U.S. anti-circumvention investigation on photovoltaic products in Cambodia, Malaysia, Thailand and Vietnam was issued on August 18, 2023, continuing the previous preliminary judgment. It was found that the export of photovoltaic products from Cambodia, Malaysia, Thailand and Vietnam had circumvented anti-dumping/countervailing duties, and the final judgment upheld the affirmative ruling on a country-wide basis for the four countries. The object
of circumvention (A): photovoltaic cells produced in Cambodia, Malaysia, Thailand or Vietnam within the scope of anti-dumping (AD)/anti-subsidy (CVD) and using Chinese silicon wafers.
(B) Components: Chinese silicon wafers are used to make batteries in Cambodia, Malaysia, Thailand and Vietnam, and more than three of the other six materials (silver paste, aluminum frame, glass , backplane, film, junction box) are made in China.
(C) a manufacturer who refuses to cooperate with the submission of information in a final determination, subject to the adverse available facts (Adverse Facts Available, AFA) investigation rules, will not be able to use the second and third point statements of tax exemption status. The establishment
of circumvention does not mean a complete ban on photovoltaic products imported from four Southeast Asian countries. Manufacturers located in these countries can still apply for the following tax exemption certificates to protect themselves from the accusation of circumvention and maintain local supply.
1. Input during the exemption period (2022.06.06-2024.06.06). It should be noted that Southeast Asian modules or cells imported into the United States after November 15 need to be used or installed in the United States within 180 days after the end of the rule.
2. The final judgment is that there are no three enterprises (Hanwha, Jingke and Bowei) that constitute circumvention, and the source of silicon wafers is required to be a specific supplier.
3. All manufacturers other than those with adverse available facts can meet the conditions that do not constitute circumvention:
(A) Southeast Asian batteries and components made of non-Chinese silicon wafers (Chinese silicon materials can be used)
(B) Southeast Asian batteries made of Chinese silicon wafers. However, for Southeast Asian components that meet the requirements of auxiliary materials, the proportion of products made in China does not exceed 2 among the 6 materials (silver paste, aluminum frame, glass, backplane, film, junction box). Products that
meet any of the above qualifications can apply for a duty-free certificate through a joint application by importers and exporters. Imports with the certificate will not be affected by the tariff rate. Imports without the certificate will be subject to AD/CVD tariffs after the end date of June 6, 2024.
Among them, the most concerned part is the identification of the origin of silicon wafers, and the final judgment also gives clear guidance. Under section 781 (B) (1) (B) (II), the origin of a silicon wafer will be determined by the country in which the final step in the manufacture of the component is "completed," i.e., the wafer will be determined by the location of the wafer. The
following examples are cited by the Ministry of Commerce:
(1) The use of Chinese silicon materials and the pulling of crystals in China, and the final completion of processing of silicon wafers outside China, do not constitute circumvention.
(2) Use overseas silicon materials and complete crystal pulling and slicing in China, which meets the definition of "Chinese silicon wafer" of circumvention behavior.
InfoLink's view is that
the results of the initial judgment and the final judgment are almost the same, with slight changes in the fact that some manufacturers do not respond to the investigation will be applied to the adverse available facts and list the circumvention behavior. The fact that anti-circumvention has been established has little impact in the short term, mainly because on June 6, 2022, President Biden of the United States granted a two-year anti-circumvention tariff buffer period to batteries and components in four Southeast Asian countries. Therefore, before the end of the exemption period on June 6, 2024 (or the early end of the emergency by the President of the United States), photovoltaic products in Southeast Asia can still be exempted from anti-dumping/countervailing tariffs and enter the U.S. market, and manufacturers in Southeast Asia can also have enough time to adjust their supply chains and test anti-circumvention investigations for their own companies. To ensure that future photovoltaic products can meet regulatory requirements. In this document, it is also specified that the tax rate will not be retroactive to the products imported during the buffer period. At present, the main obstacle to the entry of Southeast Asian components into the U.S. market is still the traceability of silicon materials.
As for whether there will be manufacturers hoarding before the expiration of the tax rate exemption, the current judgment is that the supply of the United States is still mainly restricted by the UFLPA Act, and the anti-hoarding guidelines in the final rules need to be completed within 180 days after the termination of the rules. InfoLink believes that manufacturers will reserve product stocks more rationally, that it is more difficult to hoard large quantities of goods, and that the end of the expected exemption period will stimulate relatively limited demand.
After the exemption period, if you want to enter the U.S. market, you must meet the conditions of using non-Chinese silicon wafers or components to meet the conditions of auxiliary materials. At present, the production capacity of silicon wafers outside China is relatively small, so when the preliminary judgment was issued, some manufacturers have actively evaluated the establishment of silicon wafer production capacity in Southeast Asia and even other overseas regions. This time, the Ministry of Commerce clarified that identifying the origin of silicon wafers by the location of the final processing link means that manufacturers pulling crystals in China and slicing them overseas will not constitute circumvention, which will reduce the difficulty of satisfying "non-Chinese silicon wafers"; However, due to the variability of policy implementation, there is no plan to set up a separate wafer plant, and most manufacturers still prefer to establish complete wafer production capacity in Southeast Asia or other overseas regions.
As for small and medium-sized manufacturers without overseas production capacity in the upstream, they need to increase the proportion of local production by the related auxiliary materials of components, so the overseas supply source of auxiliary materials will be an important strategic resource in the future, and the expansion of auxiliary materials in Southeast Asia is being planned accordingly, but at present, the overseas supply of aluminium frames and junction boxes is relatively scarce. Manufacturers need to lock the quantity in advance to ensure stable supply.
Under the voice of the United States attaching importance to local manufacturing, it will stimulate the gradual relocation of the supply chain. Considering the time required for planning, the stability of the IRA Act and other factors, manufacturers are more cautious about the layout of the United States. At present, only a few manufacturers consider upstream manufacturing in the United States, and the confirmed expansion plans are mainly components. However, the future import of Southeast Asian batteries into the United States requires the use of overseas silicon wafers to avoid circumvention. Therefore, it is still necessary to pay attention to whether the supply of batteries can meet local demand after the tariff exemption period.
InfoLink maintains the same view as the preliminary judgment. After the expiration of the exemption period next year, the anti-dumping/countervailing duty rates for the four countries will be formally imposed. Manufacturers must take the initiative to provide duty-free documents to prove that there is no circumvention, otherwise they will be subject to high anti-dumping/countervailing duties. The establishment of the circumvention behavior of the four countries is still a long-term impact, which will change the supply source of the US market in the future.
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