WHAT IS A SECTION 201 TRADE CASE?
Section 201 of the Trade Act of 1974 is the United States’ “global safeguard” law. It allows for temporary import relief (such as tariffs, minimum prices and quotas) in situations where increased imports of fairly traded specific products are causing “serious injury” to an American industry. A representative of an American industry may petition the U.S. International Trade Commission (ITC) to investigate whether trade relief is necessary. Should the ITC determine that the influx of fairly traded goods was the main cause of serious injury to the American industry, it would recommend remedies to the President, who has the ultimate authority to impose such remedies. The last time the Section 201 process was used to implement safeguards was in 2001 involving the American steel producing industry.
After declaring bankruptcy, Suniva, Inc. on April 26, 2017 filed a petition with the U.S. International Trade Commission (ITC) asking the government to put its thumb on the scale of the U.S. solar market. On May 25, SolarWorld Americas announced it had joined as co-petitioner. Suniva wants a tariff on imported solar cells and a floor price for solar panels made with foreign cells. This case poses a major threat to the U.S. solar industry and its 260,000 workers. If the remedies sought by the petitioners are put into effect, the U.S. solar industry would lose 88,000 jobs next year. It risks billions of dollars in private-sector investment. The company is majority-owned by a Chinese concern, which does not support Suniva’s request for tariff support. On May 23, 2017, the ITC initiated review of this “extraordinarily complicated."
Suniva, Inc. makes solar cells and panels. It is headquartered in the Atlanta metro area. Suniva declared bankruptcy in April 2017 after laying off more than 230 employees and closing its factory in Michigan earlier this year. Suniva’s actions are now controlled by a New York and London based finance firm, SQN. Suniva is majority-owned by Shunfeng International Clean Energy, a Chinese company that holds 63 percent of Suniva’s stock and publicly opposes the petition.
SolarWorld, based in Hillsboro, Oregon, manufactures solar cells and panels. SolarWorld’s decision to join the petition helps Suniva, but it is unclear what remedy SolarWorld wants, since it suggested a different approach in its press release. SolarWorld is owned by a German parent company that has said it is insolvent, which is similar to bankruptcy.
A BAD DEAL FOR AMERICA
The solar industry estimates that the higher tariffs and minimum prices imposed on imported solar cells and panels would more than double the price of these products and lead to a loss of 88,000 American jobs among the rest of the U.S. solar industry. Currently, more than 9,000 American companies employ over 260,000 American workers to make the U.S. solar industry the vibrant economic engine it is today. But this growth is jeopardized from trade remedies like high tariffs and high minimum prices that will endanger the ability of the American solar industry to invest more dollars in the U.S. and employ more Americans. This case has potential implications far outside of the solar industry, and for free trade more generally.