US Says Commerce Properly Emphasized R&D in Solar Cell Circumvention Finding

The Commerce Department reasonably placed greater emphasis on research and development investment when it found that solar cells from Cambodia were circumventing the antidumping and countervailing duty orders on solar cells from China, the U.S. said. Filing a reply brief to the Court of International Trade on Oct. 29, the government argued that the agency "set forth uncontroverted record evidence to explain that R&D is particularly important to solar producers" and that these investments are key to "technological breakthroughs in the solar industry" (BYD (H.K.) Co. v. United States, CIT # 23-00221).

The U.S. responded to arguments challenging the circumvention finding from exporter BYD (H.K.) Co. and importer Florida Power & Light Co., which challenged, in part, the weight put on the regional R&D investment (see 2407030064). The companies said Commerce doesn't have the authority to weight one statutory factor for considering circumvention more heavily than the others.

In response, the government pointed to the Statement of Administrative Action accompanying the Uruguay Round Agreements Act, which said Commerce will evaluate the factors "depending on the particular circumvention scenario." This statute thus "manifests congressional intent that Commerce should, depending on the record facts before it, weigh certain factors over others," the brief said. "That is what Commerce did, and Commerce articulated why the evidence on the record supported its determination to emphasize R&D."

BYD and Florida Power & Light also claimed that Commerce misapplied the appropriate standard in evaluating whether the exporter's Cambodia operations were "minor or insignificant." The U.S. said the firms only defended this claim by using dictionary definitions of "minor" and "insignificant" and citing SAA language referencing "screwdriver operations." None of these sources "can supplant the analysis prescribed by Congress for evaluating whether the production process in a third country is minor," the brief said, adding that the reference to "screwdriver operations" in the SAA doesn't limit the statutory definition of "minor" or "insignificant."

Another sticking point for BYD and Florida Power & Light concerned the role of BYD's unaffiliated tollers in Cambodia, which the companies said process the solar panels and make significant investments in their facilities. The U.S. said the companies failed to explain "why Commerce must treat tolling services acquired by a company with no manufacturing infrastructure in the third country any differently than the acquisition of goods and services by a respondent that has manufacturing infrastructure."

The government also said the value added by these unaffiliated parties was "small." The U.S. disagreed with the companies' reading of the statute, which would place a greater qualitative emphasis on the nature of the production process. Emphasis on the nature of the production process is provided for elsewhere in the statute, the brief said. The U.S. also said BYD's level of investment in Cambodia was "minor" and that Commerce legally used surrogate values for Chinese inputs.

BYD also argued that the circumvention finding cuts against public policy, arguing that Commerce should look to the overall cost of the circumvention finding. The U.S. said this would "augment the statute" and "impose a requirement on Commerce that is not only burdensome but would also potentially undermine the efficacy of the circumvention statute."