With a World Trade Organization ruling in its favor this week, the United States remains undefeated in trade disputes with foreign companies and governments.
However the ruling, viewed by some, could become the source of future defeats of the US in international trade dealings.
A WTO dispute settlement panel ruled as unfairly discriminatory against American manufacturers a decision by the India government that requires that companies that sell solar power to the government use only domestically-made parts and components. The case was filed by the Obama administration.
Ironically, the same thing that the Indian government had attempted to do is done by dozens of states and local governments in the United States – they subsidize local renewable energy companies and in some cases require them to buy from local manufacturers.
A December 25 paper by Vanderbit University Law School Professor Timothy Meyer says that there are 44 such programs in 23 states, and “China and India have already identified several of these programs as incompatible with WTO law”.
The California’s Self Generation Incentive Program, which offers a 20 percent discount to in-state businesses that install California-made solar panels or other renewable energy technologies is one such program that has been identified by India.
Local content requirements on electric power companies are also imposed by the governments of Connecticut, Delaware, Illinois, and many other states.
Local content requirements were ruled to be illegal by the WTO’s Appellate Body ruled in 2013. Renewable power companies buy locally-made equipment as mandated by the Ontario provincial government was termed as discriminatory against foreign suppliers by the Appellate Body.
While the ruling applied only to Ontario, experts say that it could serve as a basis for a retaliatory complaint by India against the United States.
“I think you could expect that a case will be brought against the United States” by India or another country, Meyer said.
“The precedential effect of that ruling is quite striking,” Meyer added.
There were no comments from the Indian Embassy in Washington.
“The United States strongly supports the rapid deployment of solar energy around the world – including in India. But discriminatory policies in the clean energy space in fact undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, raising the cost of generating clean energy and making it more difficult for clean energy sources to be competitive,” U.S. Trade Representative Michael Froman said in a statement.
India views that encouraging foreign governments’ efforts at reducing their climate warming greenhouse gas emissions. If it’ is to achieve its goal of dramatically increasing its reliance on solar power over the next six years, India says its domestic content requirement is necessary.
In that scenario, India probably would not agree to Froman’s remarks as it would probably not agree that their solar energy equipment is “more expensive and less efficient” than American equipment.
Added to it is the cost of importing the equipment from the other side of the world. the TWO has however has ruled in favor of providing equal treatment to American solar manufacturers and said nothing about Indian being obliged to buy from them.
Two-thirds of its electric power in India is obtained from coal and it is the third largest carbon dioxide emitter after China and the United States. The country plans to use even more of it during the next decade.
The country has also embarked on an ambitious goal of increasing its solar power capacity to 100,000 megawatts by 2022. That would be 30 times more capacity than it has now.
(Source:www.forbes.com)
However the ruling, viewed by some, could become the source of future defeats of the US in international trade dealings.
A WTO dispute settlement panel ruled as unfairly discriminatory against American manufacturers a decision by the India government that requires that companies that sell solar power to the government use only domestically-made parts and components. The case was filed by the Obama administration.
Ironically, the same thing that the Indian government had attempted to do is done by dozens of states and local governments in the United States – they subsidize local renewable energy companies and in some cases require them to buy from local manufacturers.
A December 25 paper by Vanderbit University Law School Professor Timothy Meyer says that there are 44 such programs in 23 states, and “China and India have already identified several of these programs as incompatible with WTO law”.
The California’s Self Generation Incentive Program, which offers a 20 percent discount to in-state businesses that install California-made solar panels or other renewable energy technologies is one such program that has been identified by India.
Local content requirements on electric power companies are also imposed by the governments of Connecticut, Delaware, Illinois, and many other states.
Local content requirements were ruled to be illegal by the WTO’s Appellate Body ruled in 2013. Renewable power companies buy locally-made equipment as mandated by the Ontario provincial government was termed as discriminatory against foreign suppliers by the Appellate Body.
While the ruling applied only to Ontario, experts say that it could serve as a basis for a retaliatory complaint by India against the United States.
“I think you could expect that a case will be brought against the United States” by India or another country, Meyer said.
“The precedential effect of that ruling is quite striking,” Meyer added.
There were no comments from the Indian Embassy in Washington.
“The United States strongly supports the rapid deployment of solar energy around the world – including in India. But discriminatory policies in the clean energy space in fact undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, raising the cost of generating clean energy and making it more difficult for clean energy sources to be competitive,” U.S. Trade Representative Michael Froman said in a statement.
India views that encouraging foreign governments’ efforts at reducing their climate warming greenhouse gas emissions. If it’ is to achieve its goal of dramatically increasing its reliance on solar power over the next six years, India says its domestic content requirement is necessary.
In that scenario, India probably would not agree to Froman’s remarks as it would probably not agree that their solar energy equipment is “more expensive and less efficient” than American equipment.
Added to it is the cost of importing the equipment from the other side of the world. the TWO has however has ruled in favor of providing equal treatment to American solar manufacturers and said nothing about Indian being obliged to buy from them.
Two-thirds of its electric power in India is obtained from coal and it is the third largest carbon dioxide emitter after China and the United States. The country plans to use even more of it during the next decade.
The country has also embarked on an ambitious goal of increasing its solar power capacity to 100,000 megawatts by 2022. That would be 30 times more capacity than it has now.
(Source:www.forbes.com)