Canadian solar module makers fight U.S. tariffs as Trump administration defends itself

U.S. President Donald Trump listens during a dinner with European business leaders at the World Economic Forum, Thursday, Jan. 25, 2018, in Davos. (AP Photo/Evan Vucci)

TORONTO -- U.S. President Donald 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 U.S. government in the U.S. Court of International Trade over a Trump presidential proclamation that began imposing 30 per cent 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 U.S. law in several ways.

For one thing, they say Trump ignored the position of the U.S. 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 U.S. law bars the president "from taking safeguard actions against a NAFTA country in this circumstance."

The Trump administration filed its defence late Tuesday, as ordered by CIT chief judge Timothy Stanceu, who is overseeing the case in New York City.

In court documents made available to the public, it said the argument that Trump is statutorily precluded from establishing safeguards because he did not receive an official institutional remedy recommendation from the ITC doesn't place his determination of serious injury into regulatory limbo.

"Section 201 of the Trade Act provides that, when the ITC makes a 'serious injury' determination, the president 'shall take all appropriate and feasible action within his power' to remedy the injury," the court documents read.

The Trump administration also said the three Canadian plaintiffs are on no firmer ground that the requirements of NAFTA were not satisfied in the absence of the ITC finding that goods from Canada accounted for a substantial share of imports and contributed importantly to serious harm suffered by American manufacturers.

"The president determined that Canadian goods met these criteria and should not be excluded from the safeguard measure, and the NAFTA Implementation Act makes clear that the president is the sole arbiter in making such determinations," the court documents read.

Trump's move does have the support of SolarWorld Americas Inc. of Portland, Ore., one of the companies that prompted the ITC's investigation last year, which says the president does have the authority to impose the tariffs.

"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.

The Canadians say the U.S. International Trade Commission concluded last year that solar cells and modules from Canada accounted for only about two per cent of crystalline silicon photovoltaic cells used in the United States.

They also say the commission found the Canadian imports don't meet the threshold required for the United States to include a NAFTA country in the president's general action against imported photovoltaic cells and modules.

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.

"In recent years, Minnesota has made significant and growing investments in the solar industry, often in partnerships with Canadian solar companies," they wrote in a letter to the trade court.

"These partnerships have resulted in the creation of jobs for Minnesotans and aided the rapid expansion of Minnesota's solar industry."

The Minnesota briefing says Trump's proclamation is problematic because it didn't follow a "careful and balanced process" that the executive branch needs to follow before imposing safeguard measures on foreign imports.

"The executive branch did not follow that careful process here," it asserts.

"By imposing a tariff on Canadian imports anyway, the proclamation contravenes the deliberate process Congress designed. ... Furthermore, the proclamation has written Congress out of the vital oversight role to which the statute entitles it."