On September 22, the U.S. International Trade Commission (USITC) made an unanimous determination that increased imports of solar cells into the United States are “a substantial cause of serious injury to the domestic industry”. The ITC’s ruling reaffirmed the relevance of Section 201 of the Trade Act of 1974, which has not been used for 15 years. This post examines the Commission’s injury determination that will provide President Trump with his first opportunity to take action to protect U.S. industry from imports under the safeguard law. It also takes a brief look at a second global safeguard investigation in which the Commission will make an injury determination on October 5.
The USITC initiated the global safeguard investigation on solar imports in response to a petition by Suniva, Inc., and supported by SolarWorld Americas, Inc., which was examined in an earlier post. The Commission’s injury finding was made despite significant opposition from other members of the U.S. industry. For example, the Solar Energy Industries Association (SEIA), the industry’s main trade group, called the ITC’s decision “disappointing” and contended that the foreign-owned petitioners “are attempting to exploit American trade laws to gain a bailout for their bad investments”.
With its solar imports determination, the Commission gave new life to the safeguard statute that has not been used since President George W. Bush imposed tariffs in 2002 to protect the steel industry.
As part of the Commission’s affirmative injury decision, it made findings relating to countries covered under the North American Free Trade Agreement (NAFTA) and other free trade agreements (FTAs), based on requirements in the agreements’ implementing legislation. As for NAFTA, all four commissioners found that imports from Mexico “account for a substantial share of total imports and contribute importantly to the serious injury caused by imports”; but only the Commission Chair made such a finding relating to Canada. All the commissioners found that solar imports from Korea “are a substantial cause of serious injury or threat thereof”. They did not find that imports from any other FTA partners are a substantial cause of serious injury or a threat thereof.
Having found injury to U.S. industry from solar imports, the Commission will now move to the remedy phase and develop recommendations of actions that would address the injury and facilitate industry adjustment to import competition. It will seek public input on potential remedies in an October 3 public hearing.
The agency must submit its report to the President by November 13. That report will includes its injury determination, remedy recommendations and the additional findings. After reporting the President, the Commission will make a public report concerning the investigation after it sends its findings and recommendations to the President.
The President makes the final decision on whether to provide relief and the form, amount and duration of any relief. In doing so, the President is to take into account the Commission’s report, industry efforts to make a positive adjustment to import competition and factors related to the U.S. national economic interest. The remedies available to the President include a tariff increase, a tariff-rate quota, quantitative restrictions, imposition of trade adjustment assistance, the negotiation of orderly marketing agreements or any combination of such actions. The law sets a four-year limit on any relief, but allows for an extension up to eight years. The President’s action is due within 60 days after he receives the USITC report.
The USITC will have a second opportunity to apply the safeguard law when it makes an injury determination on October 5 in a global safeguard investigation involving large residential washers. It launched that investigation on June 13, based on a petition by Whirlpool, which alleges that Samsung and LG have engaged in a pattern of “country hopping” to evade anti-dumping duties levied by the U.S. Department of Commerce. When faced with anti-dumping duties on their imports of residential washers from a particular country, the Korean companies have moved their production facilities to another country. Whirlpool contends that this practice has lead to increased imports that constitute a substantial cause of serious injury to the domestic industry.
The Commission conducted a public hearing on the injury issue in the residential washer investigation on September 7. With two vacancies on the Commission, an affirmative vote by two of the four sitting commissioners would be sufficient for an affirmative injury determination that would send the case to the President.
Jean Heilman Grier
September 26, 2017