China Loses WTO Case Challenging Safeguard on Solar Cells, Panels
Tariff rate quotas of 30% imposed in 2018 under a global safeguard tariff against solar cells and solar panels were legal under international trade law, a panel at the World Trade Organization announced. The Section 201 tariffs fell to 25%, then 20%, and were supposed to fall to 15% in 2021, but are at 18% instead (see 1711010040 and 2010130028).
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China had argued that analysis at the International Trade Commission was not well-reasoned, ignoring other reasons why domestic producers of solar panels were failing other than rising imports and those imports being so numerous that prices were driven down. China argued that poor quality and ability to meet customers' needs were as responsible for the domestic industry's woes. They also argued that exporters were not given enough information to be able to provide a proper defense. And they argued that safeguards are only allowed when the surge in imports is due to "unforeseen developments" from the perspective of WTO negotiators back in 1994, and it should not have been unforeseen that countries would want to develop and "seek energy security." The panel disagreed, saying U.S. officials could not have predicted how China would be able to subsidize industrial sectors, quickly ramp up production past economic fundamentals and how its companies would be able to quickly shift production to other countries to avoid antidumping orders. It said that the ITC was able to show cause and effect between the surge of imports and the injury to domestic producers, and that the U.S. did not have the obligation to provide affected companies with the final report, instead, they were just required to listen to exporters' views and evidence, which they did.
U.S. Trade Representative Katherine Tai noted that this was the first time that a WTO dispute panel agreed that a general safeguard action was lawful. “I welcome the WTO panel’s findings rejecting China’s challenges to the U.S. solar safeguard as baseless,” she said. “The Biden-Harris Administration is committed to ensuring America’s role in resilient clean energy supply chains as part of the Build Back Better agenda."