Safeguard Modifications Can Include Further Trade Restrictions, Court Says

The Court of Appeals for the Federal Circuit has overturned a Court of International Trade decision and ruled that Section 201 safeguards can be modified to restrict, and not just liberalize, trade.

The Section 201 safeguard on crystalline silicon photovoltaic cells and other CSPV products containing these cells consists of (1) a tariff-rate quota on CSPV cells not partially or fully assembled into other products, with an unchanged duty rate for the in-quota quantity and a higher duty rate for over-quota articles that declines each year, and (2) a higher duty rate on other CSPV products. This safeguard had been slated to expire in February 2022 but President Biden issued a proclamation that same month extending it for another four years and making various changes.

Among those changes was to exclude bifacial solar panels – which absorb light and generate electricity on each side – from the safeguard duties. That action followed a November 2021 CIT ruling against a separate proclamation revoking this exclusion, which the court said “constituted both a clear misconstruction of the statute and action outside the president’s delegated authority” because, among other things, the law permits only trade-liberalizing modifications to existing safeguard measures.

However, in a Nov. 13 decision the CAFC rejected that reasoning, stating that it is “not unreasonable” to hold that a modification to an existing safeguard may include further trade restrictions as well as trade liberalizing measures. The CAFC also ruled that in issuing the proclamation revoking the exclusion the president “did not commit any significant procedural violations of the Trade Act.”