On October 31, 2017, the U.S. International Trade Commission (ITC) voted on “Global Safeguard” import remedies regarding Crystalline Silicon Photovoltaic (CSPV) cells (see International Regulatory Bulletin (IRB) No. 565). A majority of Commissioners recommended increased duties on CSPV modules, and a tariff-rate quota (TRQ) on CSPV cells. These are less severe than what was requested of the ITC by the petitioners for this investigation, but they are still likely to be a major blow to U.S. solar companies relying on CSPV imports.
The President is to receive the ITC’s formal report by November 13, 2017, and then act, or decline to act, by January 12, 2018. Remedies such as duties and TRQs are generally to be implemented by Jan. 27, 2018. This timeline does not allow U.S. solar developers that rely on imports of CSPV products much time for additional contingency planning, or to react once the President announces his determination.
Other agencies and stakeholders must also quickly consider the effect of potential import remedies on renewable energy policies. For example, as reported in our October 25, 2017 alert, the September 29, 2017 draft Illinois Power Agency (IPA) Long Term Renewable Resources Procurement Plan (LTRRP) for Renewable Energy Credits (RECs) specifically requested recommendations as to how to adjust RECs in light of this ITC CSPV investigation. Such recommendations are due no later than November 13, 2017—the same day as the ITC’s deadline for issuing its CSPV report to the President.
President Trump has broad authority and discretion: he may impose the recommended remedies; impose no remedy; or impose remedies different from those the ITC recommends. Congress could override a Presidential decision in conflict with the ITC’s recommendations, but this authority has never been used and would essentially require a veto-proof majority.
The ITC majority’s recommended duty increases on modules ranged from 30% to 35%. The recommended TRQs (which impose a lower duty rate for under-quota imports and a higher rate for above-quota imports) on cells ranged from 10% on imports through 0.5 GW, to 30% on imports over 0.5 GW.
A different majority of Commissioners recommended additional funding toward adjustment to import competition. One among that majority recommended a straight quota (not a TRQ) on imports of CSPV products, starting at 8.9 GW, and managed by public auction of import licenses (one cent/W minimum). The amount of adjustment funding would be tied to the revenue from the license auction.
International negotiations were recommended by two Commissioners. One focused specifically on China for increased bilateral negotiation. The Commissioners unanimously recommended that a number of countries’ imports be excluded from remedial measures (certain countries with which the U.S. has a free trade agreement or that are eligible for other preferential treatment programs).
As we reported in IRB No. 565, Global Safeguard remedies can remain in place for up to eight years. The Commissioners’ recommendations regarding duties, TRQs, and quotas focus on the initial four-year period (additional time would be by way of extension of the remedy period) and gradually decrease in severity from the first year to the fourth. Regardless, costs to U.S. solar developers will likely increase significantly, and those that rely on imports of CSPV products should continue contingency planning.
As we track developments in this case, we will provide additional updates as those developments indicate the types and levels of remedies that will be imposed.