Further to our three prior alerts (June, September and November 2017), this alert is to update clients and friends on the proceeding under section 201 of the Trade Act of 1974 regarding imports of crystalline solar photovoltaic ("CSPV") cells and modules.

On January 22, 2018, the U.S. Trade Representative, acting on behalf of the President, announced "safeguard" restraints on imports of CSPV cells and modules purportedly to assist U.S. cell and module producers. The announcement and subsequent presidential proclamation provide for:

• A four-year ad valorem tariff on imports of CSPV cells and modules. The tariff will start at 30% and then decline by 5 percentage points each year (meaning a tariff of 25% in Year 2, 20% in Year 3 and 15% in Year 4).
• A tariff-free quota of 2.5 gigawatts for imports of CSPV cells throughout the four year remedy period, meaning that the first 2.5 gigawatts of CSPV cells entering the United States in each year will not face the ad valorem tariff associated with the remedy.

Announcement of solar safeguard import restraints accompanied a January 22 announcement of safeguard import restraints applicable to washing machines.

Key Points

1. The safeguard tariff and quota are to come into effect on February 7, 2018. They will be in addition to antidumping and countervailing duties on Chinese and Taiwanese CSPV cells and modules.
2. There is no reason to believe that the safeguard tariff or quota will apply to cell or module imports that pre-date February 7, 2018.
3. It appears that imports will be exempt from safeguard restraints based on country source only if they are from certain developing countries that are eligible for Generalized System of Preferences ("GSP") treatment. Although Thailand and the Philippines are GSP-qualified, imports from these countries will be covered.¹
4. Although the U.S. International Trade Commission ("USITC") concluded that free trade agreements with Canada and certain other countries should insulate imports from these countries from safeguard restraints, it appears that there will be no country-source exemptions other than those applicable to certain GSP countries.
5. The government has not announced any approach to allocating the 2.5 gigawatt CSPV cell quota. Our sources indicate that the government currently intends to administer the quota on a "first come, first served" basis. That is, the first cell imports that enter beginning February 7 up to a 2.5 gigawatt aggregate volume will be accorded tariff-free treatment. The government's position on quota allocation could change.

Background

On May 23, 2017, the USITC initiated a proceeding under section 201 of the Trade Act of 1974 to determine if imports of 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.

On October 31, 2017, the four USITC Commissioners announced their remedy recommendations to be forward to the President. (Those remedy recommendations were discussed in our November 1, 2017 alert.)

In November 2017, the Office of the United States Trade Representative ("USTR") accepted public comments from domestic producers, importers, exporters, and other interested parties as to the appropriateness of the USITC's recommended safeguard remedies and whether those recommended remedies would be in the public interest. On December 6, 2017, the USTR held a public hearing to discuss the comments submitted and address the USITC's remedy recommendations and other remedy recommendations.

USTR issued its remedy recommendations to the President earlier this month. The President adopted certain of those recommendations in his January 22 announcement of safeguard restraints.

¹ Furthermore, the exemption enjoyed by imports from any qualifying GSP country will be lifted if import volumes from the country "surge." Imports will be considered to "surge" if they account for more than 3% of total imports. In addition, safeguard restraints will be applied to all GSP countries if aggregate imports from excluded GSP countries collectively account for more than 9% of total imports.