ADD and CVD cases involving Solar Cells from China: Watch out!

Most importers of solar panels are now well aware of the ADD and CVD determinations made this year covering certain solar cells manufactured in China. However from talking to various importers, there are some key elements of the determinations that many were not aware of and that I feel importers should be cognizant of.

1.) The ADD & CVD cases cover more than you think!

The scope of the ADD & CVD cases goes well beyond coverage of solar panels manufactured using solar cells made in China. The actual investigation covered “crystalline silicon photovoltaic cells” manufactured in China, whether or not they were assembled into modules or panels. Importers can read about the cases in the Federal Register (A-570-979 for AD and C-570-980  for CVD).

What many importers may have failed to note is that under this broad language, if the product they are purchasing from a 3rd country (other than China) contains solar cells manufactured in China, that specific product may be within the scope of the ADD & CVD cases. An example would be the solar powered outdoor landscape lights that are so popular in many backyards these days. These lights use solar cells to charge the lamp during the day. If the solar cells used in the product were manufactured in China, the item may be subject to ADD & CVD, even if the actual lamp was manufactured in a 3rd country (say Vietnam or Thailand). I say “may” because there is a 10,000mm2 surface area exclusion that is applied to the cases involving consumer products. If the consumer product contains cells that do not exceed 10,000 mm2 (roughly 15.5 square inches) in total surface area, they are excluded from the case. Some consumer items with very small solar cells that I think would generally be outside the scope would be solar powered calculators and possibly solar powered flashlights.

Importers of consumer products that contain solar cells with surface area greater than 10,0000 mm2 need to do their homework and investigate where the solar cells in the product were manufactured. The Department of Commerce (DOC) is requiring that importers of such solar panels/modules that “do not contain subject solar cells produced in the PRC must maintain (an importer) certification, as well as documentation supporting the certification”. The exact language of what must be shown on the importer certification can be found here: Solar_Importer_Certification

Keep in mind that the importer is being asked to have documentation supporting the certification. This may mean requesting the manufacturer disclose the actual source of the solar cells. Taking it a step further, it may even mean asking the manufacturer to provide shipping documents from the solar cell provider. I have seen too many cases where importers were “lied to” by their manufacturers as to the true origin of their products. Ultimately, it is the importer who is liable. I would recommend that at the very least, importers get copies of purchase orders, bills of lading, and warehouse receipts showing the purchase and shipping of the solar cells from the solar cell manufacturer to the factory assembling the final product.

Having spoken with our local Customs Commodity Specialist Team (CST) at the port of San Francisco, their current request is that the shipping documents (commercial invoice and packing list) clearly indicate what country the solar cells are made in. In addition, the importer should have their Importer Certification readily available. My recommendation is to include the certification with any shipping documents sent to Customs at the time of entry

2.) What if my solar panels are made in China from solar cells manufactured outside of the PRC?

I have had various importers inform me that their products are shipping from China, but use solar cells manufactured outside of of China. My response to each of these importers is “Are you absolutely sure”? The scope of the ADD and CVD cases excludes these products. However the very fact that the items are shipping from China will definitely lead Customs to be very suspicious. Importers of such products need to be extra cautious. In addition to getting supporting documentation from the shipper in China and issuing an Importer Certification, the importer needs to also get an Exporter Certification. The language to be used in the Exporter Certification should use the following template: Solar_Exporter_Certification.

As I indicated above, ultimately it is the importer who is liable. Customs WILL investigate cases they feel are fraudulent!

One other issue to keep in mind is the possibility that at some point in the future, the DOC may decide that such products are a circumvention of the ADD & CVD case. The DOC has taken measures to prevent circumvention. If such products were already being manufactured and shipped to the United States prior to the ADD & CVD determinations, the Chinese shipper and importer have a better argument to the DOC that they are not circumventing the case. However if the product is new, importers should be careful with how they proceed with the development of the product. It such cases of “later-developed” products, arguments may be made that the products were specifically developed to circumvent the ADD and CVD cases. If the DOC concludes that circumvention does exist, the products may be brought within the scope of the ADD & CVD case.

3.) How will the bond company react to my imports of solar cells?

I have spoken to three bond underwriters about this ADD/CVD case. All are extremely cautious. If the importer begins importing goods that are indeed subject to ADD/CVD, the bond companies will require collateral on the bond. If the importer is importing products containing solar cells not manufactured in China, the bond companies are requesting letters of indemnity.

If you have any questions concerning this topic or other Customs/Logistics issues, feel free to contact me.

-Jimmy Ting

jimmyting@great-world.com

tel: 650-873-9050 (x.1019)

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