U.S. companies file petition for AD/CVD on cell and module imports from Southeast Asia

Manufacturers across the U.S. (Convalt Energy, First Solar, Meyer Burger, Mission Solar, Qcells, REC Silicon, and the start-up Swift Solar) on April 24 submitted a petition to the U.S. Department of Commerce (DOC) and the United States International Trade Commission (USITC), asking authorities to initiate investigations for the imposition of anti-dumping and countervailing duties (AD/CVD) on cell and module imports from Cambodia, Malaysia, Thailand, and Vietnam. Preliminary rulings of the investigations could establish the nation's highest trade barrier against Southeast Asia and may be retroactive to cells and modules imported before.
 

Background

Ever since the U.S. imposed lofty AD/CVD duties on China in 2012, Chinese manufacturers have shifted production to Southeast Asia. As of 2023, modules from Southeast Asia accounted for almost 60% of imports to the U.S. Imports from Southeast Asia severely injured local manufacturing in the U.S. On March 28, 2022, the DOC announced to investigate the practice of circumvention in Cambodia, Malaysia, Thailand, and Vietnam on a country-wide basis.

The DOC released preliminary findings on December 1, 2022 and final rulings on August 18, 2023, concluding that some manufacturers bypassed U.S. tariffs in the four target Southeast Asian countries on a country-wide basis.

On June 6, 2022, President Joe Biden declared a two-year waiver, allowing cells and modules from Southeast Asia to enter the U.S. duty-free until the exemption ends on June 6, 2024.

However, on April 24, 2024, seven companies submitted a petition to the DOC, requesting investigations to impose AD/CVD on cells and modules from Cambodia, Malaysia, Thailand, and Vietnam. The DOC may make preliminary rulings by the first half of 2025.

Preliminary rulings of the investigations could establish the nation's highest trade barrier against Southeast Asia and may be retroactive to cells and modules imported before.
 

Projected timeline for petition filed on April 24, 2024

The U.S. had launched AD/CVD investigations against China twice upon requests from petitioners led by SolarWorld. The USITC would confirm within 45 days whether the exports have injured the local supply chain. Once confirmed, the DOC would initiate investigations. Usually, the DOC will release preliminary determinations within 140 days after the initiation, or six months, considering possible delays. Final rulings will be announced a year after investigations start.

The USITC will issue a preliminary finding of material injury or threats of material injury by early June, 45 days after manufacturers filed the petition. Once the USITC confirms a positive material-injury determination, the DOC should release preliminary AD/CVD determinations during September and November and final rulings during March and May 2025.

If authorities terminate the emergency declared in Proclamation 10414 of June 6, 2022, as a measure to prevent foreign products from flooding the U.S. market and causing further damage to the local supply chain, the DOC may, at its soonest, impose countervailing duty in June, and anti-dumping duty during July and August, on cells and modules from Southeast Asia.


 

InfoLink analysis

Currently, Southeast Asia remains the chief source of module supply for the U.S. With Biden’s waiver ending in June, the market appears cautious despite exemption requirements, such as for cells and modules produced in Southeast Asia based on non-China wafers and those based on China-made wafers but meet certain BOM requirements. The U.S. will import much less PV products this year, affecting local supply-demand dynamics.

Before the end of 2024, planned cell production is only likely to reach 7 GW, far less than the 56 GW expected for modules. AD/CVD on imports from Southeast Asia will not only reduce demand in the U.S. but lead to price increases for locally produced modules due to inadequate supply.

Noteworthily, due to the retrospective nature of AD/CVD, increases in duty rates are likely. Hence, manufacturers now having lower rates remain cautious towards exporting to the U.S. With AD/CVD restoring in June, some small-scale module makers in Southeast Asia have reduced shipments to the U.S. in Q2 and Q3, and U.S. developers plan to purchase less, which contradicts the original intent of the U.S. government.

In the short term, U.S. module makers will face challenges finding cell suppliers outside the four targeted countries, such as from Indonesia, Laos, and India. Despite previous discussions on raising the tariff rate quota for cells to support local module production, investigations followed this petition and the expiring exemption deepened uncertainties among local module makers, affecting expansion plans in the U.S. Project delays are likely.

For module makers in Southeast Asia, exports to the U.S. can set sail from other Southeast Asian countries, India, or the Middle East. Such adjustments are more likely next year. This year, they will meet demand with inventories in the U.S. distributed market.

The U.S. may extend anti-circumvention investigations to other regions in the long run. Therefore, expanding production in the U.S. will be the safest option for securing the market. However, it still takes at least 2-3 years to bring cell capacities online, due to factors like environmental assessments, investment, and technological changes. Monitoring subsequent U.S. enforcement is essential. The impact of anti-circumvention measures and AD/CVD tariffs will manifest more significantly sometime during 2H24 and early next year.