INSIGHTi

Circumvention Inquiry into Solar Imports
June 8, 2022
On April 1, 2022, the Commerce Department initiated an inquiry into whether Chinese
manufacturers of crystalline silicon photovoltaic (CSPV) cells and panels are circumventing U.S.
measures intended to counteract unfair trade practices. Commerce initiated the inquiry in
response to a petition by Auxin Solar Inc., a U.S. manufacturer, alleging that solar cells and
panels imported from Cambodia, Malaysia, Thailand, and Vietnam use Chinese-made parts and
components to avoid high U.S. tariffs on solar equipment imported directly from China. The
investigation has been controversial, including among Members of Congress. Some stakeholders
assert that uncertainty about the tariffs could slow deployment of solar energy in the United
States while others insist that action is needed to protect U.S. solar manufacturing. While the
Biden Administration recently used emergency authorities in effort to support U.S. solar
deployment, a final decision in this circumvention inquiry is expected no later than April 2023.
Background
In 2012, the Commerce Department and the U.S. International Trade Commission (ITC) determined that
imports of solar cells and panels from China were being sold below cost (“dumped”) or unfairly
subsidized and were injuring or threatened to injure the U.S. solar manufacturing industry. Commerce
imposed two remedial orders. Its antidumping (AD) order imposed duties ranging from 18-25% on goods
produced by specific Chinese firms and duties of 250% on imports from all other Chinese firms. The
countervailing duty (CVD) order, meant to counteract subsidies, imposed duties of around 14-15% on all
solar products from China. In its petition, Auxin contended that certain producers in Southeast Asia
outside China have manufacturing operations that involve minimal capital investments and technical
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research and rely on essential Chinese inputs (e.g., solar glass, aluminum frames, and silver paste) to
make CSPV cells and panels that are then exported to the United States.
How Commerce Conducts Circumvention Inquiries
Circumvention inquiries determine whether a good imported from a country that is not subject to an AD
or CVD order should be included in the scope of an existing order.
Any interested party (e.g., relevant domestic and foreign manufacturers, importers, unions, and trade
associations) may submit a request for a circumvention inquiry. The Secretary of Commerce may also
self-initiate an inquiry. Once the Secretary receives a request, federal law and regulations establish
deadlines for further action:
 Within 30 days of receiving a request containing the required information, the Secretary
is to initiate an inquiry, publish a notice in the Federal Register, and instruct customs to
suspend liquidation (i.e., the final calculation of duties) and require any firm under
investigation to deposit duties.
 Within 150 days of the notice, the Secretary is to issue a preliminary determination.
 Within 300 days of the notice, law and regulations require that the Secretary issue a final
determination.
 If the investigation is “extraordinarily complicated,” the Secretary may extend the
deadline by up to 65 days.
As part of its inquiry, Commerce considers whether “the process of assembly or completion in the foreign
country … is minor or insignificant.” In making that determination, Commerce takes into account the
level of investment, research, and development undertaken in the foreign country, the nature of the
production process, the extent of the production facilities, and the value added to the final product.

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If Commerce determines that the goods in question should be included within the scope of the existing
order(s) (an “affirmative determination”), duties could be applied to goods that entered the United States
after publication of the notice. In certain circumstances, the Secretary may collect duties on goods entered
prior to publication, back to the date of the original order(s). Commerce could apply duties to covered
goods specific to particular producers, exporters, or importers, and on a country-wide basis (i.e., against
solar imports from Cambodia, Malaysia, Thailand, and/or Vietnam).
Domestic Solar Industry
Manufacturing of CSPV panels, the most common source of solar energy in the United States, involves
four primary stages: the refinement of polysilicon, production of thin sheets of silicon (wafers),
fabrication of solar cells, and panel assembly. Completed solar systems also require numerous
components not used to generate electricity, such as inverters that convert direct current into alternating
current and racking systems that position the panels.
No CSPV cells are produced in the United States. As of February 2022, 13 U.S. factories assembled
CSPV panels using imported cells, according to the National Renewable Energy Laboratory. Seven other
CSPV panel plants closed between 2018 and 2021. In 2020, domestic production accounted for 10% of
apparent U.S. consumption of CSPV panels, according to the ITC. Most new solar installations in the
United States use panels assembled in Malaysia, Thailand, or Vietnam. Critics of the current
circumvention inquiry assert that higher tariffs on these imports could raise the cost of solar systems in
the United States and reduce installation work, the main source of solar-related U.S. employment.
Issues for Congress
Opponents to the circumvention inquiry has raised questions about Commerce’s procedures for
initiating circumvention inquiries and the role of the Secretary of Commerce. In a recent
congressional hearing, some Members of Congress expressed concerns about the relative ease
with which an investigation can be initiated, the absence of a domestic industry support
requirement (which exists for regular AD/CVD investigations), and the absence of a procedure
for Commerce to consider external factors (e.g., public interest). Prior to the ongoing
investigation, the House passed H.R. 4521, which would codify Commerce’s circumvention

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regulations, potentially making it easier for Commerce to initiate such investigations. Similar
provisions are not in the Senate version (S. 1260) of the bill.
Some Members of Congress have urged Commerce to perform an expedited investigation to offset
uncertainty faced by the U.S. solar industry. In response, Secretary of Commerce Gina Raimondo stated
that Commerce is “required by statute to have a fulsome investigation,” but would conduct the
investigation as fast as possible. Other Members have supported Commerce’s investigation, arguing that
it is necessary to ensure that U.S. laws to counteract unfair trade practices that could harm domestic
industries are properly enforced.
On June 6, 2022, President Biden used emergency authorities to suspend AD/CV duties on imports of
solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam for 24 months to support U.S.
solar deployment efforts. The action does not terminate the investigation. Should Commerce make an
affirmative determination, solar cells that enter after the expiration or termination of the 24-month period
will be subject to AD/CV duties. The impact of the order on the potential retroactive AD/CV duties on
panels entered before June 6 or after the expiration or termination of the 24-month period is currently
unclear.

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Author Information

Liana Wong, Coordinator
Manpreet Singh
Analyst in International Trade and Finance
Analyst in Industrial Organization and Business


Christopher A. Casey

Analyst in International Trade and Finance




Disclaimer
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