Congress Approves Bill to Reverse Solar Panel Tariff Relief but a Veto is Expected
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On May 3, 2023, the Senate approved a bill that would undo President Biden’s two-year delay on the imposition of antidumping and countervailing duties on imports of solar panels from Cambodia, Malaysia, Thailand, and Vietnam. The development follows the bill’s approval in the House of Representatives on April 28. The bill, however, is expected to be vetoed by the president and is unlikely to ever enter into force. Despite the likely failure, the bill is a strong bipartisan rebuttal of the president’s effort to balance protection of the domestic solar panel manufacturing industry with the need for a rapid green energy transition.
The Joint Resolution
The bill, a joint resolution disapproving the Department of Commerce’s rules relating to “Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord With Presidential Proclamation 10414,” would undo the executive branch’s two-year pause on antidumping and countervailing duties (AD/CVD) that target solar panel imports from Cambodia, Malaysia, Thailand, and Vietnam. It is based on the Congressional Review Act, which allows Congress to pass resolutions that would overturn executive branch actions through an expedited legislative process and simple majority votes.
There is a growing bipartisan interest in Congress to decouple the United States’ green energy supply chain from manufacturers in China, especially now that Congress is providing subsidies to the sector through the Inflation Reduction Act. Members of both parties are sensitive to accusations that US government subsidies are benefiting Chinese industry. The President’s delay to the solar panel tariffs has become a target for this debate. Republicans have rallied in support of the bill, seeing it as an opportunity to challenge the Democrat’s green energy policies, attack the president’s trade policy, and depict the president as weak. Democrats in Congress are divided on the bill. Those opposing the bill see the two-year delay to the tariffs as necessary to give US industry time to expand domestic solar panel production enough to provide the number of solar panels needed for the green energy transition.1
The Senate’s version of the bill, Senate Joint Resolution 15, A joint resolution 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,”2 passed 56 to 41 on May 3, 2023. Nine Democrats joined the Republicans in approval, and one Republican voted against it. The bill was able to proceed quickly to a vote because Congressional Review Act resolutions do not require cloture, taking them directly to a simple majority vote for approval.
The week before the Senate voted, House Joint Resolution 39, which is identical to the Senate version, passed 221-202 on April 28, 2023. Twelve Democrats joined to Republicans in favor of the bill, while eight Republicans voted against it.
To become law, the president must next sign the bill. President Biden has however already announced that he will veto it.3 The administration said in its statement of policy that “This rule is necessary to satisfy the demand for reliable and clean energy while ensuring Commerce is able to rigorously enforce US trade laws, hold trading partners accountable, and defend US industries and workers from unfair trade actions. Passage of this joint resolution would undermine these efforts and create deep uncertainty for jobs and investments in the solar supply chain and the solar installation market.” The statement also added that the president does not intend to extend the current duty suspension any further after it expires in June 2024.
The Bill’s supporters in Congress will need a two-thirds majority to override the president’s veto and force the bill into law. Though the bill had bipartisan support in both chambers of Congress on the first round of votes, it did not reach a two-thirds majority. It is unlikely that supporters of the bill will muster enough support for an override.
The Circumvention Investigation and Delay
These AD/CVD circumvention measures are based on allegations that certain solar panel exports from Cambodia, Malaysia, Thailand, and Vietnam are sourcing key components from Chinese manufacturers, circumventing the already existing solar panel AD/CVD measures against Chinese exports. The Department of Commerce made an affirmative preliminary determination in the circumvention inquiry on December 2, 2022, identifying companies that it believes are circumventing the duties on Chinese manufacturers.4 The final determination is currently scheduled for August 17, 2023, after having been delayed from May 1, 2023.
President Biden, however, preempted the circumvention inquiry by issuing Proclamation 10414 on June 6, 2022, which delayed the implementation of any duties by 24 months.5 The Proclamation states that “until 24 months after the date of this proclamation” (June 6, 2024), “or until the emergency declared herein has terminated, whichever occurs first”, the Commerce Department may permit the duty-free importation of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam “not already subject to an antidumping or countervailing duty order as of the date of this proclamation.” Proclamation 10414 is based on 19 U.S.C. § 1318(a), which says the President may “declare an emergency to exist by reason of a state of war, or otherwise,” and “permit… the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work.” Proclamation 10414 used this authority to declare an emergency “with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand.” To implement Proclamation 10414, the Commerce Department published in the Federal Register a proposed rule on July 1, 2022,6 and a Final Rule on September 16, 2022 codified at 19 C.F.R. § 362.7 Regardless of the outcome of the circumvention inquiry (and assuming Congress fails to override the veto of the joint resolution), the government will not begin enforcing the solar panel duties until June 2024.
1 Bennet, Hickenlooper, Colleagues Share Op-ed in Support of Growing Solar Industry, 5/3/2023, https://www.bennet.senate.gov/public/index.cfm/press-releases?id=F08B5A11-1919-4700-812B-5E24EB9A8F81
2 S.J.Res.15 / H.J.Res.39 - A joint resolution 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
3 Statement Of Administration Policy, April 24, 2023, https://www.whitehouse.gov/wp-content/uploads/2023/04/HJRes-39-SAP.pdf
4 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.
5 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.
6 Procedures Covering Suspension of Liquidation, Duties and Estimated Duties in Accord With Presidential Proclamation 10414, proposed rule, 87 FR 39426 (July 1, 2022), https://www.federalregister.gov/documents/2022/07/01/2022-14241/procedures-covering-suspension-of-liquidation-duties-and-estimated-duties-in-accord-with.
7 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.
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