International Trade & Compliance Advisory

On December 31, 2013, SolarWorld Industries America Inc. filed petitions with the U.S. government seeking antidumping and countervailing (anti-subsidy) duties on U.S. imports of Chinese and Taiwanese crystalline silicon photovoltaic ("CSPV") products.  These new cases are to build on cases that resulted in duty orders against Chinese CSPV products beginning in December 2012 and on CSPV unfair trade cases in Europe.  Orrick is well positioned to advise producers and importers of solar panels and panel components affected by the unfair trade cases and to advance their interest before U.S. decision-makers.

Scope of Imports Covered by Cases

Imports that are the subject of unfair trade allegations include entries from China and Taiwan of CSPV cells, modules, laminates and panels, along with modules, laminates and panels partially or fully assembled into other products (e.g., building integrated materials).  To close a coverage "loophole," this "Subject Merchandise" is now to include modules, laminates and panels made in China or Taiwan from CSPV cells manufactured outside of China and Taiwan.  The Subject Merchandise does not include thin-film photovoltaic panels.

The new antidumping cases are to cover China and Taiwan.  The new countervailing duty (anti-subsidy) case is to cover only China.

Alleged Dumping and Subsidies; Duties

The petitions allege dumping by Chinese and Taiwanese exporters of Subject Merchandise and government subsidization of Chinese producers and exporters of Subject Merchandise.  Dumping is the selling of goods below "fair value." As to China, fair value generally means the estimated, fully loaded cost of producing the product, often employing surrogate unit costs from a "market economy" (here, Thailand).  The petition alleges dumping margins of well over 200 percent and a subsidy rate of 16 percent.

To succeed, the U.S. petitioner must establish dumping, subsidization or both, and must establish that imports of Subject Merchandise are injuring or threaten to injure U.S. CSPV producers.  If the cases are successful, then duties (tariffs) will be imposed on imports of Chinese Subject Merchandise, Taiwanese Subject Merchandise or both – again, building on December 2012 duty orders covering CSPV cell and panel imports from China.

Duty rates would account for combined rates of dumping and subsidization found by the U.S. Commerce Department, and they could be import-prohibitive.  Duties could apply retroactively to Subject Merchandise imports that entered the United States as of or potentially even before December 2013.

Case Attributes and Implications

These trade cases will have a variety of notable attributes and implications:

• These new cases have been filed to try to ensure that all CSPV panels shipped from China and Taiwan are subject to antidumping and countervailing duties.  The petition observes that in recent months the vast majority of U.S. imports of CSPV panels have avoided antidumping and countervailing duty liability.
• Imports of CSPV panels from China and Taiwan total over $1.1 billion annually, making these unfair trade cases among the largest in history.
• The vast majority of CSPV panels produced in China are exported.  The antidumping and countervailing duty cases currently in effect reportedly have had a relatively muted effect on Chinese CSPV panel producers – primarily because the December 2012 duty orders do not apply to Chinese CSPV panels produced from cells made outside of China.  The new cases seek to subject all CSPV panels exported from China and Taiwan to unfair trade duties, regardless of where the cells incorporated into those CSPV panels are made.
• A major increase in the cost of Chinese and Taiwanese CSPV panels would substantially raise the development costs of solar energy projects in the United States and elsewhere.  Accordingly, solar project developers and solar energy users in the United States will have a major stake in the new cases.
• The new cases will attract intensive scrutiny – some positive, some negative – in the U.S. Congress and executive branch.
• The new cases could become a further destabilizing force in the overall U.S.-China relationship.

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No international trade group is better positioned to assist with this matter than that of Orrick, Herrington & Sutcliffe LLC.  The group has engaged in scores of unfair trade cases and has a particular depth regarding microelectronics issues.  With over 30 years experience in dealing with such cases and having been centrally involved in the settlement of one of the largest unfair trade cases in history, Orrick is one of a small group of firms that can be effective in the context of the trade legal proceedings and public policy developments in this politically charged environment.

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To the extent that the cases continue, the approximate timing of case milestones is likely to be as follows:

Mid-January 2014​	Submission of responses by U.S. producers and importers and non-U.S. producers to questionnaire issued by the U.S. International Trade Commission ("USITC") focused on the issue of injury to the domestic CSPV industry.​
Late January 2014	Initiation of the cases by the U.S. Commerce Department.​
February 2014​	Preliminary determination of whether injury to the domestic CSPV industry has been caused or threatened by imports covered by the new petitions.  If this determination is negative, then the cases will immediately terminate.​
February 2014​	Commencement of requirement that importers pay duty deposits on imports of Chinese and Taiwanese CSPV cells and panels covered by the new petitions – for China, equal to the combined levels of dumping and subsidization preliminarily found by the Commerce Department; for Taiwan, at the levels of identified dumping (assuming affirmative preliminary determinations of injury to domestic producers of CSPV cells and panels).​
January 2015​	Commerce Department final determination of levels of dumping and subsidization.​
March 2015​	Final determination of injury or threat of injury to domestic producers of CSPV cells and panels by USITC.  If affirmative, duties would continue to be imposed on imports of Chinese and Taiwanese CSPV cells and panels – for China, at the combined levels of dumping and subsidization found in the Commerce Department's final determination; for Taiwan, at the levels of identified dumping.​