U.S. Prevails Over India in WTO Dispute Over U.S. Solar Exports
A World Trade Organization (WTO) dispute settlement panel found in favor of the United States in a challenge to India’s localization rules discriminating against imported solar cells and modules under India’s National Solar Mission.
The panel agreed with the U.S. that India’s domestic content requirements discriminate against U.S. solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules rather than U.S. or other imported solar technology in breach of international trade rules. The Panel rejected India’s defense and determined that India’s local content requirements are inconsistent with the national treatment obligations in Article 2.1 of the Agreement on Trade-related Investment Measures (TRIMs Agreement) and Article III:4 of the General Agreement on Tariffs and Trade 1994.
The U.S. initiated this dispute in February 2013 because it considered that India’s domestic content requirements are inconsistent with WTO rules that prohibit discrimination against imported products. The U.S. made the case that India can achieve its clean energy goals faster and more cost-effectively by allowing solar technologies to be imported from the U.S. and other solar producers.
“The United States strongly supports the rapid deployment of solar energy around the world – including in India,” said United States Trade Representative Michael Froman. “But discriminatory policies in the clean energy space in fact undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, raising the cost of generating clean energy and making it more difficult for clean energy sources to be competitive.”
The U.S. challenged the Government of India’s imposition of domestic content requirements for solar cells and modules under India’s National Solar Mission. Under these requirements, solar power generators are required to use Indian-manufactured solar cells and modules to participate in certain projects under the program. This means that U.S. companies have been effectively blocked from competing for an important share of India’s solar power equipment market. Since India enacted these domestic content requirements in 2011, U.S. solar exports to India have fallen by over 90 percent.
“Manufacturers welcome today’s U.S. victory on solar energy with the WTO’s rejection of India’s appeal and urge the Indian government to move quickly to dismantle its discriminatory domestic content requirements that have blocked access for U.S. solar cell modules,” said Linda Dempsey, National Association of Manufacturers (NAM) vice president of international economic affairs. “As each and every previous ruling in this case has shown, India’s domestic content requirements are a clear violation of core WTO rules. 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.”