On August 18, 2023, the US Department of Commerce ("Commerce") issued its final affirmative determinations that solar cells and modules completed in Cambodia, Malaysia, Thailand, or Vietnam (collectively, "Southeast Asia") using components from China, and exported to the United States, are circumventing the antidumping duty ("ADD") and countervailing duty ("CVD") orders on solar cells, whether or not assembled into modules, from China ("Orders").¹ Duties will not be collected on imports before June 2024, because of a temporary duty suspension ordered by President Biden. This alert discusses the determinations and the potential effects on producers, importers, and purchasers of solar cells and modules from Southeast Asia.

Final Determinations

Commerce has determined that circumvention occurred during the review period through each of the four Southeast Asian countries and made "country-wide" circumvention findings designating Cambodia, Malaysia, Thailand, and Vietnam as countries from which circumventing solar cells and modules are being exported. Commerce also conducted company-specific inquiries, selecting two respondents from each of the four countries (mandatory respondents). All mandatory respondents, except the two mandatory respondents from Malaysia and one mandatory respondent from Vietnam, were found to have circumvented the duties on solar cells and modules from China by completing only "minor processing" prior to shipment to the United States or based on application of total adverse facts available. Based on its affirmative findings with respect to these mandatory respondents, Commerce concluded that other producers in each country are circumventing the duties, despite the fact that Commerce did not gather or consider information regarding their specific operations.

The final determination's findings mostly match the preliminary determination issued in December 2022.² The main changes in the final determination concern individual companies. New East Solar (Cambodia) Co., Ltd., which Commerce found to be not circumventing in the Cambodia proceeding, refused to accept verification and therefore has been considered non-cooperative in the final determination. For the same reason, Vina Solar Technology Co., Ltd., which Commerce found to be circumventing in the Vietnam proceeding, has been considered non-cooperative. Consequently, these two companies are not eligible to use the "Chinese-Component" certification (discussed below). Furthermore, Vietnam Sunergy Joint Stock Company, a non-mandatory respondent in the Vietnam proceeding, has now been considered cooperative and therefore has been removed from the list of non-cooperative companies (and is eligible to use the "Chinese-Component" certification, discussed below).

Product Scope

The products subject to the final circumvention determinations are solar cells and modules that have been completed in Southeast Asia using parts and components from China, that are subsequently exported from Southeast Asia. The determinations further specify that these inquiries cover:

(A) solar cells that were produced in Southeast Asia from wafers produced in China; and

(B) modules, laminates, and panels that were produced in Southeast Asia from wafers produced in China, and where more than two of the following components in the modules were produced in China:

(a) silver paste;

(b) aluminum frames;

(c) glass;

(d) backsheets;

(e) ethylene vinyl acetate sheets; and

(f) junction boxes. 

If modules do not meet both of the conditions in (B), then they are not covered, even if the cells within the modules were produced in Southeast Asia from wafers produced in China. Finally, wafers produced outside of China with polysilicon sourced from China are not considered to be wafers produced in China for purposes of these circumvention inquiries.

Therefore, the following products produced in Southeast Asia are not within the scope of the inquiries and are not subject to duties and suspension of liquidation:

(A) solar cells produced in Southeast Asia from non-Chinese wafers;

(B) modules produced in Southeast Asia using non-Chinese wafers; and

(C) modules produced in Southeast Asia using Chinese wafers, but for which four or more of the aforementioned module components were not produced in China.

Additionally, solar cells made in Southeast Asia and then exported to non-inquiry countries for further assembly before export to the United States are not subject to the circumvention inquiry (even if made from wafers originating in China).³ This inquiry and its resulting suspension, cash deposit, and certification requirements do not cover solar cells and modules produced anywhere other than the four Southeast Asian countries.

