AAI Tells USTR to Consider Harm to Domestic Competition in Weighing Import Tariffs in the Solar Industry

The American Antitrust Institute (AAI) has filed comments with the Office of the U.S. Trade Representative opposing the imposition of “safeguard restrictions” in the solar industry under Section 201 of the Trade Act. Earlier this year, domestic producers of Crystalline Silicon Photovoltaic (CSPV) cells and modules, which are key components used in solar panels, petitioned the U.S. International Trade Commission (ITC) for Section 201 relief.

Last week, the ITC transmitted a report to the President finding that CSPV imports have caused serious injury to the domestic industry. The report also recommends a variety of potential remedies, including tariffs and tariff-rate quotas on imported cells and modules. The President now may decide whether to accept, modify, or reject the ITC’s recommendations.

The AAI comments note that the Trade Act requires the President to consider a variety of domestic-competition factors in deciding whether to implement Section 201 relief. Under the Statute, the President should implement such relief only if the President determines that safeguard restrictions would restore competitiveness to the domestic industry and foster social benefits that outweigh costs.

AAI argues that there is no sound theoretical basis to expect safeguard restrictions to achieve either of these goals. The President therefore should consider the ITC’s remedy recommendations with a strong presumption that they will not have the statutorily required effects.

In addition, safeguard restrictions can alter incentives for domestic competitors, potentially creating market structures that would lead to non-competitive outcomes once the restrictions are implemented. In the solar industry in particular, the President should consider whether raising the cost of imported CSPV cells would have the effect of foreclosing independent module producers, which are heavily dependent on imported cells. The President should also consider whether this could lead to higher prices, reduced output, and diminished quality and service for both the rest of the supply chain and end-user consumers.

The comments were written by AAI Associate General Counsel Randy Stutz, with assistance from AAI General Counsel Rick Brunell and AAI Research Fellow So Young Oh.