By a vote on February 14, 2014, the U.S. International Trade Commission (ITC) made a preliminary determination of material injury to the U.S. solar cell manufacturing industry due to low-priced Crystalline Silicon Photovoltaic (CSPV) products from China and Taiwan, thereby handing the next step of the investigation to the U.S. International Trade Administration (ITA, part of the U.S. Department of Commerce). The ITA will investigate whether the alleged CSPV products received unfair government subsidies from China during 2012, the relevant period for analysis, and whether CSPV products from both China and Taiwan were sold during that period at unfairly low prices in the United States. The ITC’s vote was 4-0 with two Commissioners not voting. Copies of the ITC report and remarks will be available after March 17, 2014. ITC’s final U.S. industry injury determinations are due on or about July 28, 2014 for the subsidy investigation and on or about October 9, 2014 for the dumping investigation.
The Pending Trade Cases Against CSPV Products from Taiwan and China
The unfair trade investigations are in response to petitions of German-American solar cell manufacturer SolarWorld Industries America Inc., filed on December 31, 2013. The ITC vote was the first determination in a multistep process under U.S. law for investigating complaints of unfair trade practices. FAQs on the respective roles of ITC and ITA in these investigations are here and here. Last month, ITC and ITA initiated the investigations (described in this factsheet) into alleged unfair subsidies to Chinese CSPV manufacturers through 33 programs of the Chinese government and unfair dumping at prices less than fair market value by both Chinese and Taiwanese CSPV manufacturers. The cases are docketed as ITC Investigation Nos. 701-TA-511 and 731-TA-1246-1247 and ITA Investigation Nos. A-570-010, C-570-11, and A-583-853.
The 2012 Orders Against CSPV Products from China
This is round two for SolarWorld. After an earlier petition from SolarWorld in 2011 and subsequent U.S. investigations, ITA issued orders in 2012 imposing countervailing duties and antidumping duties on certain CSPV products produced in China and also those produced in third countries from Chinese components. As we reported at the time, the measures taken by the United States in 2012 imposed preliminary antidumping duty rates from approximately 31% for certain Chinese solar manufacturers that cooperated in ITA’s investigation to 250% for all other manufacturers. Preliminary countervailing duty rates imposed were in the 3%-5% range. When the final orders were issued in December 2012, the penalties were adjusted. Final countervailing duty rates were increased significantly to a range of 14.78%-15.97% ad valorem, while the antidumping duty rate range was decreased slightly to 18.32%-249.96%.
The CSPV Products Under Investigation
SolarWorld’s new petition asked ITC and ITA to examine similar products coming from Taiwan, alleging that Chinese manufacturers were successfully evading the duties established in 2012 by moving manufacturing operations to nearby Taiwan and otherwise collaborating with the Taiwanese to avoid the penalties. Products covered by the new investigations are “crystalline silicon photovoltaic cells, and modules, laminates and/or panels consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including building integrated materials. For purposes of this investigation, subject merchandise also includes modules, laminates and/or panels assembled in the subject country consisting of crystalline silicon photovoltaic cells that are completed or partially manufactured within a customs territory other than that subject country, using ingots that are manufactured in the subject country, wafers that are manufactured in the subject country, or cells where the manufacturing process begins in the subject country and is completed in a non-subject country. Subject merchandise includes crystalline silicon photovoltaic cells of thickness equal to or greater than 20 micrometers, having a p/n junction formed by any means, whether or not the cell has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell” (79 Fed. Reg. 4661, 4667 (Jan. 29, 2014)(App. I)).
Products excluded from the scope of the current investigations are “thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS). Also excluded from the scope of this investigation are any products covered by the existing antidumping and countervailing duty orders on crystalline silicon photovoltaic cells, whether or not assembled into modules, from the People's Republic of China.… Also excluded from the scope of this investigation are crystalline silicon photovoltaic cells, not exceeding 10,000mm2 in surface area, that are permanently integrated into a consumer good whose function is other than power generation and that consumes the electricity generated by the integrated crystalline silicon photovoltaic cell.
The Potential Increased New Duties
ITA initiated its new subsidy investigation against Chinese CSPV products on January 22, 2014, and its preliminary determination is due on or about March 26, 2014. ITA also commenced its dumping investigation against China and Taiwan on January 22, 2014, but its preliminary determination in that investigation is not due until on or about June 9, 2014. Based on allegations in the SolarWorld petition, any antidumping penalties are likely to have the greater economic impact on U.S. imports of the CSPV products. Note that in 2012, ITA reports that imports of certain CSPV products from China and Taiwan were valued at an estimated $2.1 billion and $513.5 million, respectively. In the current case against Taiwan and China, the alleged dumping margins are 75.68% and 165.04%, respectively, whereas the estimated subsidy rates are not specified but simply alleged to be more than de minimis (i.e., greater than 2% for developing countries and 1% for developed countries). The ITA investigation will establish the current dumping and subsidy margins, if any, and the final margins could be very different from those alleged and even those set out in preliminary determinations. Nonetheless, if ITA ultimately reaches a negative final determination in either case, the investigation will terminate notwithstanding the affirmative preliminary determination by ITC.
Timing of Potential Import Duty Impacts
Until the ITA reaches preliminary determinations, the future of the duty and tariff rates applied to imports into the United States of Chinese and Taiwanese CSPV products covered by these new investigations will be uncertain. If ITA issues preliminary affirmative orders in the subsidy or dumping investigations, it could make the orders retroactive for 90 days. In the 2012 investigations, the 90-day retroactive effect of the preliminary orders caught many U.S. importers by surprise. Those parties who had cleared covered CSPV products through U.S. Customs and Border Protection (CBP) prior to the preliminary orders but within the 90-day retroactive window found themselves owing substantial amounts to CBP for their previously cleared imports. To impose its orders retroactively, ITA must make certain findings of “critical circumstances” present to justify the retroactive remedy for unfair trade injury to U.S. industry. If ITA reaches both an affirmative preliminary determination of unfair trade practices and an affirmative preliminary determination of the need for enhanced remedies, the countervailing duty penalties could be imposed on U.S. imports from as early as the end of December 2013, and the antidumping penalties could be imposed from about mid-March 2014.
However, the critical circumstances determination is not a sure thing. In the 2012 case, ITA issued preliminary orders with a 90-day retroactive effect only to see the ITC reach the opposite conclusion months later. As a result of the ITC’s negative critical circumstances determination, the ITA amended its orders and rescinded the increased tariffs on CSPV products entered during the 90-day window prior to the preliminary determinations. As a result, all increased fees owed or paid by U.S. importers during the 90-day window were canceled or refunded. With this recent reversal in mind, ITA will need to carefully consider the “critical circumstances” criteria in this new case. One thing seems sure: the worldwide CSPV industry will be watching closely for the first countervailing duty determination from ITA on March 26, 2014. Moreover, the ITA dumping determination due in June is likely to generate even greater interest in whether Taiwan’s CSPV industry will be penalized by the United States for its alleged “collusion” with China.
Stoel Rives Updates
The Stoel Rives Energy Trade Team will continue to monitor the progress of these cases and report on them for its clients and friends.