Overview
On December 1, 2022, the US Department of Commerce (Commerce) published its preliminary determination in the circumvention investigation into whether imports of crystalline silicon photovoltaic (CSPV) cells or modules imported from Cambodia, Malaysia, Thailand or Vietnam (collectively, the target countries) are circumventing antidumping duty (AD) and countervailing duty (CVD) orders on CSPV cells or modules from China.[1] Commerce found that all four target countries were circumventing the Orders, but five companies were found not to be circumventing (though Commerce is currently only applying its non-circumventing finding to one of those companies). Additionally, all companies in the target countries may certify that they qualify for the tariff moratorium on CSPV cells and modules; however, Commerce did not provide any clarity on the meaning of the term “utilize” or “utilization” as used in its regulations. Key takeaways from Commerce’s preliminary determination include the following:
- Commerce found, on a countrywide basis, that CSPV cells and modules from all four target countries are circumventing the Orders.
- Commerce established three certification regimes: One for certifying that the entries qualify for the tariff moratorium announced in Presidential Proclamation 10414[2] and established in 19 C.F.R. Pt. 362; a second for certifying that CSPV cells and modules exported from the target countries (inquiry merchandise) were manufactured by a company found not to be circumventing; and a third for companies to certify that entries are not inquiry merchandise based on the components used to produce the merchandise.
- Several companies were found to be noncompliant in Commerce’s investigation. As a result, those companies cannot participate in the second or third certification regimes discussed above. Those companies may still participate in the first certification regime and qualify for the tariff moratorium.
- Commerce established a process for exporters/producers in the target countries and/or US importers to request the rate of the Chinese affiliate of the exporter/producer in the target country or the Chinese wafer supplier (if any).
In Depth
SCOPE OF THE CIRCUMVENTION INVESTIGATION
In its preliminary determination, Commerce provided the following description of the scope of merchandise subject to the investigation:
This circumvention inquiry covers: (A) crystalline silicon photovoltaic cells that meet the physical description of crystalline silicon photovoltaic cells in the scope of the underlying AD/CVD orders, subject to the exclusions therein, whether or not partially or fully assembled into other products, that were produced in [the target county] from wafers produced in China; and (B) modules, laminates, and panels consisting of crystalline silicon photovoltaic cells, subject to the exclusions for certain panels in the scope of the underlying orders, whether or not partially or fully assembled into other products, that were produced in [the target country] from wafers produced in China and where more than two of the following components in the module/laminate/panel were produced in China: (1) silver paste; (2) aluminum frames (3) glass; (4) backsheets; (5) ethylene vinyl acetate sheets; and (6) junction boxes. If modules, laminates, and panels consisting of crystalline silicon photovoltaic cells do not meet both of the conditions in item (B) above, then this circumvention inquiry does not cover the modules, laminates, and panels, or the crystalline silicon photovoltaic cells within the modules, laminates, and panels, even if those crystalline silicon photovoltaic cells were produced in [the target country] from wafers produced in China. Wafers produced outside of China with polysilicon sourced from China are not considered to be wafers produced in China for purposes of this circumvention inquiry.[3]
This scope and the certification regime provide some clarity but do not clearly establish how Commerce will treat CSPV cells or modules that are produced in a target country but further processed in a non-target country before being exported to the United States.
COMPANIES FOUND NOT TO BE CIRCUMVENTING
While certain mandatory respondents in Cambodia, Malaysia and Vietnam were preliminarily found not to be circumventing, Commerce still found—on a countrywide basis—that exporters/producers of CSPV cells and modules from those countries are circumventing. Additionally, with the exception of one company, Commerce cannot implement its non-circumvention finding until the mandatory respondents provide the names of their Chinese wafer suppliers for the public record.
For the Cambodian and Malaysian companies that were not found circumventing, Commerce could not “implement [its] preliminary finding” of non-circumvention with respect to these companies “because [the companies] ha[d] not disclosed for the public record the names of [their] [wafer] exporters in China.”[4] If or when the companies disclose the names of their wafer exporters in China for the public record, Commerce will notify US Customs and Border Protection (CBP) that the companies’ exports of inquiry merchandise are excluded from the preliminary countrywide affirmative finding of circumvention in Malaysia or Cambodia, respectively. With respect to the one exception company, Commerce preliminarily found that its “exports of inquiry merchandise produced with wafers exported by the specific companies reported in its questionnaire responses are not subject to this preliminary finding.”[5]
COMMERCE’S USE OF ADVERSE FACTS AVAILABLE FOR CERTAIN COMPANIES
Commerce found that certain companies did not comply with its circumvention investigation to the best of their ability. Thus, while those companies will have the ability to certify that they qualify for the tariff moratorium (see below), they cannot participate in the certification process to establish whether they are circumventing the Orders. As a result, these companies will not be eligible to certify that their entries are outside the scope of the circumvention investigation.
