New AD/CVD Case, End of Grace Period for SE Asia Solar Create 'Intersecting Risks,' Law Firm Says
The “almost simultaneous” likely start of new antidumping and countervailing duty investigations and end of a grace period for AD/CVD on Southeast Asian solar cells and panels creates a “complicated situation for importers” with “intersecting risks,” law firm Covington said in a client alert May 1.
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The moratorium on anti-circumvention duties imposed on solar cells and modules from Cambodia, Malaysia, Thailand and Vietnam ends June 6 (see 2209160065 and 2308180044), and the Commerce Department and CBP "may increase their focus on verifying whether imports entered prior to termination of the emergency are ultimately ‘utilized,’” as is required to qualify for the duty pause.
“This may include requesting submission of supporting documentation that importers and exporters have been required to maintain. If it is determined that the utilization requirement is not met, U.S. importers may face an ad valorem cash deposit rate of up to 254% retroactively imposed on imports they have already made,” Covington said.
What exactly Commerce will consider to be utilized remains “uncertain,” especially because it has said goods resold, exported or destroyed are not considered utilized. “Given the high stakes of a future retroactive duty assessment, companies should proactively consider whether their imports ultimately satisfy this requirement before the deadline for utilization, which is expected to be in early December 2024,” Covington said.
At the same time, new AD/CVD investigations on solar cells and panels from Cambodia, Malaysia, Thailand and Vietnam could result in duties in at most four to six months, but potentially earlier if there’s an import surge and Commerce finds critical circumstances. That would result in retroactive duties within a month or two of the investigation’s initiation date -- which will likely be May 14 or June 3 -- or even back to the initiation date itself.
The petition underlying the potential investigation and the completed anti-circumvention inquiries cover different products -- the circumvention case covered cells and panels made from Chinese inputs, including wafers, while investigations would cover solar cells and panels made from Cambodian, Malay, Thai and Vietnamese wafers, the petition said (see 2404240071).
But the two events occurring at the same time creates opposing incentives for importers, Covington said. “On the one hand, importers are incentivized to import solar cells and modules now, before the duty-free period is set to expire on June 6. On the other hand, any surge in imports before the moratorium expires could serve as the basis for retroactive application of AD/CVD duties to imports occurring before the issuance of preliminary determinations by Commerce in the new investigations.”
“Companies planning to make shipments within the next few weeks should carefully evaluate their individualized tariff risks (and risk tolerance), including how any supply agreements account for the risk of future AD/CVD duties that may be retroactively imposed,” Covington said.