Solar tariff moratorium and Customs detentions

Solar tariff moratorium and Customs detentions

August 17, 2022 | By Keith Martin in Washington, DC

Customs detentions and import tariffs remain obstacles for US solar developers.

A 24-month moratorium is expected to take effect soon on anti-circumvention duties on Chinese-branded solar panels and cells imported from Vietnam, Malaysia, Thailand and Cambodia.

US solar panel manufacturers will then have at least 60 days to file suit to block enforcement.

In the meantime, analysts are reporting that more than 3,000 megawatts of solar panels may have been detained by US Customs due to forced labor concerns since Customs started enforcing the Uyghur Forced Labor Prevention Act on June 21. The number of detained solar panels is expected to grow by year end. (For more details, see "Customs Gets Tougher on Forced Labor" in the June 2022 NewsWire.)

The US Commerce Department proposed a moratorium on June 30 that would shield solar panels and cells imported into the United States from Vietnam, Malaysia, Thailand and Cambodia through June 5, 2024 from any anti-circumvention duties that Commerce decides to impose. The deadline for comments about the proposed moratorium was August 1.

The moratorium will not apply to panels that are made using solar cells that were manufactured in China or Taiwan.

Auxin, a US manufacturer, asked Commerce last February to investigate whether Chinese-branded cells and panels imported from the four Southeast Asian countries are circumventing duties that would have to be paid if they were imported directly from China. Roughly 80% of solar panels imported into the United States last year came from the four countries. Only 1% came from China directly.

Commerce was supposed to make a preliminary decision by August 29, 2022 and a final determination by April 3, 2023. However, Auxin asked it to delay the preliminary decision by three weeks to allow time for submission of more evidence.

The Biden administration is invoking waiver authority under section 318 of the Tariff Act of 1930 to waive duties on “food, clothing, and medical, surgical and other supplies for use in emergency relief work” to suspend any duties that the agency decides to impose for 24 months.

Financings of projects that would be uneconomic if they had to bear the duties may still be delayed until after the market has a chance to assess the merits of any lawsuit. (For more details, see "Tariffs, Inflation and Other Challenges" in the June 2022 NewsWire.)

The US has been collecting countervailing and anti-dumping duties on solar panels imported directly from China since December 2012 to offset the effects of Chinese export subsidies and of Chinese manufacturers dumping product on the US market at lower prices than the panels are sold for in China.

The duty amounts are revisited periodically. Commerce made the latest adjustments in early August.

US duties vary depending on the panel supplier. The China-wide rates are 238.95% in anti-dumping duties and 15.87% in countervailing duties. Some companies qualify for lower rates after presenting evidence to Commerce.

For example, Risen panels are subject to anti-dumping duties of 12.24% and countervailing duties of 13.18%. LONGi and BYD solar panels are subject to anti-dumping duties of 14.79% and countervailing duties of 15.87%.

These are the subsidies that Commerce found various Chinese suppliers benefited from on panels imported during calendar year 2019 and dumping margins for the period December 2019 through November 2020, the most recent periods reviewed.

Importers must post cash deposits when the panels pass US Customs.

Adjustments are made to the cash deposits as Commerce revisits the dumping margins and export subsidies over time. In such cases, importers may be required to pay more or receive refunds.