On June 6, 2022, President Biden announced that the United States would allow solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam to enter the United States free from antidumping (ADD) and countervailing duties (CVD) for a 24-month period, despite ongoing circumvention inquiries initiated by the US Department of Commerce (DOC) on April 1. President Biden invoked a rarely-used emergency authority under the Tariff Act of 1930 to waive the potential duties, declaring that "threats to the availability of sufficient electricity generation capacity" in the United States constitute an emergency. Biden Administration officials, Members of Congress, and US solar installers had previously expressed concern that the threat of new tariffs on solar imports covered by the circumvention inquiries would seriously undermine the deployment of solar technology in the United States.1
DOC initiated its circumvention inquiries on April 1, 2022, in response to a petition filed by a US domestic producer, Auxin Solar, Inc., on February 8, 2022. The petition alleges that solar cells and modules completed in Cambodia, Malaysia, Thailand, or Vietnam using parts and components manufactured in China are circumventing the ADD and CVD orders on solar cells and modules from China, which have been in place since 2012.2 The petition alleges circumvention pursuant to section 781(b) of the Tariff Act of 1930, which applies to merchandise completed or assembled in third countries.3 Affirmative findings of circumvention would result in the application of ADD and CVD to solar imports from the countries subject to the circumvention inquiries. Importantly, DOC's circumvention regulation gives DOC discretion to apply its circumvention determinations retroactively to all unliquidated entries dating back to the earliest suspension date under the order (normally the preliminary determination in the underlying investigation) – even to entries that occurred before the date of initiation of the circumvention inquiries.4
The merchandise covered by the ADD and CVD orders is crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials. Merchandise covered by the orders is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings 8501.71.0000, 8501.72.1000, 8501.72.2000, 8501.72.3000, 8501.72.9000, 8501.80.1000, 8501.80.2000, 8501.80.3000, 8501.80.9000, 8507.20.8010, 8507.20.8031, 8507.20.8041, 8507.20.8061, 8507.20.8091, 8541.42.0010, and 8541.43.0010. A complete description of the scope of the orders can be found in DOC's Initiation Memorandum.5
The threat of potential retroactive tariffs on solar imports from Cambodia, Malaysia, Thailand, and Vietnam has resulted in widespread project cancellations and delays, according to trade associations and US solar installers.6 As a result, the Biden Administration has faced mounting pressure from US solar installers and Members of Congress to mitigate the uncertainty generated by the circumvention inquiries, and to ensure that US solar installers can continue to source solar cells and modules from the four Southeast Asian countries, which currently supply roughly 80% of US solar cell imports.7
24-month suspension of ADD and CVD and invocation of Defense Production Act
On June 6, 2022, President Biden issued a Proclamation entitled Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia.8 The Proclamation notes that "the United States has been unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve our climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy prices." The Proclamation further notes the Biden Administration's efforts to promote domestic solar manufacturing capacity, but acknowledges that "building that capacity will take time." Given these circumstances, the Proclamation "declare[s] an emergency to exist with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand."
To respond to the emergency, the Proclamation directs the Secretary of Commerce to "consider taking appropriate action . . . to permit, until 24 months after the date of this proclamation or until the emergency declared herein has terminated, whichever occurs first . . . the importation, free of the collection of duties and estimated duties [under the ADD, CVD, and circumvention statutes]" of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam. The Proclamation cites the President's emergency authority under Section 318(a) of the Tariff Act as the legal basis for the suspension of duties.9 Section 318(a) provides in the relevant part that "[w]henever the President shall by proclamation declare an emergency to exist by reason of a state of war, or otherwise, he may authorize the Secretary . . . to extend during the continuance of such emergency the time herein prescribed for the performance of any act," and may also authorize the Secretary to permit "the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work." The use of this provision to suspend import duties is rare, but not unprecedented: in 1946, President Harry Truman invoked the provision to suspend import duties on lumber in response to an "emergency shortage of housing."10
Concurrent with the Proclamation, DOC issued a statement explaining that it "will issue regulations to temporarily permit for up to 24 months duty-free access to solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam."11 The statement notes that DOC's anti-circumvention proceeding "continues uninterrupted, and whatever conclusion Commerce reaches when the investigation concludes will apply once this short-term emergency period is over." In accordance with the President's declaration, "no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency." DOC's investigation is ongoing with a preliminary determination on circumvention due by August 29, 2022.
The White House has portrayed the tariff suspension as a "24-month bridge" that will ensure adequate supplies of solar materials "as domestic manufacturing rapidly scales up to ensure the reliable supply of components that U.S. solar deployers need[.]" Alongside the Proclamation, and in accordance with the goal of bolstering domestic manufacturing, President Biden issued a Memorandum authorizing the Department of Energy (DOE) to use the Defense Production Act (DPA) to support domestic manufacturing of solar panel components, including photovoltaic modules and module components.12 The White House also announced that it plans to use federal procurement to increase domestic solar manufacturing "by directing the development of master supply agreements, including ‘super preference' status."
The actions announced by President Biden are intended to strike a balance between ensuring the rapid deployment of solar technology across the United States – which is essential to meet the Administration's climate objectives – and supporting domestic manufacturing and employment in the solar industry. Nevertheless, the petitioner in the circumvention inquiries has criticized President Biden's decision to suspend the tariffs and has implied that it may challenge the decision in US courts, calling it an "unprecedented—and potentially illegal—action[.]"13
1 "Granholm ‘deeply concerned' solar tariff probe could derail US clean energy plans," PV-Tech.org, May 9, 2022, .
2 See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules from the People's Republic of China: Amended Final Determination of Sales at Less Than Fair Value, and Antidumping Duty Order, 77 FR 73018 (December 7, 2012); and Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People's Republic of China: Countervailing Duty Order, 77 FR 73017 (December 7, 2012)
3 19 U.S.C. § 1677j(b).
4 19 C.F.R. § 351.226(l).
5 See Memorandum here, "Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules from the People's Republic of China: Initiation of Circumvention Inquiries," dated March 25, 2022.
6 "Impact of the Auxin Solar Tariff Petition," Solar Energy Industries Association.
7 "Biden Invokes Emergency Power in Bid to Resolve Solar Import Dispute," Wall Street Journal, June 6, 2022
8 The Proclamation can be viewed here.
9 19 U.S.C. § 1318(a).
10 Proclamation 2708, Emergency Due to Housing Shortage-Free Importation of Timber, Lumber, and Lumber Products, October 25, 1946.
11 DOC's statement can be viewed here.
12 Concurrently, President Biden issued similar memoranda invoking the DPA to support US production of (1) critical power grid infrastructure, including transformers; (2) building insulation; (3) heat pumps; and (4) equipment for the production and use of clean electricity-generated fuels, including fuel cells, electroyzers, and related platinum group metals.
13 "Biden Invokes Emergency Power in Bid to Resolve Solar Import Dispute," Wall Street Journal, June 6, 2022.
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