In the wake of affirmative preliminary anti-dumping (AD) and countervailing-duty (CVD) determinations by the U.S. Department of Commerce (DOC), some Chinese solar cell and module exporters are reportedly planning to evade these duties, according to the Coalition for American Solar Manufacturing (CASM).
The SolarWorld-led CASM, which filed the original AD complaint and CVD petition, warns that any attempt to evade the AD/CVD orders will not be effective, could be illegal and may expose U.S. importers – in addition to Chinese exporters – to liability under U.S. law. This would be met with ‘significant’ financial penalties and criminal prosecution, the group says.
U.S. Customs and Border Protection (CBP) has begun collecting cash deposits or bonds to secure estimated AD and CVD duties on imports of solar cells and modules from China. AD duties at rates up to 249.96% and CVD duties at rates up to 4.73% currently apply to all Chinese solar cells and modules that entered the U.S. on or after Feb. 25, 2012, or Dec. 27, 2011, respectively.
By law, the U.S. importer of record is responsible for posting AD and CVD duties, and the exporter may not reimburse these duties. If an exporter reimburses the U.S. importer, the amount of duties owed by the importer will double, according to the CASM. The actual amounts of duties that will be owed on Chinese solar cells and modules will not be known until the first administrative reviews of the orders are completed – long after the goods have been imported. If the final duty amounts increase, as they often do, the importer will be responsible for paying the difference, plus interest.
Circumvention and evasion generally involve an exporter's and/or importer's intentionally seeking to avoid the lawful application of duties, whether by transshipping merchandise through a third country, by assembling the merchandise in the U.S. or a third country or through a variety of other means.
Simply transshipping merchandise through a third country does not change the product's country of origin, the CASM says. Similarly, AD and CVD orders apply to subject merchandise that undergoes minor or insignificant operations to assemble or complete them in a third country or in the U.S.
For example, the group says that toll production of cells in a third country (such as Taiwan), where Chinese producers send wafers and other raw materials to be processed into cells, should not change a solar cell's country of origin. Toll production in a third country has already been identified by Chinese producers as a means of attempting to evade AD/CVD duties, the CASM adds.
The CASM has posted additional details on the legal ramifications of tariff evasion on its website. The document is available here.