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WTO Rules Against Domestic Content Requirements in India’s Solar Power Program

Friday, February 26, 2016
Sandler, Travis & Rosenberg Trade Report

U.S. Trade Representative Michael Froman announced Feb. 25 that a World Trade Organization dispute settlement panel has ruled that the domestic content requirements in India’s National Solar Mission, which require solar power developers to use Indian-manufactured cells and modules to participate in certain projects that sell electricity to the government, violate WTO rules by discriminating against imports. USTR said the panel’s determination is “an important outcome – not just as it applies to this case, but also as other countries consider localization policies.”

According to USTR, the WTO panel rejected India’s arguments that the domestic content requirements were justified under (a) the government procurement derogation of Article III:8(a) of the GATT 1994, because the Indian government does not itself procure the solar cells or modules, (b) Article XX(j) of the GATT 1994, because the Indian government failed to establish that solar cells and modules were in short supply in India, and (c) Article XX(d) of the GATT 1994, because India failed to demonstrate that the measures are necessary to secure compliance with laws or regulations requiring it to take steps to promote sustainable development.

USTR noted that the U.S. has been working with India for several months on a possible negotiated solution to this dispute and will continue to do so.

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