240 solar companies call for rejection of anti-circumvention petition

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With the Inflation Reduction Act celebrations over, the solar industry is back to focusing on the anti-circumvention trade case. The deadline is approaching for a decision from the Department of Commerce, and more than 240 solar and storage companies are imploring Secretary Gina Raimondo to reject the petition for new anti-circumvention tariffs on solar products.

Commerce must make its preliminary determination in Auxin Solar’s anti-circumvention case by December 1, and the companies on this letter are making clear that an affirmative determination is not justified and will once again stifle America’s ability to deploy clean energy.

Yes, President Biden did waive any new tariffs from this region for a 24-month period, wielding Section 318(a) of the Tariff Act of 1930 to create a safe harbor. The certainty helps, but a finding of circumvention would be another complication for future PV module imports, many of which are already being detained at the border due to the Uyghur Forced Labor Protection Act.

“President Biden took a crucial near-term step over the summer to free up a gridlocked solar supply chain, but companies won’t be able to capitalize on the administration’s landmark climate policy if this baseless case isn’t thrown out,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA). “The Inflation Reduction Act has launched a steady stream of manufacturing investments in the United States, but more tariffs will only undermine this success.”

The U.S. solar and storage industry remains firm that the case lacks legal merit based on the fact that solar cell and module manufacturing requires specialized equipment and is an intensive process, and the standard in a case like this is the substantial transformation of a new product. Because of the significant and major manufacturing work done in the Southeast Asian countries named in the investigation, the case does not meet the standard for circumvention.

As we’ve written previously — there is already precedent of Commerce deciding cell manufacturing is not minor or insignificant.

“In addition to the 2012 AD/CVD case, Commerce has taken the position in subsequent scope rulings that the p/n junction constitutes the essential characteristic of solar cells,” according to Lynn Kamarck, International Trade Counsel with McDermott Will & Emery, citing the “SunSpark Scope Ruling Memo” on Oct. 23, 2020. In this, the position is taken that “solar cells produced in Vietnam from raw wafers imported from China are not subject to the scope of the orders because the raw wafers from China did not include a p/n junction,” she says. In another memorandum, “ET Solar Scope Ruling Memo,” on June 15, 2021, solar cells produced in Vietnam were deemed within the scope of the order because the wafers already had a p/n junction before export.

“If it’s basically raw materials coming from China — wafers, wires, etc., and there’s a lot of value add, and, in effect transformation taking place, then that’s pretty strong evidence of no circumvention,” says Mark Herlach, with Eversheds Sutherland. “But that could vary from plant to plant and manufacturer to manufacturer. If it turns out the vast majority of work is still being done in China, then that’s a going to be a problem for the respondents.”

Here’s more on how substantial a solar cell is.

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