Shining a Light on the Solar Trade: Investigation Leads to Tariffs on Solar Energy-Related Imports (Part II)

Shining a Light on the Solar Trade: Investigation Leads to Tariffs on Solar Energy-Related Imports (Part II)

Legal Sidebar

Shining a Light on the Solar Trade:
Investigation Leads to Tariffs on Solar Energy-
Related Imports (Part II)
Updated January 26, 2018
As discussed in Part I of this two-part Sidebar, on January 23, 2018, President Trump proclaimed a four-
year safeguard measure in the form of a tariff-rate quota on imports of certain crystalline silicon
photovoltaic (“CSPV”) products that enter the United States after midnight on February 7, 2018. The
Proclamation follows a U.S. International Trade Commission (“ITC” or “Commission”) safeguard
investigation (“Solar Investigation”) conducted pursuant to section 201 of the Trade Act of 1974. While
Part I provides background on section 201 safeguard investigations generally, this Part discusses the Solar
Investigation that led to the new tariff-rate quota specifically. It then concludes with some options for
Congress moving forward.
The Section 201 Investigation of Solar Energy-Related Products. On May 17, 2017, Suniva, Inc., a
U.S.-based manufacturer of CSPV cells and modules, majority owned by Chinese firm Shunfeng
International Clean Energy Limited, filed an amended petition with the ITC seeking temporary relief
against imported CSPV cells and modules. Based on this petition, the ITC instituted a section 201
investigation of certain CSPV products that are detailed in the institution notice. Notably, in December
2012 and in February 2015, the United States imposed antidumping and countervailing duties on imports
of CSPV products from China, as well as an antidumping duty order on imports of CSPV products from
Taiwan, after the Commission found that such imports were causing material injury, or a threat thereof, to
a domestic industry. While antidumping and countervailing duties are imposed on imports from a
particular country, safeguard measures under section 201 (including tariffs) are imposed on all imports of
covered products without regard to country of origin (with some exceptions for countries with which the
United States has a free trade agreement and for certain member-countries the WTO classifies as
“developing”). Tariffs resulting from a section 201 investigation are imposed in addition to any duties
already in place.
While the ITC ultimately issued a unanimous affirmative injury determination among the four
participating Commissioners, the Commissioners issued three different recommendations as to a remedy,
summarized below in Table 1.
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Table 1. ITC Four-Year Remedy Recommendations
Product &
Remedy Details
Year 1
Year 2
Year 3
Year 4
Remedy
Chairman Rhonda K. Schmidtlein’s Recommendation
Quota Volume Level
0.5 gigawatts
0.6 gigawatts
0.7 gigawatts
0.8 gigawatts
CSPV Cells:
In-Quota Tariff Rate
10%
9.5%
9.0%
8.5%
Tariff-Rate Quota
Above-Quota Tariff
30%
29%
28%
27%
Rate
CSPV Modules:
Ad Valorem Tariff
35%
34%
33%
32%
Tariff
Vice Chairman David S. Johanson and Commissioner Irving A. Williamson’s Recommendation
Quota Volume Level
1.0 gigawatts
1.2 gigawatts
1.4 gigawatts
1.6 gigawatts
CSPV Cells:
In-Quota Tariff Rate
No Change to Current Tariff Rate
Tariff-Rate Quota
Above-Quota Tariff
30%
25%
20%
15%
Rate
CSPV Modules:
Ad Valorem Tariff
30%
25%
20%
15%
Tariff
Commissioner Meredith M. Broadbent’s Recommendation
CSPV Cells &
Quota Volume Level
8.9 gigawatts
10.3
11.7
13.1
Modules:
gigawatts
gigawatts
gigawatts
Quantitative
To administer this quota, import licenses are to be sold at public
Restriction
Public Auction of Import auction at a minimum price of $0.01 per watt with the revenue
Licenses generated being used, “to the extent permitted by law, to provide
development assistance to domestic CSPV product manufacturers for
the duration of the remedy period.”
Source: Crystalline Silicon Photovoltaic Cel s (Whether or Not Partially or Ful y Assembled into Other Products), Inv.
No. TA-201-75, USITC Pub. 4739, at 2–3.
On November 13, 2017, the Commission transmitted a report containing its affirmative injury
determination and remedy recommendations to the President. On January 23, 2018, President Trump
proclaimed a four-year safeguard measure similar, but not identical, to those recommended by Chairman
Schmidtlein, Vice Chairman Johanson, and Commissioner Williamson, as detailed below in Table 2. The
Proclamation specifies the particular CSPV products that are subject to these safeguards and the effective
dates of the measures: February 7, 2018 through February 6, 2022. The Proclamation also notes the
countries from which imports will be exempted based on the ITC’s country-specific findings made
pursuant to various free trade agreements. The Proclamation also includes a provision under which the
U.S. Trade Representative may, upon request, exempt certain additional goods from the safeguard
measures.

