Department of Commerce Issues Final Antidumping and Countervailing Duty Determinations on Crystalline Silicon PV Products from China and Radically Reinterprets the Scope of the Investigations

As we reported in June 2014, the U.S. Department of Commerce (the “Department”) announced that  certain crystalline silicon photovoltaic (“CSPV”) products from the People’s Republic of China (“PRC” or “China”) had been produced by taking advantage of subsidies, and that such products could therefore be subjected to countervailing duties when imported into the United States (http://www.globalpowerlawandpolicy.com/2014/06/department-of-commerce-issues-preliminary-countervailing-duty-determination-on-crystalline-solar-pv-products-from-china/).

Subsequently, on July 24, 2014, the Department issued an affirmative preliminary determination in the companion antidumping duty investigation of imports of certain CSPV products from China.  That determination was published in the Federal Register on July 31, 2014.  See 79 Fed. Reg. 44399 (July 31, 2014).  As detailed in the factsheet available at http://enforcement.trade.gov/download/factsheets/factsheet-multiple-solar-products-ad-prelim-072514.pdf, the Department determined that mandatory respondents Changzhou Trina Solar Energy Co., Ltd. and Trina Solar (Changzhou) Science & Technology Co., Ltd. (collectively, “Trina”) should be treated as a single entity and assigned that entity a preliminary antidumping duty margin of 26.33 percent.  In addition, the Department determined that mandatory respondents Renesola Jiangsu Ltd., Renesola Zhejiang Ltd., Jinko Solar Co. Ltd., and Jinko Solar Import and Export Co., Ltd. (collectively, “Jinko”) should be treated as a single entity and assigned that entity a preliminary antidumping duty margin of 58.87 percent. Forty-two other exporters qualified for a separate rate of 42.33 percent,[1] while the PRC-Wide Entity rate preliminarily was determined to be 165.04 percent.

In the preliminary affirmative antidumping duty determination, the Department maintained the so-called “2 out of 3” rule whereby Chinese-assembled modules/panels incorporating third-country CSPV cells that, in turn, incorporated Chinese-origin inputs, such as ingots, wafers, or partially-manufactured cells, would be considered subject merchandise.  Thus, as we explained in connection with the preliminary affirmative countervailing duty determination in the case of the China investigations, a Chinese-assembled module/panel incorporating a Malaysian CSPV cell derived from Chinese-origin wafers would be within the scope the investigation and, therefore, considered to be subject merchandise.  However, on October 3, 2014, the Department unilaterally announced a “scope clarification” that dramatically would expand the scope of the pending investigations.  Specifically, the Department proposed that subject merchandise for the China investigations would include “all modules, laminates and/or panels assembled in the PRC that contain crystalline silicon photovoltaic cells produced in a customs territory other than the PRC.”  Thus, so long as the module is assembled in China the module would be considered subject merchandise, regardless of the origin of the CSPV cells.

Despite impassioned pleadings from respondent interested parties, the Department maintained the expanded scope in issuing, on December 16, 2014, its final affirmative antidumping and countervailing duty determinations, which are detailed in the factsheet available at http://enforcement.trade.gov/download/factsheets/factsheet-multiple-certain-crystalline-silicon-photovoltaic-products-ad-cvd-final-121614.pdf.  See 70 Fed. Reg. 76970 (Dec. 23, 2014) (affirmative final antidumping duty determination); 79 Fed. Reg. 76962 (Dec. 23, 2014) (affirmative final countervailing duty determination).  The Department assigned final antidumping duty margins of 26.71 percent to Trina and 78.42 percent to Jinko, which caused the final antidumping duty margins for the 43 separate rate respondents to rise to 52.13 percent.  The PRC-Wide Entity rate remained 165.04 percent.  The Department also assigned final countervailing duty margins of 49.79 percent for Trina and 27.64 percent for Wuxi Suntech Power Co., Ltd. and its affiliates.  All other producers/exporters in China were assigned a final countervailing duty margin of 38.72 percent.  In addition, the Department terminated the certification requirement associated with the prior iteration of the scope.

As a result of the final affirmative determinations, the Department instructed U.S. CBP to suspend the liquidation of entries of subject merchandise entered, or withdrawn from warehouse for consumption, on or after December 23, 2014, and to collect cash deposits equal to the applicable weighted-average dumping margins established in the final determination.  See http://adcvd.cbp.dhs.gov/adcvdweb/ad_cvd_msgs/19416.pdf.  Furthermore, as a result of the final affirmative countervailing duty determination, because the 120-day provisional measures period has expired, if the U.S. International Trade Commission (“ITC”) issues a final affirmative injury determination, which is expected on or about January 29, 2015, the Department will order the resumption of the suspension of liquidation, and require cash deposits for countervailing duties equal to the final countervailing duty margins, effective as of the date the Department publishes antidumping and countervailing duty orders in the Federal Register.

The Department has been resoundingly silent as to the possible retroactive application of the expanded scope, which we expect will trigger litigation at the U.S. Court of International Trade in the event the Department ultimately issues antidumping and countervailing duty orders.  CBP, as a technical legal matter, could require cash deposits of estimated antidumping and countervailing duties in connection with prior entries of CSPV modules from China that incorporated third country CSPV cells and no Chinese-origin inputs which, at the time of their entry, were not subject to the scope of the investigations.  However, the Department has not instructed CBP to do so and, at least in our most recent conversations, has acknowledged the issue, but has opted to remain quiet, seemingly preferring to let sleeping dogs lie.  This approach possibly could reflect the vulnerability the Department feels regarding what amounts to a radical expansion, as opposed to a mere clarification, of the scope of the investigations.

Finally, we note that U.S. Trade Representative Michael Froman recently has acknowledged that Washington and Beijing have been engaging in talks to reach a deal that would ease trade tensions over solar goods, but any such deal will be too little and too late in terms of the disruptions already caused by the ongoing trade proceedings.  And tensions in the global solar market show no signs of abating as last month the President of the Canada Border Services Agency initiated investigations under the Special Import Measures Act with respect to the alleged injurious dumping and subsidizing of certain photovoltaic modules and laminates originating in or exported from China.  The scope of the Canadian investigations is as follows:

Photovoltaic modules and laminates consisting of crystalline silicon photovoltaic cells, including laminates shipped or packaged with other components of photovoltaic modules, and thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS), originating in or exported from the People’s Republic of China.

For more information on these developments or the International Trade practice at K&L Gates, please contact Daniel Gerkin in our Washington, DC office at daniel.gerkin@klgates.com or (202) 778-9168.