The United States has imposed trade restrictions on imports of solar cells and panels starting in 2012, and since then, the number and nature of these restrictions has grown.  The last several weeks have seen a potential for further increase and/or extension of these measures, further complicating trade in this critical component of alternative energy.

First, on September 2, 2021, a World Trade Organization (“WTO”) panel circulated its report in United States – Safeguard Measure on Imports of Crystalline Silicon Photovoltaic Products (DS562), upholding the Section 201 safeguard tariffs imposed by the United States on crystalline silicon photovoltaic cells (“solar safeguard”).  The solar safeguard is a 2.5GW tariff-rate quota that was imposed by the United States in 2018 on imports of solar cells from most countries.  The tariff was initially set at 30 percent, and was scheduled to be reduced by five percentage points each year in the subsequent three years (lasting for a total of four years).  China challenged the solar safeguard at the WTO, arguing that the U.S. International Trade Commission (“ITC”) failed to comply with the 1994 General Agreement on Tariffs and Trade (“GATT”) and the Agreement on Safeguards when conducting its safeguard investigation.  China argued that the ITC had failed to demonstrate that imports of products increased “as a result of unforeseen developments,” as required by the GATT, while also attacking the ITC’s analysis regarding the link between increased imports and serious injury.  The WTO dispute settlement body has historically been skeptical of safeguard actions, often finding them inconsistent with members’ obligations.  However, in this instance, the panel rejected all of China’s claims, and affirmed the reasoning of the ITC.

Continue Reading U.S. Imports of Solar Products Face Increased Restrictions

There exists a deep-seated practice and tradition of resorting to consensus as the favoured means of decision-making at the World Trade Organization (WTO).  This practice was carried over from the time of its predecessor, the General Agreement on Tariffs and Trade (GATT).  This marked preference for decision-making by consensus over voting has been enshrined in Article IX:1 of the Marrakesh Agreement Establishing the WTO (Marrakesh Agreement) which provides that: “[t]he WTO shall continue the practice of decision-making by consensus followed under GATT 1947”.

However, Article IX:1 of the Marrakesh Agreement also states that: “[e]xcept as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting”.

Thus, while the Marrakesh Agreement formally recognizes consensus as the preferred means of decision-making, it also clearly recognizes the validity of taking decisions by voting as a subsidiary means when consensus is unattainable on any given matter.

As an added twist to decision-making at the WTO, Article IX:1 of the Marrakesh Agreement also establishes that: “[d]ecisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast”.  In other words, majority voting was intended to be the default means of decision-making for the Ministerial Conference (MC) and the General Council (GC).

Nevertheless, in practice, voting at the WTO never takes place.  Instead, WTO Members have strictly adhered to consensus since the WTO’s inception.

In this three-part series, we intend to explore how the WTO Membership’s traditional aversion to voting as a means of decision-making is coming under fire and putting a strain on the proper functioning of the WTO.

Each part will in turn discuss the following three instances where significant pressure is currently building up on consensus as the exclusive means of decision-making at the WTO: (i) the appointment of Appellate Body (AB) members; (ii) the proposed decision to waive certain provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) with regard to combatting COVID-19; and (iii) the outcomes of negotiations on e-commerce, investment facilitation, micro, small and medium-sized enterprises (MSMEs) and the domestic regulation of services conducted as “joint statement initiatives” (JSIs).

This first instalment of our three-part series will focus on the appointment of AB members.

Continue Reading Tensions Between Consensus and Voting in WTO Decision-Making – Part I: Appointing Appellate Body Members

This November, the United Kingdom will host the 26th UN Climate Change Conference (COP26) in Glasgow, from October 31 to November 12, 2021.  As part of its preparations, the UK Parliament International Trade Committee recently launched an inquiry on COP26 and international trade.  The Committee will be accepting submissions until September 7, 2021 on the series of questions that make up its call for evidence.  One of those questions asks,

What discussions, if any, are planned to develop a multilateral approach to carbon pricing systems (including border adjustment mechanisms), green subsidies and investment funds, the curbing of fossil fuel subsidies, a circular economy and sustainable supply chains?

A multilateral approach on most of these issues seems very unlikely, notably border adjustment mechanisms.  As discussed in a previous post, the European Union is pursuing its Carbon Border Adjustment Mechanism unilaterally.  The United States and others may follow suit.  This post explores the possibility of reaching a multilateral agreement on curbing fossil fuel subsidies, which could have serious implications for producers and downstream purchasers.

Continue Reading Phasing Out Fossil Fuel Subsidies: Any Prospect for Meaningful Multilateral Action?

The European Commission’s recently released proposal for a Carbon Border Adjustment Mechanism (CBAM) forms a critical part of the European Union’s Fit for 55 Package, discussed in a previous blog.  The proposed EU CBAM will require importers of certain products into the EU to pay for the tons of carbon emissions embedded in those products in the form of CBAM certificates, the price of which would be tied to the price of emissions allowances under the EU Emissions Trading System (ETS).  The CBAM is expected to be phased in gradually from 2023 in the form of detailed emissions reporting requirements, transitioning to full implementation by 2026.  Although the EU CBAM has yet to be approved and details of the mechanism remain to be fleshed out via implementing acts, companies would benefit by evaluating their potential exposure now, not just to the EU CBAM but also to the measures that may be implemented in response by other countries, including the United States.

