Tuesday, May 23, 2017

The Potential Trade Impacts of Suniva's Bankruptcy


Suniva, formerly one of the largest US manufacturers of high-efficiency solar cells and panels, has potentially triggered an international solar trade dispute. On April 17, 2017, Suniva filed for Chapter 11 bankruptcy protection, two weeks after laying off 190 employees without notice and closing its module plant in Michigan. In its bankruptcy filing, Suniva attributed its inability to compete in the domestic market to the mass influx of cheap solar panels from Asian manufacturers and signaled it would further seek relief under the 1974 Trade Act.  
On April 26, 2017, Suniva filed a petition for global safeguards with the U.S. International Trade Commission (ITC) under Section 201 of the 1974 Trade Act. Under Section 201 the President can implement tariffs, minimum prices or quotas on imported goods from anywhere around the world if it is proven the imports cause "serious injury" to a domestic industry. Suniva is asking the ITC to recommend to the president a four-year schedule that would impose a $0.40/watt tariff on solar cells and establish a minimum price of $0.78/watt for solar modules imported into the United States. These initial rates would decrease over the four-year schedule.

As the ITC has started preliminary review of Suniva's Section 201 filing, the Solar Energy Industries Association (SEIA) has emerged as a vocal opponent. In a May 12, 2017 letter to the ITC, SEIA President and CEO Abigail Ross Hopper officially registered opposition to Suniva's proposed tariff schedule. SEIA argues that Suniva does not represent the domestic cells and panels industry on whose behalf the safeguard would be implemented, the proposed relief would put the industry in peril, and safeguards would undercut, not promote, the problems of global excess in cell/module manufacturing capacity.

The ITC has until August 26, 2017, to decide if there has been a "serious injury" to the domestic solar industry. If an injury is found, the ITC will have two months to suggest a remedy to the president. The president can accept, alter, or decline the commission's proposal.