So I think it would be surprising … for them to build still more capacity, when they have already flooded the U.S. market, the EU market, and really the world market with cells and modules, and driven down prices to such dangerously harmful levels.

Next Step for SolarWorld is Enforcement; Leaving Option Open for Another Investigation

Brightbill told us SolarWorld is leaving the option open to pursue AD/CV duties on solar panels in China produced from third-country cells. But trade investigations are a long and expensive process, so U.S. industry would want to think carefully before bringing more actions. There are other options to address evasion and circumvention of AD/CV duties, and procedures short of a full-blown investigation that can be used, he said.

“In any trade case, after an order goes in place, enforcement becomes a priority, and so enforcement is going to be a priority for us,” Brightbill said. SolarWorld will be working with CBP to ensure the duties are being applied correctly. “We will monitor to see if there are dramatic shifts in import sources that are unusual or unexplained,” he said. And anti-circumvention inquiries remain a viable option to address companies using the third-country solar cell get-around to avoid payment of duties, said Brightbill.

CBP has been requiring importers of solar panels without Chinese-origin cells to certify that the panels don’t contain Chinese solar cells and therefore are not subject to AD/CV duties. Importers are required to maintain a certification from the exporter. Brightbill said the certifications are an important part of the enforcement process. “I think Commerce and Customs have done a good job laying out these specific enforcement measures, like these certifications, so that’s going to be an area of focus to make sure that the certifications are accurate and that there’s no doubt about where these products … are coming from,” he said.

Meanwhile, CASE said it will continue to encourage dialogue and negotiation between the U.S. and Chinese governments to seek a “constructive resolution,” and to avert any possible trade frictions between the two countries.—Brian Feito

(See ITT’s Online Archives 12052437 and 12032602 for summary of the ITA AD and CV final determinations, respectively. See ITT’s Online Archives 12020314 for summary of the ITA’s CV critical circumstances determination. See also ITT’s Online Archives 12061322 for summary of CBP requirement of certifications for importers of solar panels.)