From the NY Times:
The issue began with a short letter to United States customs officials last December from the small American subsidiary of a Spanish energy company. The subsidiary, GES USA, wanted to know what the tariff would be to import certain solar panels from China.
On Jan. 9, the customs agency wrote back that the panels had become too sophisticated to qualify for duty-free import. Instead — because the panels contain a basic electronic device for safety and energy efficiency — they would be treated as electric generators, subject to a duty of 2.5 percent.
Reuters has more and notes that the solar energy industy is trying to get the decision reversed:
The industry hopes it can persuade officials at U.S. Customs and Border Protection headquarters in Washington to overturn the ruling made by the New York office.
If that fails, the case could go to the U.S. Court of International Trade in New York.
I wonder if this will lead to a WTO complaint at some point. There have been a few complaints over the years related to changes in tariff classification, including one going on right now against the EC on information technology products. Such complaints can be difficult, though, in part because there are no explicit rules on classification (unlike customs valuation). Instead, the GATT Article II provisions making the schedules of concessions operative are applied. (For DSC subscribers, we discuss this a bit in a DSC blog post here).
It probably makes sense to press the issue through domestic channels first, as the industry is doing. If they do not have any luck there, they may turn to the WTO. The key will be the precise language of the U.S. WTO Schedule in relation to the product at issue. I have not looked at this, so I don't have a good sense of such a claim's chance of success, but I assume the industry's trade lawyers have been checking it out.
ADDED: I think this is the ruling referenced in the article:
N047472
January 9, 2009
CLA-2-85:OT:RR:E:NC:N1:112
CATEGORY: Classification
TARIFF NO.: 8501.31.8000
Mr. Jeffrey M. Young Moore & Van Allen, PLLC P.O. Box 13706 Research Triangle Park, NC 27709
RE: The tariff classification of a Trinasolar TSM-175D solar module from China
Dear Mr. Young:
In your letter dated December 19, 2008, on behalf of GES USA Inc., you requested a tariff classification ruling.
The merchandise concerned is referred to as a Trinasolar TSM-175D solar module. This device consists of 72 interconnected monocrystalline silicon cells. These types of cells are known as photovoltaic cells. The 72 photovoltaic cells will be connected electrically and mounted in a photovoltaic module. In addition to the photovoltaic cells, these modules will incorporate by-pass diodes. The by-pass diodes allow current to pass around "shaded cells" and thereby reduce voltage loss. When a module becomes shaded, its by-pass diode becomes forward biased and begins to conduct current through itself. The diode also holds the entire shaded module or group of cells to a small negative voltage of approximately -0.7 volts, thus limiting the reduction in array output.
These modules will not be connected to any other device when imported from China. Once imported, this module will be connected to several other modules to create a solar panel which will produce direct current electricity from the sun. The maximum output of these modules will be 175 watts.
You suggested that the Trinasolar TSM-175D solar module is classifiable under subheading 8541.40.6020 of the Harmonized Tariff Schedule of the United States (HTSUS). Subheading 8541.40.6020 provides for "Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules…: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels…: Other diodes: Other: Solar cells: Assembled into modules or made up into panels." However, Explanatory Note (EN) 85.41 (B) (i) states that heading 8541 does not cover panels or modules equipped with elements, however simple, i.e. diodes to control the direction of the current. As such, since the Trinasolar TSM-175D solar module does contain diodes, classification under subheading HTSUS 8541.40.6020 is inapplicable.
The applicable subheading for the Trinasolar TSM-175D solar module will be 8501.31.8000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Electric motors and generators: Other DC motors; DC generators: Of an output not exceeding 750 W: Generators." The rate of duty will be 2.5%.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding heading 8541, please contact National Import Specialist Linda Hackett at (646) 733-3015. If you have any other questions regarding this ruling, please contact National Import Specialist Steve Pollichino at (646) 733-3008.
Sincerely, Robert B. Swierupski Director National Commodity Specialist Division
