US launches new trade action against India over solar program

WASHINGTON/NEW DELHI (Reuters) – The United States said yesterday it would take India to the World Trade Organisation to gain a bigger foothold for US manufacturers in its fast-growing solar products market, adding another irritant to an already strained relationship.

The Obama administration said it was filing its second case at the WTO over the domestic content requirements in India’s massive solar program, which aims to ease chronic energy shortages in Asia’s third-largest economy.

roman said making Indian solar developers use locally made equipment discriminated against US producers and could hinder the spread of solar power.

“Domestic content requirements detract from successful cooperation on clean energy and actually impede India’s deployment of solar energy by raising its cost,” Froman said.

It is the second time in a year that Washington has sought a consultation at the WTO – the first stage in a dispute process that can lead to sanctions – over India’s Jawaharlal Nehru National Solar Mission.

The ongoing trade spat between the two allies follows the recent arrest and strip search of a female Indian diplomat in New York in connection with visa fraud charges.

The arrest sparked fury in India, prompted retaliatory measures against US diplomats there and plunged US-India relations to their lowest point since India tested a nuclear device in 1998.

The USTR issued its first challenge to India’s solar program last February when it formally requested consultations over its first stage. The program aims to double India’s renewable energy capacity by 2017.

US officials had hoped a second phase of the program would address Washington’s concerns, but now fear the harm to American producers would likely be even greater because the rules were expanded in October to cover so-called thin film technology that comprises the majority of US solar product exports to India.

India hit back at the initial US accusations in April, asking Washington to justify its own incentives offered to US companies that use local labour and products in renewable energy and water projects.

The Indian embassy in Washington was not immediately available for comment on the latest trade action. India has argued its solar policies are legal under WTO government procurement rules that permit countries to exempt projects from non-discrimination obligations.

Froman said the action did not undermine the value that the United States placed on its relationship with India, saying: “Today’s action addresses a specific issue of concern and in no way detracts from the importance we attach to this relationship.” Attorneys for the USTR said later such cases took months to prepare.

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