Solar Products from China and Taiwan Face Major New Investigations

by Eversheds Sutherland (US) LLP
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On February 14, the U.S. International Trade Commission (“ITC”) voted to go forward with the new antidumping and countervailing duty cases filed on New Year’s Eve by SolarWorld Industries America, Inc., the U.S. solar panel unit of Germany’s SolarWorld AG.  These cases have the potential to affect the entire U.S. solar industry and potentially could lead to significant increases in the cost of key materials for solar installations. All participants in the U.S. solar industry have an interest in following the progress of these investigations.

SolarWorld was the petitioner in the original solar trade cases filed in 2011, which resulted in substantial additional duties being levied against imports of solar cells and panels made in China.  SolarWorld filed the new cases in an effort to close a “loophole” in the existing antidumping and countervailing duty orders that currently permit solar panels made in China containing non-Chinese cells to be imported without paying antidumping and countervailing duties.  SolarWorld alleges that Chinese and Taiwanese solar producers have deliberately changed their business models to take advantage of this loophole to continue selling unfairly priced products in the United States.  The new petition broadly alleges that crystalline silicon photovoltaic products from China and Taiwan – including panels composed of cells from a third country – have injured the U.S. industry.  The petition excludes from the scope any products already covered by the existing orders.
 
The ITC’s February 14 decision concluded there is a reasonable indication that the U.S. industry is materially injured by imports from China and Taiwan.  This is a preliminary finding that U.S. law requires before a case can proceed to a full investigation.  The focus of the case now shifts to the U.S. Department of Commerce, which will seek detailed information on the pricing of Chinese and Taiwanese products and assistance by the Chinese government to its solar industry.

The new investigations are relevant to any company sourcing solar products from Asia and could impact companies importing solar panels from China or Taiwan within weeks.  If the investigations proceed on a normal schedule, provisional duties could be imposed as soon as March 2014 in the countervailing duty case and June 2014 in the antidumping case.  If imports surge in response to the new investigations, additional duties could be imposed even earlier.   Companies with existing contracts to purchase and import solar products from China or Taiwan, or that plan to enter into such contracts in the future, are likely to face significant duty liabilities. 

These investigations have the potential to cause a major disruption in the supply of solar panels for projects in the United States and may lead to other significant market effects.  This is the time for companies to review their supply agreements and take into account the dates on which provisional duties might be imposed in order to mitigate risk and limit the cost increases that could result from new antidumping and countervailing duties on solar products imported from China and Taiwan.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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