International Trade & Compliance Alert
September.26.2017
Overview
On May 23, 2017, the U.S. International Trade Commission ("USITC") initiated a proceeding under section 201 of the Trade Act of 1974 to determine if imports of crystalline solar photovoltaic ("CSPV") cells and modules are causing "serious injury" to domestic producers of CSPV cells and modules.
On September 22, 2017, the USITC unanimously determined that imports of CSPV cells and modules are causing "serious injury" to domestic producers of CSPV cells and modules. As a result, the proceeding now moves on to a remedy phase. In that phase, the USITC is to develop a recommendation to the President regarding import restraints that, in the agency's view, he should impose to offset injury experienced by the U.S. CSPV industry. The USTIC is to transmit that remedy recommendation to the President by November 13, 2017, and the agency is expected to do so on that date.
Under section 201, the President is then to either accept the proposed remedy, adopt an alternative remedy, or impose no remedy at all. Absent settlement of this controversy, and subject to special free trade agreement ("FTA") treatment described below, it appears likely that the case will lead to some level of quantitative restraints on imports of solar cells and modules (perhaps negotiated with supplying nations), additional duties on imports of cells and modules, or both.
Special Treatment for Some Countries
The USITC determined that CSPV cell and module imports from Australia, Canada, Singapore and various other countries with which the United States has FTAs are not a substantial cause of serious injury.[1] Any restraints that the President imposes are not expected to apply to imports of CSPV cells and modules that originate in these countries. Although the United States has FTAs with South Korea and Mexico, the USTIC found that imports from these two countries contribute to serious injury. Consequently, it appears that any restraints that emerge from the case will apply fully to South Korean and Mexican imports.
Key Aspect of the Proceeding
Scope
The section 201 proceeding covers all U.S. imports of CSPV cells and modules from all foreign countries. Any import restraints will not apply to imports of thin film solar products.
Expected Timing
Moving forward, the timeline for the proceeding is expected to be as follows:
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October 3, 2017 |
USITC hearing on appropriate import restraints |
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November 13, 2017 |
USITC submission of report to President on recommended import restraints |
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January 12, 2018 |
President's decision on import restraints and President's transmittal to the Congress on the decision |
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January 27, 2018 |
Effective date of import restraints imposed by the President if that remedy is consistent with the remedy proposed by the USITC and does not entail one or more agreements with foreign countries limiting the export of subject merchandise from foreign countries to the United States.[2] |
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April 12, 2018 |
Effective date of remedy proposed by the President if that remedy is consistent with the remedy proposed by the USITC and entails agreements with foreign countries limiting the export of subject merchandise from foreign countries to the United States |
Expected Remedy/Relief
The petitioners (Suniva and SolarWorld) propose four forms of relief:
(1) A tariff on cell imports and a price floor on module imports;
(2) Distribution to U.S. producers of CSPV cells and modules and U.S. producers of polysilicon antidumping and countervailing duties collected and still under suspension in the ongoing antidumping and countervailing duty cases targeting CSPV cells and modules from China and Taiwan;
(3) Creation of an economic investment development program funded with the tariffs collected under any resulting remedies under a safeguard action; and
(4) Bilateral and multilateral negotiations by the U.S. government to reduce global excess capacity and restore a supply and demand balance in the global market.
The USITC will, in our view, probably recommend a remedy involving a quota on imports of CSPV cells and modules, duties on imports of CSPV cells and modules, or both. Given uncertainties about whether a price floor would be authorized by statute and that there is no record of price floor remedies in section 201 cases, we think it unlikely that the USITC would propose a price floor as requested by the petitioners.
The governing statute instructs the President to "take all appropriate and feasible action within his power" that he believes will "facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs." In fact, the President will have broad discretion to restrain imports as he sees fit, through negotiated commitments by exporting country governments or otherwise, subject to a four year limit on section 201 measures.
[1] In addition to Australia, Canada and Singapore, the USTIC determination indicates that special treatment will also be accorded CSPV cell and panel imports from Columbia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Panama and Peru.
[2] If the remedy proposed by the President differs from the remedy proposed by the USITC or the President reports that no remedy will be implemented, then Congress, within 90 days of receiving the President's report, may enact a joint resolution not approving such decision. If such a joint resolution is enacted, then the remedy proposed by the USITC will be implemented on the date of the joint resolution.