Senators Seek to Reverse Biden’s Tariff Waivers on Chinese Solar Panels

Legislation seeks to end China's circumvention of US trade barriers

An employee works on the solar module production line at a GCL Group factory in Hefei, China on January 5, 2022. Photo by Ruan Xuefeng/VCG via Getty Images

Two Democratic senators are calling on President Joe Biden to repeal tariff waivers that Chinese companies are using to circumvent anti-dumping and countervailing duties by moving solar cells and modules through four Southeast Asian countries.

Sens. Sherrod Brown (D-Ohio) and Bob Casey (D-Pa.) cited the findings in a March 2 letter, stating that “circumvention of U.S. trade law is indisputably happening, and it is harming American workers and industry.”

On Dec. 2 of last year, the Commerce Department issued a preliminary determination on the issue, examining “a complaint alleging that eight solar companies that manufacture solar cells and modules are manufacturing the components in the PRC, then sending those cells and modules to Cambodia, Malaysia, Thailand, and/or Vietnam for minor processing before being exported to the United States.

“Such actions amount to an effort to evade the existing antidumping duty (AD) and countervailing duty (CVD) orders on solar cells and modules from the PRC,” the Commerce Department said. “Today’s preliminary determination underscores Commerce’s commitment to holding the PRC accountable for its trade-distorting actions, which undermine American industries.”

Biden Waiver to ‘Spur Domestic Clean Energy’

According to the White House’s announcement on June 6, 2022, “the United States is now on track to triple its solar manufacturing capacity by 2024.” In order to facilitate that transition, however, an interim supply of solar panels would be required—which tariff waivers would provide. “To rapidly build on this progress and create a bridge to this American-made clean energy future, we need to boost short-term solar panel supply to support construction projects in the United States right now,” the statement said.

The White House statement said the two-year tariff suspension applied to imports that supply about 80 percent of photovoltaic cells and modules used in the United States—from Cambodia, Malaysia, Thailand, and Vietnam.

However, the Commerce Department probe found that China’s solar manufacturers are evading United States tariffs by rerouting their production through three of these Southeast Asian countries.

The probe revealed that BYD Hong Kong rerouted its production through Cambodia, Canadian Solar and Trina through Thailand, and Vina Solar through Vietnam to specifically evade U.S. tariffs on China-made solar panels.

“This kind of trade cheating comes at the expense of American workers, consumers, small businesses, and more,” according to Sens. Brown and Casey. “China’s trade cheating has driven many innovative manufacturers out of business because they cannot compete with the predatory prices offered by government-subsidized Chinese competitors.”

“U.S. trade laws are designed to protect our domestic market from unfair trade practices,” the senators said. “American manufacturers will not have the room to grow unless they are adequately protected from unfair trade practices.”

To that end, the two lawmakers urged the Biden administration to fully enforce “U.S. trade remedies and to terminate the suspension of tariffs where the Department of Commerce finds evidence of circumvention.”

They further singled out an International Energy Agency (IEA) report from 2021, which shows that China manufactures about 75 percent of the solar modules installed globally.

A Bernreuter report echoed the findings of the IEA. According to Bernreuter, China accounts for 97 percent of the global supply of silicon wafers and 79 percent of photovoltaic cells.

As the Biden administration races to deploy green energy, demand for solar panels and their components is only growing, the lawmakers noted.

Given China’s control over the global solar panel market, “this dependence is unsustainable and could pose future supply chain security issues,” the senators said.

Previous Bid

In January, a bipartisan group of House representatives introduced similar legislation that also sought to reverse the tariff waivers.

“The Communist Party of China should not be allowed to circumvent our trade laws and undercut American manufacturing,” Rep. Bill Posey (R-Fla.), who led the effort, said in a statement.

“Our federal government should be getting behind American businesses and leading the effort to boost our competitiveness around the world, especially when it comes to our nation’s energy independence.”

The bill would give lawmakers the ability to undo Biden’s tariff freeze—which the Commerce Department formalized as a regulation in late 2022—by using the Congressional Review Act.

The legislation’s co-sponsor, Rep. Dan Kildee (D-Mich.), echoed Posey’s view, saying, “We cannot allow foreign solar manufacturers to violate trade law, especially when it comes at the expense of American workers and businesses.”

“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 added.

The bill was co-sponsored by Reps. Bill Pascrell (D-N.J.), Garret Graves (R-La.), Terri Sewell (D-Ala.), and Bob Latta (R-Ohio).

Restricting Solar Tech Export

Meanwhile, China is reportedly considering the imposition of export restrictions on technologies used in the manufacture of solar panels in a bid to maintain its dominance in the global market.

On Dec. 30 last year, the Chinese regime’s Ministry of Science and Technology added some of these technologies to the “restricted” list of items in an export-control circular.

The technologies are related to boosting the electricity output of solar panels, and would allow each unit of power to be produced at a lower cost.

However, some experts believe that the move could backfire on China, and make the expansion of Chinese solar firms in other nations difficult.

Naveen Athrappully contributed to this report.