February 18, 2022
A Canada-United States-Mexico Agreement (CUSMA) dispute settlement panel ruled that, under CUSMA, the U.S. was wrong in imposing safeguard tariffs on solar products from Canada.
The administration of former U.S. president Donald Trump failed to exclude Canada from the solar safeguard measure in 2018 when it imposed these tariffs on imports of solar cells, modules, and panels from all sources. This failure to exclude Canada occurred despite the explicit ruling by the United States International Trade Commission that imports from Canada did not meet the standard for inclusion under article 802.1 of NAFTA.
Canada initiated the CUSMA dispute settlement process through a request for consultations on December 22, 2020, and a request for a panel was made on June 18, 2021.
Canada demonstrated to the panel's satisfaction that all of the evidence showed that the United States is required to exclude imports from Canada from the U.S. safeguard measure under the terms of CUSMA. The panel agreed with Canada that the evidence demonstrated that imports from Canada were not a "substantial share" of total imports and that they could not have "contributed importantly" to any serious economic injury claimed to be suffered by U.S. producers of solar products.
The CUSMA panel's findings confirm that only a full exclusion for imports from Canada, as was originally recommended by the United States International Trade Commission in 2018, can ensure that the United States is compliant with its obligations under CUSMA.
The United States has 45 days to reach an agreement with Canada and resolve the dispute.