United States won WTO dispute against India's solar rules

A World Trade Organization (WTO) dispute settlement panel on 24 February 2016 ruled in favour of the United States in its challenge to New Delhi's alleged discrimination against US solar exports.

The panel agreed with the US that India's localisation rules discriminated against imported solar cells and modules under India's National Solar Mission.

The US Trade Representative's office called the ruling a significant victory that will hasten the spread of solar energy across the world and support clean-energy jobs in the United States.

Key highlights of the ruling

• The three-member panel, presided by former New Zealand trade envoy David Walker, 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 Domestic Content Requirement (DCR) measures are not justified under the general exceptions in Article XX (j) or Article XX(d) of the GATT 1994.

What was the matter?

• In 2013, the US launched a dispute against India at the WTO, complaining that its DCR measures violated core norms of trade-related investment provisions, national treatment provisions for treating imported products on a par with domestically manufactured products, and financial subsidy rules.

• The US complaint alleged that the Jawaharlal Nehru National Solar Mission subsidies were available only if developers used equipment produced in India, violating a key global trade rule.

• The US argued that the rules are a barrier to solar products made in America and elsewhere but also effectively raised the cost of generating solar power in India and were extending the country’s dependence on fossil fuels.

• The United States stated that its solar exports to India had fallen by 90 per cent from 2011, when India imposed the rules.

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