U.S. Solar Industry and Alternative Energy Market Await “Global Safeguard” Remedy Recommendations by U.S. International Trade Commission; Remedy Decision by President Trump (IRB No. 565)

by Bryan Cave
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The U.S. International Trade Commission (ITC) determined on Friday, September 22, 2017, that Crystalline Silicon Photovoltaic (CSPV) cells (regardless whether they are assembled fully or partially into other products) imported into the United States are causing “serious injury” to the portion of the U.S. solar industry that produces similar articles. The ITC will send a report to the President recommending specific remedial action. However, the President has authority to impose the recommended remedy, no remedy, or a remedy different from that which is recommended in the ITC's report.

Suniva, Inc., which petitioned for this “global safeguards” investigation under Section 201 of the Trade Act of 1974, has, among other things, requested initial increased import duties (also sometimes called “tariffs”) of $0.40/watt per CSPV cell, and a minimum price floor of $0.78/watt per solar module. Global safeguard remedies are temporary, but still can be in place for four years, with the potential for extension to a total of eight years. Possible remedies include duties, quotas, trade adjustment assistance, negotiating international agreements, and submitting to Congress legislation to aid the domestic industry.

The ITC must issue its report to the President by November 13, 2017. President Trump then has 60 days to take action. Duties or quotas generally are to be implemented within 15 days thereafter. The expected time-line of developments in this case is therefore as follows: 

  • ITC public hearing on remedies (October 3, 2017);
  • ITC vote on remedies (October 31, 2017); 
  • ITC report to the President with remedy recommendations (Nov. 13, 2017);
  • Presidential action (Jan. 12, 2018);
  • Remedies (e.g., duties/price floors) implemented (Jan. 27, 2018).

This matter will be the subject of intense lobbying—given both the President’s discretion and that of Congress. Companies that rely on imports of CSPV cells and products incorporating CSPV cells from any country should begin or continue contingency planning—to the extent possible, considering the uncertainty inherent to this case. While there are a variety of measures that are frequently used to mitigate risk (such as change-of-law, indemnification, and force majeure clauses in contracts related to development projects and mergers and acquisitions), the greater uncertainty and potential for market disruption here may render such measures insufficient.

Assuming that increased duties and price floors on imported CPSV cells and related downstream products will be the primary remedies, costs to U.S. solar developers may increase significantly. Global safeguard cases, unlike Antidumping and Countervailing Duty (AD/CVD) cases, are not limited to specified countries. Cost-effective supply of CSPV cells and downstream products incorporating CSPV cells may decrease, at least in the short term, given the poor condition of the U.S. domestic industry producing CSPV cells and related articles within the scope of the investigation. Foreign manufacturers that have expressed interest in opening U.S. plants have apparently experienced delays in their attempts to do so.

The ITC’s report to the President will provide more information about what the President may do. To the extent the ITC report influences the President’s decision, it is worth noting that the initial petition to the ITC did not request only increased duties and price floors; it also requested, among other things: (i) distribution of AD/CVD collected under the two sets of AD/CVD Orders relating to solar cells and products from China and Taiwan; (ii) an economic development program that would be paid for with duties collected under orders from this § 201 investigation; and (iii) U.S. negotiations with other countries, with one goal being to reduce excess global production capacity.

We are continuing to track developments in this case, and will provide additional updates as those developments indicate the types and levels of remedies that may be imposed.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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