Background

A U.S.-Canada-Mexico Agreement panel has ruled that the U.S. violated the USMCA by failing to exclude imports from Canada from its Section 201 safeguard on solar cells and modules.

According to information from the government of Canada, the U.S. argued that because its safeguard measure was first imposed when NAFTA was in force, Canada’s claims could not be properly made under the USMCA. However, the panel found that these claims are within its jurisdiction because the safeguard constitutes continuing conduct by the U.S. against Canadian goods that Canada alleged is currently in breach of the USMCA.

Ottawa also said it demonstrated to the panel’s satisfaction that the USMCA requires the U.S. to exclude imports from Canada from the safeguard. Specifically, the panel found that imports from Canada were not a “substantial share” of total U.S. imports of the subject goods and could not have “contributed importantly” to any serious economic injury claimed to be suffered by U.S. producers of solar products.

In a Feb. 4 proclamation, President Biden extended the safeguard for another four years but said imports from Canada may be excluded if the two sides can reach an agreement ensuring that such goods do not undermine the effectiveness of the safeguard. However, Canada asserts that the panel’s findings “confirm that only a full exclusion for imports from Canada” will ensure that the U.S. is in compliance with its USMCA obligations.

Canadian trade minister Mary Ng said the U.S. now has until March 18 to reach an agreement with Canada resolving this dispute. A Politico article added that if no agreement is reached “the decision empowers Canada to retaliate with tariffs or trade restrictions on American goods of comparable value.”

For more information on the solar cell safeguard or other trade remedy measures, please contact attorney Kristen Smith at (202) 730-4965 or via email.

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