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Case Code: LAW005
Case Length: 9 Pages 
Period: 2010-2016    
Pub Date: 2016
Teaching Note: Not Available
Price: Rs.400
Organization :-
Industry : -
Countries : India, the US
Themes:  International trade
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Human Resource Management
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Law

US-India Solar Trade Dispute

 

ABSTRACT

 
The case discusses about the solar dispute between the US and India. It was reported that in 2010 India had launched the Jawaharlal Nehru National Solar Mission (JNNSM) – the national solar power program in India under which the country aimed to produce 20,000 megawatts (MW) of solar power by 2022. Since India did not have the capacity to manufacture the required equipment, it had to source solar equipment from other countries. However, in February 2013, the US filed a complaint with the World Trade Organization (WTO) dispute panel stating that India’s domestic country requirements (DCR) accorded less favorable treatment to imported solar modules and cells. India’s DCR made it mandatory for domestic solar producers to use only solar modules and cells manufactured in India in their power plants. This meant that the US solar power companies were blocked from competing for an important share in India’s solar power equipment market.

In February 2014, the US filed another case against India when it began Phase II of the JNNSM emphasizing on DCR. The US stated that India had violated Article III: 4 of the General Agreement on Tariffs and Trade (GATT) by not giving national treatment to imported products. In addition to this, the US also stated that India had violated the WTO agreement on Trade-Related Investment Measures (TRIMs), which prohibited the imposition of local content requirements. The US also complained to the WTO that India offered certain advantages to solar power producers in the country such as long-term tariffs for electricity, depending on the solar power producers’ purchase, and use of solar modules and cells of domestic origin.

In August 2015, the WTO dispute settlement panel found that India had violated global trade rules by imposing DCR for solar modules and cells and also offering incentive policies such as subsidies to domestic solar companies for manufacturing solar modules and cells. Subsequently, India appealed against the WTO’s decision. On February 24, 2016, the WTO ruled in favor of the US, stating that the JNNSM discriminated against imported solar panels.

The WTO ruling came under severe criticism from environmentalists as they felt that the ruling undermined India’s efforts toward promoting the use of clean energy. However, some critics believed there was no rational basis for the reasoning that mandating DCR contributed to promoting the use of clean energy.

Going forward, India planned to appeal to the appellate body and also explore the option of filing a counter complaint against the US pointing out that several of its states such as Michigan, California, and Texas had allegedly employed DCR in the renewable energies sector. Some industry watchers felt that in light of Prime Minister of India, Narendra Modi’s (Modi), ‘Make in India’ campaign, which encouraged foreign companies to manufacture in India, India must resist the temptation to adopt protectionist measures such as DCR, which were inconsistent with international obligations since DCR skewed competition.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • Analyze whether the WTO’s ruling against India for violating global trade rules undermined the country’s efforts toward promoting the use of clean energy.
  • Evaluate how India could resist adopting protectionist measures such as DCR, which were inconsistent with international obligations since DCR skewed competition.
Contents
INTRODUCTION
ABOUT THE NATIONAL SOLAR MISSION
DID INDIA FLOUT THE NORMS?
THE PETITION BEFORE THE SUPREME COURT
INDIA DEFENDS ITS STANCE
THE WTO RULING
LOOKING AHEAD

Keywords

World Trade Organization (WTO), Jawaharlal Nehru National Solar Mission (JNNSM), Trade-Related Investment Measures, General Agreement on Tariffs and Trade, Domestic country requirements (DCR),Solar power program, Global trade,Renewable energy, International Trade,GATT, TRIMs,International Obligations, Protectionist Policies, Domestic Manufacturers, Imports, Discrimination in Trade, Apellate Body, Make in India

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