INSIGHTi

Circumvention Inquiry into Solar Imports
Updated December 19, 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. The antidumping (AD) order imposed duties ranging from 18%-25% on
goods produced by specific Chinese firms and 250% on imports from all other Chinese firms. The
countervailing duty (CVD) order, which counteract subsidies, imposed duties of 14%-15% on all solar
products from China. In its petition, Auxin contended that certain producers in Southeast Asia have
manufacturing operations that involve minimal capital investments and technical research and rely on
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 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:
Congressional Research Service
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 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 final
determination 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.
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. 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
Critics of the inquiry have raised questions about Commerce’s procedures for initiating circumvention
inquiries and the role of the Secretary of Commerce. In May 2022, 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 regulations,
potentially making it easier for Commerce to initiate such investigations. The provisions were not
included in a later version of the bill that was passed and signed into law (P.L. 117-167).
On June 6, 2022, President Biden issued a proclamation using emergency authorities to suspend AD/CV
duties on imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam for 24

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months to support U.S. solar deployment efforts. Commerce proceeded with the investigation, and on
December 2, 2022, issued an affirmative preliminary determination. Per Commerce’s instructions,
importers must certify that specific entries meet the requirements of “applicable entries” covered by the
proclamation. Regarding non-applicable entries, Commerce is to instruct customs to suspend liquidation
and collect cash deposits for entries entered on or after April 1, 2022.
The investigation continues to raise varying views among Members of Congress. Following Commerce’s
preliminary determination, some Members raised concerns over the impact the affirmative determination
may have on the U.S. solar industry and employment and urged the Biden Administration to extend the
tariff suspension on solar products. Some other Members praised Commerce’s enforcement of U.S. trade
law and suggested rescinding the proclamation.

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
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
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