Tag: Suniva

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ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017
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Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision

ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017

By: Stacy J. Ettinger, Elias B. Hinckley, and James R. Wrathall

As we previously reported, on September 22, 2017, the U.S. International Trade Commission (“ITC”) found that increased imports of crystalline silicon photovoltaic (“CSPV”) cells and modules have seriously injured (economically harmed) U.S. solar manufacturers. The four ITC Commissioners have now announced their separate recommendations for how to alleviate or “remedy” that economic injury. Remedies, such as tariffs or quotas, normally can be imposed for a maximum of four years.

The President will have the final say on whether to impose a remedy, and if so, the form, amount, and duration of the remedy. There is speculation in Washington that the President’s remedy decision could be announced in December.

The stakes are high. Industry experts believe that tariffs at the levels originally requested by Suniva could massively impede the economic health and growth of U.S. downstream users and consuming industries, more than doubling the costs of some solar projects and putting tens of thousands of jobs at risk. Industry experts believe that imposition of tariffs at the levels recommended by the Commissioners could potentially have less of a draconian impact. Public comments on remedy issues for the President’s consideration may be submitted before November 20, 2017.

As described below, the Commissioners’ recommendations range from 10-35 percent tariffs on cell and module imports to defined quotas on imports of CSPV products. As a result of the ITC’s earlier injury findings, imports from free trade agreement (“FTA”) countries Mexico and Korea would be subject to imposition of remedies while imports from other FTA countries, including Canada, would not.

Chair Rhonda Schmidtlein recommends an in-quota tariff rate of 10 percent and an in-quota volume level of 0.5 gigawatts for imports of cells. Imports of cells that that exceed the in-quota 0.5 gigawatt volume level would be subject to a 30 percent tariff. Commissioner Schmidtlein also recommends a 35 percent tariffs on CSPV modules, to be reduced in each subsequent year.

Vice Chair David Johanson and Commissioner Irving Williamson recommend a 30 percent tariff on CSPV cell imports in excess of 1 gigawatt. In each subsequent year, the tariff rate would decrease and the in-quota amount would increase. For imports of CSPV modules, Commissioners Johanson and Williamson recommend a 30 percent tariff, to be reduced in each subsequent year.

Commissioner Meredith Broadbent recommends a quantitative restriction (quota) on imports of CSPV products into the United States, including cells and modules. The first year import quota would be set at 8.9 gigawatts, to be increased by 1.4 gigawatts in each subsequent year.

Commissioner Broadbent also recommends the President administer these quantitative restrictions through the sale of import licenses at public auction at a minimum price of one cent per watt. The revenue generated by the sale of import licenses would be used to assist domestic CSPV product manufacturers, including for purchase of production equipment, hiring of production workers, and R&D.

The ITC will send its final report to the President, including the Commissioners’ remedy recommendations, by November 13, 2017. The President has up to 60 days – and complete discretion – to determine the form, amount, and duration of the remedy.

The Commissioners’ remedy recommendations, if adopted by the President, would likely result in less impact on final module pricing than Suniva had originally requested. For example, the initial pricing impact of a 30 percent tariff would likely be in the range of 10 to 15 cents per watt on CSPV modules. This amount would likely decline as the price of modules drops and the tariff rate is reduced over time. Additionally, some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding, which could further pull prices lower over time.

Public comments on remedy issues for the President’s consideration are due to the Office of the United States Trade Representative (“USTR”) on November 20, 2017. Rebuttal comments are due November 29, 2017. USTR will hold a public hearing on December 6, 2017.

For more information on the solar proceeding, including information on filing comments on remedy issues, contact Stacy Ettinger, Elias Hinckley, or Jim Wrathall of K&L Gates.

Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision

In response to a petition by bankrupt U.S. solar panel manufacturer Suniva Inc., today the U.S. International Trade Commission (“ITC”) issued a finding that low-cost solar panel imports have caused “serious injury” to the domestic manufacturing sector.

It is widely believed that trade sanctions from this decision could cause price increases on the most commonly used type of solar panels, and therefore significant harm to the U.S. solar industry and corporate energy consumers.  By early November, the ITC will recommend a remedy, which will go to the White House for a final decision within three months.

The ITC’s injury finding generally applies to solar panel imports from all countries.  However, the ITC also is required to separately consider whether imports from countries with which the U.S. has a Free Trade Agreement (“FTA”) account for a substantial share of total imports and are contributing “importantly” to the serious injury.  In this case, the ITC made affirmative injury findings for imports from FTA countries Mexico and Korea, which will be included in the determination of remedies. The ITC made negative findings with respect to the other FTA countries, including Canada, which therefore will not be subject to such remedies.

The stakes are high.  Industry experts have said that by increasing the cost of panels, the tariffs sought by Suniva could have a negative impact of more than $50 billion on the U.S. solar industry.  More than 88,000 jobs in the solar supply chain could be eliminated, and 47 gigawatts of solar installations could be cancelled in the next five years.  Major corporate energy consumers relying on solar to meet sustainability commitments could see costs of installed utility-scale projects more than double.  It is unclear whether raising tariffs, especially to levels requested by Suniva, would significantly boost domestic panel manufacturing or create new jobs.

The ITC remedy recommendations will go to the White House, which has authority to impose whatever remedies President Trump chooses.  There is opposition to tariffs across the political spectrum, with commenters ranging from The Wall Street Journal and the Heritage Foundation on the right to the Solar Energy Industries Association (SEIA), environmental groups, and labor unions on the left, all arguing that imposing tariffs would harm U.S. economic interests.  Despite this broad opposition, the solar industry is very concerned that President Trump may view tariffs favorably as appearing to make a strong statement in favor of U.S. manufacturing and against Chinese trade imbalance.

The outcome of the remedy may be heavily influenced by political calculations.  SEIA and a number of industry coalitions will respond to the ITC decision with vigorous political advocacy, making the case to the White House and Congress that tariffs on solar panel imports would be counterproductive.  Another group, the American Solar Jobs Coalition, is working to build a path forward that “will support all aspects of the U.S. solar industry and ensure that the President’s decision will allow the solar industry to continue to support American businesses and drive American prosperity.”  Companies in the solar sector and clean energy consumers should actively monitor the outcome of this matter, and consider strategic responses in the event significant trade sanctions are imposed.

For more information on the Suniva proceeding, contact Elias Hinckley, Stacy Ettinger, or Jim Wrathall of K&L Gates.

Elias B. Hinckley
+1.202.778.9091
elias.hinckley@klgates.com

Stacy J. Ettinger
+1.202.778.9072
stacy.ettinger@klgates.com

James R. Wrathall
+1.202.778.9092
jim.wrathall@klgates.com

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