Planned Temporary Duty-Free Importation of Solar Cells and Modules from Southeast Asia

On June 6, 2022, the Biden Administration announced its intention to waive collection of antidumping (“AD”) and countervailing (“CVD”) duties on imports of crystalline silicon photovoltaic (“CSPV”) cells and modules from Cambodia, Malaysia, Thailand, and Vietnam for two years, regardless of the outcome of the ongoing circumvention proceeding covering such imports.^[1] There are crucial uncertainties regarding implementation of this action, and it may be vulnerable to attack in court.

President Biden issued a proclamation that:

• Declares a national emergency with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand; and
• Purports to provide authority to the U.S. Commerce Department (“Commerce”) to permit U.S. imports of CSPV cells and modules from Cambodia, Malaysia, Thailand, and Vietnam not already covered by the China AD/CVD orders to enter the United States free of any AD or CVD cash deposits or duties for 24 months after the date of the proclamation or until termination of the emergency (whichever occurs first).

In addition, Commerce announced that it will promulgate regulations to temporarily permit for “up to 24 months” duty-free imports of CSPV cells and modules from Cambodia, Malaysia, Thailand, and Vietnam. Commerce clarified that, once the announced 24-month waiver period is over, the results of the ongoing circumvention proceeding will apply to imports of CSPV cells and modules from the four Southeast Asian countries.

Significant uncertainties remain regarding the Administration’s duty-waiver initiative:

• Commerce has not described a timeframe for issuance of the regulations implementing the waiver. As a result, many details as to the specific nature, coverage, and duration of the cash deposit and duty waiver remain uncertain at this time;
• While the Presidential proclamation describes a waiver duration of 24 months, the Commerce announcement refers to duty relief for “up to 24 months,” which may be due to the possibility that the emergency is terminated before 24 months or other reasons, and
• There are obvious questions about whether the statutory provision (19 U.S.C. § 1318(a)) that the proclamation identifies authorizes the President to take the action. The statute specifies that if the President declares a national emergency, he or she may authorize the Secretary of the Treasury to permit the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work. It is not clear that threats to the availability of sufficient electricity generation capacity, and in particular renewable energy generation capacity, to meet expected customer demand would qualify. Past Presidents have rarely invoked this provision – most recently, in connection with the national emergency concerning the COVID-19 outbreak in 2020, and historically, in response to the national balance of payments concerns or during wartimes.

Auxin Solar, the petitioner in the circumvention proceeding, has reportedly expressed opposition to the duty-waiver announcement. Much could depend on whether it (or some other party) challenges the action in court. A court challenge may not be ripe until Commerce promulgates implementing regulations.

^[1] For background information on the Commerce Department’s circumvention proceeding, please see Orrick’s webinar here.