On June 6, 2022, President Biden declared a national emergency (the “Declaration”) in relation to energy resources and temporarily extended the time of duty-free importation of solar panels and parts from Malaysia, Cambodia, Thailand, and Vietnam. This declaration comes in response to industry concerns over the implications, for ongoing solar energy projects, of the anti-circumvention inquiry by the U.S. Department of Commerce that was initiated on April 1, 2022. The Declaration permits the Secretary of Commerce to provide waive the collection of duties and other estimated duties on imported solar cells and modules from Thailand, Vietnam, Malaysia, and Cambodia for the next twenty-four months, regardless of the outcome of the anti-circumvention inquiry.

The administration provided a fact sheet, which explains the additional steps that the administration will take to ensure that the domestic industry is supported while the duty waiver is in effect.

• First, the president will authorize the use of the Defense Production Act to accelerate the domestic production of clean energy technologies
• Second, the president will actively utilize federal procurement and contracts to provide additional solar manufacturing capacity, and
• Finally, as stated above, the administration will direct the Secretary of Commerce to delay the application of duties on imports of solar panels and cells for twenty-four months.

This move is mainly spurred by the anti-circumvention inquiry launched on April 1, 2022 by Commerce that aims to identify whether imports of components of solar cells from China, which are currently subject to duties, are imported into Vietnam, Malaysia, Thailand, and Cambodia where they undergo only minor processing in an effort to avoid the import duties on Chinese goods. The petitioner in the investigation, Auxin Solar Inc. (Auxin) alleged that solar cells and modules from Vietnam, Cambodia, Malaysia, and Thailand are utilizing parts from China and therefore circumventing the antidumping duty and countervailing duty orders (“Orders”) currently applicable to imports of solar cells and modules from China.

The Department of Commerce has issued its own statement echoing the Declaration and affirming that it will support the Declaration by altering regulations to ensure the twenty-four-month lift on duties of solar panels from the above-mentioned countries will be enforced. It is unclear at this time whether Commerce will delay the issuance of the preliminary determination in the circumvention case, as well as the final determination, although this seems likely. It is also unclear how the two-year “grace period” will be reconciled with the current effective date of duties if there is an ultimate finding of circumvention, but it seems likely that any circumvention finding only would be prospective after the two years, and not retrospective. We expect that Commerce will clarify this issue in the near future. Importantly, the Declaration will not prohibit Commerce from initiating any new investigations and will not alter any existing duties on solar panels from the above-mentioned countries, if applicable.

This direction of Commerce by the Biden Administration is unprecedented and may be challenged in court by Auxin or another interested party. Such a challenge would likely be brought to the U.S. Court of International Trade in New York.

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