Democrats Question Lobbying Against Solar Circumvention Investigation; Trade Group Questions Auxin's Analysis

Sens. Sherrod Brown, D-Ohio, and Bob Casey, D-Pa., and Reps. Tim Ryan, D-Ohio; Mike Doyle, D-Pa.; Marcy Kaptur, D-Ohio; and Terri Sewell, D-Ala., sent President Joe Biden a letter May 26 saying China has come to dominate solar panel manufacturing through "a combination of lax environmental standards, the use of forced labor in the Xinjiang region, targeted subsidies, and other predatory trade practices such as dumping, circumvention, and intellectual property theft," and that American solar panel makers have been forced to play "whack-a-mole" as Chinese companies moved subsidized operations to Taiwan after a 2012 antidumping duty case, and then to Southeast Asia after a 2014 antidumping and countervailing duty case against a Taiwanese operation.

"This new petition filed on behalf of a small woman-and-minority-owned company, Auxin Solar, alleges that the antidumping and countervailing duties on Chinese cells and modules are being circumvented by shipping Chinese-made goods though countries like Malaysia, Vietnam, Thailand, and Cambodia. If the petition is correct, this is an illegal circumvention of U.S. trade remedy laws. The [Department of Commerce] is upholding U.S. law by investigating this petition. Investigations must be allowed to move forward, free from external influence," they wrote. "If there is no illegal circumvention of our trade remedy laws, the investigation will draw that conclusion."

They said Commerce Department career employees need enough time and money "to thoroughly investigate this petition -- any request to end the investigation earlier than what is necessary for a thorough investigation is, in essence, a request for lax enforcement of U.S. trade remedy laws."

They also argued that the arguments against the circumvention case on climate grounds are disingenuous, as solar installations have grown as tariffs have added up. "The cost of solar has continued to decline, despite previous tariffs imposed under Solar 1 and Solar 2 AD/CVD and Section 201 Solar Safeguards," they wrote.

“If undue political influence on this case is allowed to prevail, it would lead to more risks and vulnerabilities tomorrow by sending the message to non-market countries that our trade enforcement laws and future AD/CVD cases can be undermined through aggressive political lobbying,” they said in closing.

The congressional letter follows a recent filing from a renewable energy trade group that called on Commerce to end the inquiry, citing a recent news article that quoted energy industry analysts saying Auxin Solar misapplied the group's research to justify its allegations of circumvention.

In a May 20 filing, the American Council on Renewable Energy (ACORE) said a Canary Media article published two days earlier calls into question the basis of Auxin’s requests for the anti-circumvention inquiries. Commerce “relied heavily” on “characterizations” included in Auxin’s request of research from BloombergNEF when it initiated the inquiries. But in the article, the BloombergNEF analyst said Auxin’s use of the data didn't accurately reflect the research.

“Now that Commerce is aware that Auxin’s petition mischaracterized and misused BloombergNEF research, it is crucial that Commerce immediately rescind the circumvention inquiry to protect its administrative process,” the rescission request said. “Otherwise, the agency is essentially inviting parties to misuse its process with impunity.”

The day earlier, parties to the anti-circumvention inquiry submitted their comments on potential importer certification requirements should Commerce find circumvention in the upcoming preliminary results of the inquiry. In the comments, importers and foreign exporters called on Commerce to either find no circumvention in its preliminary determination or to end the inquiry, with one also citing the Canary Media report on the purported unreliability of Auxin’s inquiry request.

“It should be evident to Commerce that the only reasonable outcome in these inquiries is negative circumvention determinations,” NextEra and Florida Power & Light said. “Auxin has failed to rebut the substantial evidence on the record that the processing steps that occur in the targeted third countries involve converting wafers (an inert input) into a functioning [crystalline silicon photovoltaic (CSPV)] cell, capable of converting sunlight to electricity. These critical, complex, and capital-intensive steps are substantially more than minor or insignificant,” they said.

“Indeed, the factual premise for many of Auxin’s allegations (and, in turn, Commerce’s initiation notice) are in serious doubt, given recent revelations that Auxin misrepresented -- in its certified inquiry request -- the data contained in a BloombergNEF report that formed the basis for much [of] Auxin’s request,” NextEra and FP&L said.

Nonetheless, if Commerce does reach a preliminary circumvention finding, it should put in place a certification process to allow “importers to certify that the p/n junction is formed outside of China to qualify the goods to enter free” of solar cells duties, NextEra and FP&L said. And company-specific rates should be tied to the company that exports the wafer, not the company that made it, they said.

“Commerce should clarify that the exporter of the wafer determines whether an importer can claim a company-specific rate, without regard to any other inputs,” NextEra and FP&L said. “There is limited vertical integration throughout the CSPV supply chain. Not all wafer manufacturers produce cells; and cell producers obtain wafers from a variety of suppliers,” they said. “If Commerce’s intent is to broadly permit use of company-specific rates that are lower than the combined China-wide AD and all-others CVD rates of over 250 percent, limiting the application of company-specific rates to wafer producers with such rates would not achieve that goal.”

NextEra and Florida Power & Light also called for cells and modules to be excluded unless all production up to the wafer stage took place in China. LONGi mirrored those comments in its brief. The antidumping and countervailing duty orders on solar cells from China explicitly exclude Chinese modules made from non-Chinese cells, so they can’t cover Cambodian, Malaysian, Thai and Vietnamese modules made from non-Chinese cells either, LONGi said.

And should Commerce find that turning wafers into cells qualifies as circumvention, the Chinese wafers should be entirely produced in China, from only Chinese inputs, to qualify, the company said.

In its own brief, Auxin Solar, which requested the inquiries, said it agrees a certification process should be established. Certification should be grounded in the origin of the polysilicon wafers used in cell and module production, it said. And the default for importers should be the China-wide AD rate and the all-others CVD rate, Auxin said, “unless an exporter/importer can certify that the Chinese-origin inputs were sourced from a company with company-specific AD and/or CVD rates.”