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Table 2. Safeguard Measures Imposed by Presidential Proclamation No. 9693
Product &
Remedy
Remedy Details
Year 1
Year 2
Year 3
Year 4
CSPV Cells:
Quota Volume
Tariff-Rate Quota
Level
2.5 gigawatts
2.5 gigawatts
2.5 gigawatts
2.5 gigawatts

In-Quota Tariff
No Change to Current Tariff Rate
Rate

Above-Quota
30%
25%
20%
15%
Tariff Rate
CSPV Modules: Ad Valorem Tariff
30%
25%
20%
15%
Tariff
Source: Proclamation No. 9693, 83 Fed. Reg. 3541 (Jan. 25, 2018).
Options for Congress
Under certain circumstances, the statute contemplates an immediate role for Congress in reviewing the
President’s decision. Specifically, if the President reports to Congress that the safeguard action taken
(1) “differs from the action recommended by the Commission” or (2) “no action will be taken,” then “the
action recommended by the Commission shall take effect . . . upon the enactment of a joint resolution”
within ninety days of receipt of the President’s decision. That is, a joint resolution disapproving of the
President’s decision is available only if the President reports to Congress that (1) he is imposing a
safeguard measure that differs from the action the ITC recommended, or (2) he is taking no action.
Importantly, such a resolution, if enacted following presentment to the President, does not simply undo
the President’s action, but, instead, puts into effect the action recommended in the Commission’s report.
This provision therefore raises the question of what constitutes “the action recommended by the
Commission,” where, as here, the ITC report contains more than one recommendation. The statute
contains a tie-breaking provision that states if “there is an affirmative determination of the Commission . .
. that serious injury . . . exists . . . and a majority of the commissioners voting are unable to agree on a . . .
recommendation,” then:
(A) if a plurality of not less than three commissioners so voting agree on a remedy finding, such
remedy finding shall . . . be treated as the remedy finding of the Commission, or
(B) if two groups, both of which include not less than 3 commissioners [(i.e., a 3-3 tie)], each agree
upon a remedy finding and the President reports . . . that—
(i) he is taking the action agreed upon by one such group, then the remedy finding agreed upon
by the other group shall . . . be treated as the remedy finding of the Commission, or
(ii) he is taking action which differs from the action agreed upon by both such groups, or that
he will not take any action, then the remedy finding agreed upon by either such group may be
considered by the Congress as the remedy finding of the Commission and shall, for purposes
of [the joint resolution provision], be treated as the remedy finding of the Commission.
As is evident, none of the ITC’s recommended actions in this case was agreed upon by “not less than
three commissioners” as required by this provision. Thus, one could conclude under the tie-breaking
provision that there is no recommendation from the Commission (because none garnered three votes) for
purposes of determining whether the President’s action differs from the ITC’s recommendation, thereby
making the joint resolution provision available. Perhaps suggesting this view, the President’s
Proclamation states: “The ITC did not recommend an action within the meaning of section 202(e) of the
Trade Act (19 U.S.C. 2252(e)).”

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One could also conclude that “action,” as used in the statute, refers more generally to the enumerated
actions the statute allows the ITC to recommend. That is, the term “action” may refer to a type of measure
(e.g., a duty, a tariff-rate quota, a quantitative restriction) instead of the specific recommended
implementation of that action (e.g., a 30% duty). Interpreted this way, at least three Commissioners in the
Solar Investigation recommended a tariff-rate quota, and therefore it could arguably be concluded that “a
plurality of not less than three commissioners so voting” agrees on a tariff-rate quota, and therefore this
remedy could “be treated as the remedy finding of the Commission.” Under this interpretation, the joint
resolution provision would not be available because the President imposed a tariff-rate quota, the same
action three Commissioners recommended.
On the other hand, under a stricter reading of the statute, the President’s imposed safeguard measures
could arguably be read as differing from the ITC’s recommendation, thereby making the joint resolution
available. Support for this view may come from the fact that the President imposed a quota volume level
that is higher than that recommended by the ITC—5 times higher than that recommended by Chairman
Schmidtlein and 2.5 times higher than that proposed by Vice Chairman Johanson and Commissioner
Williamson—and with no annual increase. Read this way, the joint resolution provision may arguably be
available because the President’s action differs from that recommended by the ITC. This interpretation,
however, does not avoid the question of what constitutes the ITC’s recommendation in this case, as the
joint resolution provision works to put into effect “the action recommended by the Commission.”
Ultimately, the paucity of case law concerning the availability of the joint resolution of disapproval does
not give conclusive support to either interpretation. And, such a resolution would be subject to the
President’s veto.
To avoid this interpretive puzzle, Congress could pass legislation that, inter alia, amends or repeals
section 201 or imposes a different trade remedy. As discussed in this CRS report, “Congress is
constitutionally authorized to raise revenue through taxes, tariffs, duties, and the like, and to regulate
international commerce” and “has the accompanying authority to ‘make all Laws which shall be
necessary and proper for carrying into Execution’ these powers.” Any such action on the part of
Congress, however, would also be subject to the President’s veto. Some may wonder whether a
cancellation of the President’s Proclamation might be available under the Congressional Review Act
(“CRA”), which allows Congress to overturn certain agency actions, again subject to the President’s veto.
(For a discussion of the CRA generally, see these CRS products). The CRA, however, applies to an
agency “rule” that the Act requires administrative agencies to submit to Congress. As such, it is
questionable whether this mechanism is available to counteract a presidential proclamation of a safeguard
measure imposed pursuant to section 201.
What appears to be more certain is that the President’s actions could result in a dispute before the
WTO to challenge the United States’ imposition of these safeguard measures, which, in turn,
could lead to a finding that the safeguards violate the country’s obligations under the WTO
agreements. The WTO’s ruling with regard to the 2002 safeguard measures on certain steel
imports could be an indication of how the body might rule on the Trump Administration’s new
measures. As one commentator has observed, the WTO “has ruled that every single safeguard
measure implemented by the United States since 1994 has violated, at least partially, WTO law.”
An adverse ruling from the WTO could potentially lead to the imposition of retaliatory measures
against U.S. exports by other member countries.

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Author Information

Brandon J. Murrill

Legislative Attorney

Disclaimer
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to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
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