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India questions U.S. green energy incentives at WTO

According to reports, India hit back at U.S. accusations of trade restrictions in its solar industry on Wednesday, suggesting Washington was guilty of the banned practices, in a move that may deepen divides between giants of the developing and developed world.

India asked Washington to justify incentives offered to U.S. companies to use local labour and products in renewable energy and water projects, in filings to the World Trade Organization published on Wednesday.

It cited a list of projects in U.S. states and regions. “As the U.S. is aware, compliance with requirements of WTO agreements extends to all levels of government within a WTO member,” India said in one of the filings.

Its requests for information – sometimes used as a precursor to a formal trade dispute – came two months after the United States launched a trade dispute about incentives offered to local suppliers in India’s solar industry.

Both sets of allegations focus on the use of “local content requirements” that encourage companies to use local inputs in their projects, which can amount to discrimination against foreign firms and a breach of international trade law.

Local content requirements have been a growing area of trade friction since Japan and the European Union challenged Canada over a renewable energy scheme in the province of Ontario.

Canada lost the case at the WTO and, although it is still due for a final appeal ruling by May 6, its defeat has triggered a hunt for other discriminatory clauses worldwide, led by the United States, the European Union and Japan.

Their scrutiny has fallen upon capital-intensive industries in big developing markets, where they could potentially force open markets worth billions of dollars to their own companies.

Aside from the U.S. complaint about India’s solar sector, the three rich trading powers have questioned the validity of local content rules in Indonesia’s telecoms, mining, oil and gas sectors and Nigeria’s energy industry.

They are also suspicious of Brazil’s tax rules, such as a 30 percentage points hike in sales tax on cars that do not meet a 65 percent local content threshold, they said in a statement circulated by the WTO on Wednesday.

They had similar concerns about Brazil’s treatment of telecoms and semiconductors.

Other sectors facing scrutiny for their local content rules include agricultural machinery in Russia and the electricity sector in Ukraine.

In one of its WTO filings, India said the existence of the U.S. requirements for renewable energy “raises concerns about their compatibility” with global trade rules.

India asked the United States to provide full details of state, regional and local renewable energy programmes that had local content requirements and listed four schemes about which it had specific questions.

It cited Michigan’s renewable energy legislation, Los Angeles’ solar incentive programme, California’s self generation programme and incentives for commercial and residential solar power offered by Austin Energy in Texas.

It said water utilities in South Carolina, Pennsylvania, West Virginia and some New England states had mandatory domestic content requirements for ductile iron pipes and fittings for water projects.

It also cited tenders in Alabama, South Carolina and Florida which it said specified that only U.S.-made pipes were allowed to be used.

One comment

  1. Remember Madonna’s song with little modification: Papa Don’t Preach, we know many double standards…The only problem with Indians is not to stick to : Be Indian and Buy Indian….. why our own Indian Large corporate companies sought low cost debt fund from EXIM bank or such FIs, why did not ask Government to provide low cost funds to provide low cost energy, instead, our ministers reward such large corporate companies with 100 MW solar pv at rs. 17.9/kwh and allow to access EXIM funding, then, buy energy at high price while collecting National Clean Tech funds, without creating our own small INDIAN new generation Entrepreneurs !!

    Corporate governance is at very low level and sustainability is under big question with recent PPA negotiations due to Indonesia coal…. where were these Secretaries, policy makers, Large Industry promoters (who boast of CSR or good entrepreneurship qualities) to promote INDIA FIRST CULTURE, instead begged international funds with a hedging risks, while allowing TATA NANO to get low cost funding during this high interest regime??

    Which means, we have will to favours few, but, not the COUNTRY and its new generation Small Entrepreneurs??

    We sold ourselves through Deals (read as Nuclear), FDI in retail with Policy making as a tool for few people to control INDIA, now, when, the policy makers are in a vicious circles with many small parties, we are trying to loose democracy, becoz, the big parties did not listen to the people nor to these small parties, thus, complete unsustainability…..

    There has to be a common minimum program amongst ruling parties and opposition and all the parties, before election that the basic infrastructure (health, education, water, power etc) shall not be affected and shall only be through open and transparent policy mechanism (not just through IAS, but, with all learned and good experts who are now available outside the parliament and UPSC system), whosoever assumes power to rule / seva to mother INDIA with a COUNTRY FIRST CULTURE with maximum concern to Common Man and India’s economic sovereignty..

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