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Sept. 16 — The Obama administration hailed the World Trade Organization's (WTO) latest rejection of India's domestic solar policy as a win for American manufacturing and the global effort to combat climate change.
The WTO ruled Sept. 16 that India's national solar program violated WTO rules and unfairly discriminated against imported solar cells and modules.
“This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change,” U.S. Trade Representative Michael Froman said in a news release.
“We strongly support the rapid deployment of solar energy worldwide, including in India,” Froman said. “But local content requirements are not only contrary to WTO rules, but actually undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, making it more difficult for clean energy sources to be cost-competitive.”
The WTO ruling helps bolster USTR efforts to demonstrate how international trade agreements like the 12-nation Trans-Pacific Partnership can be beneficial to ordinary Americans.
India's government was not surprised by the verdict, according to a Commerce Industry official. “We were aware of this outcome. India has always adhered to the ruling. It will do so even now.” However, the ruling will adversely impact India's various clean energy programs, the official said.
The case centers on India's Jawaharlal Nehru National Solar Mission program, which established a series of policy measures—including new domestic content requirements—with the goal of deploying 100 gigawatts of solar power by 2022 and reducing the cost of solar power generation.
The WTO appellate body's Sept. 16 decision upheld a February ruling that found the program's domestic sourcing requirements violate Article 2.1 of the WTO Agreement on Trade-Related Investment Measures and Article III:4 of the General Agreement on Tariffs and Trade 1994.
The panel also rejected India's argument that the measures should be covered by the government procurement exemption under Article III:8(a) of the General Agreement on Tariffs and Trade 1994 and said the measures were not justified as a general exception to the WTO rules under articles XX(j) and XX(d) of the GATT 1994.
The ruling may now be submitted to the WTO's Dispute Settlement Body for formal adoption at any point in the next 30 days. India will then have 30 days to determine whether and how it will comply with the ruling.
It remains unclear if India will comply with the terms of the WTO's latest ruling and any reluctance to do so could result in retaliatory trade actions from the U.S.
In February, the Indian government told U.S. trade officials it would not be able to entirely eliminate the domestic content requirements of its solar energy program (33 ITD, 2/19/16).
India's Power Minister Piyush Goyal told Froman that India would consider withdrawing the domestic content provisions of its Jawaharlal Nehru National Solar Mission program for commercial projects but not for public sector projects.
Goyal told Froman that completely eliminating the program's domestic content requirements would jeopardize the Indian government's goal of deploying 100 gigawatts of solar power by 2022.
Last week, India launched a new WTO dispute over a series of alleged U.S. subsidies and requirements in the renewable energy sector that New Delhi said violated international trade rules.
The case—which was launched in retaliation for the U.S. dispute against India's solar program—claimed that eight U.S. states imposed illegal domestic content requirements and provided subsides that favored domestic products over imported goods.
Though New Delhi did not cite which specific programs it was targeting, it said the measures violated the WTO's Agreement on Trade-Related Investment Measures and the Agreement on Subsidies and Countervailing Measures.
India's request for consultations is the first step in the WTO dispute settlement process and trade officials from India and the U.S. are expected to soon hold meetings on the matter.
The Sept. 16 decision cannot be further appealed and will benefit b the U.S. solar industry, whose exports to India declined by more than 90 percent since the country's solar program was launched.
“Today's victory will give an important boost to U.S. manufacturing,” said Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers.
“This decision also demonstrates why the strong rules-based WTO system and trade agreements with binding and strong enforcement rules are critical to open markets and eliminate unfair barriers overseas,” Dempsey said in a news release.
“This is an important victory for the U.S. solar industry and America’s hard-working 209,000-plus solar employees,” said Christopher Mansour, vice president of federal affairs for the Solar Energy Industries Association.
“Now that litigation is finally behind us, our hope is that India will quickly come into WTO compliance and we look forward to a path where the solar supply in both our markets can grow.”
With assistance from Nayanima Basu in New Delhi, India.
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The appellate body report is available at http://src.bna.com/iFU.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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