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India complains against US at WTO over subsidies

India complains against US at WTO over subsidies


India has complained against the US at the World Trade Organization (WTO) for what it calls illegal subsidies and domestic content requirements for the renewable energy sector in eight American states, even as the Donald Trump administration pursues a Buy American, Hire American policy.

According to New Delhi’s complaint reviewed by Mint, India has called for establishing a WTO dispute settlement panel to adjudicate over the subsidies and domestic content requirements worth tens of billions of dollars in Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota.

India’s request will come up for consideration on 20 February.

In all likelihood, the US would block India’s first time request for the panel as defendants invariably do at the WTO. Washington, however, will not be able to prevent the panel’s establishment when India makes a second request on the same issue.

In the first stage of their dispute in November, India and the US held consultations for an amicable outcome. But the two sides failed to reach an agreement, following which India opted for the panel.

In its 11-page request, India argued that the dispute with the US arose “from certain measures in the form of incentives which are granted and/or maintained contingent upon the use of domestic over imported goods in the renewable energy sector by various States of the US at sub-federal level.”

These measures include “renewable energy cost recovery incentive payment program” (Washington) “the self-generation incentive program” and “Los Angeles Department of Water and Power’s Solar Incentive Program” (California), Montana tax incentive for Ethanol Production in (Montana), Renewable Energy Credits (Michigan), Delaware Solar Renewable Energy Credits (Delaware), and Made in Minnesota Solar Incentive Program (Minnesota), among others.

India has argued that these programs violate Articles 3.1 (b) and 3.2 of the Subsidies and Countervailing Measures Agreement as they are contingent upon the use of domestic over imported goods, Article III:4 of national treatment because of the failure to treat imported products on par with domestically manufactured like products, and Article 2.1 of the Trade-related Investment Measures Agreement (TRIMS). More important, the US did not notify the measures to the WTO until now which, in itself, is a violation of Article 25 of the SCM Agreement, India complained.

India’s move to take the dispute to the second stage comes after a humiliating blow that New Delhi suffered in its dispute with US over the Jawaharlal Nehru Solar Energy Mission that included incentives for domestically produced solar cells and modules.

In 2016, the WTO’s Appellate Body, the highest court for resolving trade disputes, struck down India’s local content requirements for solar cells and modules.

The inordinate delay in launching the current dispute with the US has denied New Delhi the strategic leverage normally availed of by WTO members in tit-for-tat trade disputes.

At a time when India has to implement the appellate body ruling against its own domestic content requirements, New Delhi has to wait for several years to secure relief from the WTO’s highest court, legal analysts said.

New Delhi was similarly delayed in calling for establishing a dispute settlement panel against the US over Washington’s alleged barriers on the movement of short-term services providers, or non-immigrant visas. India raised the dispute on several measures concerning the US’s fees and numerical commitments for H-1B visas in April last year.

Subsequently, the two sides held consultations in Geneva in May last year but failed to reach an agreement. Until now, India has not made a request for the establishment of the panel.

It remains to be seen whether New Delhi will raise a fresh dispute on the proposed conditions for H-1B programme which would make it difficult for Indian short-term service providers to operate in the US because of the proposed wages and social security conditions, analysts said.

Anand Gupta Editor - EQ Int'l Media Network


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