U.S. Duties on Chinese Solar Products Survive Legal Appeal

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By Brian Flood

U.S. duties on Chinese solar cells and modules will remain in place, after a Federal Circuit Court of Appeals panel Jan. 22 struck down a challenge brought by a group of Chinese companies and their affiliated U.S. importers.

The ruling came on the same day that the Trump administration announced it would apply “safeguard” measures over four years to imports of solar products from around the world, and that it would engage in negotiations “that could lead to positive resolution” of the anti-dumping and countervailing duties on Chinese solar products.

The president imposed safeguard duties ranging from 30 percent in the first year down to 15 percent in the fourth, the Office of the U.S. Trade Representative (USTR) said.

Imports Caused Injury

The three judges upheld the International Trade Commission’s finding that the Chinese products directly caused injury to domestic U.S. solar producers.

Plaintiffs Changzhou Trina Solar Energy Co., Yingli Green Energy Holding Co., and their U.S. affiliates tried to convince the panel that the commission didn’t give enough consideration to other factors that could have hurt the industry, such as competition with natural gas and a decline in government subsidies for solar-energy products. But the judges found that the commission had adequately addressed those concerns and still found that the Chinese imports drove down prices and cost U.S. producers market share.

In recent administrative reviews of these duty orders, the Commerce Department assigned anti-dumping duty rates of 5.82 percent to 238.95 percent, and a countervailing duty rate of 13.93 percent.

John Rogers, senior energy analyst at the nonprofit Union of Concerned Scientists, told Bloomberg Law that these duties were a big factor in the U.S. turning away from China as a source of solar product imports in recent years. Now China accounts for only about 20 percent of U.S. solar products imports.

Administration Unveils Safeguards

The fact that manufacturing shifted from China to other Asian countries in the wake of these tariffs was a major impetus for the push for “global safeguards” on solar modules and cells not just from China, but from around the world, said M.J. Shiao, head of Americas Research at GTM Research, a market analysis firm.

U.S. producers Suniva Inc. and SolarWorld Americas Inc. sought these rarely invoked trade measures, claiming that competition from solar imports contributed to the closure of nearly 30 U.S. production facilities in the industry since 2012 and operating losses of $865 million.

On Jan. 22, USTR announced that the president decided on a four-year safeguard measure, starting with tariffs of 30 percent in the first year, and scaling down to 15 percent by the fourth year. The first 2.5 gigawatts of imported solar cells will be exempt from the safeguard tariff in each of those four years, according to USTR.

Rogers told Bloomberg Law that solar products manufacturing make up only about 15 percent of total U.S. solar employment. Other parts of the industry, including solar installers, have been very concerned about the possible negative effects of safeguards, he said.

Negotiations on Chinese Duties

In announcing the safeguard measures, USTR also said that it would engage in discussions “among interested parties that could lead to positive resolution of the separate anti-dumping and countervailing duty measures currently imposed on Chinese solar products and U.S. polysilicon.”

After the duties were put in place, “China moved production elsewhere and evaded U.S. relief, while maintaining capacity,” said USTR. “Today, China dominates the global supply chain and, by its own admission, is looking to increase its capacity to account for 70 percent of total planned global capacity expansions announced in the first half of 2017.”

The case is Changzhou Trina Solar Energy Co. v. U.S. Int’l Trade Comm’n , Fed. Cir., No. 2016-1053, 1/22/18 .

To contact the reporter on this story: Brian Flood in Washington at bflood@bloomberglaw.com

To contact the editor on this story: Jerome Ashton at jashton@bloomberglaw.com

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