Delay in the Suspension of Liquidation and Cash Deposit Requirements

Despite the final affirmative determinations, certain duties owed under the inquiries will not be collected on imports before June 2024. On June 6, 2022, President Biden issued Proclamation 10414 ("Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules From Southeast Asia") authorizing the Secretary of Commerce to suspend collection of ADD/CVD duties and cash deposits on subject solar cells and modules from Southeast Asia.⁴ This exemption will remain in place until June 6, 2024 (or until the emergency is declared terminated, whichever occurs first – the "Date of Termination"). On September 12, 2022, Commerce issued a final regulation implementing the proclamation.⁵

After the preliminary determination, pursuant to Proclamation 10414 and Commerce's final regulation, Commerce instructed the US Customs and Border Protection ("CBP") to suspend liquidation of entries of subject solar cells and modules entered between April 1, 2022, and June 5, 2024, unless the importer and the exporter meet the "Applicable Entries" certification, the "Non-Circumventing Entries" certification, or the "Chinese-Components" certification requirements (discussed below).⁶

The Biden administration's decision to delay the tariffs has encountered controversy in Congress⁷ and a joint resolution was passed to reimpose the tariffs in May 2023.⁸ The president, however, vetoed the bill and the duty suspension remained in force.⁹ Though Congressional objections to the duty suspension continue,¹⁰ opponents of the suspension do not have enough votes to overcome the president's veto. The administration has given no indication that it might reverse the duty suspension, though President Biden has clarified that he does not intend to extend it further.¹¹

Entries made on or after April 1, 2022, but before the Date of Termination

Consistent with the instructions that Commerce issued after the preliminary determination, Commerce will instruct CBP to continue to suspend liquidation and require a cash deposit for entries of subject solar cells and modules made on or after April 1, 2022, but before the Date of Termination (June 6, 2024), with the exception of entries that are accompanied by an "Applicable Entries" certification, a "Non-Circumventing Entries" certification, or a "Chinese-Components" certification (discussed below). As for the cash deposit rate, it will also be the same as set forth in the preliminary determination:

(A) if the exporter has a company-specific cash deposit rate under the Orders, the cash deposit rate will be the company-specific rate established for that company in the most recently completed segment of the solar cells proceedings;

(B) if the exporter does not have a company-specific cash deposit rate under the Orders, the cash deposit rate will be the company-specific rate established under the Orders for the company that exported the wafers to the producer/exporter in the relevant Southeast Asian countries that were incorporated in the imported solar cells or modules; and

(C) if neither the exporter nor the wafer supplier has a company-specific rate, the cash deposit rate will be the China-wide rate (ADD: 238.95%; CVD: 15.24%).

Entries made on or after the Date of Termination

In the preliminary determination, Commerce stated that it intended to issue instructions to CBP with respect to entries made on or after the Date of Termination. Commerce, however, has not issued such instructions. The final determination suggests that any future instructions will be consistent with the ones described in the preliminary determination. In particular, with the exception of entries that are accompanied by a "Non-Circumventing Entries" certification or a "Chinese-Components" certification (discussed below), Commerce will instruct CBP to suspend liquidation and require cash deposit for entries of subject solar cells and modules made on or after the Date of Termination (June 6, 2024). As such, there will be no exception for the "Applicable Entries" starting from the Date of Termination. As for the cash deposit rate:

(A) if the exporter has a company-specific cash deposit rate under the Orders, the cash deposit rate will be the company-specific rate established for that company in the most recently completed segment of the solar cells proceedings;

(B) if the exporter does not have a company-specific cash deposit rate under the Orders, the cash deposit rate will be the company-specific rate established under the Orders for the company that exported the wafers to the producer/exporter in the relevant Southeast Asian countries that were incorporated in the imported solar cells or modules; and

(C) if neither the exporter nor the wafer supplier has a company-specific rate, the cash deposit rate will be the China-wide rate (ADD: 238.95% + CVD: 15.24%).

