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On December 2, 2022, the Department of Commerce (“Commerce”) announced its preliminary circumvention determination with respect to certain solar cells and modules exported from Cambodia, Malaysia, Thailand, and Vietnam.  Commerce found that imports of solar cells from all four countries circumvented the antidumping (“AD”) and countervailing (“CVD”) orders on solar cells and modules from the People’s Republic of China (China).  Commerce conducted an eight-month investigation following allegations by the domestic solar industry claiming that solar cell producers, which manufacture solar cells and modules in China, were sending the fabricated cells and modules to one of the four named countries to undergo only minor processing prior to export to the U.S. in an attempt to evade AD/CVD orders.  U.S. imports of solar cells and modules from China have been subject to AD/CVD orders since 2012. See 77 Fed. Reg. 73017-73018 (Dec. 7, 2012).

Commerce individually examined eight exporters, however, the preliminary determination applies on a country-wide basis to all solar cells and modules produced in and exported from Cambodia, Malaysia, Thailand, and Vietnam to the U.S., except for the four companies that Commerce determined were not circumventing the Chinese order.  Commerce also has allowed comments on the instituting of a certification process that exporters can submit to demonstrate and certify that they are not circumventing the AD/CVD orders and avoid paying the AD/CVD imposed by this determination. The four companies specifically exempted from the preliminary determination are New East Solar in Cambodia, Hanwha Q Cells and Jinko Solar in Malaysia, and Boviet Solar Technology in Vietnam, provided their production process and supply chain remain unchanged.

We expect that the certification requirements will go into effect towards the end of the first week of December, such that any imports starting with the date of publication of the preliminary anticircumvention determination would require a certification to be presented at the time of entry.  Should an exporter wish to continue to export from one of these countries, the certification requirements will be stringent and exporters should work with their importers on these issues.   Solar cells and modules would not be subject to AD/CVD duties if an exporter can certify that the input cells are not made from Chinese wafers, or if the modules are either not made from Chinese wafers or not using certain other Chinese components. However, despite the general availability of importer/exporter certifications permitted to exempt entries from AD/CVD, Commerce preliminarily found twenty-two (22) individual companies in Malaysia, Thailand, and Vietnam are ineligible for certification due to their failure to cooperate with the inquiry. Any companies wishing to have their certification ineligibility re-evaluated may request an administrative review “during the next anniversary month of these Orders (i.e., December 2022 for the Solar Cells AD Order and December 2023 for the Solar Cells CVD Order).”

As this is a preliminary determination, Commerce will next conduct in-person verifications over the ensuing months to verify the information in its initial findings. In addition, all parties will be able to comment on Commerce’s finding before Commerce issues its final determination on May 1, 2023.

We expect that many importers and consumers of solar panels now will need to assess their risks while signing contracts, with CVD and antidumping duties potentially being applied to exporters that may affect projects being planned for 2024 and beyond.

Notwithstanding Commerce’s final determination, the Presidential Proclamation issued on June 6, 2022, provides that Customs and Border Protection (CBP) will not collect duties on any solar module and cell imports from these four countries until June 2024, unless parties cannot certify that the imports will not be consumed in the U.S. market within six months of the entry date. Domestic solar importers should utilize this time to make any necessary supply chain adjustments and to ensure they are not sourcing from companies found to be circumventing these duties.

Commerce’s full preliminary determination can be found here.

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If you have questions about how these regulations might impact your business, contact Nithya Nagarajan, Jeffrey Neeley, or your Husch Blackwell attorney.