Margaret Kim, Riyaz Dattu
June 6, 2017
Our last international trade brief dealt with NAFTA renegotiations being set in motion after Trump’s final notice to Congress, the imminent implementation of CETA, and a Trade Case Alert relating to Canadian anti-dumping duties being imposed for certain fabricated industrial steel components that can be anticipated to affect various infrastructure projects. In this brief, we discuss Global Affairs Canada seeking comments on NAFTA renegotiations, the increased enforcement of U.S. trade laws, a Trade Case Alert pertaining to anti-dumping import duties for gypsum panels shipped to Western Canada, and a Trade Case Alert dealing with a global safeguard investigation into solar panels imported into the U.S.
On May 25, 2017, the U.S. International Trade Commission (ITC) notified the World Trade Organization (WTO)’s Committee on Safeguards that it initiated an investigation into imports of crystalline silicon photovoltaic cells (solar panel products) under Section 201 of the Trade Act of 1974 (Trade Act). The ITC commenced the investigation in response to a global safeguard relief petition filed by U.S. solar companies Suniva, Inc. (Suniva) and SolarWorld Americas, Inc. (SolarWorld).
Section 201 investigation
Under Section 201 of the Trade Act, U.S. domestic industries seriously injured or threatened with serious injury by increased imports may petition the ITC for import relief. Criteria for import relief under section 201 are based on those in Article XIX of the WTO’s General Agreement on Tariffs and Trade (GATT), which is sometimes referred to as “the escape clause” because it permits a country to “escape” temporarily from its obligations under the GATT with respect to a particular product when increased imports of that product are causing or are threatening to cause serious injury to domestic products. Unlike in an anti-dumping proceeding or countervailing duties proceeding, imports under a safeguards case can be restrained even when fairly traded, based simply on relative or absolute volume of increase in imports that are threatening serious injury.
The solar panel petition
Suniva is a Georgia-based manufacturer of high-efficiency solar cells and panels with production facilities in Georgia and Michigan. In mid-April, Suniva filed for bankruptcy; the company alleges that unless global safeguards are imposed, Suniva will be forced to terminate its remaining production operations permanently. The co-petitioner, SolarWorld, also faces difficulty; its German parent company SolarWorld AG declared bankruptcy and it also recently notified its workers about an impending mass layoff and potential plant closure in Hillsboro, Oregon.
The petition requests that the ITC recommend that President Trump impose global safeguards for four years, the maximum statutory duration. The requested relief is an initial duty rate on imposed solar cells of $0.40/watt, along with an initial minimum price on solar modules of $0.78/watt. Commentators suggest that under current market conditions, the price of imported solar modules would roughly double if Suniva and SolarWorld’s requests were granted.
The ITC will make an injury determination by the end of September 2017 and submit a final report to President Trump by as early as mid-November 2017. President Trump will have the final say on any relief or remedy recommended by the ITC.
As Section 201 allows for a “global safeguard,” if granted, the remedies would be global in scope and would affect all solar cells and modules imported into the U.S., regardless of the originating country. In his 2017 Trade Policy Agenda, President Trump has underscored the “safeguard” provision under Section 201 as “a vital tool for industries needing temporary relief from imports to become more competitive.”
Canada is seeking to have itself excluded from the global safeguard case based on provisions of NAFTA which set out special rules for NAFTA members.