Canada Bringing NAFTA Chapter 20 Case on Solar Safeguards Against US

Canada asked for a Chapter 20 review under NAFTA of safeguard tariffs on solar panel imports.The tariffs on solar panels apply after a country has exported 2.5 gigawatts worth of product (see 1801230052), it said in a news release. Canada noted the U.S. International Trade Commission recommendation that Canada be excluded from any safeguard measures after finding that imports from Canada are not a source of injury to U.S. industry. Despite that, Canada is still subject to the tariffs. "The tariffs violate NAFTA rules and were imposed despite the fact that the United States International Trade Commission found that imports of solar panels from Canada were not harming U.S. industry," Chrystia Freeland, Canada's foreign minister, said July 23.

Canada requested a Chapter 20 panel on the steel and aluminum tariffs in June (see 1806040040). Simon Lester, associate director of the Cato Institute's trade studies center, said requesting a panel under NAFTA is a bit quixotic, because no panel has been formed in 18 years. "The U.S. blocked a previous panel from being appointed, I don't know why they would like this one go through. My expectation is ... it will go nowhere."

The panel that was blocked was on protectionism for the U.S. sugar industry. Mexico asked for a panel under Chapter 20, and, Lester said, there was no roster of panelists active at the time. So, he said, each person suggested for the roster was vetoed by the U.S., and therefore no panel could be formed.

Since then, there have been other panel requests, including by the U.S. in 2009, but no panels, he said. "My sense is everyone understands the process has broken down," he said. "Sometimes these things are just about principle more than anything." Even when panels did have a finding, they weren't really enforceable. Lester said Mexico won a panel decision on U.S. restrictions on Mexican truckers driving in the U.S., and even though both the George W. Bush and Obama administrations made attempts to comply, Congress blocked trucking liberalization.