Continue Reading The EU CBAM: What the Proposed Regulation Covers, What Happens Next, and What Companies Should be Thinking About Now

Luke Tillman and Rebecca Robinson recently published an article in Law 360 assessing US regulations governing the importation of certain types of artwork and cultural antiquities. The article explores how these laws may also be implicated in museum efforts to repatriate some of these items.

Met Artifact Return Highlights Museums’ Legal, Ethical Risks – Law360

On July 13, 2021, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) released its opinion reversing the U.S. Court of International Trade’s (“CIT”) decision that President Trump had unlawfully doubled tariffs on imports of steel from Turkey under Section 232 of the Trade Expansion Act of 1962 (“Section 232”).  The CIT had initially found that such action was beyond the President’s authority as it was taken outside the timeframe set forth in Section 232.  Our prior blog post discussing Section 232 cases at the CIT, including that decision, can be found here.

In Transpacific Steel LLC v. U.S., the CAFC found that the increase in Section 232 tariffs on Turkish steel was permissible because the initial proclamation imposing tariffs on steel imports had allowed for future adjustments.  According to the CAFC, under the statute, the President can take a “continuing course of action” which allows later modification, including the increase of import restrictions.  The CAFC concluded that the CIT’s narrow reading of the statute obstructs the statutory purpose of Section 232, and would impede the President’s ability to effectively address the national security issues raised by the Department of Commerce.  The CAFC also reversed the CIT’s finding that the tariff increase had violated equal protection rights under the Fifth Amendment.  One member of the CAFC panel, Judge Reyna, dissented, arguing that the CIT correctly found that the President exceeded his authority under Section 232.

While this decision concerned a temporary increase in 232 tariffs with respect to imports of steel from Turkey, its impact could be much broader, in that the Biden Administration may rely on this decision to adjust any of the Section 232 duties on steel and aluminum imports more freely.  Currently, it is unclear what President Biden’s next steps with regard to these Section 232 tariffs will be, and now, he may have a freer hand in modifying these tariff levels to effectuate broader trade and industrial policies.

Yesterday, the European Commission published the long-awaited “Fit for 55” Package designed to drive forward the EU’s objective to radically reduce dependence on fossil fuels. As European Commission President von der Leyen stated in the press conference, the “fossil fuel economy has reached its limits”. Consisting of over a dozen initiatives, including both new and revised proposals, it aims to ensure that the European Green Deal’s objective of reducing carbon emissions by at least 55% below 1990 levels is met by 2030, ahead of the 2050 climate neutrality objective.

  Continue Reading The European Commission Proposes to Raise Climate Targets Across Sectors Under the Fit for 55 Package to Further Decarbonize the Economy

On June 24, 2021, US Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) pursuant to 19 USC 1307 against Xinjiang, China-based Hoshine Silicon Industry Co. Ltd. and its subsidiaries (Hoshine). The WRO instructs CPB personnel to detain shipments of silica-based products produced by Hoshine and its subsidiaries, including “materials and goods (such as polysilicon) derived from or produced using those silica-based products.”

On the same day, the US Commerce Department’s Bureau of Industry and Security (BIS) added Hoshine Silicon Industry (Shanshan) Co., Ltd  and four other Xinjiang-based companies to the Entity List based on allegations of their participation “in the practice of, accepting, or utilizing forced labor” in their production processes.

On June 23, 2021, the Department of Labor (DOL) published a Federal Register notice updating its List of Goods Produced by Child Labor or Forced Labor  (TVPRA List) to include polysilicon from China.

Meanwhile, the US Senate Foreign Relations Committee (SFRC) advanced a bill that, if passed, would impose additional restrictions on the importation of goods from China’s Xinjiang Province.

Continue Reading Biden Administration Targets Xinjiang-based Solar Companies over Labor Allegations

US Customs and Border Protection (CBP) maintains a comprehensive set of regulations restricting the importation of various pieces of artwork, antiquities, and cultural property. On June 16, 2021, CBP published in the Federal Register a final rule amending those regulations to reflect the imposition of new import restrictions on certain archeological material imported from Turkey.

The final rule recognizes that the artwork and cultural antiquities from Turkey are in jeopardy of pillage. It adds Turkey to the list of countries which have a bilateral agreement with the United States imposing import restrictions on the cultural patrimony from their respective countries and provides a Designated List identifying the types of archaeological material that are now governed by the restrictions.

Continue Reading CBP Publishes New Import Restrictions on Archeological Material from Turkey

Economists from the Federal Reserve Bank of New York recently published a report analyzing the US-China trade deficit after the imposition of Section 301 tariffs on imports from China in 2018. They concluded that the trade deficit narrowed, but attributed a significant part of this narrowing to duty evasion on the part of Chinese exporters and/or their U.S. importers. Specifically, the authors concluded that U.S. importers artificially reduced the value of their imports from China in order to reduce the “entered value” of those goods, which was the basis on which the additional Section 301 duties were calculated.  This reduction in entered value reduced the overall value of Chinese imports during the period, which in turn reduced the U.S.-China trade deficit.  The authors estimate that the United States lost approximately $10 billion in duty revenue through this possible underreporting of entered value.