Solar Installer Alert: ITA Delays Trade Case Decision on Chinese Solar Modules | ITC's U.S. Solar Industry Injury Investigation Enters Final Phase

Energy

3/17/2014
The U.S. International Trade Administration (ITA) has postponed its countervailing duty determination by about two months, leaving the solar industry hanging for a while longer.

On March 11, 2014, the ITA gave notice of its determination that it needs more time to investigate alleged unlawful subsidies provided by China to the Chinese Crystalline Silicon Photovoltaic (CSPV) products manufacturing industry. 79 FR 13617 (Mar. 11, 2014), Case No. C-570-011. ITA stated that the complexity of the case justified moving the case from the “normal” investigation track for a countervailing duty (CVD) case to the “complicated” case track under relevant law and regulations.

The action extends the expected date of the ITA’s preliminary determination in the CVD investigation from about March 28, 2014 (65 days after initiating the investigation) to about June 2, 2014 (first business day past 130 days after initiation). The CVD investigation only affects CSPV products from China. The dumping (AD) investigation against CSPV products from both China and Taiwan is unchanged, and a preliminary determination in that case is still due on or about June 9, 2014. Case Nos. A-570-010, A-583-853.

At the outset of the CVD investigation, ITA noted that the petitioner SolarWorld had alleged some 33 subsidy programs provided by China were “countervailable.” ITA’s initial investigation revealed that there was enough evidence to continue its investigation of 28 of the alleged subsidy programs. See 79 FR 4667, 4670 (Jan. 29, 2014). Also, ITA reported that it had invited and conferred with representatives of the Government of China about the subsidy programs and invited the Chinese industry to participate in the investigation. Id. at 4668, 4670. In its March 11 notice, ITA stated that it “is investigating numerous alleged subsidy programs in the PRC; these programs include preferential loans and directed credit, debt forgiveness, grants, tax incentives, export incentive programs, and the provision of goods, services, and land for less than adequate remuneration.” 79 FR at 13617. The scope of this investigation led to the “complex” case designation and the postponement of the preliminary determination.

Solar Industry Concerned

We have heard from installers, developers, manufacturers and others in the solar industry that they are looking forward to gaining some certainty around the potential duties to be imposed on CSPV products from China and Taiwan. This delay in the first preliminary ruling correspondingly delays the anticipated certainty in the CVD investigation.

There are three open questions of particular interest:

  1. will ITA make affirmative preliminary determinations in the CVD investigation against CSPV products from China and the AD investigation against CSPV products from China and Taiwan
  2. if so, what will be the preliminary duty rates imposed, and
  3. will ITA consider a “critical circumstances” determination?
The answers to the first two questions will likely come on June 2 for the CVD investigation and about June 9 (or later if delayed) in the AD investigation. The SolarWorld petition alleged only a “more than de minimis” countervailable subsidy rate (i.e., greater than 2% for developing countries and 1% for developed countries) and a dumping margin of 75.68% and 165.04% for Taiwan and China, respectively. The solar industry will be waiting anxiously for the exact penalty rate determinations, if affirmative.

The “critical circumstances” determination is less clear. In our previous Client Alert, we raised the possibility that ITA could also make a “critical circumstances” determination which, if affirmative, would mean that preliminary CVD and AD duties could be retroactively imposed on imported target CSPV products for up to 90 days. We noted, however, that since ITC ultimately made a negative critical circumstances determination in the 2012 CSPV cases against Chinese products, thereby rescinding the ITA critical circumstances determination and orders, whether ITA would find enough evidence to do so this time was uncertain.

Moreover, in the prior 2012 CSPV case, SolarWorld alleged critical circumstances in its original petition and ITA announced in the initiation of its investigations that it would be investigating that allegation. See e.g., ITA’s Notice of Initiation of the CVD Investigation, 76 FR 70966, 70969 (Nov. 16, 2011). In the current case, ITA made no mention of a critical circumstances investigation when it initiated the present CVD and AD investigations. Cf. 79 FR 4667 and 79 FR 4661 (both Jan. 29, 2014). Nonetheless, the absence of a critical circumstances investigation notice in the ITA’s announcements to date is not necessarily the end of the story.

