As has been widely reported, Georgia-based solar panel manufacturer Suniva Inc. filed an action with the U.S. International Trade Commission (ITC) aimed at, in some cases, doubling the price of solar panels and cells produced outside of the U.S. Recently, SolarWorld Americas Inc. joined Suniva’s cause.
Both companies allege that cheap imported solar panels and cells have led to financial hardships for them and fellow U.S.-based manufacturers, because U.S.-produced panels and cells cannot compete with foreign imports on price. Suniva filed for Chapter 11 bankruptcy just days before filing its initial petition with the ITC, and SolarWorld Americas’ parent company also declared bankruptcy (although SolarWorld Americas continues to operate outside of bankruptcy). To make U.S.-manufactured panels and cells competitive again, Suniva’s petition recommends setting price floors for modules and cells not produced in the U.S., at 78 cents per panel and 40 cents per cell in the first year, with such floors ratcheting down on a yearly basis.
The domestic manufacturers’ squabble with Chinese (and other) imports is in no way novel. For instance, certain tariffs were put in place beginning in 2012 to combat government subsidizing of modules and cells manufactured in China and Taiwan. However, both the breadth of the remedy sought and the method by which Suniva is raising its claims have the industry currently abuzz. The Trade Act of 1974 is rarely implicated because of past difficulties obtaining affirmative relief from presidents. Since the ITC agreed to move forward and investigate Suniva’s complaint, it will look to determine whether the quantity of foreign modules and cells imported is “a substantial cause of serious injury, or threat thereof, to the domestic industry producing an article like or directly competitive with the imported article,” pursuant to 19 U.S.C. § 2251 (2017). If the ITC determines that these imported modules and cells are the substantial cause of serious injury to the domestic industry, it will send a recommendation to the president, who has the sole discretion of determining the kind of relief granted. That relief can be expansive and can include tariffs, such as the ones proposed here.
Both sides of the issue argue that jobs and American industry are at stake; however, many stakeholders who oppose the petition argue that the value of any jobs saved by the proposed tariff would be dwarfed by the chilling effect such a price increase would have on the proliferation of solar generation. In fact, they argue that the loss of jobs due to such chilling effect would outweigh the number of manufacturing jobs theoretically saved. Nevertheless, the petitioners’ hopes are buoyed by President Trump’s outspoken support for U.S. manufacturers competing against foreign imports, especially those with ties to China.
The ITC must make its recommendation by September 22, 2017, and will submit its report to the president by November 13, 2017. Ultimately, it will be up to President Trump to decide what specific actions to take, if any.
Please contact any of the authors to learn more about this trade action and its potential impact on the industry as a whole. McGuireWoods will continue tracking this issue.