Trade panel recommends tariffs of up to 35%

Source: Christa Marshall, E&E News reporter • Posted: Wednesday, November 1, 2017

A U.S. trade panel today backed tariffs as high as 35 percent on imported solar components, giving President Trump a road map to overhaul U.S. policy and enact trade barriers that could spike prices.

Two members of the U.S. International Trade Commission — an independent federal agency — recommended tariffs of 30 percent on solar cells after 1 gigawatt of imports, and a 30 percent tariff on solar modules, with decreases occurring over four years.

In April, solar manufacturers Suniva Inc. and SolarWorld Americas filed a petition with the ITC asking for trade restrictions to address a flood of cheap solar technology from Chinese-backed companies.

One of the three commissioners suggested a 35 percent tariff on solar modules and a 30 percent level on cells. A fourth called for a less strict option where imported cells and modules would be limited to 8.9 GW on a global basis for a year, with annual increases over four years.

The panel consists of both Republicans and Democrats. Each commissioner can make recommendations to the president for final determination by mid-January.

The tariff suggestions are less strict than SolarWorld and Suniva requested. Last month, the ITC agreed the companies were experiencing “serious injury” (Greenwire, Sept. 22). The ruling covers crystalline solar photovoltaic technology that makes up most solar panels.

“The White House is reviewing the recommendations of the U.S. International Trade Commission regarding the global safeguard investigation into crystalline silicon photovoltaic cells and modules and looks forward to receiving the ITC’s full report,” White House spokeswoman Lindsay Walters said in a statement this afternoon.

“The President will examine the facts and make a determination that reflects the best interests of the United States. The U.S. solar manufacturing sector contributes to our energy security and economic prosperity,” she said.

Most U.S. solar companies, environmentalists and free-trade groups are united against tariffs, saying equipment price increases would kill jobs, dampen industry growth related to solar power installations and give unfair benefits to two companies with foreign ties.

Suniva and SolarWorld say those concerns are overblown and trade restrictions are the only way to revive solar manufacturing.

Road ahead

The solar case now enters its most political phase yet, and groups are expected to ramp up already intense pressure on administration officials.

By Nov. 13, the ITC is scheduled to send a final report of recommendations to the president. The Office of the U.S. Trade Representative within the White House announced this month it will also take written comments through Nov. 20 and hold a public hearing Dec. 6.

The involvement of the Trade Representative adds another layer to the process but doesn’t change the fact that Trump can enact any remedy he chooses, said Timothy Fox, a vice president at research firm ClearView Energy Partners LLC.

However, Fox said, “it’s unclear if this post-remedy recommendation comment period (from the trade representative) will cause the White House to hold off on issuing its decision until December or even early 2018. Based on President Trump’s public comments, he may wish to make an announcement sooner.”

Privately, observers say the discussion is likely to highlight divergent opinions between free traders in the White House and a more protectionist wing, with senior trade adviser Peter Navarro and Trade Representative Robert Lighthizer.

The split emerged earlier in August when the president reportedly said “bring me some tariffs” concerning a different trade case (Greenwire, Aug. 28).

Since then, stakes have risen for the solar industry because of a delay in a different decision involving tariffs for the steel industry.

Administration officials said action on steel won’t happen until after tax reform. By contrast, the solar case has a set schedule, requiring the president to act 60 days after receiving a report from the ITC.

“Now the solar case is the first opportunity for Trump to impose tariffs,” said Paul Nathanson, a spokesman for the Energy Trade Action Coalition, which opposes tariffs.

It also is the first opportunity to “damage U.S. manufacturing jobs given that far more Americans employed in the solar industry will be hurt by tariffs than helped,” he said.

‘Will not heal the damage’

Today’s ITC recommendations left parties on both sides dissatisfied.

Suniva said while it was deeply appreciative the ITC unanimously found last month that foreign imports were causing solar manufacturers serious injury, the proposed ITC remedies “will not heal the damage.”

“The ITC’s remedy simply will not fix the problem the ITC itself identified, and with it, we’ll see very shortly the extinction of what remains of this manufacturing sector,” the company said in a statement.

Suniva had recommended an approximate 36 percent tariff for cells and a 50 percent level for modules.

Abigail Ross Hopper, CEO of the Solar Energy Industries Association, said it was worth noting that in no case did a commissioner recommend anything close to what the petitioners asked for.

“That being said, proposed tariffs would be intensely harmful to our industry,” Hopper said. “While we will have to spend more time evaluating the details of each recommendation, we are encouraged by three commissioners’ reference to alternative funding mechanisms, including our import license fee proposal.”

Commissioner Meredith Broadbent, for example, recommended the sale of import licenses that could generate more than $89 million. She was nominated by President Obama.

The commissioner who made the 35 percent tariff suggestion, Rhonda Schmidtlein, also asked Trump to initiate international negotiations to address the underlying cause of cheap solar imports. She is also an Obama pick.