India Files WTO Challenge Against US State Programmes for Renewable Energy

15 September 2016

India has filed a request for WTO consultations with the US, citing select measures which it claims unfairly support the renewable energy sector in eight American states.

The move is the first step in dispute settlement proceedings at the Geneva-based organisation, and marks the latest development in a long-running debate over how to best support the deployment of renewable energy without running afoul of global trade rules.

The consultations request was submitted on Friday 9 September, trade sources said, with the news being made public on Monday. Over the last several months, Indian officials have indicated in various media reports that such a dispute might be forthcoming, pending internal processes.

While the request for consultations was not yet public at the time of this writing, sources say that it refers specifically to subsidies and domestic content requirements that are allegedly in place in California, Connecticut, Delaware, Montana, Massachusetts, Michigan, Minnesota, and Washington.

Details on which specific state-level programmes are being cited by New Delhi – and what specific subsidies or domestic content requirements are involved – have not yet been confirmed.

These measures, India claims, are allegedly in violation of both the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the Agreement on Trade-Related Investment Measures (TRIMs).

Under WTO rules, parties to a dispute must now conduct consultations for a minimum 60-day period, in an effort to find a mutually agreed solution to the case. Should these talks fail to yield such an outcome, India can request that a panel be established to hear the case.

AB report in other US-India solar case forthcoming

The news of the WTO complaint comes just days before the organisation’s highest court is meant to release its own findings in a separate India-US renewable energy dispute (DS456).

The latter case, involving domestic content requirements (DCRs) within the Asian economy’s Jawaharlal Nehru National Solar Mission (JNNSM), has been under appeal by New Delhi after an earlier panel ruled that those DCRs were in violation of global trade rules. (See Bridges Weekly, 3 March 2016 and 28 April 2016)

The panel stressed at the time that its analysis was limited only to whether these policies were legal under global trade rules, and was not questioning whether India’s policy objectives – such as improving energy security – were legitimate.

In its subsequent appeal, India had specifically argued that the JNNSM’s domestic content requirements are covered by a provision in the WTO’s General Agreement on Tariffs and Trade (GATT) that exempts government procurement-related measures from the organisation’s rules on national treatment. The latter requires like products from foreign and domestic producers to be treated equally.

New Delhi had also argued that the measures qualify for some of the GATT’s Article XX exemptions, which outline a series of reasons for which a WTO member can adopt policies that would otherwise violate global trade rules.

Both disputes are likely to fuel a long-running debate over how best to increase the use and development of clean energy sources, particularly given that many experts now suggest that DCRs – along with being trade-restrictive – may not be the best approach for meeting such objectives.

A full report on the Appellate Body ruling, along with a more detailed analysis of India’s consultations request in the new case, will be featured in the next edition of Bridges Weekly.

ICTSD reporting; “India confirms it will file 16 solar cases against US under WTO dispute,” PV MAGAZINE, 13 May 2016.

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