CIT Says Commerce Properly Weighed R&D Investments in Solar Cell Circumvention Findings
The Commerce Department properly found that exporters Canadian Solar and Trina Solar circumvented the antidumping duty and countervailing duty orders on Chinese solar cells by sending their products through Thailand, the Court of International Trade held on May 16. Judge M. Miller Baker sustained Commerce's decision to put special emphasis on the amount of research and development investment into the companies' Thai facilities to show that the companies' processes in the country were "minor or insignificant."
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During the anti-circumvention proceeding, Commerce said it heavily weighed the R&D factor due to its preeminent importance in the solar industry. Acknowledging it had viewed the factor "less importantly" in past proceedings, the agency emphasized the factor's special importance in the present proceedings, since the companies' "Chinese corporate parents made the 'major or ultimate decisions'" and also provided "most or all of the Thai investment," among other reasons.
Trina and Canadian Solar challenged the circumvention finding on many fronts, one of which was that Commerce never previously found a process to be "minor or insignificant" when less than a majority of the five statutory circumvention factors weighed in favor of a circumvention finding. Baker said Commerce has never articulated a "majority rule," adding that such a rule would "effectively reduce Commerce’s [role] to a counting exercise that would frustrate [its] ability to ascribe weight to the factors” in any particular case.
Balancing the statutory factors "is an art, not a science," the judge said.
The exporters also challenged the additional weight Commerce put on the research and development factor and the evidentiary basis for the agency's use of the factor in making the circumvention determination. Baker accepted the agency's explanation that R&D is of "preeminent importance to solar makers" and is "most important to wafer production that is exclusively produced by the Chinese affiliates" of Trina and Canadian Solar and not performed in Thailand.
Where the court did find error in Commerce's analysis was with the agency's decision to attach "less weight to its negative" statutory findings, since Chinese affiliates controlled the exporter's major decisions and arranged nearly all the investments in Thailand. Baker said the statute, 19 U.S.C. Section 1677j(b)(1), requires the agency to undertake an "if/then" analysis, whereby the agency can only decide whether to expand an AD/CVD order to cover a third country if the statutory conditions regarding whether operations are minor in that country are satisfied. By letting one of the 1677j(b)(2) factors, which relate to third-country operations, "bleed over into its weighing of the" Section 1677j(b)(2) elements that bear on Section 1677j(b)(1), Commerce "erred as a matter of law."
However, Baker said this was ultimately a "harmless error," since the agency didn't just rely on this affiliation to assign less weight to the negative third-country operations factors, and the agency "effectively placed dispositive weight on the R&D factor," as the exporters acknowledge.
Trina and Canadian Solar also said the evidence doesn't support Commerce's weight on the level of R&D investment, since, among other things, Canadian Solar devotes a large portion of its global R&D to its Thai operations. Baker found that Commerce did actually engage with the relevant record evidence and found that Canadian Solar's R&D expenditures in China were over four times the amount in Thailand.
The exporters also bemoaned Commerce's exclusive reliance on monetary values without considering the qualitative aspects of their Thai operations. Baker accepted the government's view of the circumvention statute, which distinguishes "the nature of the production process" from the "value of processing."
Trina and Canadian Solar additionally argued that Commerce failed to show that an affirmative circumvention finding was "appropriate" under the statute. Baker dubbed this a "last-ditch effort to force a remand," and held that the companies "misread the statute." The law doesn't require the agency to show that an affirmative finding is appropriate, but rather directs the agency to determine that action is appropriate under the statute "to prevent evasion of such order or finding."
Commerce "did just that: It found action appropriate because circumvention would not stop unless the agency included the Thai solar cells and modules within the scope of the orders on such merchandise from China," the court said. "Nothing more was required.”
(Canadian Solar International v. United States, Slip Op. 25-59, CIT # 23-00222, dated 05/16/25; Judge: M. Miller Baker; Attorneys: Jonathan Stoel of Hogan Lovells for plaintiff the Canadian Solar companies; Matthew Nicely of Akin Gump for plaintiff-intervenor NextEra Energy Constructors; Brian Boynton for defendant U.S. government)
(Trina Solar Science & Technology (Thailand) v. United States, Slip Op. 25-59, CIT # 23-00227, dated 05/16/25; Judge: M. Miller Baker; Attorneys: Jonathan Freed of Trade Pacific for plaintiff Trina Solar Science & Technology (Thailand) Ltd.; Matthew Nicely of Akin Gump for plaintiff-intervenor NextEra Energy Constructors; Brian Boynton for defendant U.S. government)