Background

The U.S. and Canada signed July 8 an agreement under which the U.S. will suspend its Section 201 safeguard on solar cells and modules from Canada, thus avoiding the potential imposition of trade sanctions by that country.

The Section 201 safeguard on crystalline silicon photovoltaic cells and other CSPV products containing these cells, which applies to imports from most countries, 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, and (2) a higher duty rate on CSPV modules.

A U.S.-Canada-Mexico Agreement panel ruled earlier this year that the U.S. had violated the USMCA by failing to exclude imports from Canada from this 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.

A joint memorandum of understanding resolves this dispute by suspending the safeguard for unliquidated entries of subject goods that are originating in Canada under the USMCA and country of origin Canada under 19 CFR Part 102. This action will be effective with respect to subject goods entered or withdrawn from warehouse for consumption on or after 12:01 a.m. on Feb. 1, 2022.

The MOU allows the U.S. to revoke this suspension if a surge in imports from Canada undermines the effectiveness of the safeguard. President Biden recently extended the safeguard until February 2026, increased the in-quota quantity from 2.5 to 5.0 gigawatts each year, continued the higher duty on CSPV modules at rates that will start at 14.75 percent and decline by 0.25 percent each year, and excluded bifacial solar panels from the safeguard duties.

According to the Office of the U.S. Trade Representative, the MOU “promotes greater North American solar supply integration and reaffirms both countries’ commitment to prohibit imports of solar products produced in whole or in part with forced or compulsory labor.”

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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