More than nine months after initiating a highly consequential inquiry into whether imports of solar cells and modules from four Southeast Asian countries are circumventing antidumping and countervailing duty (AD/CVD) orders on Chinese-made solar cells (whether or not assembled into modules), the Commerce Department (DOC) on December 2 announced a split decision.  The preliminary determinations conclude that some foreign producers’ operations constitute circumvention while others do not. That means there are fewer “non-Chinese” suppliers to the U.S. market. But the decision also provides some clarity and a roadmap on new rules for producing solar cells and modules that will not run afoul of DOC’s anticircumvention rules.  Yet it may take some time before restructured supply chains in response to the new rules are in place.

Split Decision

DOC issued affirmative preliminary determinations of country-wide circumvention of the 2012 China Solar Cell AD/CVD Orders for all four countries under consideration, Cambodia, Malaysia, Thailand and Vietnam, based on the failure of a total of 22 producers in three of those countries to timely respond to DOC’s initial “quantity and value” (Q&V) questionnaire. That’s a document DOC uses primarily to identify which producers should be selected as mandatory respondents and therefore required to respond to extensive questionnaires regarding their operations and costs. DOC reached the conclusion that the non-responsive – and therefore deemed uncooperative – companies were circumventing the China Solar Cell Orders as a result of using “facts available with an adverse inference” (AFA).

But for the eight selected mandatory respondent companies that DOC individually examined (two from each country), DOC concluded that four were NOT circumventing the China Solar Cell Orders. As part of the final determination phase of the inquiry, on-site verifications of the information these companies provided are being performed by DOC and are key to the negative circumvention determinations being upheld. Final determinations are scheduled to be made in early May 2023.

A key issue for each mandatory respondent was whether the finishing or assembly of CSPV cells and/or modules in the Southeast Asian countries from inputs, including wafers, from China was “minor or insignificant.” To determine whether the process of assembly or completion is minor or insignificant, the statute (19 U.S.C. § 1677j(b)(2)), directs DOC to “take into account” the following:

(A) the level of investment in the foreign country,

(B) the level of research and development in the foreign country,

(C) the nature of the production process in the foreign country,

(D) the extent of production facilities in the foreign country, and

(E) whether the value of the processing performed in the foreign country represents a small proportion of the value of the merchandise imported into the United States.

In the DOC memoranda explaining the agency’s decision-making processes for each of the eight mandatory respondents, DOC consistently found that cell and module production is more significant than the production of ingot and wafers from polysilicon and weighed against a circumvention finding. (Generally, cells and modules are being produced in Cambodia, Malaysia, Thailand and Vietnam from polysilicon wafers produced in China, as well as from some inputs used to produce modules.) However, DOC’s weighing of “the totality” of factors considered often appeared to turn on the extent of independence from versus affiliation with Chinese input suppliers and the extent of non-Chinese investment and research and development in the country assembling or completing the cells and modules. The ultimate weighing of the different factors mostly seemed to be a close call for DOC, suggesting that new sourcing options may require rulings from DOC to obtain certainty.

New Rules for Determining Origin

Nevertheless, DOC has identified a formula for avoiding circumvention of the China Solar Cell Orders, based on limiting how many Chinese-made inputs are used to produce cells and modules outside of China. Specifically, in a Federal Register notice announcing the preliminary determinations, DOC identified the new rules that will be used to determine what origin, for purposes of the AD/CVD laws, applies to CSPV cells and modules produced outside of China from wafers and/or other inputs produced in China. In place of the longstanding rule that origin is conferred when a p/n junction is added to a wafer to create a solar cell, DOC will henceforth base origin on the following component content rules: For imports of solar cells, origin is determined by the origin of the wafer. If a module is made with a Chinese-origin wafer, then the module is also considered Chinese origin. On the other hand, for imports of solar modules (or products that contain solar modules) that were not manufactured with Chinese-origin wafers, the focus turns to the origin of what DOC considers to be key module inputs. Specifically, a module’s origin will be China if more than two of the following six inputs were produced in China: silver paste, aluminum frames, glass, backsheets, ethylene-vinyl acetate, or junction boxes.

