U S of A Challenges India's Requirements Affecting U.S. Solar Product Exports
UNITED States has requested World Trade Organization (WTO) dispute settlement consultations with India concerning domestic content requirements in Phase II of India's National Solar Mission ("NSM"). These domestic content requirements discriminate against U.S. solar cells and modules by requiring solar power developers participating in Phase II to use Indian-manufactured solar cells and modules instead of U.S. or other imported equipment. Moreover, India has now extended the domestic content requirements to more solar energy products than covered under Phase I of the NSM.
According to the US Trade Representative Michael Froman (who made this announcement late last night - IST), "These domestic content requirements discriminate against U.S. exports by requiring solar power developers to use Indian-manufactured equipment instead of U.S. equipment. These unfair requirements are against WTO rules, and we are standing up today for the rights of American workers and businesses. We also take this action in support of the rapid global deployment of renewable energy. These types of 'localization' measures not only are an unfair barrier to U.S. exports, but also raise the cost of solar energy, hindering deployment of solar energy around the world, including in India."
The US Trade Representative explains the background as,
"The National Solar Mission ("NSM") is India's national program to promote the development of solar power generation facilities. In 2010, India launched the first of three phases of the NSM. To participate in Phase I, solar power developers were required to agree to use certain solar cells and modules manufactured in India. Under Phase I, India initially required solar power developers using crystalline silicon technology to use solar modules manufactured in India. India later expanded this domestic content requirement to crystalline solar cells as well. India excluded projects employing thin film technology from the domestic content requirement. In February 2013, the United States requested WTO consultations with India with respect to these domestic content requirements. The formal consultations failed to resolve U.S. concerns.
In addition to the WTO consultations held on Phase I, the United States has engaged India on concerns regarding the NSM over the last three years, including in bilateral for a such as the U.S.-India Trade Policy Forum and the U.S.-India Energy Dialogue, and at the WTO in various committees.
The domestic content requirements under Phase II appear to be inconsistent with India's obligations to provide treatment to imported products no less favorable than that accorded to domestic products under the Article III:4 of the General Agreement on Tariffs and Trade and Article 2 of the Agreement on Trade-Related Investment Measures."