US government to block solar imports linked to polysilicon providers

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President Biden is set to announce the new measures later today. Image: US Government/Flickr.

The US government is set to block the imports of some solar products with links to the Xinjiang region of China in response to allegations of the use of forced labour.

Various media reports claim that the measures, set to be confirmed today by the US Department of Commerce and US Customs and Border Protection, will see the US prohibit the import of metallurgical-grade silicon produced by Hoshine Silicon Industry, one of the world’s largest producers of raw polysilicon, as well as products using the raw material.

Also named as being included in the measures are Xinjiang-based subsidiaries of East Hope, GCL New Energy Material and Daqo New Energy, as well as Xinjiang Production and Construction Corps.

While the US authorities have yet to publish any concrete details of the legislation, media reports cite sources familiar with the matter stating that Customs and Border Protection will issue withhold and release orders (WRO) that will essentially block products made directly by companies featuring on the list of barred entities as well as products featuring components or materials produced by them.

The WROs would mean products would be held at US ports unless companies can prove the goods have no connection with forced labour.

What it means for solar imports to the US

A fact sheet published by the White House explains that actions will be brought by the US Customs and Border Protection, the Department of Commerce and the Department of Labor.

The US Customs and Border Protection has formally issued a WRO on silica-based products made by Hoshine Silicon Industry Co and its subsidiaries. Personnel at all US ports of entry have been instructed to immediately detain shipments containing silica-based products made by Hoshine and goods “derived from or produced using those silica-based products”.

Meanwhile, the Department of Commerce has updated its Entity List to include Hoshine Silicon Industry (Shanshan), Xinjiang Daqo New Energy, Xinjiang Eat Hope Nonferrous Metals, Xinjiang GCL New Energy Material and XPCC. All companies on the DoC’s Entity List are restricted from exporting, reexporting or transferring commodities.

The Department of Labor has also updated its list of goods produced by child labor or forced labor, adding polysilicon products linked to the above companies.

As explained to PV Tech by Johannes Bernreuter of Bernreuter Research, more than 90% of solar-grade polysilicon stands to be affected. “…This is the combined market share of the top eight polysilicon manufacturers who are all customers of Hoshine,” Bernreuter said, adding that the measures listed in the fact sheet, if applied to their letter, will cause “turmoil” for the US solar market.

Writing for PV Tech earlier this week, Finlay Colville, head of research at PV Tech Research, explained the difficulties of potentially tracking and tracing polysilicon supply in China given how it is traded and blended in the country. You can read Finlay’s full explainer on the subject, which includes details of how much of today’s solar module shipments are made in China, here.

The scope of the WRO and investigation so far

At a press conference held by the Department of Homeland Security (DHS) today, secretary of state Alejandro Mayorkas said the investigation had been launched after it had received information “reasonably indicating” the use of forced labour by Hoshine. US Customs and Border Protection executive director Ana Hinojosa confirmed that the scope of the WRO extends to both silica-based products of Hoshine’s and solar modules using polysilicon developed by Hoshine, potentially implicating significant quantities of imports from China-based module manufacturers.

Hinojosa said that while there was no specific figure on the current levels of imports of solar products that would fall foul of the WRO, over the last two years around US$6 million of products imported directly from Hoshine and a further US$150 million of downstream products (i.e. solar modules) had been identified.

While this would seem limited, Hinojosa confirmed that the scope of CBP’s investigation is “evolving” and that it remained likely other products and manufacturers would be targeted as a result of the WRO. “There are certainly more products that have been produced, but we are continuing our investigations into importers and end products to determine what additional targeting we need to incorporate,” Hinojosa said.

Furthermore, while Secretary Mayorkas and Hinojosa said the current investigation was linked specifically to companies and not regions, as other investigations into forced labour practices by the US government have been, neither official ruled out a possible expansion in the future. Hinojosa in particular said CBP would not comment on where the investigation is headed.

Mayorkas also clarified how imports deemed to contravene the WRO would be handled. If goods are detained under the WRO, the importer has three months to either submit evidence proving that there is no connection to forced labour or to re-export them. Any goods that cannot be proven to be free of forced labour and not re-exported within 60 days of the three month limit are assumed abandoned and destroyed.

Mayorkas also stressed that importers are required by law to exercise reasonable care that the products they import do not break any current legislation. If an importer is found to have failed to exercise reasonable care, sanctions including monetary penalties can be imposed.  

Are other nations likely to follow suit?

During a press briefing yesterday, President Biden’s press secretary Jen Psaki was asked whether any prospective ban on the import of solar products from China would damage the president’s climate agenda. Psaki noted that G7 countries had committed to ensuring global supply chains remain free of forced labour following the G7 summit earlier this month.

“…As a part of that, you can expect that the United States will continue to hold those who engage in forced labour accountable and that we will continue to remove goods made from local forced labour from our supply chains.

“As you also know, and I think this is the root of your question, we also remain committed to making progress… domestically and internationally on addressing the climate crisis. But we think we can certainly do both,” she said, adding that further details would be released in the coming days.

A statement published by The White House in the wake of the summit noted that the US and G7 had committed to removing forced labour from supply chains, noting that the main supply chains of concern had links to Xinjiang and pointing to solar as one of three sectors in particular, alongside agricultural and garment industries.

“We look forward to identifying areas for strengthened cooperation and collective efforts to eradicate the use of all forms of forced labour in global supply chains, in accordance with international and national law,” the statement read.

Rumours earlier this year suggested that the US was priming legislation to prohibit the import of solar products with supply chain links to the Xinjiang region, but wanted to do so simultaneously with other regions including the European Union. It was suggested at the time that John Kerry, the US climate envoy, was lobbying for support for the measures internationally.

PV Tech asked the European Union and the UK government – representative of notable members of the G7 – as to whether similar legislation was being prepared for their respective jurisdictions. The European Commission said it would not be in a position to comment today on possible future sanctions it could take under the EU Global Human Rights Sanctions Regime.

The Commission did, however, point to sanctions unveiled earlier this year against XPCC and individuals linked to the company.

The UK government’s Department for Trade said it was “thoroughly investigating” reports of forced labour in the global solar panel supply chain, but offered no formal clarification as to whether or not it would be shortly joining the US in announcing similar sanctions.

The Chinese government has also responded to the US action, with China foreign ministry spokesperson Zhao Lijian dismissing the sanctions in a press conference held earlier today as an attempt to “cripple the industrial development in Xinjiang”.

“This not only violates international trade rules and the principles of the market economy, but also undermines the global industrial and supply chains,” Zhao said.

If you need detailed visibility across the PV manufacturing sector, our PV Manufacturing & Technology Report is an invaluable resource allowing you to track, benchmark and forecast the shifts in the PV market.

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