Those PRC rascals are at it again. Allegedly.
Back in December, the U.S. Department of Commerce released its preliminary findings on circumvention inquiries of solar cells and modules from the People’s Republic of China (PRC).
They determined that 4 of 8 companies under investigation had shipped cells and modules to Cambodia, Malaysia, Thailand, and/or Vietnam for minor processing before being exported to the United States, thereby circumventing antidumping duty (AD) and countervailing duty (CVD) orders on solar cells and modules from the PRC.
Not that the PRC hasn’t pulled tricks like this before, but this could have serious repercussions for domestic production inasmuch as AD/CVD was meant to buoy it.
For those unaware, U.S. Customs and Border Protection defines “dumping” as a foreign producer or exporter selling a product in the United States at a price that is below “normal value.”
Antidumping laws define “normal value” as the price the goods are sold in the original country’s domestic market or a third-country market, plus several alternative methodologies (including surrogate values for non-market economies).
Meanwhile, Countervailing Duties are tariffs meant to offset government subsidies paid to the producers of the goods in their original country. It’s a way to bolster domestic production and prevent dumping by leveling the economic playing field.
Whatever your thoughts on protectionism, this particular AD/CVD order certainly isn’t without due cause – in 2021, photovoltaic solar arrays produced about 5% of the world’s electricity, and a huge proportion of that is China’s.
China was the #1 producer of solar power in 2021, with their 306,973 MW more than the next four countries put together. That includes the U.S., whose 95,209 MW amount to around 30% of China’s.
American solar is definitely growing, but it can’t always compete with cheap, government-subsidized components from China. Hence, the various protective measures by the U.S.
A couple years ago, we mentioned the heavy tariffs imposed on China by the previous administration, and in 2021, President Biden barred the import of solar products made in China’s Xinjiang region.
Regarding the AD/CVD order in question, the offenders include Build Your Dreams (BYD) Hong Kong, Canadian Solar, Trina, and Vina Solar, and the countries acting as middlemen – Cambodia, Thailand, and Vietnam – become part of a “country-wide” circumvention finding, which “simply designates the country as one through which solar cells and modules are being circumvented from the PRC.”
While the Commerce Department insists this isn’t a ban on imports from those countries, it now falls on them to certify that they are not circumventing the AD/CVD orders.
The Commerce Department will issue a final determination on May 1, 2023, and if found guilty, the companies face tariffs anywhere from 16%-254%.
