BUSINESS

Ministries bicker over strategy in U.S. solar case

COMBINED CASE:Commerce ministry favours one case

COMBINED CASE:Commerce ministry favours one case  

Inter-ministerial differences have cropped up on what should be India's strategy in dragging the U.S. to the World Trade Organisation’s (WTO) Dispute Settlement Body (DSB) in a matter involving renewable energy policies of several State governments in the U.S. “violating” the global trade body’s norms.

The renewable energy (solar & hydro power) policies in question allegedly have local content requirements and / or greater incentives to domestic manufacturers in the U.S. thereby “restricting and distorting” trade, and in turn “violating” WTO rules.

One vs sixteen

The commerce ministry has opposed the power ministry’s proposal that India should file sixteen separate cases against the U.S. with the WTO on the measures of different State governments there “providing protection” to the local renewable sector including solar panel producers. As per the commerce ministry, India will have better chances of winning the case if it, instead, files one comprehensive case incorporating the details of how all those states are "violating" the WTO norms using their “protectionist” policies, high-level government sources said, asking not to be identified.

Strange delay

According to Abhijit Das, Head & Professor, the Centre For WTO Studies, Indian Institute of Foreign Trade (IIFT), India had several years ago raised the matter before the WTO committees on Trade-Related Investment Measures (TRIMs) as well as on Subsidies & Countervailing Measures (SCM) by pointing out that the renewable energy schemes of many State governments in the U.S. had “very significant” domestic content requirements “violating” the US obligations under the WTO agreements on TRIMs and SCMs.

He added that “India was not satisfied with the response given by the US then. Therefore it is surprising that India waited for so long, instead of dragging the US to the WTO’s DSB much earlier without wasting time.”

It is learnt that the policies that India is looking into include that of California, Washington, Texas, Pennsylvania, New Jersey, Massachusetts, South Carolina, Oregon and West Virginia. These policies apparently offer more incentives to domestically made items and components and/or to encourage local assembling of products used in the renewable sector. The government is also studying a report in this regard prepared by the Centre For WTO Studies at IIFT.

The move comes close on the heels of India recently losing a case to the U.S. at the WTO pertaining to local content requirements in the Jawaharlal Nehru National Solar Mission for solar cells/modules.

Recommended for you