Next week, a dispute settlement panel of the WTO will commence hearings on a trade dispute between Washington and New Delhi over the Indian government’s imposition of local content requirements for solar cells and solar modules under the Jawaharlal Nehru National Solar Mission (JNNSM). The panel, which will be chaired by former New Zealand trade envoy David Walker, will begin its proceedings on 3 February when the US will make its first submission as to how India violated WTO commitments by implementing JNNSM.
In its dispute notification, the US has charged India with imposing national content requirements and denial of national treatment for solar cells and solar modules. The US has also complained that India provides subsidies to its domestic producers involved in the manufacture of solar cells and solar modules. WTO members are not supposed to insist on national content requirements that discriminate against foreign products. Governments are also required to provide national treatment, under which imports must be treated on par with domestically manufactured products.
The US claims that the Indian government’s measures to impose national content provisions and deny national treatment have impaired benefits accruing to American companies. The WTO dispute settlement proceedings will go on for several months and a preliminary ruling will be issued in six months. In New Delhi, a senior Indian government official said on condition of anonymity that India wouldn’t budge from its stand at the WTO. “Without support from the government, our domestic industry can’t survive,” said the official.
Interestingly, Chinese and Taiwanese firms may be slapped with an anti-dumping duty by the US after the US International Trade Commission on Wednesday ruled that their photovoltaic product shipments had hurt US domestic manufacturers. India has rolled out an ambitious campaign to promote solar energy by enlisting the Indian Army, Indian Railways and central public sector units in the effort and providing them with grants on the condition that they source solar equipment from domestic manufacturers.
According to the plan, reviewed by Mint, the government will provide financial support of up to Rs.1 crore per megawatt (MW) to the implementing agency for setting up large solar capacities by placing orders with domestic manufacturers. It requires an investment of around Rs.8 crore per MW for setting up solar photovoltaic power projects. JNNSM was launched by the previous Congress government four years ago and aims to promote ecologically sustainable growth while addressing India’s energy security challenges. Gujarat, where Modi was chief minister before becoming prime minister last year, was the first state to implement the mission.
Although the US has made a strong case about the loss of commercial gains to its domestic producers of solar cells and solar modules in the Indian market, Washington too, has resorted to similar measures, including local content requirements and a range of subsidies for promoting its renewable energy sector at the federal, state, regional, and local levels. India has raised the issue repeatedly against the US at the WTO’s committee on subsidies and countervailing measures, stating that American subsidy schemes relating to local or domestic content requirements are inconsistent with its global trade obligations.
New Delhi has provided a five-page questionnaire listing out US programmes such as solar energy credits that are contingent upon compliance with domestic content requirements. But the Indian government has refrained from raising a trade dispute against the US on its WTO-inconsistent programmes in the renewable energy sector despite collecting evidence about the US subsidy regime and the country’s local content provisions. Against the backdrop of the Modi-Obama agreement to promote clean energy and increase cooperation in solar energy initiatives, trade lawyers are asking whether the US is prepared to suspend the dispute against India on solar cells and solar modules.
“The dispute settlement understanding in Article 12.12 states that the panel proceedings can be stopped anytime at request of the complaining party,” said a trade lawyer who asked not to be identified. “If there is political will due to changed circumstances or new understanding between the two leaders, then the US can simply call for the suspension of panel proceedings,” the lawyer added. The way the US-India trade dispute on solar cells goes could well decide whether genuine national necessities and bilateral initiatives to promote renewable energy eventually triumph over mercantile commercial concerns.
Source: Live Mint – Antidumping