Biden Issues Veto Threat on Solar Duty Pause Resolution

The House of Representatives intends to take a vote this week to overturn the administration's decision to delay collection of duties for antidumping and countervailing duty circumvention in the case of solar panels made with Chinese components coming from Southeast Asia.

Currently, importers of those panels do not have to pay assessments or cash deposits through the middle of 2024. The bill passed out of the House Ways and Means Committee with some Democratic support, but mostly Republican votes (see 2304190052).

The White House sent a letter on April 24 to the House Rules Committee saying that Biden would veto the resolution of disapproval if it reached his desk.

House Ways and Means Committee Chairman Rep. Jason Smith, R-Mo., said before his committee passed the resolution that choosing to waive the deposits after the preliminary finding that there was circumvention of duties “has sent a signal that there will be less, not more accountability for unfair trade practices that have given China a dominant position in solar panel production, despite longstanding American innovation in this sector."

Biden echoed Smith's frustration with how U.S. manufacturing in the sector had been undercut by "unfair trade" in his veto threat statement.

"For too long, unfair trade practices and underinvestment in domestic manufacturing have left the United States dependent on imports for solar power products that are important for reducing energy costs for consumers, improving public health, and combating climate change. From day one, the President has prioritized investments that will create good-paying jobs and build secure supply chains in the United States, including for solar energy.

"The Administration is working aggressively to support domestic solar panel manufacturing," it said, noting that in the last two years, plans to build 90 GW of solar manufacturing capacity have been announced. The Inflation Reduction Act, which no Republicans voted for, offers tax breaks for solar manufacturing.

"However, these investments will take time to ramp up production -- which is why last spring, the President declared an emergency to ensure that Americans have access to reliable, affordable, and clean electricity," the statement said. "The Commerce rule provides a short-term bridge to ensure there is a thriving U.S. solar installation industry ready to purchase the solar products that will be made in these American factories once they are operational. Given the strong trends in the domestic solar industry, the President does not intend to extend the tariff suspension at the conclusion of the 24-month period in June 2024."

If Congress were to pass a resolution with a veto-proof majority of two-thirds, importers of those panels would have to pay duties for entries since April 1, 2022. Not all imported solar panels from Cambodia, Malaysia, Thailand and Vietnam were found to be circumventing the AD/CVD orders on solar cells from China -- New East Solar in Cambodia, Hanwha Q Cells and Jinko Solar in Malaysia, and Boviet Solar Technology in Vietnam are not, Commerce investigators found (see 2212020064). In addition to those carve-outs, solar panel importers also can avoid the trade remedies if their panels are made with Chinese wafers but source no more than two of the following components from China -- silver paste, aluminum frames, glass, backsheets, ethylene-vinyl-acetate or junction boxes -- or if their panels do not use Chinese wafers.

The same disapproval resolution in the Senate was introduced in February by Sen. Rick Scott, R-Fla., and seven other Republicans. Although no Democrats are on the resolution, two Democratic senators argued, in a letter to Biden in March, that the pause was wrong (see 2303030063).

The action to temporarily shield solar panel importers from antidumping and countervailing duties was unprecedented, but followed sustained political pressure from a third of the Senate's Democratic caucus, along with two Republicans, to stop the anti-circumvention investigation. Those against the action argue both that it is illegitimate because the large domestic solar manufacturers didn't support it, and that utilities and solar installers would be harmed, since the large majority of solar panels installed each year come from Asia.

Senate Finance Committee Chairman Ron Wyden, D-Ore., whose committee has jurisdiction, did not respond to request for comment.

Congress has the ability to overturn the executive action because it came in September 2022, less than six months before the end of the previous congressional session (see 2209160065). The resolution, if it succeeds, would also prevent Commerce from promulgating a similar rule.