Significant Tariffs on Imported Solar Cells and Modules Until 2022

Bryan Cave Leighton Paisner
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President Trump has imposed a tariff-rate quota (TRQ) on imported solar cells and a tariff on imported solar modules, both effective February 7, 2018. Imports into the U.S. of Crystalline Silicon (c-Si) Photovoltaic (CSPV) cells exceeding an aggregate 2.5 gigawatts (GW) per year will be subject to a 30% tariff (the “CSPV Cell TRQ”). Imports into the U.S. of CSPV modules will be subject to a 30% tariff regardless of annual import volume (the “CSPV Module Tariff”). For both the CSPV Cell TRQ and the CSPV Module Tariff, rates will decrease by 5% in each of the subsequent 3 years (i.e., 25% in Year Two, 20% in Year 3, and 15% in Year 4), after which the remedies will terminate unless extended for another four-year period.

These measures reflect most of the recommendations of the U.S. International Trade Commission (ITC) in its “Global Safeguard” investigation of CSPV cell and module imports (see International Regulatory Bulletin (IRB) No. 570, IRB No. 569, and IRB No. 565). The measures rely on specific definitions of “CSPV cell” and “CSPV module,” exclude imports from certain countries, and exclude a limited number of CSPV products. Significantly, the measures do not affect imports of thin-film photovoltaic products.

This development is sure to increase the cost of CSPV solar cells and modules (which are defined to include panels, cells attached to inverters or batteries and cells that are classifiable as DC generators). The TRQ and tariff, however, do provide an identifiable cost basis for participants in the solar markets after many months of uncertainty.

The CSPV Cell TRQ and the CSPV Module Tariff apply to imports from all nations other than 79 of the 82 countries eligible for Generalized System of Preferences (GSP) treatment (notwithstanding the December 2017 expiration of GSP authority). Despite recommendations and speculation about exclusions for imports from additional countries, the CSPV Cell TRQ and the CSPV Module Tariff apply to imports from Argentina, Canada, Mexico, South Korea, the Philippines and Thailand (in the cases of Argentina, the Philippines and Thailand, regardless of their eligibility for GSP treatment).

For purposes of the CSPV Cell TRQ and the CSPV Module Tariff, “CSPV cells” are defined as crystalline silicon photovoltaic cells (including photovoltaic cells incorporating both crystalline silicon and other photovoltaic materials) of certain characteristics and imported as cells—i.e., not having been assembled into circuits, laminates, modules or panels. Importers of CSPV cells must report to U.S. Customs and Border Protection the electrical power output of the cells so that the agency can determine when the in-quota level of 2.5 GW has been exceeded.

The definition of “CSPV cell” expressly excludes, among other things, thin-film photovoltaic products made from other technologies, namely, amorphous silicon (a-Si), cadmium telluride (CdTe), and copper indium gallium selenide (CIGS). The CSPV Cell TRQ and the CSPV Module Tariff thus favor these thin-film products when manufactured abroad, and do nothing to discourage the successful manufacture of such products in the U.S.

The definition of “CSPV module” is, primarily, CSPV cells in a joined group that is capable of generating electricity, regardless of the group’s number of cells or shape. The definition thus includes panels consisting of one or more CSPV cells that have been processed, assembled or interconnected (e.g., into a circuit or laminate). The definition of “CSPV module” also includes CSPV cells attached to inverters or batteries and CSPV cells that are classifiable as DC generators.

The definitions specifically exclude a number of related goods whose characteristics place them out of the scope of the remedies. The definitions also specifically exclude a number of low-power product types. With the exclusion of thin-film photovoltaic products, the effect of the CSPV Cell TRQ and the CSPV Module Tariff on the overall U.S. solar industry and markets remains uncertain.

The CSPV Cell TRQ and the CSPV Module Tariff have implications for the U.S.’s obligations as a World Trade Organization (WTO) member. In 2017, the U.S. provided the WTO with multiple notices of the ITC Global Safeguards investigation. In his Proclamation imposing the CSPV Cell TRQ and the CSPV Module Tariff, the President stated that if WTO consultations between the U.S. and other WTO members through late February 2018 indicated that the measures should be modified, the President would do so.

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Bryan Cave Leighton Paisner
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