When Good Intentions are Not Enough: Revisiting the US-India Solar Panels WTO Dispute

Abstract

The US-India Solar Panels dispute, before the WTO, made waves at a time when, India had gone from having virtually no solar capacity to boasting of being one of the world’s fastest growing solar industries. On the heels of the recent global summit in Paris to tackle climate disruption, the WTO has ruled against an important piece of the climate solution puzzle: India’s ambitious program to create home-grown solar energy.

The US challenged the Jawaharlal Nehru National Solar Mission at the WTO alleging that India’s power purchase agreements with solar power developers mandated the use of India-manufactures solar cells and modules, which would amount to a forbidden domestic content requirement under India’s WTO obligations. In September 2016, India lost the appeal it had filed against the WTO Panel Ruling.

At a time when India is forging an ambitious security alliance with the US, including cooperation on solar energy and climate-change issues, the Appellate Body’s adverse ruling is a sober reminder that in the mercantile trading framework, bilateral considerations and climate change issues are subservient to the interests of the developed world. In addition to this, the ruling has come under severe criticism, from environmentalists, as undermining India’s efforts towards promoting the use of clean energy. However, there appears to be no rational basis for how mandatory local content requirements contribute towards promoting the use of clean energy as solar power producers should be free to choose energy-generation equipment on the basis of price and quality, irrespective of whether they are manufactured locally or not.

This paper attempts to simplify the Appellate Body and Panel Reports so as to present the issues involved broadly, the arguments of the parties and the findings in the simplest manner possible and yet bring out the significance of the decision. The authors also seek to place the decision against the context of the global movement towards addressing climate change issues by pushing for cleaner energy.

The present piece of work is divided into three parts. Part I gives a broad overview of the technicalities of the legal dispute, Part II looks into the arguments of the parties before the WTO Appellate Body and its findings, and with Part III, the authors offer a conclusion.

Keywords: Domestic Content Requirements; India-US Solar Panels; Renewable Energy; WTO