On Thursday, 24 June 2021, the Biden administration took various actions against solar product manufacturers in the Xinjiang region, which will have implications on the supply chain for the construction of solar energy projects both within and outside U.S. borders.
The U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (“WRO”) against Hoshine Silicon Industry Co. Ltd. (“Hoshine”), a company located in the Xinjiang region.
As a result of the WRO, personnel at all ports of entry within the U.S. must immediately begin detaining shipments containing silica-based products, including materials and goods derived from or produced using silica-based products, made by Hoshine and its subsidiaries. Silica is a raw material used in the production of solar panels. CBP has the authority to seize products covered by the WRO unless U.S. importers can prove the products or materials are not produced with forced labour. Forced labour is defined as “all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself [/herself] voluntarily1.” Practically, the effect of the WRO is that importers in the U.S. importing any silica-based products should obtain supply chain tracing information to check whether their products are made by Hoshine or its subsidiaries.
The U.S. Department of Commerce's Bureau of Industry and Security (BIS) updated its Entity List to include five Chinese entities that make polysilicon, also a raw material for solar products. The entities are:
The Entity List requires U.S. companies to have licenses for the export, re-export, and transfer (in-country) of items including commodities, software, and technology subject to the Export Administration Regulations (EAR), where listed entities are a party to the transaction (i.e., purchaser, intermediate consignee, ultimate consignee, end-user).
U.S. Congress is also considering legislation that would ban all imports from the Xinjiang region to the U.S., unless companies can certify that products do not use forced labour in their supply chains. The proposed legislation would also allow further sanctions to be imposed on companies in the Xinjiang region.
Xinjiang reportedly produces 45% of the world’s polysilicon and it remains to be seen what practical effect these measures will have on solar manufacturers in the region and on the global supply in general.
1. Section 307 of the Tariff Act of 1930 (19 U.S.C. §1307)