June 28, 2022

Volume XII, Number 179

Advertisement
Advertisement

June 28, 2022

Subscribe to Latest Legal News and Analysis

June 27, 2022

Subscribe to Latest Legal News and Analysis

Recent Memorandum from Commerce Regarding Solar Circumvention Investigation

On May 2, 2022, the U.S. Department of Commerce (“Commerce”) released a memorandum to “All Interested Parties” that clarifies the scope of the investigation into the alleged circumvention of tariffs on certain solar cells and solar modules imported into the United States from Malaysia, Thailand, Vietnam or Cambodia, originally announced by Commerce on March 28, 2022 (the “Investigation”). For additional background, please see Foley’s article regarding the launch of the Investigation.

Among other things, the three-page memorandum, entitled “Circumvention Inquiries with Respect to Cambodia, Malaysia, Thailand, and Vietnam, - Potential Certification Requirements” (the “Memorandum”) provides more clarity on (i) what type of certification requirements would be placed on solar cells and modules, (ii) what types of inputs would be subject to the duties, and (iii) what the amount of the duties would be, in each case, in the event of an affirmative preliminary or final determination in the Investigation.

Certification Requirements

The Memorandum notes that in previous affirmative circumvention inquiries, Commerce established certification procedures for importers and exporters regarding the source of the materials used in the subject products, and indicates that Commerce would utilize a similar certification process here. In the past, only imports that were found not to comply with the certification requirements were subject to the orders and applicable cash deposits, and imports that satisfied the certification requirements were considered not subject to the orders. The only exception to this was the exclusion of companies that “did not cooperate” to the best of their ability in the circumvention inquiry and companies that were unable to trace the input from the subject country to the actual merchandise that the company shipped to the United States.

Inputs

Importantly, Commerce makes clear that wafers made from polysilicon sourced from China but actually sliced into wafers outside of China are outside the scope of the circumvention inquiries.  Similarly, Commerce noted that only Chinese-origin inputs that have not undergone further manufacturing processes in another country are subject to the investigation. This added clarity will allow panel manufactures to better assess their risk of circumvention duties and may give manufacturers that do not use wafers manufactured in China an advantage in commercial negotiations. 

Potential Duties

Importantly, Commerce stated that solar cells and modules made from non-Chinese wafers are not covered by the circumvention proceeding and will not be subject to cash deposit requirements even if Commerce issues an affirmative determination.  Commerce states that in the event of an affirmative determination, if solar cells or modules have Chinese inputs that are traceable to a specific Chinese manufacturer and are found to be subject to the duties, the intended cash deposit rate for such imports will be equal to that Chinese manufacturer’s company-specific rates, as if they had been shipped directly from China. Even though Commerce identifies the origin of silicon wafers as the determining factor as to whether a panel is subject to the investigation, Commerce does not say that cash deposits would be required to cover only the value of the wafer. If Commerce issues an affirmative circumvention determination, then cash deposits will be based on the entire value of the cells and modules incorporating Chinese wafers.  For imports that cannot be tied to a specific Chinese manufacturer, the U.S. Customs and Border Patrol will be instructed to suspend liquidation of the entry and collect cash deposits at the rates applicable under applicable law relevant to Chinese-produced solar cells and modules.1

The Department of Commerce is requesting any interested parties to provide comments and other factual information related to the material in the Memorandum prior to 5:00pm Eastern Time on May 9, 2022.


FOOTNOTES

1 See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules from the People’s Republic of China: Amended Final Determination Letter of Sales at Less Than Fair Value, and Antidumping Duty Order, 77 FR 73018 (December 7, 2012); and Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the Republic of China: Countervailing Duty Order, 77 FR 73017 (December 7, 2012)

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 126
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Legal, Business, Jeffery Atkin, Foley Lardner, Environmental Attorney
Partner

Jeffery R. Atkin is a partner and business lawyer with Foley & Lardner LLP. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing. Mr. Atkin is chair of the Solar Energy Team, co-chair of the Energy Industry Team, and a member of the Latin America Practice.

Mr. Atkin’s experience in renewable energy and project finance includes representing developers,...

213.972.4557
Michael J. Walsh Government Litigation Lawyer Foley Lardner Law Firm
Partner

Michael J. Walsh, Jr. is a partner and litigation attorney with Foley & Lardner LLP. Based in the firm’s D.C. office, he is a member of the Government Enforcement Defense & Investigations Practice.

Prior to joining Foley, Mike served as Chief of Staff at the U.S. Commerce Department, and he also performed the duties of the General Counsel since August 2019. In this role as Chief Legal Officer, Mike oversaw more than 600 attorneys and was responsible for all legal matters within the Department. He also served as the senior advisor to the Secretary of Commerce on the most...

202.295.4040
Natalie S. Neals Attorney Business Law Foley Lardner Milwaukee
Senior Counsel

Natalie S. Neals is a business lawyer, senior counsel, and member of Foley’s Finance & Financial Institutions Practice. In addition to her representation of financial institutions and borrowers in general financing transactions, Natalie is also a member of the firm’s Energy Industry Team and dedicates a large part of her practice to project development and finance, representing both companies that are engaged in the development, financing, construction, and operation of solar power, wind power, and other alternative energy projects and financial institutions and...

414-319-7176
Rachel Conrad Associate Foley & Lardner LLP
Associate

Rachel E. Conrad is an associate and business lawyer with Foley & Lardner LLP where she is a member of the Finance Practice and the Energy Industry Team. Rachel advises clients on energy project finance and renewable energy project development, and has worked on developing and financing numerous utility-scale solar projects. Rachel also has experience with renewable energy...

608-258-4348
Advertisement
Advertisement
Advertisement