China Solar Energy Put Back On Notice By New Congress

China solar panel makers in Southeast Asia were put back on notice on Thursday, with introductory legislation that could remove them from a special privilege President Biden gave them last year.

Democrat Dan Kildee (MI-8) and Republican Bill Posey (FL-8) said today they would introduce legislation that would repeal a two-year moratorium on anti-dumping and countervailing duties against Chinese multinationals, granted by Biden in June.

Biden intervened in a Commerce Department investigation brought on by California solar company Auxin Solar last year. Commerce was looking into whether Chinese firms were circumventing previously imposed duties by using manufacturing bases in Vietnam, Thailand, Malaysia and Cambodia.

On June 6, the White House issued an emergency declaration stating that the war in Ukraine could impact American electricity supply chains. And because the U.S. was moving to solar, any impediments on solar imports would be problematic. Biden unilaterally put a hold on any new tariffs on Chinese solar made in those four Southeast Asian nations.

That did not stop Commerce from investigating Auxin Solar’s complaint. But if Commerce found Chinese companies were breaking tariff rules, they would not be punished within that 24-month window thanks to the Biden emergency declaration.

Last month, Commerce issued its preliminary findings and cited four Chinese solar companies for circumventing duties imposed on China, as Auxin’s claim suggested they were doing.

Commerce said that BYD Hong Kong, Trina Solar, Vina Solar (a subsidiary of LONGi) and Canadian Solar, which is Canadian in name only and is entirely manufactured in Asia, were circumventing existing tariffs.

Canadian Solar shares fell over 2.5% in the late afternoon hours on the news.

Eight companies were being investigated overall. Companies were allegedly bypassing U.S. duties by doing minor processing in Southeast Asia before exporting to the U.S., their prime market, Commerce said.

A final determination by Commerce is expected May 1. But if found guilty, the Biden declaration would free them of the tariff penalty.

That’s before Thursday’s move by Reps. Kildee and Posey was announced.

“We cannot allow foreign solar manufacturers to violate trade law, especially when it comes at the expense of American workers and businesses,” Kildee said in a statement today. “The Biden administration found in its own investigation that China is evading U.S. tariffs on solar imports, but has paused action on this matter, which is unacceptable,” he said, adding that the legislation, if passed, will repeal Biden’s two-year waiver.

Under the Congressional Review Act, Congress can repeal rules enacted by the executive branch.

Reuters reported that the repeal of the Biden declaration “would be a blow to U.S. solar project developers, who have argued that tariffs on imports from Southeast Asia would increase their costs and freeze development of clean energy projects.”

Solar importers have long lamented the cost factor associated with punishing China companies for dumping products into the U.S. However, over time, and since anti-dumping duties have been imposed on mainland China and solar tariffs were imposed by the Trump administration, prices of both residential and commercial solar panels have declined, according to the National Renewable Energy Laboratory.

The solar panel hardware is only about 25% of the cost of installing a solar panel system. Price variations in the solar panel itself have a minor impact on the cost of solar installation.

U.S. Representatives Bill Pascrell (D-NJ-9), Garret Graves (R-LA-16), Terri Sewell (D-AL-07) and Bob Latta (R-OH-5) joined Posey and Kildee in introducing the legislation.

Solar companies have been investing in the U.S. over the last several years thanks mainly to the Section 201 solar safeguard tariffs imposed by Trump and extended by Biden. And the recent tailwind provided by the Inflation Reduction Act, signed into law last year.

In November, Ohio-based First Solar announced a $1.1 billion investment in a new solar manufacturing plant in Alabama. And in January, China multinational JA Solar said it would invest $60 million in a solar panel manufacturing plant in Arizona. The company was not part of the 8 companies under investigation by Commerce.

If the legislation passes, it will set the table for Congress to strip Presidents of other declarations it does not like. Seeing how both parties are on board, and the Inflation Reduction Act is geared towards helping domestic solar producers, both House and Senate will likely remove the declaration of emergency. And with that, the two-year breather granted Southeast Asian solar exporters will end if the Commerce investigation does not go their way. Tariffs would be imposed, probably around 30% or more, on those four companies.

Kildee said in his press release today that Chinese manufacturers of solar panels have a proven history of violating U.S. trade law by using unfair trade practices, government subsidies and forced labor to undercut U.S. solar manufacturers.

The U.S. depends on foreign supply chains to meet at least 80% of its solar demand, mostly from Asia, led by China.