NEW DELHI: 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 systems manufactured in the states, to produce 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.
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