WASHINGTON – President Donald Trump's pledge to offer American companies more aggressive protection from foreign competition got fresh ammunition Friday, when a government board cleared the way for him to deploy a long-dormant legal weapon to restrict solar panel imports.
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The significance of the 4-0 vote by the U.S. International Trade Commission goes beyond the energy sector.
The independent, bipartisan agency authorized the use of trade barriers under a law last invoked in 2002 by the George W. Bush administration to protect U.S. steelmakers. The decision is likely to encourage more industries to turn to the "safeguard" law, which permits companies to seek relief if they can prove "serious injury" from a sudden surge in imports.
The Trump administration has vowed to take a fresh look at a wide range of little-used protection powers in pursuit of its "America First" trade agenda, and the safeguard law is just one of them. Trump aides have in recent months also considered dusting off other long-ignored trade-law provisions to pressure China over intellectual property, and to protect U.S. steel and aluminum makers.
The Trump approach marks a break with previous administrations from both parties, which had de-emphasized such unilateral actions in deference to global arbiters, especially after the World Trade Organization was created in 1995 to handle such matters. The Bush administration removed the steel tariffs after the WTO deemed them improper, and industries have since been discouraged from pursuing such protection.
But Mr. Trump's election has given fresh encouragement to distressed U.S. manufacturers. In addition to the solar petition, U.S. washing machine makers are also seeking relief under the same law. The ITC is scheduled to vote on that request Oct. 5.
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In the solar panel case, filed by Georgia-based Suniva Inc. and joined by Oregon-based SolarWorld Americas Inc., the ITC commissioners will now consider specific policy recommendations and submit those to the White House by Nov. 13. Mr. Trump then has two months to decide whether to impose solar trade barriers.
The White House issued a statement Friday saying that Mr. Trump would await the ITC's solar industry relief recommendations, "which can inform his final determination." The statement didn't say whether Mr. Trump favored imposing new import barriers, but did suggest that officials would look favorably at measures designed to shore up domestic production, saying "the U.S. solar manufacturing sector contributes to our energy security and economic prosperity."
Prior administrations have at times rejected similar import restriction recommendations from the ITC, saying that broader economic and national security concerns outweighed those of the domestic industry. And solar company users, joined by conservative, free-trade economists, encouraged the Trump administration to do the same in the solar case.
"Analysts say Suniva's remedy proposal will double the price of solar, destroy two-thirds of demand, erode billions of dollars in investment and unnecessarily force 88,000 Americans to lose their jobs in 2018," said the Solar Energy Industries Association, which promotes solar use.
But Mr. Trump has, in general, suggested he would take a more sympathetic stance toward requests for protection, and both the solar and washing machine industries have appealed to those concerns.
"We brought this action because the U.S. solar manufacturing industry finds itself at the precipice of extinction at the hands of foreign market overcapacity," Suniva said. The firm filed for bankruptcy protection earlier this year.
"There's a lot of pent-up demand for trade enforcement," said Scott Paul, president of the union-backed Alliance for American Manufacturing, which filed a brief supporting the solar petition. He said sectors that might follow include semiconductors, wind turbines, paper and steel, adding that "there will be more willingness to file cases if they believe an administration will move forward."
In a 2016 campaign trade speech, Mr. Trump singled out Section 201 of the 1974 Trade Act -- the provision invoked in Friday's ITC solar decision -- when pledging to "use every lawful presidential power to remedy trade disputes." The administration has already revived two other little-used trade provisions he mentioned in that same speech.
In August, officials opened a Section 301 investigation into whether China's aggressive acquisition of U.S. intellectual property constitutes an "unfair" trade practice, just the second probe under that law since 2001. In April, aides launched studies on blocking steel and aluminum imports under Section 232 of a 1962 trade law, powers allowing protection in the name of "national security" -- a tool last invoked in 1982.
So far, though, none of that has produced action. The China 301 study is expected to take months. Trump aides had promised steel and aluminum decisions by June, but those cases have stalled amid divisions between Mr. Trump's economic nationalist advisers and more free-trade oriented aides wary of sparking a trade war.
A similar political fight will likely follow the ITC 201 ruling for solar panel protection. As an early indication of the divide, 69 members of Congress wrote the ITC in August arguing against solar safeguards, saying the higher costs would "stop solar growth dead in its tracks."
In the 43 years since the 201 safeguard law took effect, 76 petitions have been filed. The ITC has authorized industry protection in 41 cases, with one -- the washing machine case, filed by Whirlpool Corp. -- pending.
There is no official record of how many times presidents have followed through. But in his forthcoming book, "A History of U.S. Trade Policy," to be published in November, Dartmouth's Douglas Irwin writes that between 1975 and '80, the White House imposed tariffs in just nine of the 24 cases in which the ITC recommended such action. Presidents concluded the barriers "would be contrary to the national economic interest," "put a significant burden on consumers" and "damage relations with foreign countries," Mr. Irwin explains.
Under a separate safeguard law aimed at China -- in effect from 2001 to '13 -- just one petitioning industry, makers of automotive tires, won protection.
Those hurdles have discouraged industries from turning to Section 201. Most have instead sought relief through anti-dumping laws, which are applied through ITC votes and don't require White House approval. But anti-dumping protections have limits.
The industry has to prove foreign companies are improperly selling below costs or benefiting from government subsidies, and duties apply narrowly to exports from a specific offending country. Section 201 relief can be granted if a petitioner shows injury from imports -- without proving bad behavior -- and can apply broadly to goods made world-wide.
That flexibility has been cited by Suniva and Whirlpool. Both had won anti-dumping cases against foreign rivals, then complained of "country hopping" by competitors shifting production locations to avoid the penalties. It is a theme raised by Trump advisers, who say commonly used remedies have been insufficient to protect U.S. industries, prompting them to revisit long-ignored laws.
The ITC relief recommendation "will provide an important opportunity for President Trump to show...his administration will in fact use all tools available to support our companies and their workers," Terence Stewart, a Washington trade lawyer advocating tougher trade enforcement, wrote in a recent note to clients.
Write to Jacob M. Schlesinger at firstname.lastname@example.org, Andrew Tangel at Andrew.Tangel@wsj.com and Erin Ailworth at Erin.Ailworth@wsj.com
(END) Dow Jones Newswires
September 22, 2017 16:24 ET (20:24 GMT)