This is an extract from a recent policy brief “Overview of Use of US Trade Restrictions on Clean Energy Technology Imports” by The American Council on Renewable Energy. This policy brief provides an overview of the primary provisions of U.S. trade law that have been used to address international trade concerns in the clean technology sector, particularly key components such as polysilicon, steel, and aluminum, and goods like cells and modules for solar energy generation, batteries, and EVs.
The U.S. clean energy industry has long relied on an international supply chain to source equipment for generation and storage technologies. However, stimulated by recent policy support, domestic clean energy manufacturing capacity is primed to scale up significantly over the next decade. The People’s Republic of China (PRC or China) currently dominates global supply chains and production capacity for clean energy technologies. China’s ability to oversupply items for solar energy generation, lithium-ion batteries, and electric vehicles (EVs), and more, has become a major issue of concern for U.S. policymakers. While the Biden Administration recently announced a suite of actions to address these concerns, the use of trade restrictions to respond to Chinese oversupply, particularly in solar technologies, is not new. In fact, portions of the domestic solar industry have sought relief under U.S. trade laws to address unfair trade with China for more than a decade.
US Trade Law and Unfair Competition: Broadly, U.S. trade laws are intended to help ensure a fair playing field for domestic businesses and workers, particularly in sectors where foreign competition exists to produce similar items. To address these concerns, U.S. trade laws allow for imposing tariffs (taxes or fees) on the import of foreign goods to address price imbalances or subsidised production. Goods may also be prohibited from entering the U.S. if they are found to be produced using forced or child labor. Related to the clean technology sector, the U.S. government has imposed tariffs and duties under three primary legal authorities: Section 201, Section 301 , and antidumping (AD) and countervailing duties (CVD). Each of these authorities has a different purpose and process for investigating and imposing tariffs, as described in this brief. In addition to measures such as tariffs, U.S. trade laws include provisions that seek to protect U.S. intellectual property from infringement and other forms of unfair competition. These laws have long recognized that the use of forced labour to produce goods is a violation of human rights and contained provisions intended to prevent the importation of such goods. These authorities have also been used in the clean technology sector.
Responsible Departments and Agencies:
Section 201: Measures implemented under Section 201 of the Trade Act of 1974, are referred to as “safeguard” measures and are intended to help U.S. industry compete successfully with increases in foreign competition. Investigations under this section are generally submitted to the USITC by domestic industry stakeholders who are seriously injured or are threatened by increased foreign imports of comparable products. The USITC then conducts an injury investigation to determine whether injury to U.S. industry has occurred and meets the threshold for relief. If the USITC sends the President a report containing an affirmative finding of serious injury or the threat thereof to domestic industry, the President then makes a determination as to what actions are appropriate to support domestic industry. Import relief (tariffs) can be imposed for up to four years and may be extended for an additional four years, or up to eight total years.
Section 301: The Trade Act of 1974 includes several provisions (collectively “Section 301”) intended to provide legal authority to provide relief from unfair trade practices by imposing trade sanctions on foreign countries that violate U.S. trade agreements, or that burden U.S. commerce in an “unjustifiable” or “unreasonable” manner. Investigations under this section can be initiated in response to a petition or by the USTR. Once an investigation is initiated, USTR must request consultations with the foreign government of concern. If the USTR’s investigation concludes that there has been a violation of a trade agreement or that a foreign government’s actions are “unjustifiable” and “burden or restrict” U.S. commerce, the USTR must take action. Actions include imposition of duties or other import restrictions, withdrawal or suspension of trade agreement concessions, or direct engagement with the foreign government.
Antidumping (AD) and Countervailing Duties (CVD): AD/CVD duties are intended to counteract the adverse effects of sales of foreign goods in the United States at unfair prices (“dumping”) or of foreign goods whose production benefited from certain foreign subsidies, either of which injure or threaten to injure U.S. businesses. AD/CVD duties imposed under the Tariff Act of 1930, as amended , are administered by the U.S. DOC, specifically the department’s International Trade Administration. If the DOC makes an initial affirmative determination, it instructs CBP to collect AD/CVD cash deposits from U.S. importers of the offending products. If both DOC and USITC make affirmative final findings, DOC issues an order and instructs CBP to continue collecting AD/CVD cash deposits from U.S. importers.
Recent actions related to clean energy technologies:
December 2014: DOC issued affirmative final determinations on petitions received in December 2013: AD investigations of certain crystalline silicon photovoltaic products from the PRC and Taiwan, and its CVD investigation into certain crystalline silicon voltaic products from the PRC identified in the order.
February 2015: DOC issued a final AD order finding dumping margins of between 11.45 and 27.55 % for firms in Taiwan.
February 2015: DOC issued a final AD and CVD order that found dumping margins of between 26.71 and 165.04 % percent on imports from certain companies and PRC-wide, and CVD rates of between 27.64 and 38.43% from certain companies and PRC-wide.
June 2021: DHS issued a “Withhold Release Order” (WRO) against one of China’s largest producers of silica-based products, which include solar panels, electronics, and other goods, due to concerns related to the use of forced labor in the XUAR for production of the goods.
February 2022: DOC received a petition alleging that since the actions taken in 2012, Chinese producers acted to circumvent existing U.S. tariffs on imports directly from China by working through third countries, specifically Cambodia, Malaysia, Thailand, and Vietnam. In June 2022, prior to the DOC issuing a final determination in the case, the President issued a Proclamation that declared an emergency due to threats to the availability of sufficient electricity generation capacity to meet expected consumer demand and imposed a 24-month pause on the collection of AD/CVD duties on imports alleged to be circumventing existing AD/CVD orders. The DOC issued its final determination in August 2023, which found that imports of certain crystalline silicon photovoltaic cells imported from Thailand, Vietnam, Malaysia, and Cambodia, using parts from China, are circumventing the AD and CVD orders on solar cells and modules from China. The two-year pause on imported items from the named countries expired on June 6, 2024, and items imported during that time must be used/installed within 180 days (December 3, 2024) to avoid AD/CVD duties.
April 2024: The American Alliance for Solar Manufacturing Trade Committee (AASMTC), which is made up of seven domestic solar manufacturers, filed AD and CVD petitions with the USITC and DOC. The petitions allege that certain crystalline silicon photovoltaic cells, whether or not assembled into modules, imported primarily from Chinese-headquartered firms’ operations in Vietnam, Thailand, Malaysia, and Cambodia, are being or are likely being dumped in the U.S. and are being subsidised, and that these imports are materially injuring the U.S. domestic industry.
May 2024: DOC announced the initiation of AD and CVD investigations and set the dates for the case to proceed, which are likely to be extended.
June 2024: ITC voted 4-0 to continue the investigation based on ITC’s determination that U.S. industry is materially injured by the alleged sale of less than fair value and subsidised cells and modules from Malaysia, Thailand, and Vietnam, and subsidised cells from Cambodia.
Access the complete brief here
