U.S. court upholds strict scope for duties on Chinese, Taiwanese imports

The anti-dumping and anti-subsidy (CVD) rulings in 2012 and 2014 which imposed tariffs on solar products from China and later Taiwan were highly unpopular with a wide swath of the global solar industry, including those manufacturers who used components imported from the two countries.

But while the duties themselves are hard to challenge in court, solar companies have taken aim at a series of scoping rulings by the U.S. Department of Commerce (DOC) which strictly defined the solar cells and modules to which the tariffs applied.

This challenge officially came to an end last Friday, with Judge Claire Kelly of the Court of International Trade upholding DOC’s scoping rules in two separate decisions. These found that while modules made with Taiwanese cells should be subject to duties no matter where the final assembly took place, that tariffs should also apply to any solar modules whose final assembly was in China, no matter where the components came from.

This may be the broadest scope possible under the trade rulings, and is a departure from the previous “2 out of 3” rule. This rule stated that for such modules to be considered made in China, that a substantial portion of the parts – two out of three components – would need to have been produced there.

The 2 out of 3 rule was originally proposed in the 2014 import duty investigation, which would cover Chinese cells and modules, as well as cells made in Taiwan. However, in October 2014 DOC changed the rule, citing difficulties determining the origin of various components as well as a “history of evasion” by Chinese PV makers regarding the 2012 duties.

The following language by DOC was cited by Judge Kelly in her 32-page ruling on the Chinese import duties:

the Department found that the two-out-of-three scope language originally proposed by Petitioner would not be administrable, given that certain parties reported that they did not track where the ingots, wafers, or partial cells used in third-country cells being assembled into modules in the PRC were produced, and that it would be “virtually impossible” for importers to have that information. Additionally, in light of the history of evasion under the Solar I PRC Orders and the undisputed “complex and readily adaptable global supply chain,” the Department found that the two-out-of-three scope language would permit further evasion and ultimately incomplete relief.

DOC chose a different tack for the Taiwan ruling, finding that modules, laminates and panels produced in any third-country using Taiwanese cells should be subject to import duties – which the court has agreed with.

The challenge to the China ruling was led by a who’s who of leading solar Chinese solar makers such as JinkoSolar, Trina and LDK, but SunPower and Canadian Solar served as the named plaintiffs. The Taiwan case was brought by Kyocera and bankrupt developer and PV maker SunEdison, and in both cases SolarWorld Americas, which led the charge for the imposition of the duties, served as defendant-intervenor.

SolarWorld’s law firm has celebrated the ruling. Tim Brightbill of Wiley Rein, who has represented SolarWorld throughout these AD/CVD cases, noted that “These broad-scope definitions were necessary to address the injury to U.S. solar manufacturers caused by the unfair trade practices of solar producers and exporters from China and Taiwan and, in particular, from Chinese producers’ attempts to change their operations and sourcing patterns in order to evade duties imposed by the Solar I AD/CVD orders.”

SunPower did not respond to pv magazine request for comment by press time.

Of course, such wrangling over the details of the 2014 anti-dumping and anti-subsidy cases pales in importance to the outcome of another case which is currently being considered by the U.S. government.

The International Trade Commission (ITC), an independent semi-judicial body which is not part of DOC, is currently investigating the Section 201 petition brought by Suniva and backed by SolarWorld. If ITC finds damage has been done to the domestic solar industry by imports, it will be up to the Trump Administration to determine the remedy – meaning literally anything could happen.