U.S. import safeguards on crystalline silicon photovoltaic cells and modules have had varying impacts on domestic manufacturers, according to a report from the International Trade Commission. Possible changes to these measures, which are scheduled to remain in place for another two years, will be evaluated in a future ITC report.
The February 2018 safeguard is applicable to imports from all countries, except certain developing countries that are members of the World Trade Organization as long as imports from these countries individually or collectively do not exceed specified volume thresholds. The tariff-rate quota portion of the safeguard imposes additional tariffs of 30 percent in the first year, 25 percent in the second year, 20 percent in the third year, and 15 percent in the fourth year on imports of (a) CSPV cells in excess of 2.5 gigawatts annually and (b) CSPV modules.
The ITC indicates that the TRQ on CSPV cells has had limited positive effects. Imports increased from 2017 to 2018 and were higher in the first half of 2019 compared with the first half of 2018 as several new module producers imported cells to ramp up U.S. production. At least two major U.S. cell producers ceased production, leading to declines in domestic production and production capacity, and only one cell producer remained in operation in the first half of 2019. Employment at U.S. cell production facilities declined from 2017 to 2018 but was higher in the first half of 2019.
According to the ITC, one U.S. cell producer said the TRQ allowed it a viable exit path from bankruptcy and had a measurable impact on its efforts to restart cell operations. However, this producer also said that the large size of the TRQ, which did not fill in 2018 and was not expected to fill in 2019, and the June 2019 exclusion of bifacial CSPV modules from the safeguard (which is currently under review) have delayed and diluted the remedial effects of the intended relief.
For CSPV modules, the tariff increase had mixed results. Imports declined from 2017 to 2018 but were higher in the first half of 2019 compared with the first half of 2018 as many firms imported modules prior to the anticipated stepdown of tax credit incentives after Dec. 31, 2019. Multiple large module producers opened production facilities in the U.S., particularly in the first half of 2019, leading to increases in domestic production, production capacity, and market share. Employment at U.S. module production facilities declined from 2017 to 2018 but was higher in the first half of 2019 compared with the first half of 2018.
Nevertheless, some U.S. module producers said the positive impact of the safeguard has been limited by factors such as stockpiling of imports prior to the implementation of the safeguard, exporter tariff cost absorption, higher input and transportation costs for domestic manufacturers, and the exclusion of bifacial modules from the safeguard. Some U.S. producers also argued for an increase in the cell TRQ, which they said will be insufficient to supply the U.S. module industry and will be exceeded in 2020 and 2021.
For both products, prices for imported and domestically-made products generally decreased after the safeguard was imposed. However, this decline was primarily attributed to a variety of factors that have consistently driven prices downward, and the ITC said the safeguard caused prices to be higher than they would otherwise have been.
The ITC said several participants in this investigation have suggested modifications to the safeguard and that it will provide its advice on the probable economic effects of such modifications in an upcoming report.
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