Achieving the nation's climate targets will require access to raw materials and components along the clean energy and technology supply chains at competitive costs. Currently in the US, these supply chains rely heavily on imports, particularly from China, an imbalance which the US has been working to address through massive incentive programs designed to bolster clean energy and technology development while boosting domestic manufacturing capabilities and the purchase of domestically produced goods. These programs are increasing consumer demand for clean energy and clean technologies such as electric vehicles, as well as key business-to-business demand in areas such as energy storage systems.
While emerging domestic suppliers benefit from favorable trade policy, other companies will need to import raw materials and components to keep up with the pace of demand, at least in the near term while domestic production comes online. Hence, knowing how to navigate trade policy has become an essential part of doing business related to clean energy and technology. This is true whether a company's goal is to strengthen trade restrictions to maintain a competitive domestic advantage or avoid trade restrictions to access or supply raw materials and components needed to meet consumer demand.
Below, we discuss the primary trade restrictions at play and how potentially affected companies can navigate trade policy to hew with their particular situations. Specifically, we review the tools available to companies that may wish to initiate, adjust, continue, suspend, or seek exclusions from trade restrictions. We conclude with next steps.
1. Primary Trade Restrictions Relevant to Clean Energy and Technology Sectors
US trade policy will influence the effectiveness of the new incentive programs established to bolster clean energy and technology development. Therefore, it is essential to know how trade restrictions work. The four main categories of trade restrictions are (1) antidumping/countervailing ("AD/CVD") duties, (2) Section 201 restrictions, (3) Section 301 restrictions, and (4) Section 232 restrictions. 1
The general objective of trade policy is to influence the import of goods into the US via the different categories of trade restrictions meant to facilitate specific outcomes. For example, AD/CVD duties seek to offset the "material injury" to domestic industry that results from the dumping of goods into the US at less than their fair value and/or the foreign subsidization of goods imported into the US.2 Similarly, Section 201 restrictions seek to protect US companies from imports that are or may become a "substantial cause of serious injury" to domestic industry.3 By comparison, Section 301 restrictions seek to protect US rights under trade agreements and/or counteract "unjustifiable" foreign activities that burden or restrict US commerce.4 Section 232 restrictions seek to protect national security.5 These goals may be accomplished through the imposition of duties, tariff-rate quotas,6 or other import restrictions.
Companies can seek to influence trade restrictions in several ways, such as by influencing whether restrictions are initiated, adjusted, or continued, by seeking and participating in the process by which companies are granted exclusions, and by influencing the suspension of restrictions.
Table 1 organizes these trade restrictions by objective, governing body, duration, and tools that can be utilized to strengthen the restriction ("Pro-Restriction Tools") or limit the restriction ("Anti-Restriction Tools").
TABLE 1.
Primary Elements of Key Trade Restrictions Affecting Products that Advance Climate Goals
2. Initiation, Adjustment, Continuance, and Suspension
Each trade restriction has its own initiation process. For instance, AD/CVD duties are established through a process led cooperatively by the US Department of Commerce ("Commerce" or "Commerce Department") and the US International Trade Commission ("USITC").7 By comparison, Section...
