Tariff Statute Does Not Only Permit Trade Liberalizing Alterations, US Tells Federal Circuit

The "text, structure, purpose, and history" of the Section 201 statute all reveal that Congress did not intend for the Court of International Trade's strict reading of the president's authority to modify safeguard duties, the U.S. argued in its May 11 opening brief at the U.S. Court of Appeals for the Federal Circuit. DOJ is fighting to reverse a ruling at CIT that found that the law only permits trade liberalizing alterations to existing safeguard measures (Solar Energy Industries Association v. United States, Fed. Cir. #22-1392).

The plaintiff-appellees in the action, led by the Solar Energy Industries Association, launched the case to challenge President Donald Trump's proclamation withdrawing an exclusion on bifacial solar panels from the Section 201 safeguard duties on imported crystaline silicon photovoltaic solar panels. Section 204 of the Trade Act of 1974 says the president can, on his or her own authority, "reduce, modify, or terminate" previous safeguard duties after finding the industry has made a "positive adjustment to import competition."

The case hinged on the definition of "modify," with the plaintiffs successfully arguing that this encompasses only trade liberalizing action and the government pushing for a broader definition. The plaintiffs said it defies "logic and congressional intent" to bolster trade restrictions when the domestic industry has made a "positive adjustment." The trade court agreed, ruling that interpreting the statute to include both trade liberalizing and trade restricting modifications would run counter to the "detailed statutory scheme" (see 2111160032).

The U.S. then appealed the decision to the Federal Circuit, filing its opening brief May 11. In it, DOJ said that, despite the focus on the statutory scheme, the trade court's interpretation of the law conflicts with "many aspects of the safeguard statute" that show that Congress did not restrict the president's ability to make limited adjustments to a safeguard measure. One such aspect says that not every action affecting a safeguard measure is considered to be trade liberalizing.

"The only part of the statute that calls for liberalization, which the trial court did not cite in its opinion, is 19 U.S.C. § 2253(e)(5)," the brief said. "That provision requires certain types of actions, such as duties, to be 'phased down at regular intervals during the period in which the action is in effect.' Notably, section 2253(e)(5) does not address exclusions. Consequently, [the president's move], which slowed but continued the downward trajectory of the duty rate, while restoring those duties on bifacial panels, is consistent with the statutory phasedown requirement."

Further, Congress' use of the term "modification" stands as an "especially stark refutation of the trial court's reasoning," the U.S. argued. In certain sections of the safeguard statute, Congress uses "modification" in a way that "unequivocally connotes the President taking trade-restricting action when proclaiming the initial safeguard action," the brief said. This point is highlighted by the legislative history of the statute, which lays out an "open-ended definition" of the term "modification" which shows that Congress viewed the definition as "including trade-restrictive actions," the U.S. argued.

CIT's opinion also expressed a concern that the president would use the modification as a loophole to skirt procedural requirements surrounding the imposition of a safeguard. The U.S., though, said that this concern "fails to appreciate" the requirement that duties under a safeguard measures be phased down over time. Also, this concern has created "significant consequences" for the current safeguard measures.

For instance, the International Trade Commission noted a massive uptick in bifacial panel imports to the point where they became a large portion of the market due to the bifacial exclusion. "If the President cannot use the statutory modification authority to address developments like these in the future -- regardless of whether the President determines to do so in a particular case -- it will curtail the President’s ability to provide a safeguard remedy for suffering United States industries as Congress intended," the brief said.