Canada wins solar tariff trade dispute against US

Thomas Catenacci, DCNF

An independent panel determined Tuesday that current U.S. tariffs placed on solar panel imports violated the 2018 U.S.–Mexico–Canada Agreement (USMCA).

The three-member USMCA panel, which included two former World Trade Organization officials and one former International Law Commission member, ruled that Canada must be exempt from the tariffs, Canada’s global affairs ministry said. The U.S. previously argued that the solar tariffs weren’t under the jurisdiction of the USMCA because they went into effect before the trade agreement was ratified.

The USMCA was drafted in 2018, but revised in 2019 and went into effect in July 2020, according to the Office Of the United States Trade Representative (USTR). Former President Donald Trump introduced the 30% solar cell safeguard tariffs to protect domestic industry in January 2018.

“I welcome the findings of the [USMCA] dispute settlement panel, which unequivocally confirmed that U.S. tariffs on Canadian solar products are unjustified and in violation of [USMCA],” Canadian Trade Minister Mary Ng said in a statement Tuesday.

“We welcome the United States’ intention to pursue a resolution with Canada and Mexico, as indicated by the President in his recent announcement,” she added. “It has been made clear today in the [USMCA] dispute settlement panel’s report that tariffs on Canadian solar products are in violation of (USMCA).”

On Feb. 4, President Joe Biden announced he would loosen the Trump tariffs on solar panels despite pleas from labor unions that argued they were important for protecting U.S. manufacturing jobs. The solar industry has consistently opposed the tariffs.

But Biden suggested in his announcement that the USTR may negotiate the removal of tariffs if it determines, alongside the Departments of Commerce and Energy, that the levies violated trade agreements.

Ng added Tuesday that Canada would work toward the “complete removal” of the solar tariffs.

While the tariffs mainly targeted China, which produces more than 90% of the world’s supply of solar wafers, they also negatively impacted Canada’s solar industry. The firm Canadian Solar produces 4% of the global solar wafer supply, the largest share of any company outside China.

Canadian solar exports to the U.S. have declined 82% since the imposition of the tariffs, according to Ng.

The U.S. has 45 days to resolve the dispute with Canada, the Canadian government said.

“The U.S. appreciates that the panel rebuffed Canada’s request and reaffirmed the President‘s authority to make exclusion determinations in safeguard proceedings,” a USTR spokesperson told the Daily Caller News Foundation in a statement. “We will continue to review the report and work with Canada to resolve the dispute.”

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