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President Biden has announced a 24-month tariff exemption on solar modules manufactured in Cambodia, Malaysia, Thailand, and Vietnam, which are under investigation from the U.S. Department of Commerce for selling solar panels made, in part, with slave labor.
David Dayden of the American Prospect writes an excellent piece on the tariffs, and the use of slavery. I have included sections of the piece below:
The Commerce Department investigation involves attempts by Chinese-owned companies to evade antidumping and countervailing duties (AD/CVD) placed on solar imports from China back in 2012. The main tactic is to route exports through third countries not subject to the duties, and pretend that the products originate there. The companies subject to the duties include JinkoSolar, JA Solar, LONGi Solar, Trina Solar, BYD, Hanwha Q Cells, and Canadian Solar, all of whom are SEIA members.
While the Commerce investigation is about circumvention of anti-dumping laws, it’s impossible to dissociate it from a looming statutory prohibition on imports using forced labor in the solar-producing region of Xinjiang, which comes into force at the end of June. Many see the current fight as a dry run for the attempt to overturn the enforcement of a congressional statute. Several Chinese-owned firms in SEIA’s membership have also publicly admitted to using slave labor. Yet SEIA allowed all these companies to sign a pledge it organized committing to ban forced labor from the solar supply chain.
THE DUTIES DATE BACK to Barack Obama’s administration. Since December 2012, the U.S. has collected anti-dumping and countervailing duties on solar imports from China. These were intended to offset the effect of Chinese state-owned companies, which control about 80 percent of the solar supply chain, overproducing and underpricing polysilicon wafers, solar cells, and modules in order to gain market share on production. It’s a rather overt tactic: China’s latest five-year plan only outlines getting 20 percent of its own energy from renewables by 2025, but since 2005, it has made solar production a strategic focus. And this is a common way that Chinese companies have dominated industries.
The response to the countervailing duties was similarly deliberate. Suddenly, solar component imports to the U.S. from four Southeast Asian countries—Cambodia, Malaysia, Thailand, and Vietnam—spiked. Today, they account for “82 percent of the most popular type of solar modules used in the United States,” the Times noted.
Critics argue that the strategy was clear: Chinese companies were transshipping solar components (nearly all polysilicon originates in China) to neighboring nations to circumvent the duties. In the face of that, any U.S. solar manufacturer could file a circumvention claim, which must by law be investigated by the International Trade Administration, the Commerce Department’s trade enforcement arm, in a quasi-judicial process with court review.
The tariffs for dumping present one problem, but Dayden also writes of the use of slave labor to manufacture the panels threatens the future of these companies.
THE UYGHUR FORCED LABOR PREVENTION ACT is designed to prohibit any imports from the Xinjiang region, where detention camps run rampant. It passed the House 428-1 and the Senate by voice vote, and was signed by the president last December. The bulk of the solar components produced in China, and about half of the world’s polysilicon, comes from this region.
While the Chinese government has called the use of forced labor in Xinjiang “a rumor,” it has been acknowledged by virtually everyone involved in the industry. Polysilicon from China is on an official Department of Labor list of goods produced by forced labor. “It is a problem,” John Kerry conceded in House testimony last year.
In February 2021, SEIA had 175 member companies sign a pledge that opposed forced labor in the solar supply chain. “We hereby commit to helping ensure that the solar supply chain is free of forced labor and raising awareness within the industry on this important issue,” the pledge reads.
But incredibly, among the companies signing that pledge were U.S. subsidiaries of Chinese firms that have been credibly accused of engaging in forced labor. LONGi, one of the signatories, had its shipments seized by Customs and Border Protection (CBP) under a separate anti-slavery statute last November. JinkoSolar, Canadian Solar, and Trina Solar have also had imports blocked. Jinko and Trina are also signatories to the pledge. A U.K. report in April 2021 named those two companies and JA Solar as users of Uyghur forced labor. JA Solar also signed the pledge.
A March 2021 letter from Sens. Jeff Merkley (D-OR) and Marco Rubio (R-FL) notes that Jinko, JA, and LONGi have all “publicly indicated that they source polysilicon” from Xinjiang.
Asked about the signatories to the pledge, SEIA’s Whitten said that the organization created a traceability tool to help companies maintain an ethical supply chain, and “has been calling on all U.S. solar companies to immediately leave the Xinjiang region since October 2020.” But it’s hard to square that with pledge-signers including subsidiaries of Chinese companies still producing in Xinjiang.
For their part, the Chinese companies have implausibly intimated that they have a floor in their factories where non-slaves make components for the U.S. market, according to sources.
This will all come to a head June 23, when the Uyghur Forced Labor Prevention Act takes effect. Instead of short-term delays on shipments that can be sourced back to Xinjiang, there will be a full-on prohibition of those goods.
At least, that’s the theory. While CBP has caught some goods with slave labor, they have been criticized for mild disinterest in enforcement. The way it works is that the importer must affirmatively prove its goods are free of forced labor, and CBP must create an entities list that is prohibited, and a standard for how companies can get off the list. None of that has been completed yet, according to sources. “By statute, they should stop everything, but are they really going to do that?” asked Wallach.
The connection between the anti-dumping/countervailing duty investigation and the looming forced labor order is unmistakable. If the solar industry can stop a Commerce Department inquiry, they can set a standard to quietly ignore goods made with slave labor, as long as it’s in the name of hitting climate goals.
Those climate goals are in question, too. Solar component production uses large quantities of energy, and the Xinjiang plants rely on low-cost coal. In 2020, China started more coal plants than the world decommissioned combined, much of it in the solar-producing region. It takes years for a solar plant using coal to return to carbon neutrality. Domestic manufacturing would not have the same kind of problems.
Most important, holding the future of the green transition subservient to one country is folly, as two years of evidence with pandemic-era disruptions of concentrated supply more than proves. Even if you think that China is a rational actor that won’t overprice or hold back solar to get what it wants, any disruption can cause chaos, not just an anti-dumping investigation. Several Chinese cities are currently under lockdown because of the country’s zero-COVID policy. Floods have delayed production significantly. Extreme heat last year shut down factories due to government restrictions on energy. And Europe’s situation with natural gas and Russia should spark caution about how political unrest can upend supposedly stable supply.
Plenty of businesses and public officials are using this moment to consider decoupling from China to increase supply chain resiliency. The solar industry appears to want to do the opposite, looking the other way at slave labor and increased dirty-energy use.
China’s use of slave labor to drive down the cost of solar panels should be an outrage to all of the groups that say they care about ensuring a “just transition.” Instead, these groups crow about the declining cost of solar panels while ignoring the gross injustice of slavery that is enabling the trend. It is the equivalent of marveling at the price of Confederate cotton.
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