U.S. Trade Representative Requests Further Information on Remedy Recommendations for Imported Crystalline Silicon Photovoltaic Cells (IRB No. 570)

December 13, 2017

On November 13, 2017, the U.S. International Trade Commission (ITC) sent President Trump its formal report on its “Global Safeguard” investigation into imports of Crystalline Silicon Photovoltaic (CSPV) cells (whether or not partially or fully assembled into other products) (see International Regulatory Bulletin (IRB) No. 565 and IRB No. 569). On November 27, 2017, however, U.S. Trade Representative (USTR) Robert Lighthizer requested a supplemental report from the ITC that would “identify any unforeseen developments that led to the articles at issue being imported into the United States in such increased quantities as to be a substantial cause of serious injury.”

The November 13, 2017 report contained the ITC’s remedy recommendations, which included increased tariff rates. USTR Lighthizer’s request may indicate concern about the effect of the ITC’s recommended remedies on the broader U.S. solar industry and market. USTR Lighthizer explicitly framed his request within the context of the economic and social cost/benefit analysis that is to guide the President in his broad discretion as to what remedies to impose.

USTR Lighthizer’s request pushes back the expected timeline of this case. The ITC must provide its supplemental report by December 28, 2017, and the President must act or decline to act by January 27, 2018. Remedies such as tariffs (increased duties) and tariff-rate quotas (TRQs) (in which aggregate imports—i.e., all imports from all non-excluded countries—up to an “in-quota” level are entitled to a lower duty rate, but “over-quota” imports are subject to a higher duty rate) are generally to be implemented by February 11, 2018.

The ITC’s recommendations were similar to those we described in IRB No. 569 based on the four International Trade Commissioners’ October 31, 2017 vote. To the extent there was a consensus on remedies, three of four Commissioners recommended: (i) a TRQ on CSPV cells, with over-quota thresholds of 0.5 GW–1 GW and over-quota rates of 30%–35%; (ii) a tariff rate of 30%–35% on CSPV modules; and (iii) consideration of measures aiding adjustment to import competition, such as trade adjustment assistance for workers or firms affected by CSPV product imports.

The Commissioners unanimously recommended that such remedies exclude imports from: (i) certain countries with which the U.S. has a free trade agreement, specifically: Australia, Colombia, Israel, Jordan, Panama, Peru, Singapore and the Dominican Republic-Central America FTA member countries, which include Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua; and (ii) the Caribbean Basin Economic Recovery Act beneficiary countries. Three of the four Commissioners recommended that imports from Canada also be excluded from such remedies.

As we noted in IRB No. 565 and IRB No. 569, Global Safeguard remedies can remain in place for up to eight years if they are extended beyond the initially authorized four years. Over either period, it is unclear whether the recommended remedies will rejuvenate the domestic industry for CSPV cell manufacturing or prevent harm to the broader domestic solar industry and market. The supplemental report may help clarify these issues, but it remains uncertain what the President will do. 

The broader solar industry and market are expected to be disrupted due to higher costs resulting from any significant tariff rate increase, even when costs for large installations are levelized. The USTR’s request suggests that this factor is being considered by the President. After the ITC issues the supplemental report and the President has determined what remedies he will impose, we will provide a further update. We continue to be available to discuss the potential impact the proposed remedies might have on various types and levels of enterprises, including project development, financing and operations.