Chinese solar manufacturers have avoided US tariffs, investigation finds

WASHINGTON — U.S. officials have found that four of the eight major Chinese solar companies investigated in recent months tried to avoid tariffs by routing products to the United States through Southeast Asian countries, in a trade case that pits clean energy advocates against local manufacturers of solar panels.

The decision applies to the Thai operations of Canadian Solar and Trina Solar, as well as BYD Cambodia and Vina Solar Vietnam, according to a decision posted on the Commerce Ministry’s website on Friday morning.

The investigation, launched at the request of a small California company called Auxin Solar, focused on whether Chinese companies tried to circumvent tariffs imposed by the United States on cheap solar panels imported from China. In recent years, Chinese solar companies have significantly expanded their manufacturing presence in Southeast Asian countries that do not face the same tariffs.

The trade case hinges on whether Chinese companies actually use these Southeast Asian countries as a significant manufacturing location or simply make minor changes to products that are largely made in China to try to circumvent US trade rules.

Other companies that were also investigated – namely New East Solar Cambodia, Hanwha Q CELLS Malaysia, Jinko Solar Malaysia and the Vietnam operations of Boviet Solar – were not found to be in violation of US trade rules.

Companies that import solar products into the United States — including large U.S. installers as well as the U.S. branches of Chinese solar companies — have protested the investigation, saying it prevents them from importing enough materials to meet growing demand for clean energy solutions. energy. They lobbied the Biden administration and lawmakers to argue that the trade case would prevent the United States from meeting its ambitious climate goals. President Biden has pledged to cut greenhouse gas emissions by 50 percent from 2005 levels by the end of the decade.

In 2020, 89 percent of solar modules used in the United States were imported, with Southeast Asian countries accounting for the majority of shipments.

Abigail Ross Hopper, chief executive of the Solar Energy Industries Association, which opposed the investigation, said the group was “obviously disappointed that Commerce chose to exceed its legal authority,” arguing that cell and module manufacturers significantly transform their products in Southeast Asia.

“This decision will block billions of dollars in American clean energy investment and result in the significant loss of good-paying American clean energy jobs,” she said, adding, “This is a mistake that we will have to deal with over the next several years.”

The findings of the investigation seem likely to draw criticism from Republicans and domestic industry that the Biden administration is failing to crack down on China for unfair trade behavior.

The Biden administration decided in June to suspend any tariffs resulting from the investigation, regardless of the decision, for a period of two years to ensure that the United States has an adequate supply of solar panels to power the energy transition and mitigate climate change.

The Biden administration has set a goal of generating 100 percent of the nation’s electricity from carbon-free sources such as solar, wind or nuclear energy by 2035 compared to just 40 percent in 2020, a target that may require more than doubling the annual rate of solar installations.

In a statement Friday, the Coalition for a Prosperous America, a group that promotes American manufacturing, called on the Biden administration to withdraw its emergency declaration that neutralized the outcome of the investigation and instead enforce U.S. trade laws.

Mr Biden’s declaration “gives Chinese manufacturers a free pass to illegally” circumvent US trade laws for 24 months and protects them from retroactive tariffs, the coalition said.

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