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Datamyne Blog

Covering trade & transport, with tips on using import-export data to advantage

Split Decision: ITC Offers Choice of Outcomes in Solar Imports Case

Category: Imports, Trade Policy

The U.S. renewable energy industry awaits a decision in the Section 201 solar imports case that could result in protective tariffs on crystalline silicon photovoltaic (CSPV) cells and modules.

After agreeing that a surge in solar imports is causing harm to domestic solar panel makers, the U.S. International Trade Commission (ITC) has split on an appropriate remedy. The ITC is offering three options, including new tariffs on solar panels, and leaving the choice to President Trump.

Antidumping and countervailing duties (AD/CVD) cases concerning solar imports have been brought, settled and tariffs imposed [see, for instance, our blog coverage here and here].

The current case before the ITC is different from AD/CVD cases, which seek to investigate and correct cases of low-cost imports that are unfairly subsidized or dumped on the U.S. market.

U.S. solar manufacturers petitioned for relief from CSPV imports in May under Section 201 of the Trade Act of 1974. Known as the “global safeguard” law, it is intended to provide temporary relief when a surge in imports causes serious injury to a U.S. domestic industry.

Solar Imports Trade Data

The trade data confirms the surge in solar imports through 2016. As this chart shows, the volume and value of imports of panels and modules (HS 8541406020) have risen in tandem – an indication that the surge in imports does not appear to be the result of dumping of low-cost product:

U.S. Solar Imports: Panels and Modules 2010-16

The next chart shows a spike in volume against a more modest gain in the value for imports of solar cells – indicating a decrease in cost per unit:

U.S. Solar Imports: Cells 2010-16

However, more recent data indicates a sharp reversal in solar import trends. Here is the Census data on U.S. imports of solar panels and solar cells through third-quarter 2017 compared with the same period in the peak solar import year of 2016:

U.S. Solar Imports: January through September 2017 vs 2016

Impact of Tariffs on Solar Imports

The last time Section 201 was used to curb imports was in 2002 when President G.W. Bush deployed tariffs to provide relief to the U.S. steel industry.

Then, as now, objections to protective tariffs were raised by U.S. industrial sectors that rely on imported inputs and would have to pay the duties and mark up prices on their products accordingly.

The Solar Energy Industries Association (SEIA) argues that tariffs on solar imports would raise costs and slow deployment of renewable energy, harming companies in that sector.

The choice of remedies in the solar Section 201 case recommended by the ITC does include substantial duties: either a 30% tariff on solar modules that declines 5% per year over four years plus a tariff-rate quota (TRQ) for solar cells up to 0.5 gigawatts, above which the 10% tariff increases to 30% – or a 35% tariff on modules that declines 1% over four years along with a similar TRQ for cells.

A third option, offered as a way to address the injury to manufacturers while minimizing the disruption of the renewable energy sector, would set an 8.9 gigawatt quota on CSPV module and cell imports that increases 1.4 gigawatts per year over four years. In addition, an import license program would be created. The licensing fees would fund domestic development assistance for CSPV manufacturers.

Countries Facing Solar Tariffs

A separate question to be decided is whether countries linked to the U.S. by free trade agreements (FTAs) should be exempt from any remedies applied in the Section 201 solar case.

This chart summarizes the data on the top countries of origin for U.S. solar imports over the last three years:

U.S. Solar Imports: Top Source Countries by Value of Trade 2014-16

The ITC was unanimous in finding that U.S. FTA partners Mexico and South Korea should be included in the injury finding. If the ITC recommendation is adopted, all other FTA partners (including top source Singapore) would be exempt from any remedies.

 

Related:  

From our blog:

From our trade content solutions:

  • Descartes CustomsInfo™ Manager offers solutions to monitor duty rates, as well as trade regulations and rulings relevant to your business – and integrate this content with your global operations systems. Ask for a demo.
  • Descartes Datamyne maritime bill of lading data captures the transactional and logistical details of U.S. import trade in solar panels and cells. Ask for a demo.

Date posted: November 10, 2017

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