Solar Installer Alert: Commerce Dept. Reduces Preliminary Antidumping Duty Rates for Solar Products from Taiwan

Legal Alert

The International Trade Administration of the U.S. Department of Commerce (“ITA”) on August 18 issued a notice amending its Affirmative Preliminary Determination for antidumping (“AD”) duties against certain crystalline silicon photovoltaic (“CSPV”) products from Taiwan. The revised rates will be retroactive to July 31, 2014. The AD rate changes are as follows:

Party New AD Rates Original AD Rates
Motech   20.86%   44.18%
Gintech   27.59%   27.59%
All Others 24.23%   35.89%

As we reported earlier, on July 31, 2014, ITA published affirmative preliminary AD determinations in its investigations for CSPV products from China (case no. A-570-010) and Taiwan (case no. A-583-853) in response to petitions from U.S. company SolarWorld Industries, alleging sales of such products in the United States at less than fair value. As a result of its determinations, importers of subject CSPV merchandise were required to make AD cash deposits at the calculated rates upon entry of the products through U.S. Customs in addition to the payment of normal tariffs.

Almost immediately after publication of the ITA’s original determination and AD rates, various parties alleged ministerial errors in the calculation of the dumping margins and corresponding AD rates. After reviewing the allegations, ITA concluded that the errors in the separate rate for Motech of Taiwan were material and justified an amendment. Since the “All Others” rate is a function of the individual rates for Motech and Gintech in the Taiwan investigation, reducing the Motech AD rate reduced the All Others rate as well. Cash deposits already collected by CPB (“U.S. Customs”) at the higher original rates will be refunded to the extent they exceed the amended rates.

No Change in the AD Rates for CSPV products from China

Despite some allegations of calculation errors in certain AD rates for Chinese manufacturers and exporters, ITA did not find sufficient reason to revise them. On August 18, 2014, ITA issued instructions to U.S. Customs for collecting the cash deposits on CSPV products from Chinese manufacturers and exporters. The guidance reflected cash deposit rates for the named Chinese parties adjusted for the prior CVD rates imposed by ITA in June on the same products in the unfair subsidy investigation (case no. C-570-011). See our Alert on the June 9 CVD determination for more information. Those adjustments, however, are only applicable to parties receiving a separate AD rate. The “All Others” AD rate for unlisted Chinese parties remains at 165.04%.

The U.S. Customs guidance for Chinese CSPV products noted that the published cash deposit rates would be in effect until October 8, 2014, at which time the preliminary CVD duties will terminate and the cash deposit requirements for the remaining AD rates will be reissued. The CVD rates end on October 8 because U.S. law limits the use of preliminary CVD rates to a four month period (June 10 - October 8). Since ITA chose to align the CVD and AD investigation timelines and issue a final decision in both on or about December 16, 2014 (79 Fed. Reg. 44402 July 31, 2014), the alignment pushed the final CVD determination for Chinese products well beyond the four month limit. Note that the CSPV products from Taiwan are not subject to a CVD investigation at this time, so the October 9 changes will only affect the CSPV products from China.

Product Scope Questions Remain

The scope of the CSPV products at issue has not changed since the initiation of these investigations in January of this year. The scope definition in full is repeated in the ITA’s recent AD Fact Sheet. However, a number of parties have questioned the scope and its interpretation since it varies from historical country of origin determination practice. For example, in its Decision Memorandum supporting the July 31, 2014 affirmative preliminary AD determination for CSPV products from Taiwan, the ITA acknowledged the questions as follows.

In accordance with the preamble to the Department's regulations, in our Initiation Notice we set aside a period of time for parties to raise issues regarding product coverage. Between February 18,2014, and April 21, 2014, numerous interested parties timely submitted scope comments and rebuttal scope comments. The Department is continuing to analyze interested parties' scope comments, including comments on whether it is appropriate to apply a traditional substantial transformation or other analysis in determining the country of origin of certain solar modules described in the scope of the investigation. (p. 5; citations omitted, emphasis added)

It is reasonably clear that assembly and final finishing of solar panels and modules alone will not determine country of origin for AD/CVD purposes, rather it is the origin of the cells that counts. This may not be true for other solar products, but it appears to be the consensus for panels and modules. If a cell is manufactured wholly within a country from ingots or wafers produced in that country, the cell is a product of that country, therefore, panels or modules made with those cells are a product of that country, wherever assembled.

The questions arise around mixed production, namely, using ingots or wafers produced in one country as the starting point for finished solar cell production in another country. When there is mixed production for cells - part in one country and part in another - the country of origin for the finished cells, and hence the application of AD and CVD rates, or not, is raising questions among various parties. As ITA continues to analyze these issues and U.S. Customs begins rendering AD/CVD cash deposit determinations, there could be adjustments made to the final scope of subject merchandise. With experience, some of the answers to the scope questions should become clearer.

Government of China Seeks to Suspend the U.S. Investigation

Among calls by some parties for a “negotiated solution,” the Government of the People’s Republic of China has now weighed in on the matter. By letter submitted to ITA on August 15, 2014, the Chinese Government informed the U.S. Department of Commerce that it wished to negotiate a Suspension Agreement with respect to the AD investigation against CSPV products from China. We will report on this effort as the information becomes available.

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. For more information, please contact a key contributor.

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