In response to the dispute raised by India against the renewable energy policies of eight American states, the World Trade Organization (WTO) has set up a panel to resolve the bone of contention between the two countries.
New Delhi had alleged that the Domestic Content Requirement (DCR) norms imposed by eight U.S. states are not in line with the global trade rules. These eight states are Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware, and Minnesota. India had also alleged that the measures of these eight American states are inconsistent with WTO’s Agreement on Trade-Related Investment Measures and the Agreement on Subsidies and Countervailing Measures.
In September 2016, India had requested consultation with the U.S. under the DCR system of WTO regarding the alleged domestic content requirements and subsidies provided by these states in the clean energy sector. Under the norms of DCR, it is mandatory for the domestic companies to acquire a portion of inputs from indigenously produced products.
After the two countries failed to resolve the issue in the bilateral consultation process, India then sought the formation of dispute resolution panel. Later, at its meeting on 21 March 2017, the Dispute Settlement Body (DSB) of WTO agreed to set up a panel to look into the allegations raised by New Delhi on these eight states.
“After losing the DCR case to the U.S., in a tit-for-tat, India had complained to the WTO about eight U.S. states and the subsidies given to their renewable programs. But unlike India’s Jawaharlal Nehru National Solar Mission (JNNSM), the United States does not have a central government run solar policy or a national Renewable Purchase Obligation which makes the case slightly complicated. Also, it is unclear at this point if the mentioned states are still running those programs,” said Raj Prabhu, CEO of Mercom Capital Group.
India has asserted that the policy measures of these states are inconsistent as they provide less favorable treatment to imported products when compared with the domestic products because the subsidies are contingent on the use of domestic goods.
Brazil, China, the European Union, Indonesia, Japan, the Republic of Korea, Norway, the Russian Federation, the Kingdom of Saudi Arabia, Singapore, Chinese Taipei, and Turkey have reserved their rights to participate in the panel proceedings as third parties.
Image credit: Flickr