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US solar tariffs threaten return as Senate okays CRA resolution

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A farmer uses solar energy for agriculture in Kampong Chhnang. SOLAR GREEN ENERGY CAMBODIA

US solar tariffs threaten return as Senate okays CRA resolution

Cambodia, Malaysia, Thailand and Vietnam (CMTV) may soon have to pay tariffs as high as 254 per cent on the export of solar panels and modules to the US, following claims that mainland Chinese manufacturers could be circumventing Washington’s duties by assembling related equipment in these four Southeast Asian countries, according to reports.

The US Senate on May 3 approved a Congressional Review Act (CRA) resolution to rescind President Joe Biden’s two-year “pause of antidumping and countervailing duties on solar products” from the CMTV nations, according to the American Action Forum (AAF).

The resolution will now be forwarded to President Joe Biden, who is expected to veto it and prolong the tariff moratorium that he imposed, which is set to remain in effect until early June 2024. A potential veto could, however, be overridden by a subsequent two-thirds vote in both the House and the Senate, respectively the lower and upper chambers of Congress.

“Congress and the administration agree on the necessity of trade enforcement but disagree on these tariffs specifically. Many in Congress view imposing tariffs on solar products from CMTV countries as essential to enforcing trade rules and addressing Chinese trade abuses,” the Washington-based AAF said in a report.

“Other members view implementing these tariffs as an additional tool to target China’s solar industry, which has been found to use forced labour. The administration ostensibly views solar product imports as essential to advance its climate objectives.

“This insight presents policy avenues for Congress and the administration to ensure effective trade enforcement in the case of solar products, as well as create an environment for both conventional and renewable energy sources to compete and flourish in the United States,” it said.

The AAF noted that Biden in June last year “issued an executive order that delayed the application of antidumping and countervailing duties on solar product imports from the CMTV countries for two years”.

It cited a main objective of the order as: “to promote the expansion of domestic solar manufacturing capacity, including our capacity to manufacture modules and other inputs in the solar supply chain.”

The Department of Commerce (DoC) then “issued a final rule incorporating the president’s executive order in September 2022, which went into effect on November 15”, said the forum, which bills itself as “a 21st century centre-right policy institute providing actionable research and analysis to solve America’s most pressing policy challenges”.

Cambodia Chamber of Commerce vice-president Lim Heng remarked that the US congressional move could very well stifle the investment momentum of the Cambodian solar manufacturing industry gained in recent years.

“The congressional decision took aim at China, although the four ASEAN countries are key producers of the solar products. The US Congress should reconsider their actions, allowing us to export with the tariff exemption as they had been doing, enabling us to accelerate progress in the industry and boost economic growth,” he said.

Earlier this year, Ministry of Mines and Energy director-general for energy Heng Kunleang stressed that the government encourages the manufacture of solar panels for both domestic use and export, as the Kingdom strives “to mitigate the effects of climate change and maximise the use of renewable energy”.

Customs (GDCE) reported that Cambodia exported a total of 54,319.83 tonnes of solar panels valued at $273.87 million in 2021, an increase of “more than 27 per cent” on the previous year in terms of tonnage. This means an average per-kilogramme value of $5.04.

Exports to the US clocked in at 53,188.19 tonnes – up “more than 33 per cent” on a yearly basis – to the tune of $256.88 million that year, which accounted for 97.92 per cent and 93.8 per cent of the total tonnage and value, respectively. The average per-kg value was $4.83.

Solar panels and modules are covered in Chapter 85 of the Harmonised System (HS) of Tariff Nomenclature, short-titled “electrical, electronic equipment”.

Cambodia exported $736.776 million worth of Chapter 85 items in the first quarter of 2023 – up 101.70 per cent year-on-year, up 41.77 per cent half-on-half, and up 2.6 per cent quarter-on-quarter – accounting for 13.66 per cent of the value of the Kingdom’s total exports over the January-March period, or $5.392 billion, according to provisional GDCE figures.

However, a breakdown of Cambodia’s first-quarter Chapter 85 exports by country was not immediately available. Still, statistics from the GDCE and Trading Economics suggest that the US accounted for $548.03 million or 50.69 per cent of the Kingdom’s total Chapter 85 exports in 2021, compared to $281.26 million and 36.91 per cent in 2020.

GDCE data indicate that Cambodia in 2022 exported Chapter 85 items to the tune of $1.998 billion, marking an 84.83 per cent jump from the $1.081 billion logged a year earlier – and accounting for 8.89 per cent of the $22.483 billion in total exports for last year.

Last year’s monthly average came to $166.516 million – or $154.521 million with December’s peak of $298.465 million excluded. October saw the second largest monthly figure for 2022, at just 65.8 per cent of that, or $196.405 million.

For reference, the full title of Chapter 85 is “electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles”.


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