In its final determination, the Dept. of Commerce found dumping margins ranging from 18.32% to 249.96% and countervailable subsidies ranging from 14.78% to 15.97%.

Commerce Dept. Issues Final Determination Regarding Tariffs on Chinese PV Cells

Dena E. Wiggins | Ballard Spahr LLP

What are the rates of the dumping margins and the countervailable subsidies in light of the final determination?

In its final determination, the Dept. of Commerce found dumping margins ranging from 18.32% to 249.96% and countervailable subsidies ranging from 14.78% to 15.97%. 

Dumping occurs when a foreign company sells a product in the U.S. at less than its fair value. Countervailable subsidies are financial assistance from foreign governments that benefit the production of goods by foreign companies.

Specifically, Commerce found dumping margins of 31.73% for PV cells made by Suntech, 18.32% for Trina Solar, 25.96% for Chinese firms that requested but had not received individual duty determinations, and 249.96% for all other Chinese PV producers. Commerce found countervailable subsidies of at 14.78% for Suntech, 15.97% for Trina Solar, and 15.24% for all other Chinese manufacturers. 

Additionally, Commerce affirmed the finding of critical circumstances, which allows retroactive tariffs on imports going back to December 2011 for countervailing duties and February 2012 for anti-dumping duties.  However, Commerce found no critical circumstances for Suntech concerning dumping duties.  Critical circumstances exist when a major spike in imports occurs ahead of the possible imposition of duties, necessitating retroactivity.

What was the basis of the decision?

The decision is based on an investigation encompassing Chinese crystalline silicon PV cells, and modules, laminates, and panels consisting thereof, either partially or fully assembled into other products.  The investigation also covered modules, laminates, and panels produced in a third country from cells produced in China.  However, modules, laminates, and panels produced in China from cells produced in a third country are not covered.

The dumping investigation covered the period of April 1, 2011 through September 30, 2011 and the countervailable subsidies investigation covered the period of January 1, 2010 through December 31, 2010.

Initially, the petitioners compiled a significant amount of information and data in order to petition Commerce to initiate an investigation.  The subsequent investigation involved a detailed review of data, in part based on answers to questionnaires submitted to both Chinese solar cell manufacturers as well as domestic manufacturers.  This is a very fact intensive and market intensive investigation. 

Commerce sent questionnaires to the parties in the case in the course of its dumping and countervailing margins investigation and ITC sent questionnaires to domestic producers, Chinese producers and importers in the course of its injury to domestic industry investigation.  The responses to these questionnaires probably constitute the main body of evidence in this case.

What are the changes from the preliminary determinations?

Critical circumstances exist when a major spike in imports occurs ahead of the possible imposition of duties, necessitating retroactivity.  Commerce’s finding that there are no critical circumstances for Suntech concerning dumping duties is a new development.  In its preliminary determination, Commerce found that critical circumstances exist for all Chinese manufacturers and instructed U.S. Customs and Border Protection to require a cash deposit or bond based on the preliminary rates, applicable to all entries of Chinese solar cells made up to 90 days prior to the publication of the preliminary determination.  Therefore, the anti-dumping tariffs are expected to apply to Suntech entries made on or after May 25, 2012 (i.e., the date of publication of the preliminary dumping determination) and to all other Chinese entries made on or after February 25, 2012 (i.e., 90 days prior to the date of publication of the preliminary dumping determination).  However, Commerce affirmed the finding of critical circumstances with regard to countervailing duties for all Chinese imports allowing countervailing duties to be imposed on imports on or after December 27, 2011 (i.e., 90 days prior to the date of publication of the preliminary countervailing duties determination).

Also, Trina Solar’s dumping margin of 18.32% is a significant reduction from the preliminary determination of 31.14%. 

Although the final countervailable subsidies which ranged between 14.78% and 15.97% appear to be significantly higher than the preliminary determination which ranged between 2.90% and 4.73%, this increase may be tempered by a finding of an export subsidy rate of 10.54% which serves to reduce the final computation of the tariffs.

What are the next steps?

The International Trade Commission (ITC) is expected to make a final determination in November that Chinese solar imports are hurting domestic industry and then Commerce will issue orders for the imposition of tariffs.

Are the rates likely to change further?

The rates are unlikely to change further because the next steps normally do not involve additional rate revisions.

What is the timetable for implementation of the Tariffs?

Liquidation of Chinese solar imports has been suspended on entries made since December 27, 2011.  This means that all entries made on or after that date will likely be subject to the tariffs.  The final orders are expected to be issued in December and they will likely include guidance on the computation of the rates and their retroactive implementation.

Who is directly and indirectly affected by the decision and what does it mean for future development of solar equipment in the US?

Any solar project developer who had previously planned to rely on solar cells from China is potentially impacted as the cost of those solar cells will increase once the duties go into effect. 

Also, Chinese manufacturers may be impacted because their products will be less competitive in the US market especially at a time that they may be facing similar investigations in the European Union.  However, these manufacturers have other markets to sell their products and many of them have production facilities outside of China where they can still export their solar products without being subject to these tariffs.

On the other hand, US solar cell manufacturers may find that they are competing in a more level playing field due to the tariffs on Chinese products. 

 

Dena E. Wiggins is an Energy and Project Finance partner in the Washington, D.C. office of the law firm Ballard Spahr. She has more than 20 years of experience representing a range of energy clients in regulatory, legislative, transactional, and litigation matters. Ms. Wiggins advises on energy policy issues, liquefied natural gas matters, and incentives for natural gas production. She also counsels clients on foreign acquisitions reviewed by the Committee on Foreign Investment in the United States.


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