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Solar Tariff to be Reinstated

Wednesday, April 29, 2020

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According to a notice published earlier this month in the Federal Register, the United States Trade Representative is planning to withdraw its exclusion of imported bifacial solar panels from application of the safeguard measure.

The decision would again include two-sided solar panel imports in Section 201 tariffs.

Solar Tariff Background

Starting in November 2017, the U.S. International Trade Commission completed an investigation, determining that crystalline silicon photovoltaic (CSPV) products were being imported into the nation in such high quantities that the endeavor could potentially cause serious injury to the domestic industry and could even produce a competitive article.

Additionally, the Commission concluded in its findings that the import increases were leading to a decrease in financial performance for the domestic industry.

Akiromaro / Getty Images

According to a notice published earlier this month in the Federal Register, the United States Trade Representative is planning to withdraw its exclusion of imported bifacial solar panels from application of the safeguard measure.

A couple months later in January, Trump imposed a four-year-long safeguard measure on CSPV products, slated to begin on Feb. 7, 2018. The safeguard involved a tariff-rate quota (TRQ) on CSPV cell imports not partially or fully assembled into other products, in addition to an increase in duties on imports of CSPV modules.

When broken down, the safeguard TRQ imposed additional tariffs of 30% in the first year, 25% in the second year, 20% in the third year and 15% in the fourth year on imports of CSPV cells in excess of 2.5 gigawatts annually and on the imports of CSPV modules.

Later that same week, the U.S. Trade Representative established procedures for interested persons to request product-specific exclusions from application of the safeguard measure. By June 13, 2019, the U.S. Trade Representative published a notice granting certain requests for exclusions and excluding the products at issue from the safeguard measure’s application.

However, in October, the U.S. Trade Representative announced the elimination of a tariff exclusion for bifacial solar panels, a technology that at the time, was still largely in its infancy. Bifacial solar panels produce power from both sides, in contrast with the more traditional monofacial option.

Had the endeavor revealed success, the Solar Energy Industries Association (SEIA) also warned that the administration could tighten the tariffs to lower the phase-down to 1% annually.

On the matter, The Trade Representative noted, “In light of new information, which indicated that the production of these panels was increasing across the globe, the exclusion would likely result in increases in imports, resulting in competition with materials produced in the U.S. market.”

Adding that maintaining the exclusion would undermine the objectives of the safeguard measure.

By December, the U.S. Court of International Trade temporarily blocked the Trump administration’s October decision in an order stating that the U.S. Trade Representative had acted unlawfully when it withdrew its exemption for bifacial modules.

Although the U.S. International Trade Commission notes in its most recent review that no U.S.-based producer has reported production of bifacial modules since 2016, it expects that there will be 10 gigawatts of U.S. utility-scale demand this year, which current domestic supply won’t be able to match.

In February, the Commission released a midterm report on Section 201 tariffs on solar cells and modules, using information from 2016, 2017 and 2018, in addition to interim periods January-June 2018 and January-June 2019.

According to the data and received questionnaire responses, the report revealed mixed results on the matter.

However, according to SEIA, the industry would be doing better without the tariffs in place and as a result of them, have already negatively affected the industry by preventing an estimated 62,000 jobs, cost $19 billion in industry investments, and resulted in 10 fewer gigawatts in domestic solar power capacity nationally.

The U.S. Trade Representative accepted comments until the end of the month on the potential of eliminating the exclusion of bifacial modules.

Reinstating Solar Tariffs

While some solar panel manufactures previously rallied for the need of tariffs on bifacial modules last year in December, some members in the industry have opposed them.

"The [solar] industry initially sought this exclusion because there is, and will be for the foreseeable future, an acute shortage of [monofacial or bifacial] domestic panels used in utility-scale solar projects," said John Smirnow, SEIA's general counsel and VP of market strategy, in a statement.

“Throughout this process, the solar industry has sought to find a middle ground solution that addressed this shortage in a way that did not undermine the objectives of the underlying Section 201 safeguard measure.”

However, based on an evaluation of comments received and other responses to the tariff exclusion, the Trade Representative—in consultation with the Secretaries of Commerce and Energy—has determined that the bifacial solar panel exclusion is actually undermining the safeguard measure and is requesting that the U.S. Court of International Trade lift the order preliminarily enjoining the withdrawal from entering into effect.

As a response to the request, SEIA is reportedly looking for opportunities to legally challenge the Trade Representative’s decision.

Regarding a timeline on the matter, the withdrawal is slated to apply to imported panels in the decision that the Court lifts the injunction, but in no case would go into effect earlier than May 18.


Tagged categories: Energy and Commerce Committee; Government; NA; North America; President Trump; Program/Project Management; Project Management; Solar; Solar energy

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