May 12, 2022 – Section 201. Section 307. Section 337. Suspension of release orders. Antidumping. Bypass. The last five years of solar supply have been a crash roller-coaster course in American trade remedies. Trade lawsuits against solar panel imports have frustrated renewable energy proponents. They ask: What happened to the administration’s support for renewable energy? The answer: The administration supports renewable energy in a form that is both legal and sustainable.
According to a statement from the Solar Energy Industries Association on Twitter, “the Biden administration is undermining the state’s clean energy goals” because the U.S. Department of Commerce is investigating potential trade remedies against imported solar equipment.
Responding to requests from lawmakers recently, U.S. Secretary of Commerce Gina Raimondo explained that “the Commerce Department stands ready to work with Congress to diversify our supply chains and develop greater domestic solar manufacturing capacity here at home. we”. (Letter to Senator Jacky Rosen, April 26, 2022) Cool heads will appreciate. Even though the administration supports “incentives to boost renewable energy” — in Raimondo’s words — it’s no license for renewable energy to escape otherwise applicable laws.
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Renewable energy in the United States will not be sustainable if it relies on forced labor, unlicensed use of intellectual property, or foreign government subsidies. As this article explains, trade remedies exist to penalize such practices, and renewables will survive, if not thrive, when trade remedies are imposed against such practices.
In June 2021, U.S. Customs issued an order suspending imports of solar panels under Section 307 of the Tariff Act of 1930, which prohibits the importation of goods mined, produced, or manufactured, in whole or in part , in any foreign country by a convict. labor and/or forced or indentured labour, including forced child labour.
Five months earlier, the US Secretary of State had determined that China was committing genocide against the Uyghur population of Xinjiang, where the main silicon factory of Hoshine Silicon Industry Co., Ltd. is located. Six months later, President Joe Biden signed into law the Uyghur law. Forced Labor Prevention Law, which creates a presumption that “with respect to goods, commodities, articles and commodities extracted, produced or manufactured wholly or partly in Xinjiang… (1) the importation of such goods, wares, articles and merchandise is prohibited under section 307 of the Tariff Act 1930.”
The stay release order effectively froze the import of solar panels for several months. But imports picked up when US Customs put in place processes for importers to certify compliance with the order and manufacturers investigated their sources of silicon to avoid producers in the Xinjiang region.
In January 2018, President Trump approved a four-year tariff on imports of solar cells and modules, from all countries, pursuant to Section 201 of the Commerce Act of 1974, following investigation and recommendation by the United States International Trade Commission (“USITC”). In January 2022, following a new USITC report and a compendium of public comments, President Biden extended the Section 201 tariff for another four years.
In extending the Section 201 tariff, the President stated that the safeguard measure on imports of solar cells and modules “continues to be necessary to prevent or remedy serious injury to the domestic industry” and that the evidence shows that the domestic industry “makes a positive adjustment to import competition.”
Section 201, also known as the global safeguard measure, allows the President to take action in response to a USITC determination that increased imports are causing serious injury to domestic producers. In support of the original Section 201 duties, the USITC found that prices for solar cells and modules fell 60% between 2012 and 2016 and that most U.S. producers of solar cells and modules had closed during this period.
Last month, the Commerce Department initiated an investigation into alleged circumvention of anti-dumping and countervailing duty orders on solar cells and modules from China, following a request from Auxin Solar filed on February 8, 2022. The circumvention investigation covers “solar cells and modules that have been completed in Cambodia, Malaysia, Thailand or Vietnam, using parts and components from China, which are then exported from Cambodia, Malaysia, Thailand or Vietnam to the United States.”
The Commerce Department issued the underlying anti-dumping and countervailing duty orders in 2012, against cells and modules from China, based on determinations that the subject goods were sold in the United States United States at less than fair value and that China provided compensatory subsidies to manufacturers and exporters of solar cells and panels. As noted, the USITC found in the Section 201 case that prices for solar equipment continued to decline by 60% during the years 2012 to 2016.
According to the data provided in Auxin’s application, since the imposition of the underlying orders, imports of solar cells and modules from Cambodia, Malaysia, Thailand or Vietnam have completely replaced imports of the same goods in from China and now account for more than 80% of all US imports of solar cells and modules. The nationwide duty rate in the underlying orders exceeds 250%, which would more than triple the cost of importing any merchandise in those orders into the United States. This possibility has dampened imports of solar cells and modules from the Southeast Asian countries named in the circumvention investigation.
Pursuant to Section 337 of the Tariff Act of 1930, the USITC may also issue exclusion orders against unfair imports determined to infringe a patent, trademark, or other intellectual property of the United States that protects a domestic industry of the United States. For example, earlier this year, the USITC issued a customs order to exclude certain imported wind turbine equipment based on a General Electric claim that certain imported wind turbines violated GE’s patents (Inquiry No. 337 -TA-1218).
However, the evidence required by the USITC before issuing an exclusion order is demanding. Unlike the case just mentioned, the USITC denied a petition by a U.S. solar panel manufacturer to exclude imports of alleged counterfeit solar panels (Investigation No. 337-TA-1151) ; the agency determined that the imported panels did not infringe the claimed U.S. patents, and the United States Court of Appeals for the Federal Circuit upheld it.
Several levels of federal review examine each trade remedy application. Solar equipment importers and buyers of imported equipment have pushed back at every step, with some success. For example, when an anonymous group of domestic solar manufacturers requested a circumvention investigation in October 2021, Commerce denied the request, in part based on solar importers’ objections to petitioner anonymity.
In another example, when the U.S. Trade Representative revoked an exemption for bifacial solar panels under Section 201 of the tariff, solar panel importers filed a lawsuit in the U.S. Court of International Trade, claiming that the dismissal was arbitrary and did not follow the procedures required by the administrative regulations. Procedure Act, which governs the conduct of federal agencies.
The court agreed, issued a preliminary injunction prohibiting Customs from collecting Section 201 tariffs on bifacial panels, blocked a second attempt by the U.S. Trade Representative to revoke the bifacial exemption, and ultimately ruled against every attempt to revoke the bifacial exemption (decisions under review On appeal).
Back to the larger question: are trade remedies compatible with a policy that supports renewable energy? Absolutely yes. The flow of federal dollars into renewable energy does not require the use of imported equipment depreciated by forced labor, unlicensed intellectual property, or foreign government subsidies. On the contrary, trade remedies that block or tax such practices are consistent with federal support for renewable energy. Such remedies divert industry development from short-term profits to more sustainable growth.
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