The U.S. Department of Commerce has issued a preliminary determination that “critical circumstances” exist for imports of crystalline silicon photovoltaic (PV) cells from China. This is the latest development in the ongoing countervailing duty (CVD) and antidumping (AD) cases that began in October 2011 when SolarWorld Industries America Inc. filed a petition with Commerce concerning imports of these PV cells from China.

The petition alleged that certain solar PV cells were being sold in the United States at less than fair value and that Chinese manufacturers were receiving countervailable government subsidies. The petition also alleged that critical circumstances exist with respect to imports of the merchandise under investigation.

Critical circumstances exist if the Chinese subsidy is inconsistent with World Trade Organization agreements and there are massive imports of the subject merchandise over a relatively short period of time prior to the imposition of CVDs in order to avoid them. Commerce normally compares the import volumes of the subject merchandise for at least three months immediately preceding the filing of the petition to a comparable period of at least three months following the filing of the petition. Imports are considered massive when imports have increased by 15 percent or more between these two periods.

This “critical circumstances” finding is an important development as it opens the way for imposition of countervailing duties for the period during which massive imports occurred. In particular, if Commerce later determines that countervailable subsidies have been provided to Chinese solar manufacturers, it will instruct Customs to suspend liquidation (the process by which imports are finalized) on any covered products on a date that is 90 days prior to the effective date of the determination. Commerce will also require Customs to collect either a cash deposit or a bond in the amount of the preliminary subsidy rate. The Preliminary Determination in the countervail case is now due on or before March 2, 2012, although the effective date will be determined by the date of publication in the Federal Register.

This proceeding has great importance for both manufacturers of PV solar panels and for solar energy developers. It likewise has broad implications for the U.S. economy, international trade, and relations with China.

The attorneys in Ballard Spahr’s Energy and Project Finance Group provide a wide range of legal counsel on the development of energy projects, including advice on the potential implications of decisions by the Department of Commerce. If you have questions or concerns regarding this alert, please contact any member of the Energy and Project Finance Group.


Copyright © 2012 by Ballard Spahr LLP.
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