On Monday, President Biden issued an Executive Order suspending the collection of anti-dumping and countervailing duties (AD/CVD) of certain solar cells and modules exported from Cambodia, Malaysia, Thailand, and Vietnam. The Executive Order comes on the heels of a Commerce Department investigation initiated back in March 2022 into whether solar cell and modules from the aforementioned countries were circumventing AD/CVD duties on solar cells and modules made in China. The anticircumvention investigation, however, will continue to run its normal course, and if circumvention is found, AD/CVD duties will not be imposed until the end of the 24 month period (or until the emergency is declared terminated) (see here).
President Biden also took actions to accelerate domestic production of solar modules. President Biden tied the 24-month hold on AD/CVD duties to this initiative to accelerate domestic manufacturing, expressly referring to it as “a 24-month bridge as domestic manufacturing rapidly scales up” (see here).
The two-year duty relief will likely be welcomed by solar project developers in the United States and their non-U.S. suppliers. The AD/CVD duties on Chinese and Taiwanese solar equipment, as well as the uncertainty of potential duties on solar equipment from four other countries, had already created significant supply chain disruptions and disputes on which parties might take responsibility for the enormous cost hikes the duties would represent for a solar energy project.
Key Takeaways
- The Commerce Department Inquiry will Continue Uninterrupted: The President’s announcement of a 24-month reprieve on AD/CVD duties will not impact the Commerce Department’s investigation into whether solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam are circumventing AD/CVD orders on solar cells and modules from China. The petition that catalyzed the anti-circumvention inquiry claimed that minor production steps were occurring in these four countries to avoid the AD/CVD duties.
- If Commerce Finds Circumvention, Any Practical Effect will take Place After the AD/CVD Hold is Lifted: A preliminary determination on the investigation is due by August 29, 2022. Under current regulations, the Commerce Department may impose retroactive duties. However, this is unlikely given that any decision on circumvention and associated AD/CVD duty rates is practically moot until and unless the AD/CVD hold is lifted.
- Existing Duties on Chinese and Taiwanese Imports will Remain in Effect: Despite the 2-year hold on duties from solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam, existing duties on Chinese and Taiwanese imports of solar cells and module will remain in effect.