INDIA and USA

India has won a major trade dispute against the US at the World Trade Organization
(WTO), with a dispute settlement panel.

 India had claimed that the domestic content requirements and subsidies instituted by the
governments of the eight states of the US in the energy sector violated several provisions of the
Trade-Related Investment Measures (TRIMs) Agreement and Subsidies and Countervailing
Measures Agreement.
 India brought this dispute to the WTO in 2016.

o The same year, the US had won a case at WTO against India’s solar power
policies, claiming that policies had resulted in a 90% reduction of U.S. solar exports to India.
 The panel pronounced that subsidies and mandatory local content requirements instituted
by eight American states (Washington, California, Montana, Massachusetts, Connecticut,
Michigan, Delaware and Minnesota) breached global trade rules.
 The panel found that all the US state measures at issue are inconsistent with GATT 1994
(Article III-national treatment) because they provide an advantage for the use of domestic
products, which amounts to less favourable treatment for similar imported products.

o Under the national treatment provision, foreign producers must be treated on a par
with domestic producers.
 The US can challenge the panel’s ruling before the Appellate Body (AB) of WTO.

o However, the AB has become dysfunctional because the US has been blocking
appointments to it.

India received a shot in the arm in its fight against some US states offering favourable treatment
to domestic renewable energy systems and components with a World Trade Organization (WTO)
panel backing its complaint. The panel on Thursday ruled in favour of New Delhi which had
claimed that subsidies and mandatory local content requirements in 11 renewable energy
programmes in eight American states are inconsistent with global trade rules.

India had requested consultations with the US in September 2016 regarding certain measures
relating to domestic content requirements and subsidies instituted by the governments of the US
states of California, Connecticut, Delaware, Massachusetts, Michigan, Minnesota, Montana, and
Washington, in the renewable energy sector. These states were offering incentives such as
renewable energy credits through direct and indirect payments and rebates, tax credits and tax
refunds for the purchase of renewable energy equipment and systems.

New Delhi held consultations with the US on the matter in November 2016, but the talks failed
to resolve the dispute, prompting India to request the establishment of a panel to rule on its
claims citing the measures to be inconsistent with the US’ obligations under the General
Agreement on Tariffs and Trade (GATT), Trade-Related Investment Measures (TRIMs)
Agreement, and the Agreement on Subsidies and Countervailing Measures.

India’s win at the WTO is a tit-for-tat trade dispute as the US had complained in 2014 and won
against India in a case on the incentives for domestically produced solar cells and modules under
the Jawaharlal Nehru Solar Energy Mission.

“The panel found that all the US state measures at issue are inconsistent with GATT 1994
because they provide an advantage for the use of domestic products, which amounts to less
favourable treatment for like imported products,” the panel said in its findings.

The ruling comes at a time when trade tensions between the two sides have escalated with
Washington terminating preferential benefits to Indian exports and New Delhi imposing high
duties on 28 American products.

As per WTO norms, the panel report shall be adopted by the dispute settlement body (DSB)
within 20 to 60 days of circulation, unless the DSB decides by consensus not to adopt the report
or either party notifies its decision to appeal.

A ruling given by the WTO’s dispute settlement panel on renewable energy or the solar sector in
favour of India has been challenged by the US in the upper body of the World Trade
Organization.

In June, a WTO dispute resolution panel ruled in favour of India in a case against the US saying
that America’s domestic content requirements and subsidies provided by eight of its states in the
renewable energy or the solar sector are violative of global trade norms.

The US has challenged this ruling in the WTO’s Appellate Body, which is above the dispute
settlement panel.

“The US hereby notifies its decision to appeal to the appellate body certain issues of law covered
in the report of the panel in US Certain Measures Relating to the Renewable Energy Sector and
certain legal interpretations developed by the panel,” a WTO communication has said.

The panel in its ruling had concluded that the measures of the US are inconsistent with certain
provisions of the General Agreement on Tariffs and Trade (GATT).

The GATT aims to promote trade by reducing or eliminating trade barriers such as customs
duties.

In September 2016, India had dragged the US to the WTO’s dispute settlement mechanism over
the issue.

Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and

Minnesota were the eight states providing subsidies.
India had stated that the measures are inconsistent with global trade norms because they provide
less favourable treatment to imported products than domestic products, and because the subsidies
are contingent on the use of domestic over imported goods.

Parties to a dispute can appeal a panel’s ruling. Appeals have to be based on points of law, such
as legal interpretation – they cannot re-open factual findings made by the panel.

Each appeal is heard by three members of an Appellate Body, comprising persons of ecognized
authority and unaffiliated with any government.

Each member of the appellate body is appointed for a fixed term. Generally, the Appellate Body
has up to 3 months to conclude its report.

The Geneva-based body can uphold, modify or reverse legal findings and conclusions of WTO’s
dispute panel and its reports. If the body’s ruling goes against India, the country will have to
comply with the order in six-seven months.

The ruling in favour of India came at a time when there are trade tensions between the two
countries.

The US has rolled back export incentives from India under its Generalized System of Preferences
programme and New Delhi has imposed higher customs duties on 28 American products.

The two countries are also at loggerheads over a number of other disputes at the WTO. The US
has challenged certain export promotion schemes of India, while India has challenged the US’
unilateral increase in customs duties on certain steel and aluminium products.

US and INDIA
India hit back at Washington’s latest legal assault on its solar power policies at the World Trade
Organisation (WTO)

India rejected a U.S. legal claim and started exploring possible new protection of India’s own
solar industry

India told the WTO last week that it was considering the case for imposing temporary emergency
tariffs on solar cells, modules and panels, after a petition from the domestic industry

Safeguard tariffs are permitted by the WTO if there is evidence of serious harm or threat of
serious harm, to a country’s production from a sudden, unforeseen surge in imports

Last month the United States triggered a new round of litigation at the WTO
It argued that India had failed to abide by a ruling that it had illegally discriminated against
foreign suppliers of solar cells and modules

India said it had changed its rules to conform with the ruling and that a U.S. claim for punitive
trade sanctions was groundless

It said Washington had skipped legal steps, failed to follow the correct WTO procedure, and
omitted to mention any specific level of trade sanctions that it proposed to level on India, leaving
India “severely prejudiced”

India would be vindicated if the proper process was followed

India unveiled its national solar programme in 2011, seeking to ease chronic energy shortages in
Asia’s third-largest economy without creating pollution

The United States complained to the WTO in 2013 that U.S. solar exports to India had fallen by
90 percent

The WTO judges agreed that India had broken the trade rules by requiring solar power
developers to use Indian-made cells and modules

Renewable energy has become an area of severe trade friction

This is because major economies are competing to dominate a sector that is expected to thrive as
reliance on coal and oil dwindles

Context: India lost a case in WTO pertaining to local content requirements in the Jawaharlal
Nehru National Solar Mission for solar cells/modules

News: There are inter-ministerial differnces over strategy to be adopted by India to drag US to

WTO’s Dispute Settlement Body

The renewable energy policies of several State govt’s in US violates the global trade body’s
norms

How? Many State govts in US had “very significant” domestic content requirements “violating”
the US obligations under the WTO agreements