Solar Installer Alert: US Dept. of Commerce Issues Affirmative Final Determinations in Chinese and Taiwanese Solar CSPV Products Dumping and Subsidy Investigations

On December 16, 2014, the  U.S. International Trade Administration (ITA, part of the U.S. Department of Commerce) issued Affirmative Final Determinations in the alleged unfair subsidy investigation against Crystalline Silicon Photovoltaic (CSPV) products from China and the alleged less than fair value import (dumping) investigations against CSPV products from both China and Taiwan.  These decisions make an immediate change in the cash deposit rates collected by U.S. Customs and Border Patrol (CBP).  They also pave the way for Final Countervailing Duty (CVD) and Antidumping Duty (AD) Orders to issue in about two months if the U.S. International Trade Commission (USITC) likewise issues an Affirmative Final Determination of material injury to the U.S. solar cell industry in late January, 2015.

We will provide further commentary and analysis as ITA makes available additional case materials to the public.  Here are the highlights of these Final Determinations on the information available so far:

Revised AD and CVD Rates

ITA revised some of the applicable dumping margins and subsidy rates from the earlier Affirmative Preliminary Determinations.  Here’s how the new rates compare:

Chinese Industry Dumping Margins

Rate Category	Preliminary Determination	Final Determination	Change
2 Mandatory Trina Solar Respondents	26.33%	26.71%	+0.38%
4 Mandatory Jinko Solar Respondents	58.87%	78.42%	+19.55%
43 Separate Rate Companies	42.33%	52.13%	+9.80%
China-Wide Entities	165.04%	165.04%	0%

Taiwanese Industry Dumping Margins

Rate Category	(Amended) Preliminary Determination	Final Determination	Change
Gintech Energy	27.59%	27.55%	-0.04%
Motech Industries	20.86%	11.45%	-9.41%
All Others	24.23%	19.50%	-4.73%

Chinese Industry Subsidy Rates

Rate Category	Preliminary Determination	Final Determination	Change
2 Trina Solar Respondents	18.56%	49.79%	+31.23
6 Other Respondents	35.21%	27.64%	-7.57
China-Wide Rate	26.89%	38.72%	+11.83

The new rates are the result of additional information developed and verifications done where possible since the Preliminary Determinations earlier this year.  ITA stated that the China-Wide Rate reflected its view that the Government of China had not been cooperative in completing the questionnaires sent by ITA during its investigations. 

ITA Adopts a New Scope of CSPV Products Covered

Perhaps the most significant change from the Preliminary Determinations is in the scope of goods description.  Initially and throughout the investigations until now, ITA used a scope description originally provided by SolarWorld Americas in its petitions.  This scope description included an unusual formulation to determine, in effect, country of origin for various solar products.  Whereas traditional country of origin rules follow the origin of the cells and disregard the assembly country, the original scope adopted by ITA included a determination of whether any production or processing of the cells was done in China or Taiwan and combined that with the assembly country to dictate country of origin of the finished goods.  Therefore, even though traditional rules of origin point to a third country for cell production, and therefore finished modules or panels follow the cell origin, the ITA’s original scope description embodied a rule that switched the country of origin to the assembly country in the event of assembly in China or Taiwan.

Starting early in the investigations and continuing throughout, various parties questioned and challenged the scope description.  SolarWorld defended it before the ITA.  Finally, on October 3, 2014, ITA  published a new scope description for consideration and invited comments.  Various parties vigorously argued for or against the new scope description.  In this Final Determination, ITA adopted the new scope description.

The scope description is different for China and Taiwan.  For China, the new scope description reverses the traditional rules of origin and designates, in effect, China as the country of origin for CSPV products assembled there with cells from any other country.  By contrast, for Taiwan the assembly of CSPV products in Taiwan from cells of any other country but China will exclude the assembled product from the scope.  In other words, the traditional rules of origin apply to assembly in Taiwan.  The scope continues to cover Taiwanese cells and products assembled with Taiwanese cells anywhere but China.  The scope continues to exclude any cells or products made with cells from China since those are already subject to the earlier 2012 AD/CVD orders against Chinese manufacturers and exporters.  Our February 2014 Alert explains the 2012 cases.

The table below summarizes our view of the new scope description:

Assembly Country	Cell Country	Scope Coverage
China	China	2012 Cases
China	Taiwan	2014 Cases (China)
China	Any Third Country	2014 Cases (China)
Taiwan	Taiwan	2014 Cases (Taiwan)
Taiwan	China	2012 Cases
Taiwan	Any Third Country	Excluded
Any Third Country	China	2012 Cases
Any Third Country	Taiwan	2014 Cases (Taiwan)
Any Third Country	Any Third Country	Excluded

In addition, the scope continues to exclude certain non-silicon photovoltaic products and certain consumer products integrated with less than 10,000mm² of CSPV cells.  See this Fact Sheet for a full scope description.

Impact on CBP Cash Deposits

CBP will collect cash deposits equal to the new dumping margins on solar merchandise covered by the new scope description starting on the date these Final Determinations are published in the Federal Register, probably in the next few days.  Cash deposits for the subsidy rates cannot be collected until the USITC issues its Final Determination on material injury to the U.S. solar cell industry in late January.  See our earlier December 2014 Alert on the USITC investigations.  The new scope description is not retroactive.

Next Steps

Now, all eyes turn toward the USITC’s scheduled vote on January 20, 2015, and issuance of its Final Determination.  If the USITC Final Determination is negative, the investigations end and all cash deposits collected during these investigations will be refunded.  If the USITC final Determination is affirmative, then ITA will issue amended orders in early February, 2015, as well as instructions to CBP to apply the AD and CVD remedies to all goods in scope.

Lurking in the background is the possibility of a settlement between the governments of China  and the United States, and possibly Taiwan.  Earlier in the investigations, China indicated that it would seek a negotiated settlement.  Taiwan also reportedly reached out to the United States through various channels.  To date, there has been no public follow up to these initial overtures.  However, some in the industry still see a settlement as possible.  See, e.g., this story from PVTech.

Stoel Rives Updates

The Stoel Rives Energy Trade Team will monitor further developments in these Solar Trade Cases and report on events as they occur, including the impending USITC final determinations.   For more information, please contact a key contributor: