On April 26, 2017, the U.S.-based solar manufacturer Suniva, Inc. filed a petition for global safeguards with the U.S. International Trade Commission (“ITC”). In particular, Suniva requests the imposition of tariffs on solar cells and the establishment of a minimum price for solar modules imported into the United States. The petition was filed under Section 201 of the Trade Act of 1974, as amended, which authorizes global safeguards investigations, also known as “escape clause” investigations. Throughout the proceedings, affected parties will have multiple opportunities to submit their views not only to the ITC but also to the Trump Administration, which will have the final say on any relief recommended by the ITC.

The Suniva Petition

Suniva is a manufacturer of high-efficiency solar cells and panels based in Georgia, with production facilities in Georgia and Michigan. Earlier this year, Suniva laid off nearly 200 employees; in mid-April, it also filed for Chapter 11 bankruptcy protection. The company’s ITC petition claims that unless global safeguards are imposed, Suniva will be forced to shutter its remaining production operations permanently.

Suniva is filing its Section 201 petition against a backdrop of existing trade remedy measures in the solar industry. Specifically, the ITC and the U.S. Commerce Department previously imposed antidumping and countervailing duties against solar cells and modules from China and Taiwan, and those tariffs remain in effect.

The Suniva petition goes beyond the existing antidumping and countervailing duty orders because the requested safeguards are not limited to imports from specific countries; rather, the remedies under Section 201, if granted, would be global in scope and would affect all solar cells and modules imported into the United States, regardless of origin. The scope of the petition is limited to crystalline silicon photovoltaic cells and modules; it expressly excludes competing thin film photovoltaic products. The petition also excludes modules, laminates, and panels produced in other countries using cells manufactured in the United States.

In terms of duration, Suniva asks the ITC to recommend that the President impose global safeguards for four years—the maximum statutory period. The requested relief is an initial duty rate on imported solar cells of $0.40/watt, along with an initial minimum price on solar modules of $0.78/watt. These initial rates would be reduced slightly over the course of the proposed four-year schedule. Reports suggest that under current market conditions, the price of imported solar modules would roughly double if Suniva’s request were granted.

Section 201 Investigations

In a Section 201 investigation, the ITC must determine whether an article is being imported “in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article.” If the ITC issues an affirmative injury determination, it recommends a remedy to the President, who ultimately decides what remedy, if any, will be imposed.

The ITC is currently reviewing Suniva’s petition to determine whether it was “properly filed” in accordance with its rules. By regulation, petitions must contain specific supporting information including import data, domestic production data, and data showing the alleged injury. Once this initial review is complete, the ITC will decide whether to institute the investigation and will publish a notice of its decision in the Federal Register.

If the ITC institutes an investigation, stakeholders will have various opportunities to present their views. Public hearings are held during the ITC’s consideration of injury (or threat of injury) to the domestic industry and during any subsequent remedy phase. “All interested parties and consumers, including any association representing the interests of consumers,” may attend, present evidence, and cross-question other presenters at hearings.

The injury phase must be concluded within 120 days after the petition’s filing, though the ITC has an extra 30 days to complete “extraordinarily complicated” investigations. Then, in the event of an affirmative injury determination, the ITC submits a report to the President at the conclusion of the remedy phase containing its findings and recommendations. This report must be submitted within 180 days after the petition’s filing.

In determining what relief to provide, if any, the President must take into account the ITC report, the domestic industry’s efforts to make a positive adjustment to import competition, the economic and social costs and benefits of the proposed relief, U.S. economic and security interests, and other statutory factors. Additionally, an interagency trade group must make a recommendation to the President about any action to be taken. This interagency group—chaired by the U.S. Trade Representative and including the Secretaries of Commerce, State, Agriculture, Labor, and the Treasury—will request public comments following an affirmative injury determination by the ITC.

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In his recently released 2017 Trade Policy Agenda, President Trump emphasized that the “safeguard” provisions of Section 201 “can be a vital tool for industries needing temporary relief from imports to become more competitive.” While it remains to be seen what actions the Administration may take in response to the results of the ITC’s Section 201 investigation, Suniva’s petition appears designed to capitalize upon the Administration’s stated interest in strictly enforcing U.S. trade remedy laws, strengthening the nation’s manufacturing base, and protecting against domestic job losses. Depending upon the outcome, the beneficiaries could include not only Suniva but also traditional energy sectors that compete with the solar industry.

 

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Photo of Jay Smith Jay Smith

Jay Smith is of counsel in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and…

Jay Smith is of counsel in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and Litigation groups draws on this academic and policy experience.

He is currently helping clients develop and implement strategies to mitigate supply chain risks arising from U.S. trade actions, such as product exclusions from the restrictions on imported steel and aluminum imposed under Section 232. In addition, Jay regularly represents respondents in U.S. trade remedy proceedings and related litigation, helping to secure a number of negative injury determinations at the ITC in recent years. Jay also advises clients on the negotiation and enforcement of international treaty commitments under the WTO, bilateral and regional trade agreements such as the USMCA, and other international fora—including the ongoing Indo-Pacific Economic Framework negotiations. Much of his policy work is at the intersection of trade and other areas, such as intellectual property, the environment, or labor rights.

Photo of Shara Aranoff Shara Aranoff

Shara helps clients navigate trade remedies, tariffs, and customs regulations in support of their U.S. and global market strategies.

Shara is the Chair of Covington’s International Trade Practice Group, and co-leads the Customs practice.

Drawing on her 20 years of service in the…

Shara helps clients navigate trade remedies, tariffs, and customs regulations in support of their U.S. and global market strategies.

Shara is the Chair of Covington’s International Trade Practice Group, and co-leads the Customs practice.

Drawing on her 20 years of service in the U.S. government, she develops legal and public policy strategies to assist clients engaging with the U.S. International Trade Commission (ITC), U.S. Customs and Border Protection (CBP), Congress, and the courts. In high-stakes antidumping and countervailing duty investigations, Shara helps global manufacturers, distributors, and retailers protect their access to the U.S. market. She assists technology, life sciences and manufacturing companies enforce and defend their intellectual property rights in cross-border Section 337 investigations. Chambers praises her for bringing “behind-the-curtain knowledge to the private sector” in proceedings before the ITC by leveraging her experience as a decision maker.

Shara also regularly advises clients in a wide range of industries on Customs compliance and tariff mitigation, including:

  • Providing legal opinions or seeking Customs rulings on classification, valuation, country of origin, and product marking/labelling.
  • Conducting internal compliance reviews, drafting compliance policies, and providing training.
  • Responding to CBP audits and inquiries and filing voluntary disclosures.
  • Developing strategies to reduce tariffs and take advantage of trusted trader programs.

Prior to joining the firm, Shara was a Commissioner and Chairman of the ITC, where she was a decision-maker in hundreds of Section 337, antidumping, countervailing duty, and safeguard investigations.

She previously served as Senior International Trade Counsel for Senator Max Baucus (D-MT) at the U.S. Senate Committee on Finance, where she was responsible for legislative and policy issues including Trade Promotion Authority; negotiations involving the World Trade Organization and free trade agreements; and trade remedy and customs laws. She was also an attorney-advisor in the Office of the General Counsel at the ITC, where she was lead counsel in litigation before the Court of Appeals for the Federal Circuit and the Court of International Trade.

Photo of John K. Veroneau John K. Veroneau

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade matters.

Ambassador John Veroneau is a Chambers-ranked international trade lawyer in the firm’s International Trade Practice Group. Having served in senior positions in both Executive and Legislative branches, he provides legal and strategic advice to clients on a broad range of international trade matters. Ambassador Veroneau held Senate-confirmed positions under President Bush as Deputy United States Trade Representative (USTR) and USTR General Counsel, and under President Clinton as an Assistant Secretary of Defense.