Certifications for Exceptions

Imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam will not be subject to suspension of liquidation or cash deposit requirements if accompanied by a certification attesting that they are not circumventing the ADD/CVD orders. There are three types of certifications:

(A) "Applicable Entries" Certification (Appendix IV of the Determination): Available to all companies producing and exporting in-scope solar cells and modules from Southeast Asia. Companies need to certify that the solar cells and modules they export and import are "Applicable Entries" (i.e., entries of subject cells and modules that are entered into the United States, or withdrawn from warehouse, for consumption before the Date of Termination and, for entries that enter after November 15, 2022, are used in the United States by the Utilization Expiration Date). "Utilization Expiration Date" is the date 180 days after the Date of Termination. "Utilization" and "utilized" means the cells and modules will be used or installed in the United States.

(B) "Non-Circumventing Entries" Certification (Appendix V of the Determination): Only companies that were found to be not circumventing the Orders and their importers are eligible to use this certification (i.e., Hanwha, Jinko, and Boviet).

(C) "Chinese-Components" Certification (Appendix VI of the Determination): All companies that export solar cells and modules from Southeast Asian countries (except for the non-cooperative companies in Appendix II) and their importers are eligible to use this certification. Companies need to certify that the solar cells and modules they export and import are not subject to these circumvention inquiries. In particular, they need to certify that: (1) the Southeast Asian-made solar cells covered by the certification were not manufactured using wafers produced in China; (2) the Southeast Asian-made modules covered by the certification were not manufactured using wafers produced in China; or (3) the Southeast Asian-made modules covered by the certification were manufactured using wafers produced in China but no more than two of the aforementioned module components that were used to manufacture the modules were produced in China.

1 "Antidumping and Countervailing Duty Orders on Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People's Republic of China: Final Scope Determination and Final Affirmative Determinations of Circumvention With Respect to Cambodia, Malaysia, Thailand, and Vietnam," via ACCESS.trade.gov.
2 "Antidumping and Countervailing Duty Orders on Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of China: Preliminary Affirmative Determinations of Circumvention With Respect to Cambodia, Malaysia, Thailand, and Vietnam (87 FR 75221)," December 8, 2022, https://www.federalregister.gov/documents/2022/12/08/2022-26671/antidumping-and-countervailing-duty-orders-on-crystalline-silicon-photovoltaic-cells-whether-or-not.
3 "Clarification of Product Coverage," December 19, 2022, https://www.commerce.gov/sites/default/files/2022-12/Solar-Circumvention-Product-Coverage-Memo.pdf.
4 "Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules From Southeast Asia, (87 FR 35067)," June 9, 2022, https://www.federalregister.gov/documents/2022/06/09/2022-12578/declaration-of-emergency-and-authorization-for-temporary-extensions-of-time-and-duty-free.
5 Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord With Presidential Proclamation 10414, final rule, (87 FR 56868), September 16, 2022, https://www.federalregister.gov/documents/2022/09/16/2022-19953/procedures-covering-suspension-of-liquidation-duties-and-estimated-duties-in-accord-with.
6 Commerce Message to CBP, No. 3041408 (February 10, 2023).
7 See White & Case's previous coverage of activities in Congress here: https://www.whitecase.com/insight-alert/congress-approves-bill-reverse-solar-panel-tariff-relief-veto-expected.
8 H.J.Res.39 - Disapproving the rule submitted by the Department of Commerce relating to "Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord With Presidential Proclamation 10414," https://www.congress.gov/bill/118th-congress/house-joint-resolution/39.
9 "Statement from President Joe Biden on His Veto of H.J. Res. 39," May 16, 2023, https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/16/statement-from-president-joe-biden-on-his-veto-of-h-j-res-39/.
10 See, e.g., "Brown Urges Commerce Dept. To Continue Standing Up To Political & Foreign Interference In Trade Enforcement, Stand Up For Ohio Workers And Ohio Companies," August 14, 2023, https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-commerce-dept-foreign-interference-trade-enforcement-ohio-workers-companies.
11 "Message to the House of Representatives — President's Veto of H.J. Res. 39," https://www.whitehouse.gov/briefing-room/presidential-actions/2023/05/16/message-to-the-house-of-representatives-presidents-veto-of-h-j-res-39/.