In March of 2022, the U.S. Department of Commerce opened an investigation into the possible circumvention of 2012 Obama-era tariffs on solar panels from China. Large Chinese companies supported by Beijing are alleged to be circumventing those tariffs by shipping panels and parts from Cambodia, Malaysia, Thailand, and Vietnam instead of from China. These four Southeast Asian countries currently supply roughly 80 percent of U.S. solar panels and parts, meaning that if a determination is made that China has circumvented U.S. trade law, appropriate tariffs will be applied to the Chinese companies shipping from them. A preliminary finding is due in August, with a final report expected in January 2023.
Opponents of the SE Asian Solar 1 AD/CVD Circumvention case have spread a number of myths about the case to try to undermine a well-established process, create panic and alarm, and improperly influence the enforcement of U.S. trade laws. This fact sheet addresses those untrue claims.
Merits of the Investigation and Need for Enforcement
Myth: It is appropriate to interfere politically in the legal process of this Circumvention case.
Fact: Political interference is not appropriate because the Department of Commerce’s consideration of this Circumvention case is a legal process to enforce trade laws. Any sort of interference in this investigation violates the law, due process and contributes to the unfair landscape that is being created.
Myth: The actions of Chinese solar manufacturers in South East Asia do not meet the legal tests for circumvention.
Fact: The actions of Chinese manufacturers in South East Asia meet the legal test for circumvention for these reasons:
First, patterns of trade are a critical factor under the law. Chinese factories in South East Asia were built to target the U.S. market only after Solar 1 duties were implemented. The result has been that solar imports directly from China to the U.S. have fallen dramatically while Chinese manufactured imports from South East Asia have skyrocketed in order to avoid Solar 1 duties.
Second, if Chinese company investments in South East Asia are “insignificant” in relation to the China-based supply chain benefitting from trade cheating, circumvention is likely to be found. The China-based supply chain does indeed dwarf the small South East Asia investment because it includes Chinese R&D, factories, equipment, polysilicon, wafers and a host of other Chinese components
Finally, the “substantial transformation” test is not a part of this case, as Chinese company opponents and their trade associations SEIA and ACP have claimed. Circumvention cases by definition expand the initial scope. “Substantial transformation” was a test involved in the initial Solar 1 AD/CVD case but not in this one.
Myth: This circumvention case is a broad case targeting all SouthEast Asian solar manufacturers.
Fact: While several companies produce in South East Asia, only Chinese solar manufacturers circumventing the original Solar 1 AD/CVD through their operations in SouthEast Asia are included.
Myth: Trade laws do not need to be enforced in solar. Tax or other incentives alone would be enough for American solar manufacturing.
Fact: Tax incentives are important to spur American solar manufacturing growth, but insufficient in the face of multidimensional Chinese abuses. Those abuses include extraordinarily large subsidies that the U.S. government would never match. They also include dumping, circumvention, use of forced labor, dirty coal and theft of intellectual property. The combination of these abuses have allowed Chinese companies to create a virtual monopoly of the solar supply chain. A whole-of-government approach to bolster the domestic supply chain and meet deployment targets is needed.
Tariff Rates and Cost of Solar
Myth: If determined to be circumventing, Circumvention tariffs would make solar too expensive.
Fact: Tariffs have not and will not halt the per kilowatt decline in solar prices. Advances in product and process technology as well as scale economies of new plants have been and will be the driver of price. Solar is now the lowest cost form of producing electricity despite the imposition of tariffs in 2012 and 2018. Ensuring large scale domestic production will insure against future solar price hikes and supply chain shocks by preventing a renewable energy monopoly in the hands of a hostile nation.
Myth: If the Circumvention case is successful, then solar panels could be subjected to tariff rates as high as 250%.
Fact: Commerce Secretary Raimondo has made clear that this claim is untrue. Major Chinese manufacturers who have been found to engage in trade abuses have already established tariff rates that are in the range of only 20%.
On Wednesday, May 11, 2022, Raimondo testified: “ [If Chinese companies] are found to be circumventing, they will be subject to the rates they have already been assigned. These duties are applied at the company level. For 90 percent of all imports from China, the rate is, in total, between 12 and 20 percent, and that’s only assessed on the components, not the entire solar panel.”
U.S. Energy Independence and National Security
Myth: Relying on a Chinese produced solar supply chain running through SouthEast Asia does not pose risks to U.S. energy independence and national security.