THE CERTIFICATION PROCESS
In the preliminary determination, Commerce established three certification processes with which importers and exporters must comply: (1) to establish whether the imported merchandise qualify for the moratorium on imports established by Presidential Proclamation 10414 and 19 C.F.R. Pt. 362; (2) to establish whether the entries were produced by a company found not to be circumventing; and (3) to establish whether the entries are inquiry merchandise (i.e., in-scope) based on the inputs used in producing the entries.
Moratorium (Or Applicable Entries) Certification
Commerce established a certification process by which importers and exporters can qualify for the tariff moratorium. This requires the importer and exporter to certify that the merchandise was produced in one of the target countries and exported to the United States “without further assembly in another country.”[6] The importer must also certify that: (1) the merchandise was withdrawn from a CBP warehouse before June 6, 2024 (or before the date when the emergency described in Proclamation 10414 is terminated, if it is terminated early); and (2) that, for merchandise withdrawn from a CBP warehouse after November 15, 2022, the merchandise (cell or module) will be utilized in the “United States by no later than 180 days after the earlier of [June 6, 2024], or the date the emergency described in Presidential Proclamation 10414 is terminated.”[7] Claims made in this certification “are subject to verification by CBP and/or Commerce.”
Certification for Non-Circumventing Companies
There are special certifications for the one exception company as it was found not to be circumventing.[8] If the other companies that were found not to be circumventing provide the names of their Chinese wafer suppliers for the public record, Commerce will likely allow those companies to use the same type of certifications to establish that their entries are not subject to the circumvention finding.[9]
Certifying That Entries Are Out-of-Scope
Commerce also established a certification process through which importers and exporters can certify that the imported entries do not contain inputs so as to be in-scope of the circumvention investigation.
For Cells
If the imported merchandise is a CSPV cell that is not incorporated into a CSPV module, laminate, or panel, then the importer and exporter must certify that the wafers were not supplied from a Chinese company to certify out of the circumvention finding.[10]
For Modules
If the merchandise is or contains a CSPV module, laminate, or panel, then, to certify that the merchandise is outside the scope of the circumvention investigation, the importer and exporter must certify either that:
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The wafers were not supplied by a Chinese company; or
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The wafers were supplied by a Chinese company, but no more than two of the following inputs (which were used to manufacture the CSPV module) were produced in China:
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Silver Paste
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Aluminum Frames
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Glass
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Backsheets
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Ethylene-Vinyl Acetate
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Junction Boxes[11]
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ESTABLISHING RATES
If merchandise is subject to the circumvention finding, then Commerce explained two ways (depending on the circumstances) how the rate for the inquiry merchandise may be determined.
First, if the exporter/producer in the target country has a Chinese affiliate or used Chinese wafers to manufacture the CSPV cell or module, and the Chinese affiliate or Chinese wafer supplier (as the case may be) has a rate in the AD/CVD proceedings on the Orders, then Commerce will apply that Chinese affiliate’s or Chines wafer suppliers’ rate.
To receive the rate of the Chinese wafer supplier, the exporter/producer in the target country or the importer of record in the United States “may file a request in ACCESS on the record of the applicable proceeding segment that Commerce establish a case number in ACE for the Orders for the applicable third-country that is specific to the Chinese wafer exporter. CBP may also submit such a request to Commerce through the ACE AD/CVD Portal Inquiry System.”[12]
Second, if the exporter/producer in the target country does not have a Chinese affiliate and used Chinese wafers to manufacture the CSPV cell or module, and the Chinese wafer supplier does not have a rate in the AD/CVD proceedings on the Orders, then Commerce will use the China-wide rate in the underlying AD proceeding (238.95%) and the all-others rate from the CVD proceedings (15.24%) for a total rate of up to 254.19%.
ISSUES THAT REMAIN UNCLEAR
Commerce did not provide any additional guidance on the meaning of the term “utilized” or “utilization” as used in 19 C.F.R. § 362.102. However, the certification regime indicates one potential avenue that Commerce may use to enforce the utilization requirement: Representations that CSPV cells and modules will be utilized within 180 days of the termination of the emergency described in Proclamation 10414 are subject to verification by Commerce or CBP.[13]
