The US on Monday blocked a request by India at the World Trade Organization (WTO) to establish a dispute settlement panel to adjudicate over billions of dollars of subsidies and domestic content requirements for the renewable energy sector in eight American states. Washington said India is raising the dispute on political grounds, according to people familiar with the meeting.
At a dispute settlement body meeting, India made its first-time request for a panel to rule against 11 renewable energy programmes in eight American states that provide subsidies to targeted recipients on the condition that they use local content in the production process.
India said it held talks on 16-17 November to discuss the subsidies and domestic content requirements which allegedly violate global trade rules. The meetings were held were held in Geneva about the allegedly illegal programmes pursued by the eight states. New Delhi said the US’s renewable energy programmes are full of subsidies that are contingent on local content needs which violate global trade rules.
The programmes include: “renewable energy cost recovery incentive payment program” (Washington); “self-generation incentive program” and “Los Angeles department of water and power’s solar incentive program” (California); Montana tax incentive for ethanol production; renewable energy credits (Michigan); solar renewable energy credits (Delaware); and the Made in Minnesota solar incentive programme.
India said the subsidies are tantamount to “prohibited” subsidies and remain inconsistent with Article III of GATT (General Agreement on Tariffs and Trade) 1994 as well as Article 2.1 of the TRIMS (trade-related investment measures) agreement. “Therefore, India is concerned with these identified programmes, which negate the benefits to WTO Members,” it maintained.
The US blocked India’s first-time request on the grounds that New Delhi is raising a political dispute after losing a trade dispute against the US on its local content requirements for solar cells and modules, according to people present at the meeting. The US also insisted that India has no trade interest in the current dispute as there are no exports from Indian companies in the renewable sector to the US.
The US, however, will not be able to prevent the establishment of a panel at the next meeting when India makes a second request under the WTO’s dispute settlement understanding.
India’s move to take the dispute to the second stage came suffering a defeat in its dispute with the 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.
A delay in launching the current dispute with the US has denied New Delhi the strategic leverage normally open to the 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.
Meanwhile, India is yet to take a decision on how it intends to proceed with the H1-B visa trade dispute which is still pending and a steel dispute with the US in which Washington has not implemented the WTO’s Appellate Body recommendations.