Fact: America cannot exchange Middle East oil dependency for Chinese renewable energy dependency. Europe’s over-reliance on Russian oil and gas is the most recent reminder. China is supporting Russia’s Ukraine invasion and continues threatening to invade Taiwan. Over reliance on a geopolitical adversary is the more expensive and insecure option.
Solar Deployment, Climate Goals, and Environmental Justice
Myth: If this circumvention case is successful, then solar deployment will be slowed.
Fact: Tariffs addressing Chinese trade abuses have been applied since 2012 and, rather than slowing down, solar deployment has grown rapidly in the United States and will continue to do so. Rapid solar deployment requires a stable and secure domestic supply chain, which can only be accomplished if the trade laws are enforced.
Myth: Short-term supply disruptions and uncertainty in the solar supply chain are a legitimate reason to not enforce trade laws for solar.
Fact: The short-term supply disruptions and uncertainty are caused by the U.S.’ unhealthy dependence on a supply chain controlled by Chinese manufacturers. This industry has been subject to increases in logistics costs, skyrocketing polysilicon prices caused by a Chinese monopoly, concerns over Chinese forced labor, or other issues caused by a lack of control over our supply chain. If trade enforcement is abandoned, then the short-term disruptions and uncertainty will become long-term issues. We can solve these issues by supporting American solar manufacturers in rebuilding an alternative supply chain not over-reliant on Chinese companies.
Myth: Climate goals can’t be met unless we continue our over-reliance on solar produced by Chinese companies in South East Asia.
Fact: If the trade laws are enforced and American manufacturers don’t have to keep competing with solar panels produced by forced labor, then American workers will be able to supply more than 50% of U.S. needs by 2025 and 100% by 2030. In fact, the U.S. will be in a position to export solar products globally and be a leader in promoting climate technology and solutions to nations around the world. There is also substantial capacity produced by manufacturers from allied countries such as India, Singapore, South Korea, Japan, and Europe, as well as non-Chinese manufacturers in South East Asia that can be utilized to allow us to meet our goals without an unhealthy over- reliance on Chinese companies.
Myth: Chinese solar products are true green products.
Fact: Chinese solar products have a much higher carbon footprint than the U.S.-produced solar products because they use coal-fired electricity to power their factories. U.S. solar products have a much lower carbon footprint, with factories utilizing lower carbon sources of electricity such as hydropower.
Myth: Chinese trade abuses do not harm black, brown and other marginalized communities.
Fact: Chinese trade abuses have cost black, brown and other marginalized communities millions of jobs. Enforcement of the trade laws in solar can result in the creation of hundreds of thousands of high quality, stable and place-based manufacturing jobs of the future. Solar manufacturing jobs, which are far superior to unstable, seasonal and project-based jobs installing Chinese solar modules, are a powerful tool to bring equity and a bridge to the middle class for black, brown and other marginalized communities.
One study from Howard University found that the average trade shock to exposed industries resulted in a 32.4 percent reduction in jobs, translating to 405,679 jobs that would have continued to exist had it not been for import penetration from China. Another, more recent study from the Economic Policy Institute found that the loss of good-paying, union manufacturing jobs are more acutely felt by many of Black, Indigenous, and BIPOC communities.
American Solar Manufacturing and Jobs
Myth: U.S. solar manufacturers are harmed by the Circumvention case.
Fact: U.S. solar manufacturers are harmed if the Department of Commerce does NOT pursue this case. Enforcement of trade laws is necessary to address Chinese trade abuses and level the playing field for U.S. solar manufacturers.
Myth: We don’t need solar manufacturing jobs in the U.S.
Fact: Solar manufacturing jobs are exactly the kind of high quality, place-based and stable jobs of the future that Americans need. Jobs merely installing Chinese solar panels, many of which are seasonal, project-based, not place-based or not full time do not provide the same path to the middle class that is provided by solar manufacturing jobs. If the trade laws are enforced it will result in hundreds of thousands of high quality, stable, full time manufacturing jobs of the future.
Slave Labor used by Chinese Solar Manufacturers implicated in this Circumvention Case
Myth: Chinese solar manufacturers implicated in this Circumvention case do not have affiliates implicated in use of forced labor.
Fact: Several Chinese solar manufacturers, including four Chinese members of the largest solar trade association in the United States, SEIA, were named in an academic report that was released by the Coalition to End Forced Labour in the Uyghur Region detailing the widespread use of Uyghur forced labor within the solar industry. The report found that the four largest solar panel suppliers in the world—JinkoSolar, JASolar, TrinaSolar and LONGi – all source from at least one polysilicon manufacturer that is directly alleged to be using Uyghur forced labor.