New Certification Requirements

Despite the affirmative circumvention determinations, U.S. importers of solar cells and modules from the four targeted countries do not face the immediate imposition of AD/CVDs on their merchandise. A two-year reprieve issued by President Biden remains in place. Under the June 6, 2022 Presidential Proclamation 10414, “Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia,” and implementing rules promulgated by DOC (19 C.F.R. Part 362) in November, the assessment of antidumping and countervailing duties on cells and modules considered to be circumventing the China Solar Cell Orders under the new rules is stayed until June 6, 2024, to address concerns that broader application of AD/CVDs would disrupt the supply of solar products to the U.S. market. That said, for the 22 AFA entities and the 4 mandatory respondents DOC says are circumventing, DOC will soon issue instructions to U.S. Customs & Border Protection (CBP) to preliminarily suspend liquidation and require cash deposits for estimated AD/CVDs on their solar cells and solar modules that were entered, or withdrawn from warehouse, for consumption on or after April 1, 2022, the date of the Federal Register publication of initiation of these circumvention inquiries. The AD/CVD cash deposit rates will be based on the rates applicable to the Chinese suppliers of the inputs.1 However, this can be overcome, at least through June 6, 2024, if “Applicable Entries” Certifications are timely completed.

In all, DOC has established 3 detailed certification processes for both exporters and importers to certify that 1) their entries qualify as “Applicable Entries” for purposes of a moratorium on the application of the duties on the products subject to the anticircumvention inquiries before June 6, 2024, 2) their products are among those found not circumventing the Solar Cell Orders, and 3) their products are outside the scope of the Solar Cell Orders – based upon the new origin rules developed in the anticircumvention inquiry.2 The AFA entities  are only eligible to submit certifications that their entries are “Applicable Entries.” All exporter certifications must be completed by time of shipment (and provided to the importers) and all importer certifications must be completed by the time of entry; companies have 45 days from the date of publication of the Federal Register notice (December 8, 2022) to complete certifications for entries made between April 1, 2022 and 14 days after the date of publication. That is January 23, 2022.  The importer must submit both the importer’s certification and the exporter’s certification to CBP as part of the entry process.  All certifications are subject to verification by DOC.

Certifications for “Applicable Entries” must state that the imported goods were produced in one of the four target countries, were not further assembled thereafter in any other country, were withdrawn from a CBP warehouse before June 6, 2024 (assuming the moratorium is not terminated earlier), and if withdrawn from warehouse after November 15, 2022 will be utilized no later than 180 days after June 6, 2024.

Only the 4 mandatory respondents which received negative circumvention preliminary determinations may provide the Certification for Non-Circumventing Companies, although 3 of the 4 mandatory respondents with preliminary negative circumvention determinations may not do unless they timely publicly disclose the names of their Chinese exporters of wafers. Presumably, that incentive means they will provide that information. These are Hanwha Q CELLS Malaysia Sdn. Bhd., Jinko Solar Technology Sdn. Bhd. (Malaysia), and New East Solar (Cambodia) Co. Ltd. Boviet Solar Technology Co., Ltd. (Vietnam) has identified its wafer suppliers.

Under the Certification Regarding Chinese Components, at entry, the parties must certify that if the exports/imported products are solar cells, those solar cells were not manufactured using wafers produced in China, and if the exports/imported products are solar modules or products that contain solar modules, either they 1) were not manufactured using Chinese-origin wafers or 2) were manufactured with Chinese-origin wafers, but no more than two of the following six inputs that were used to manufacture the solar modules were produced in China: silver paste, aluminum frames, glass, backsheets, ethylene-vinyl acetate, or junction boxes.


1 The suspension of liquidation and duty rates will apply until final assessment instructions on those entries are issued, whether by automatic liquidation instructions, or by instructions pursuant to the final results of an administrative review of the China Solar Cell Orders. DOC advises that parties that want to have their suspended entries reviewed, and their ineligibility for the certification program re-evaluated, should request an administrative review of the relevant suspended entries during the next anniversary month of these Orders (i.e., December 2022 for the Solar Cells AD Order).

2 The Federal Register notice announcing the preliminary results and a detailed certification process for exporters and importers will be published later this week, setting in motion deadlines by which exporters and importers will have act to avoid suspension of liquidation of import entries and the risk of incurring AD/CVD cash deposit liability.