US Trade Commission Extends Probe of Solar Tariff Evasion in Southeast Asia

This decision is the latest in a years-long saga that the U.S. solar industry claims could have a devastating effect on manufacturing.

Signage outside the U.S. International Trade Commission in Washington on Aug. 31, 2020. Andrew Kelly/Reuters

The U.S. International Trade Commission voted on June 7 to continue its investigation into potential tariff-dodging by manufacturers of photovoltaic solar cells in southeastern Asia.

This decision is the latest in a years-long saga that the U.S. solar industry claims could have a devastating effect on manufacturing.

The commission confirmed in a June 7 statement that it will keep moving forward with its investigation of the manufacturers, who are located in Cambodia, Malaysia, Thailand, and Vietnam.

China-based companies have been accused by supporters of the investigation, such as the American Alliance for Solar Manufacturing Trade Committee, of employing these manufacturers to evade U.S. tariffs targeting the Chinese Communist Party’s (CCP’s) unfair subsidizing of the solar panel industry, which the Biden administration stated was aimed at “creating dependency.”

According to the statement, the trade commission found there to be a “reasonable indication” that the U.S. solar industry was “materially injured” by imports related to the solar industry from Cambodia that are allegedly subsidized by the government of Cambodia.

The trade commission, along with the Department of Commerce, plans to continue its investigation into imports of solar cells from Cambodia, Malaysia, Thailand, and Vietnam. The two groups announced that the report on the investigation will be completed by roughly Oct. 1.

This decision came days after congressional Democrats called on the Biden administration and others to investigate the alleged unfair trade practices of Chinese-owned companies in the solar industry and almost a month after the Biden administration announced that President Joe Biden’s “Investing in America” agenda would reiterate his position toward the CCP through a crackdown on solar imports, allocating millions of dollars toward clean U.S. energy.

Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, penned a June 4 letter to David Johnson, chairman of the International Trade Commission, and Secretary of Commerce Gina Raimondo expressing support for the antidumping and countervailing duty petitions filed by the American Alliance for Solar Manufacturing Trade Committee.

The alliance includes companies such as Convalt Energy, First Solar, South Korean company Hanwha-Q Cells, Meyer Burger, Mission Solar, REC Silicon, and Swift Solar. It represents companies involved in the domestic solar manufacturing industry and supports roughly 34,000 U.S. workers.

According to the letter, Chinese-owned companies operating in Cambodia, Malaysia, Thailand, and Vietnam have engaged in market-distorting practices, including illegal subsidies, that allegedly harm the U.S. solar industry, which is the target of the petition.

“China’s dominance of the solar supply chain creates significant energy security risks, in addition to stifling domestic job growth and harming American manufacturing potential,” Mr. Brown said. “This industry cannot reach its full potential in the U.S. if China’s companies operate as a one-nation solar cartel.”

The senator called for a second look at how the administration views solar imports, warning that failing to address it comprehensively could lead to production shifts by Chinese-headquartered producers to other countries.

The multiagency investigation follows last month’s announcement that new tariffs would be imposed on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China.

There is a possibility that tariffs could ignite a more extensive trade dispute between the two nations as they react to each other’s actions. China is endeavoring to establish a technological advantage and ascend the economic ladder.

At a time when the CCP is grappling with mounting global criticism from liberal democratic states, there are some indications that it is reducing its production of lithium-ion batteries, which are utilized in electric vehicles, mobile phones, and other consumer electronics.

A draft rule was released by the Ministry of Industry and Information Technology of China shortly after the announcement with the objective of “strengthening the management of the lithium-ion battery industry and promoting the sector’s high-quality growth.”

Currently, the United States imposes a 27.5 percent tariff on Chinese electric vehicles. This encompasses a 2.5 percent import tariff and an additional 25 percent tariff implemented during the Trump administration and subsequently renewed during the Biden administration.

The Associated Press contributed to this report.