For CVD investigations, Section 703(e) of the Tariff Act provides:

“(e) Critical Circumstances Determinations.

 (1) In general. If a petitioner alleges critical circumstances in its original petition, or by amendment at any time more than 20 days before the date of a final determination by the administering authority, then the administering authority shall promptly (at any time after the initiation of the investigation under this subtitle) determine, on the basis of the information available to it at that time, whether there is a reasonable basis to believe or suspect that

 (A) the alleged countervailable subsidy is inconsistent with the Subsidies Agreement, and

 (B) there have been massive imports of the subject merchandise over a relatively short period.”

(Emphasis added)

Comparable language for AD investigations is found in Tariff Act § 733(e). See also 19 C.F.R. § 351.206. User-friendly descriptions can be found in the ITC’s AD/CVD Handbook (Pub. 4056, Dec. 2008) at pp. I-10 and II-41. We could see an amendment alleging critical circumstances at almost any time SolarWorld perceives there is evidence in the CVD or AD investigations to support it.

Where We Currently Stand

For now, assuming the current projected determinations timetable holds, the only certainty appears to be that ITA will issue a preliminary determination with respect to unfair subsidies for CSPV products from China (that are not already subject to CVD and AD duties from the previous cases) by about June 2, 2014, and with respect to unfair price dumping for CSPV products from both China and Taiwan by about June 9, 2014 (or later). It would be speculative at this point to guess what the duty rates might be or whether there is likely to be a 90-day retroactive application of them due to an allegation of critical circumstances. At this time, it seems fair to say that no combination of rulings and events could impose new increased CVD or AD duties on imports of CSPV products from China and Taiwan entered or withdrawn from warehouses before March 1, 2014.

ITC Initiates Final Phase of its U.S. Solar Industry Injury Investigation

With little fanfare and no surprise, ITC published a notice on March 4, 2014, of its official determination that there is a “reasonable indication” that a U.S. industry is “materially injured” by reason of imports of CSPV products from China and Taiwan and the corresponding decision to initiate the final phase investigation in both the subsidy and dumping import injury investigations for such products. 79 FR 12221 (Mar. 4, 2014) As we reported in our previous Client Alert, ITC announced its preliminary determination of material injury to a U.S. industry on February 14, 2014 in its investigations of CSPV products from China and Taiwan. Investigation Nos. 701–TA–511 and 731–TA–1246–1247 (Preliminary). This final phase will depend on decisions by ITA but will last for several months. U.S. industrial users and consumer organizations representing retail users who did not participate in the preliminary phase may file a notice of appearance to join the ITC proceedings in this final phase.

Perhaps the most interesting thing about this ITC notice was the accompanying release of the report on the basis for the ITC’s preliminary determination: Certain Crystalline Silicon Photovoltaic Products from China and Taiwan (Investigation Nos. 701-TA-511 and 731-TA-1246-1247 (Preliminary), USITC Publication 4454, February 2014). Among other facts and information reported was a discussion of why thin-film solar products were excluded from the definition of “domestic like products” and that both monocrystalline and multicrystalline (or polysilicon) CSPV products are included in the definition. The report also discusses how the ITC arrived at a definition of the parties that are considered the “domestic industry” and the U.S. manufacturers which were excluded because they were related to Chinese or Taiwanese entities, such as Motech, Wanxiang and Suntech. Lists of parties siding with petitioner SolarWorld and with the Chinese and Taiwanese respondents are included. Copies of the report are available here.

Stoel Rives Updates

Stoel Rives Energy Trade Team will continue to monitor the progress of these cases and report on them for its clients and friends. For more information, please contact the following Stoel Rives lawyers:

Gary Glisson at (503) 294-9656 or gwglisson@stoel.com  
Jay Eckhardt at (503) 294-9189 or jneckhardt@stoel.com


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