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Clouds on the horizon

Clouds on the horizon

Three Ontario-based manufacturing companies are suing the US government over import restrictions on solar panels.

The sun will not shine for everyone. On September 22nd, 2017 the United States International Trade Commission paved the way for import restrictions on solar panels, ruling that imports had injured American cell manufacturers.

On September 26th the Department of Commerce pencilled in tariffs of 220% on airliners made by Bombardier, a Canadian manufacturer. A third decision on washing machines is due by October 5th.

President Trump’s decision to hit imports of Canadian solar energy modules with staggering tariffs, starting this month, has sparked another court battle over the extent of his powers to push through his America First agenda.

Three Ontario-based manufacturing companies are suing the US government in the US Court of International Trade over a Trump presidential proclamation that began imposing 30% tariffs on imports of their products as of Feb. 7.

Silfab Solar Inc. of Mississauga, Heliene Inc. of Sault Ste. Marie and the U.S. subsidiary of Canadian Solar Inc. of Guelph jointly argue that Trump has overstepped his authority under US law in several ways.

The case of solar panels was brought by American companies Suniva and SolarWorld Americas. They blame financial troubles on imported solar cells, which surged by 500% between 2012 and 2016. Cheap Chinese supply has not been contained by narrower anti-dumping duties, they claim, as producers have set up operations in third countries.

“SolarWorld is the last remaining U.S. producer of solar cells still in operation in the United States; the remaining U.S. cell producers have all been driven out of business by foreign imports,” SolarWorld’s lawyer said in a briefing to the court.

American businesses that use solar panels would be hurt by import restrictions, too. Tom Werner, Chief Executive of SunPower, an American solar-energy company, and an opponent of the action taken by Suniva and SolarWorld, reports that this is the hot topic among his employees. He points out that the two petitioning companies employ a tiny fraction of America’s solar-energy workforce. The industry association is warning that 88,000 jobs would be at risk if tariffs were imposed.

For one thing, they say Trump ignored the position of the US International Trade Commission, a quasi-judicial body that would be required to recommend global tariffs on imports of solar cells and modules — mainly from Asia.

They also claim Trump disregarded an exemption for the Canadian companies, under the North American Free Trade Agreement, because they haven’t caused significant harm to the few remaining American manufacturers. They argue that US law bars the president “from taking safeguard actions against a NAFTA country in this circumstance.”

The Canadians say the US International Trade Commission concluded last year that solar cells and modules from Canada accounted for only about 2% of crystalline silicon photovoltaic cells used in the United States.

The Canadian companies do have supporters in the United States, including from two Minnesota state senators: Republican Paul Gazelka and David Tomassoni of the Minnesota Democratic-Farmer-Labor party.

“The worry is that this is a crack open of the door and it’s about to swing open,” says Douglas Irwin, an economic historian at Dartmouth College —a rare case where closed might be better than open.