WASHINGTON, D.C. (Feb. 10, 2014) — Following notification to Indian government officials in New Delhi, Geneva, and in Washington, DC, United States Trade Representative Michael Froman announced Tuesday that the 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.
“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,” said Ambassador Froman. “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.”
In October 2013, India’s cabinet approved measures governing the implementation of Phase II of the NSM. For solar projects under Phase II, India is again imposing domestic content requirements, under which solar power developers must use Indian-manufactured solar cells and modules instead of U.S. or other imported equipment.
Moreover, the Phase II domestic content requirements have been expanded to cover thin film technology, which was exempt from such requirements under Phase I. As thin film currently comprises the majority of U.S. solar product exports to India, these domestic content requirements are likely to cause even greater harm to U.S. producers than under Phase I.
A request for consultations is the first step in the WTO dispute settlement process, and consultations are intended to help parties find a solution at this stage. Under WTO rules, if the matter is not resolved through consultations within 60 days of the request, the United States may ask the WTO to establish a dispute settlement panel.
The Interagency Trade Enforcement Center (ITEC), established within USTR by this Administration to enhance U.S. trade enforcement capabilities, provided key support to USTR’s Monitoring and Enforcement unit in the development of this consultations request.
The National Solar Mission 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 our concerns regarding the NSM over the last three years, including in bilateral fora 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.