As expected, the U.S. Department of Commerce has made a preliminary finding that certain crystalline silicon photovoltaic products from the People's Republic of China are being dumped on the U.S. market and thus are subject to countervailing duties (CVD).
According to the U.S. International Trade Commission (ITC), Commerce has calculated a preliminary subsidy rate of 18.56% for Trina Solar Energy Co. Ltd. Suntech Power Co. Ltd. and five of its affiliates received a preliminary subsidy rate of 35.21%. All other producers/exporters in China have been assigned a preliminary subsidy rate of 26.89%.
As a result of the preliminary finding, U.S. importers of products from the aforementioned companies will have to pay cash deposits based on these rates.
William Perry, an international trade law partner at Dorsey & Whitney in Seattle, notes, ‘U.S. importers pay anti-dumping and countervailing duty tariffs, not Chinese companies. U.S. importers are retroactively liable for the difference plus interest if anti-dumping and/or countervailing duty rates go higher in annual review investigations.’
Importantly, the preliminary finding applies to PV modules assembled in third-party countries from components manufactured in China. Previous tariffs had enabled Chinese PV firms to use offshore assembly as a loophole, and it is this policy that SolarWorld has successfully sought to close with its latest petition.
The preliminary determinations in the related antidumping investigations on PV products from China and Taiwan are scheduled for July 24. There is some cause for optimism that PV products manufactured and assembled in Taiwan not involving components from the People's Republic may be off the hook.
‘What is not clear is whether Chinese solar panels and modules with solar cells that are totally produced in Taiwan or solar cells that are produced in third countries are out of the case,’ Perry says. ‘Commerce issued a supplemental questionnaire to all the companies in the China case asking them whether the solar cells are partially produced in China. The implication is that those Chinese modules and panels with solar cells totally produced in Taiwan may be out of the case.’
SolarWorld's grievances against China-sourced PV competitors were highlighted when the U.S. Department of Justice leveled charges against Chinese military hackers, accusing them of economic espionage against that company's U.S. subsidiary. Nevertheless, the vast majority of the U.S. solar sector is horrified at what a PV trade war might do to domestic industry growth.
‘These damaging tariffs will increase costs for U.S. solar consumers and, in turn, slow the adoption of solar within the United States,’ says Rhone Resch, president and CEO of the Solar Energy Industries Association, in a statement. ‘Ironically, the tariffs may provide little to no direct benefit to the sole petitioner, SolarWorld, as we saw in the 2012 investigations. It's time to end this needless litigation with a negotiated solution that addresses SolarWorld's trade allegations while ensuring the continued growth of the U.S. solar market.’
Barring an extension of the deadline, Commerce is scheduled to announce its final determination in this investigation on or about Aug. 18. If Commerce makes an affirmative final determination, and the ITC makes an affirmative final determination that imports of certain crystalline silicon photovoltaic products from China materially injure, or threaten material injury to, the domestic industry, Commerce will issue a CVD order. The ITC is scheduled to make its final injury determination approximately 45 days after Commerce issues its final affirmative determination.
Industry observers say it is a forgone conclusion that Commerce will indeed find in the affirmative and heavy tariffs are sure to follow.
‘Pursuant to Commerce's methodology, it will find dumping and subsidization in 100 percent of the cases against China,’ Perry says. ‘This methodology often results in very high anti-dumping rates, sometimes over 100 percent to 200 percent.’