US claims victory against India in WTO solar panel dispute

The US on Friday claimed victory over India at the WTO wherein it had challenged the local content requirement in solar panels by the Indian government. The US Trade Representative (USTR) Michael Froman said the World Trade Organisation (WTO) Appellate Body has issued a report finding in favour of the Obama Administration's challenge to India's "domestic content requirements" under its National Solar Mission.

Since India enacted these requirements in 2011, which requires solar power developers to use Indian-manufactured cells and modules, American solar exports to India have fallen by more than 90%, he said.

The Appellate Body affirmed an earlier WTO panel report agreeing with the US that India's domestic content "requirements discriminated against" American-made and other imported solar products, in breach of international trade rules. The decisive finding rejected all of India's defensive arguments, USTR said.

"This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change," Froman said. The Obama administration, he said, strongly support rapid deployment of solar energy worldwide, including in India.

"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," Froman alleged.

The National Association of Manufacturers (NAM) in a statement welcomed WTO's rejection of India's appeal and urged the Indian government to move quickly to dismantle its discriminatory domestic content requirements that have blocked access for US solar cell modules.

"As each and every previous ruling in this case has shown, India's domestic content requirements are a clear violation of core WTO rules and today's victory will give an important boost to US manufacturing," NAM said.

"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," it said.

Earlier in February this year, USTR said the WTO panel found in favour of the US in a dispute challenging India's "localization" rules discriminating against imported solar cells and modules under India's National Solar Mission. 

The WTO panel agreed that India's domestic content requirements discriminate against US solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules, in breach of international trade rules, it said.

"The WTO Appellate Body rejected all of India's defensive arguments," USTR said.

In particular, the Appellate Body upheld the Panel's finding that India's DCR measures are not justified under the government procurement derogation of Article III:8(a) of the GATT 1994 because the Indian government does not itself procure solar cells or modules under the NSM, it said.

The Appellate Body upheld the Panel's finding that India's DCR measures could not be justified under Article XX(j) of the GATT 1994, because the Indian government had failed to establish that solar cells and modules were "in short supply" in India, it added. The Appellate Body also upheld the Panel's finding that India's DCR measures are not justified under Article XX(d) of the GATT 1994, because India failed to demonstrate that its DCR measures are in fact "measures to secure compliance with laws or regulations which are not inconsistent with the provisions of [the GATT 1994]," USTR said.