Shedding light on the US solar probe

US producers of crystalline silicon photovoltaic (CSPV) cells and modules submitted petitions on April 24, 2024 to the US Department of Commerce (DOC) and US International Trade Commission (USITC), requesting an anti-dumping (AD) and countervailing duty (CVD) investigation on solar cells and modules imported from four countries in Southeast Asia: Cambodia, Malaysia, Thailand and Vietnam.
The group alleged the CSPV dumping practices of these countries undercut domestic manufacturing efforts, materially injuring the US solar manufacturing industry.
On May 14, in response to the petition, the DOC initiated AD and CVD investigations of solar cells, assembled and unassembled into modules, from these four countries.
On Oct 4, the US announced preliminary affirmative determinations for the CVD probe, noting that solar cells and modules from Cambodia, Malaysia, Thailand and Vietnam are “being sold, or are likely to be sold”, at less than fair value in the US.
In addition, a preliminary affirmative determination was issued for “whether a countervailable subsidy is being provided with respect to” those solar cells and modules.
A final determination is scheduled to be released in February or March next year.
Q: What are CVDs and why is Thailand subject to them for solar cell products?
Countervailing duties (CVDs), also known as anti-subsidy duties, are trade import duties imposed under the World Trade Organization.
They are applied following an investigation that determines a foreign country’s subsidies on exports have harmed domestic producers in the importing country.
These duties aim to offset or “countervail” the subsidies granted by the exporting country for the production or trade of the product.
According to international trade agreements, a subsidy is defined as: a financial contribution, income or price support from the government that confers a benefit tailored to a specific company, industry or region.
The petitioner alleged the Thai government subsidised exports of CSPV cells to the US through projects such as the Board of Investment tax incentive projects and China’s Belt and Road Initiative.
Q: How will the US imposition of CVDs on Thai solar cell products affect exports?
The US released the preliminary CVD results on Oct 4, with the proposed tariff rates for manufacturers from the four Southeast Asian countries shown on the table.
The CVDs for Thai solar cell products were determined to range from 0.14-34.5%.
The first figure (0.14%) represents manufacturers that cooperate with the investigation.
The figure is below 1%, deemed a “very low level” and considered without a subsidy (de minimis), meaning a CVD duty will not be charged.
The second figure (34.5%) represents manufacturers that did not cooperate with the investigation, resulting in punitive duties imposed by the DOC.
The US plans to impose retroactive duties for up to 90 days at the preliminarily determined rate of subsidy.
A tariff exemption was previously granted by US presidential order, allowing US renewable energy businesses to continue importing products from existing trading partners.
US clean energy investments recently increased, ignited by the Inflation Reduction Act of 2022. The law offers tax benefits for the business sector and rebates for households to incentivise the installation of clean energy systems, especially solar cell products, to reduce carbon emissions and electricity costs.
The impact of the US CVD measures may become evident this year, when US renewable energy operators could consider changing their trade partners to avoid the tariffs.
The extent of the impact depends on the timing and results of Thai manufacturers’ submission of evidence to the US authorities in the investigation.
Although some Thai solar cell manufacturers may face higher costs for export as a result of CVDs, other producers determined to have not received a subsidy can maintain their competitiveness in the export market.
Treerat Sirichantaropas, chief executive of New Energy Plus, the distributor of solar panels made by Shanghai-based Jinko Solar Holding, said CVDs would not discourage local manufacturers from exporting solar cells products because they can export low-cost solar panels to markets other than the US.
He said the DOC’s move is a trade barrier, similar to that imposed on electric vehicles made by Chinese companies.
However, the real concern among Thai solar product manufacturers may not be the CVD probe, but rather tough competition from Chinese rivals, said Mr Treerat.
Q: How is the Commerce Ministry reacting?
The Foreign Trade Department, which protects the interests of exporters, is monitoring the progress of the investigation, said Noppadon Kuntamas, deputy director-general of the department.
In collaboration with relevant government agencies and the private sector, the department plans to gather evidence and information to file arguments in its defence against the US allegations, working with legal advisors with extensive trade dispute experience to ensure fairness in international trade competition.
Q: What should the Thai private sector do in response?
Thai solar cell manufacturers should provide accurate and complete information, evidence and facts to the Foreign Trade Department to protect their interests.
Entrepreneurs should adjust their business strategies in line with the changing business landscape, in particular trade policy, including developing value-added products and differentiating their products, expanding to other markets to diversify risk, and partnering with foreign companies to access technology and gain a wider distribution network.