SOLAR MANUFACTURERS MAKE LAST PITCH FOR TARIFFS: U.S.-based solar manufacturers are increasingly concerned that the Biden administration is preparing to gut tariffs on imported panels – a move they say could stunt their nascent industry and inadvertently hamper President Biden's climate goals. Extension in name only: Last week, Reuters reported that the White House is considering a dramatic reduction in solar panel tariffs. While some tariffs would remain in place, the plan would double the amount of panels that can be imported before duties are imposed, from 2.5 gigawatts to 5 gigawatts. And it would exempt double-sided panels common in large scale projects altogether. The administration is indeed considering such a policy, your host confirmed through an industry source with knowledge of the talks. But the plan is not final and could change when staff briefs President Biden on the decision, expected this week, or through other internal conversations. Trial balloon? Because of that, the solar industry largely viewed the Reuters article, which was based on two anonymous sources, as a trial balloon for their tariff decision. And while the developers of solar projects would be pleased with the outcome, manufacturers of solar panels in the U.S. are dismayed. "Any [tariff] extension less than four years would stunt investment, but an uncapped bifacial exclusion would render the policy completely hollow," said Scott Moskowitz, director of strategy and public affairs at Hanwha Q Cells, a South Korean panel maker with a factory in Georgia. There's still debate in the administration, however. Some agencies, like the Department of Labor, have argued for an extension of the tariffs, according to two officials with knowledge of the comments. The State Department and White House climate envoy John Kerry, meanwhile, have argued for a reduction in the duties. Manufacturing emissions in focus: Opponents of the tariffs say that easing the flow of cheap imports will help meet Biden's ambitious climate goals. But proponents are making a final push to convince the Biden administration otherwise, pointing out that panels made in China or Southeast Asia, where electricity is primarily generated from coal, emit more carbon in the manufacturing process. "Having high-carbon renewable energy devices, the impact of that can cascade to really undermine the overall contribution that these PV modules should make" to combat climate change, said Dustin Mulvaney, a professor in the Environmental Studies Department at San José State University, who is part of a group working on a low-carbon standard for solar panels. "If we have this system set up where we're ignoring how much carbon is in the supply chain, we really erode some of the greenhouse gas savings." Decision time: Tariff supporters are under the gun to make their case. Biden has to decide whether to overrule the International Trade Commission — which recommended extending the tariffs — by Feb. 6. Don't be surprised if the decision comes a bit earlier than that, likely the end of this week. HOUSE TAKES UP CHINA BILL THIS WEEK: The House is moving at warp speed – in Washington terms – to finalize its version of broad anti-China legislation before Biden delivers his State of the Union address on March 1. The House this week will take up its version – dubbed the America COMPETES Act — beginning with a Rules Committee session on Tuesday . With more than 500 amendments submitted, consideration could spill into Wednesday or beyond. But no other committee markups are expected, said two Hill staffers with knowledge of the legislative plan, so the aim is to pass a final bill by the end of the week. But don't expect a bipartisan package like in the Senate. The House stuffed the bill full of Democratic priorities , including trade language that would impose tariffs on small-value shipments from China, set up screening for American investments overseas, and reinstate trade assistance programs for victims of offshoring. Looking for leverage: The maximalist approach is largely a ploy to strengthen House Democrats' hand in a coming conference committee with the Senate, which will bring a compromise bill that passed 68-32. Whatever bill the conference produces will have to pass both chambers again, so even supporters of the House version know their pet provisions are unlikely to be included in the final legislation. But low stakes don't mean low drama. House Republicans slammed the bill repeatedly last week , saying it is soft on China and offering alternative language that increased military spending to counter Beijing. And some Democratic members have quietly chafed that their leaders went all-in on the trade title without a final markup in the Ways and Means Committee. Trade tensions: Over the weekend, Ways and Means member Rep. Stephanie Murphy (D-Fla.) introduced an amendment directing the Biden administration to set up an exemption process for Section 301 tariffs "nearly identical" to the one in the Senate version. Rep. Ron Kind (D-Wisc.), led a group of other Dem moderates in similar Section 301 language, and Rep. Suzan Delbene (D-Wash.) led another Dem moderate group in an amendment pushing USTR to develop digital trade rules with allies, among others. Dems can't be in disarray: With no GOP support expected, House Speaker Nancy Pelosi will need her party to be nearly unanimous in support of the China bill to ram it through this week. Raimondo running point: The White House, led by Commerce Secretary Gina Raimondo, is pushing hard behind the scenes for Congress to complete its work, desperate for a legislative accomplishment to tout when Biden makes his trip to the Capitol in just over a month. Expect Raimondo to redouble her call for swift congressional action when she speaks to POLITICO's Lauren Barrón-López at noon today. DON'T CALL IT A TRADE DEAL: As Congress hashes out its anti-China bill, Biden's diplomatic team is busy trying to design a multi-nation region framework to combat Beijing's growing economic influence. That so-called "Indo-Pacific economic framework" has inspired confusion since the White House announced it last fall, and now former Wall Street Journal reporter Bob Davis has your inside look at the initiative in POLITICO Magazine, including a previously unreported White House memo outlining talking points for foreign allies. In a nutshell, it's definitely not a trade deal. Read more here. CANADIAN DAIRY RESPONSE AWAITED: USTR officials expect to hear by Thursday how Canada plans to comply with a USMCA panel ruling last month against its system for allocating tariff-rate quotas for imports of U.S. cheese, milk powders, ice cream and other dairy products. The panel found that Canada violated the agreement by reserving 85 percent or more of 14 different dairy TRQs exclusively for use by Canadian dairy processors, such as the Agropur Dairy Cooperative based in Quebec. "We are confident we will be able to meet the findings of the panel, and we continue to work closely with industry and partners to reach a solution," Global Affairs Canada spokesperson Alice Hansen said. "We are actively working with the United States to resolve this. While we don't have an update on timing, we are working to get this right." EYES ON CANADIAN POTATOES: A delegation from Canada, including Minister of Agriculture and Agri-Food Marie-Claude Bibeau, met with USDA Secretary Tom Vilsack in D.C. late last week to discuss the ongoing challenges with the latest detections of potato wart in Prince Edward Island potato fields. Read more on that in Morning Agriculture. RUFUS ON THE MOVE: Former Deputy U.S. Trade Representative Rufus Yerxa has joined the trade practice at the strategic advisory firm McLarty Associates. He was most recently the head of the National Foreign Trade Council, a lobbying group that advocates freer trade policies.
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