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USITC Proposes Remedies in Solar Cell Safeguard Probe as USTR Seeks Public Input

The U.S. International Trade Commission recently determined in a section 201 global safeguard investigation that a surge in imports of crystalline silicon photovoltaic cells is threatening serious injury to U.S. producers. The Commission is proposing a host of remedies to counter this surge, with the president expected to make a final determination in the weeks ahead.

Specifically, USITC Chairman Rhonda Schmidtlein is recommending a tariff-rate quota on CSPV cells with an initial in-quota tariff rate of 10 percent and an initial in-quota volume level of 0.5 gigawatts. A 30 percent tariff would be imposed on imports of cells that exceed the 0.5 gigawatt volume level, falling to 29 percent in year two, 28 percent in year three and 27 percent in year four. This TRQ would be in place for four years and the in-quota level would be incrementally increased (to 0.6 gigawatts in year two, 0.7 gigawatts in year three and 0.8 gigawatts in year four) and the tariff rate incrementally reduced (to 9.5 percent in year two, 9.0 percent in year three and 8.5 percent in year four) during the remedy period.

With respect to CSPV modules, Chairman Schmidtlein is proposing an initial 35 percent tariff rate that would be reduced to 34 percent in year two, 33 percent in year three and 32 percent in year four. She also recommends that the president initiate international negotiations to address the underlying cause of the increase in imports of CSPV products and alleviate the serious injury thereof.

Vice Chairman David Johanson and Commissioner Irving Williamson are also recommending a TRQ on CSPV cells, with annual imports in excess of one gigawatt subject to an additional 30 percent tariff. In each subsequent year, the commissioners are proposing that this tariff be reduced by five percentage points and that the in-quota amount be raised by 0.2 gigawatts. The rate of duty on in-quota CSPV cells would remain unchanged.

In the case of CSPV modules, the two commissioners favour an additional 30 percent tariff to be phased down by five percentage points during the four-year remedy period. They also believe the president should direct the U.S. Department of Labor and the DOC to provide expedited consideration of any application for trade adjustment assistance for workers and/or firms that are affected by subject imports.  Additionally, they favour the approval of product-specific exclusions requested by the respondents and to which the petitioners have not objected, as well as any appropriate funding mechanisms that may facilitate a positive adjustment to import competition.

Finally, Commissioner Broadbent is proposing an absolute quota of 8.9 gigawatts on CSPV cells and modules in the first remedy year, to be increased by 1.4 gigawatts each subsequent year. She mentioned that these quantities are consistent with the market share held by imports in 2016, adjusted to reflect projected changes in demand for photovoltaic products over the next four years. Therefore, she believes such quotas would not disrupt expected growth in CSPV demand and would help address the serious injury to the domestic industry by preventing further surges in imports.

Ms. Broadbent is of the opinion that the import quotas should be administered by selling import licences at public auction at a minimum price of one cent per watt. The proceeds from this sale, which could reach US$89 million in the first year and grow by at least US$14 million each year thereafter, should be used to provide development assistance to domestic CSPV product manufacturers for the duration of the remedy period.

According to Ms. Broadbent, the underlying cause of the increase in imports of subject merchandise has been damaging global oversupply resulting from the subsidisation of manufacturers in mainland China in the context of targeted industrial policy programmes. She therefore supports any efforts by the administration to address mainland China’s non-market economic policies that have contributed to the global oversupply.  

Meanwhile, the Office of the U.S. Trade Representative has announced a process for importers, exporters, domestic producers and other interested parties to comment on the appropriateness of these safeguard measures and whether they are in the public interest. USTR is particularly interested in the short-term and long-term effects that (i) the proposed actions are likely to have on the domestic CSPV industry, other domestic industries and downstream consumers and (ii) not taking the proposed actions would likely have on the domestic CSPV industry, its workers, and other domestic industries and communities. Written comments are due by 20 November, written responses to the initial round of comments are due by 29 November and a hearing will be held on 6 December.

Content provided by Picture: HKTDC Research
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