Retaliation by China and their Allies Against American Solar Manufacturers
Myth: Auxin is alone in supporting this case.
Fact: A coalition of U.S. solar manufacturers agree with Auxin’s position. Due to a track record of Chinese retribution, however, they have legitimate fear of publicly expressing their support. In 2014, President Obama’s Department of Justice issued an indictment of the Chinese military for hacking SolarWorld and stealing valuable intellectual property as retribution for their involvement in solar trade cases. Auxin too has recently faced harassment of its employees and attacks on their factories as a result of their petition.
Myth: The Chinese government, Chinese solar manufacturers and their supporters and enablers don’t engage in harassment, intimidation, retribution and crimes against American solar manufacturers.
Fact: There is a long history of harassment, intimidation, retribution and crimes by the Chinese government, Chinese solar manufacturers and their supporters and enablers against American solar manufacturers. Attorney General Eric Holder in 2014 indicted agents of the Chinese government for hacking into the systems of SolarWorld, a petitioner in the original Solar 1 AD/CVD trade case and one of the largest American solar manufacturers at the time who has since been driven out of business as a result of Chinese trade abuses. There is also a well documented history of solar IP theft by China. Now, because of this circumvention case, Auxin’s systems and physical facilities have recently been hacked and broken into. Auxin has also been blacklisted and subjected to trolling reviews and digital media reputational attacks, including a website dedicated to “exposing” Auxin, by those hoping that if Auxin is driven into bankruptcy this circumvention case will be dropped and Chinese companies will be free to continue their trade abuses without fear of trade law enforcement. Opponents of this circumvention case, through their coordinated and well-funded PR campaign, are now even resorting to tactics aimed at directly intimidating the Department of Commerce; the Secretary of Commerce has recently been accused of misconduct for performing her duty to investigate Chinese trade abuses in solar.
Support for American Solar Manufacturing and Enforcing Trade Laws in Solar
Myth: Voters don’t care about Chinese trade abuses in solar nor where their solar panels come from.
Fact: A poll by Morning Consult overwhelmingly shows that voters support American solar manufacturing and believe that Chinese trade abuses in solar should be addressed.
- 90% of voters think the U.S. should manufacture renewable energy domestically
- 70% say the U.S. should not be dependent on China and Chinese-controlled factories in Southeast Asia for solar imports
- Forced labor and coal use in China’s solar supply chains, and U.S. taxpayer dollars funding purchases of Chinese solar equipment are top concerns among voters
SEIA, ACP, Chinese Manufacturers, and Opponents of this Circumvention Case
Myth: Opposition to this circumvention case is not a coordinated and well-funded campaign of misinformation aimed at improperly influencing Commerce’s enforcement of the trade laws.
Fact: SEIA, ACP, their Chinese members, and other corporate interests are engaged in a multimillion dollar, coordinated lobbying and PR misinformation and influence campaign. Their goal is to improperly interfere with the Department of Commerce’s investigation of trade abuses and enforcement of trade laws. They campaign to allow Chinese companies the ability to continue their trade abuses and drive American solar manufacturers and their workers out of business.
Myth: SEIA, ACP, and others opposing the Circumvention case represent the interests of U.S. solar manufacturers.
Fact: SEIA, ACP, and others opposing the Circumvention case do not represent the interests of American solar manufacturers. SEIA have current and past Chinese board and other members whose affiliates have been implicated in this Circumvention case and also in the use of forced labor. Four of SEIA’s Chinese solar members were named in an academic report that was released by the Coalition to End Forced Labour in the Uyghur Region detailing the widespread use of Uyghur forced labor within the solar industry. The report found that the four largest solar panel suppliers in the world—JinkoSolar, JASolar, TrinaSolar and LONGi all source from at least one polysilicon manufacturer that is implicated in Uyghur forced labor either through direct participation in forced labor schemes, and/or through their raw material sourcing.
Myth: SEIA projections and surveys related to this circumvention are reliable and unbiased.
Fact: SEIA surveys are biased and misleading because they are opt-in only and directed to their Chinese members and others who benefit from subsidized, dirty coal, forced labor solar components. Their past projections of tariff harm to solar prices, deployment and employment have been wildly wrong and should not be trusted.
