Commerce Extends Initiation Deadline in Solar Circumvention Inquiries & USTR to Start Targeted China 301 Tariff Exclusion Process
COMMERCE EXTENDS INITIATION DEADLINE IN SOLAR CIRCUMVENTION INQUIRIES – NEW DEADLINE LATE NOV
On September 29, 2021, Commerce determined to delay a decision on initiation in the solar circumvention inquiries. Commerce instead asked the US solar manufacturers – A-SMACC (the so-called American Solar Manufacturers Against Chinese Circumvention) – for additional information. In particular, Commerce requested additional information related to why the A-SMACC companies have requested anonymity in the circumvention proceeding. Commerce also requested information regarding the A-SMACC companies’ ties to business interests in China or Southeast Asian countries.
At the request of A-SMACC, Commerce extended the deadline for A-SMACC’s response to the additional questions until October 13. Commerce regulations permit other interested parties to file comments on A-SMACC’s response within seven days.
Commerce has indicated it will make its decision on initiation within 45 days of A-SMACC filing its response to Commerce’s questions. Assuming A-SMACC files on October 13, Commerce’s decision on initiation would be due on or by November 27. If Commerce initiates on November 27, the final results of the full investigation would be due on or by September 23, 2022.
Note that the new Commerce initiation deadline is just past the date the US International Trade Commission is expected to make its decision on the solar safeguard/201 extension (November 24, 2021).
Senate letter. On September 29 (around the time Commerce was initially set to issue its initiation determinations) twelve Senators sent a letter to the Commerce Secretary Raimondo expressing concerns regarding the anonymous petitions alleging illegal trade activity filed with the Department that would have “a devastating impact on the US solar industry and American solar jobs.” The Senators urged Commerce to “carefully assess the validity” of the petitions.
Background. On August 16, US solar manufacturers (the so-called American Solar Manufacturers Against Chinese Circumvention) requested that Commerce launch a circumvention inquiry on imports of solar products produced in Chinese-owned factories in Malaysia, Vietnam and Thailand. If Commerce initiates on November 27, the final results of the full investigation would be due around by September 23, 2022.
A wide range of interested parties have filed comments on A-SMACC’s initial anti-circumvention inquiry request. The parties have raised factual and legal issues related to whether A-SMACC’s inquiry provides sufficient justification for initiation. The parties have also made economic and policy arguments regarding the negative impact if Commerce were to initiate.
In particular, the interested parties argue that initiation of the circumvention inquiry would disrupt solar imports as companies park panels/modules offshore. They also argue that initiation would undermine the Biden Administration’s push for expansion of US solar installation and capacity. In addition, nearly 200 companies involved in the solar industry, along with solar industry groups, have warned that imposition of tariffs on imported panels/modules from Malaysia, Vietnam and Thailand would devastate the industry and threaten US jobs.
The circumvention action is tied to the AD/CVD orders on Chinese CSPV cells. The petitioners in the circumvention case are arguing that imports of solar panels/modules produced in Chinese-owned factories in Malaysia, Vietnam and Thailand, with Chinese wafers and other Chinese components, should be subject to current antidumping and countervailing duty orders on Chinese cells/modules.
Commerce (or CBP) could act to make the circumvention findings retroactive, which means there is the potential that importers could be on the hook for payment of additional duties on previous imports.
USTR TO START TARGETED CHINA 301 TARIFF EXCLUSION PROCESS
On October 8, USTR published notice that it will consider requests to reinstate previously-granted China 301 tariff exclusions. The catch is: (1) only previously-granted exclusions that were subsequently extended through the end of 2020 are up for consideration; and (2) the reinstated exclusions would only apply to merchandise entered into the US on or after October 12, 2021 (the date USTR opens the public docket for filing reinstatement requests).
USTR intends to evaluate the possible reinstatement of each exclusion on a case-by-case basis. The public docket opens on October 12, 2021. The deadline for filing comments is December 1, 2021. Parties seeking to comment on more than one exclusion must submit a separate comment for each exclusion.
USTR has provided a list of the 549 previously-extended product exclusions up for consideration, on its website.[1] In addition, comments need to be filed using the form provided by USTR on its website.[2] The form contains specific requests for information regarding the company, many of which will look familiar from the original exclusion and exclusion extension process.
A key factor in USTR’s evaluation will be whether the particular product remains available only from China. USTR is requesting that commenters address the following issues—
- Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
- Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments.
- The efforts, if any, the importers or US purchasers have undertaken since September 2018 to source the product from the United States or third countries.
- Domestic capacity for producing the product in the United States.
In addition, USTR will consider—
- Whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other US interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States, and
- The overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the section 301 investigation.
Exclusion track record. From 2018 to 2020, US stakeholders submitted about 53,000 exclusion requests to USTR for specific products covered by the section 301 China tariffs. A US Government Accountability Office report found that the agency denied 46,000 of those requests (87 percent) while approving about 2,200. Of the approvals, just 549 saw their tariff breaks extended – and it is these 549 previously-extended product exclusions that are up for consideration and possible reinstatement.
[1] https://ustr.gov/sites/default/files/files/Notices/Section 301 China Request for Comments/Annex of Previously Extended Exclusions for Website.pdf.
[2] https://ustr.gov/sites/default/files/files/Notices/Section 301 China Request for Comments/Facsimile of Data Requested.pdf.