In a relief for India, the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) has agreed to set up a panel to look into the ongoing trade conflict between the United States and India.

The panel would determine whether India has complied with the previous WTO ruling regarding the Domestic Content Requirements (DCR) for solar cells and modules.

The request to establish a compliance panel was put forth by India in the face of stiff resistance from the U.S. delegation. The first request for the formation of a panel was blocked by the U.S. on February 9, 2018.

However, according to the norms of the WTO, any country that’s part of a dispute can block the creation of a panel once, but when the DSB meets for the second time, the appointment can no longer be blocked unless there is a consensus against appointing the panel.

Consequently, on February 28, 2018, India submitted its second request for the establishment of a panel to determine its compliance with rulings of the DSB in this dispute. The DSB, in return, gave its green signal for the establishment of a panel.

In its request, New Delhi reiterated that it has complied with the findings of the panel and appellate body and that the logical course for disagreements over whether a member has complied with a WTO ruling is recourse to compliance panel proceedings under Article 21.5 of the WTO’s Dispute Settlement Understanding (DSU).

The United States once again declared that India has no basis for asserting compliance with the ruling and that India continues to apply the WTO-inconsistent solar trade measures.  The US also added that it has reserved its right to move forward with the request for WTO authorization to take countermeasures under Article 22.6 of the DSU.

Commenting on the development, a Geneva trade official told Mercom, “Under Article 21.5 of the WTO’s DSU, the panel normally has 90 days to issue its compliance ruling. However, it can go longer if it informs the DSB the reason for the delay and gives an estimated date for the circulation of the ruling”.

“The United States has initiated separate proceedings under Article 22.2 of the DSU seeking WTO authorization to impose trade sanctions on India for its alleged non-compliance with the earlier panel ruling.  India objected to the US request, which automatically triggers WTO arbitration proceedings on the appropriate level of sanctions.  Normally, this proceeding should have finished within 60 days of the deadline for India to comply with the ruling which was on December 14, 2017,” the official said.

“We do not have any information at the moment on the state of play in the arbitration proceedings, when they might be completed, or how they will be carried out in light of yesterday’s establishment of the compliance panel.  India has argued that the compliance panel must rule first before the arbitrator can proceed with his/her work; the United States does not share that opinion, the official further added.

The European Union, Singapore, Korea, China, Canada, Japan, Chinese Taipei, Indonesia, Norway, and Russia have reserved their third-party rights to participate in the panel proceedings.

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