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United States Wins Decisive Victory in Dispute Challenging Discrimination Against U.S. Solar Exports

Obama Administration wins WTO dispute defending American solar manufacturers and workers, advances the continued development of clean energy around the world

WTO Appellate Body affirms United States victory in dispute challenging discriminatory trade practices that undercut American solar products and jobs

American solar exports to India had dropped 90 percent due to unfair trade barriers

Washington, D.C. – The Obama Administration has secured an important victory for American solar manufacturers and workers on trade barriers in India that discriminate against American solar exports, supporting the advancement of clean energy around the world.

United States Trade Representative Michael Froman today announced that the World Trade Organization (WTO) Appellate Body issued a report finding in favor of the Administration’s challenge to India’s “domestic content requirements” under its National Solar Mission, which requires solar power developers to use Indian-manufactured cells and modules. Since India enacted these requirements in 2011, American solar exports to India have fallen by more than 90 percent.

The Appellate Body today affirmed an earlier WTO panel report agreeing with the United States that India’s domestic content requirements discriminated against American-made and other imported solar products, in breach of international trade rules. The decisive finding rejected all of India’s defensive arguments.

“This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change,” said Ambassador Froman. “The Obama Administration is committed to strengthening the clean energy sector and the jobs it supports here in America and all over the world.  We strongly support the rapid deployment of solar energy worldwide, including in India. But local content requirements are not only contrary to WTO rules, but actually undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, making it more difficult for clean energy sources to be cost-competitive.”

The victory in this challenge brought forward by the Office of the United States Trade Representative (USTR) is the latest successful WTO dispute secured during the Obama Administration.  Under President Obama’s direction, the United States has mounted the most ambitious upgrade of trade enforcement in recent history.  The Obama Administration has brought 23 complaints at the WTO since 2009 – more than any other WTO Member.  The United States has prevailed in every single dispute that has been decided by the WTO so far, victories have resulted in the removal of barriers on billions of dollars of American exports.

“Trade enforcement is critical for ensuring that American clean energy goods and services can compete around the world,” said Ambassador Froman.  “It is essential that we enforce the rules of international trade, and defend American workers and industries from unfair practices. We welcome today’s ruling, and we will keep fighting unfair trade policies that distort our markets, harm our environment, and undercut American businesses and workers.”

Levelling the playing field for American products on the global market is the central objective of the landmark Trans-Pacific Partnership (TPP) trade agreement.  In addition to the enforcement victory achieved today, the TPP would give a boost to clean energy manufacturers across the United States.  In TPP, the United States has negotiated the most robust and enforceable environment commitments of any trade agreement to-date.  It would eliminate foreign taxes on environmentally-beneficial products and technologies, including solar panels, wind turbines, air pollution control equipment, and other clean energy products.  Read more.

The Obama Administration’s Trade Enforcement Record

  • Since President Obama was inaugurated in 2009, USTR has filed 23 enforcement complaints (including this one) at the World Trade Organization (WTO) – more than any other WTO Member.  The United States has won every single one of those complaints that has been decided by the WTO so far.
     
  • Obama Administration has brought 14 trade enforcement challenges against China, 3 against India, and several other complaints against a series of major economies including Indonesia, Argentina, the Philippines, and the European Union. To ensure the greatest economic benefits for American workers and exporters, the Obama Administration has used our trade enforcement actions to emphasize opening these large, strategic markets to which the United States exports a diverse array of products and services.
     
  • Since 2015, in addition to announcing 5 new WTO challenges, the Obama Administration announced 5 enforcement wins on key matters:
    • In April 2016, China signed a Memorandum of Understanding with the United States in which China agreed to take specific actions that would remove all the WTO-inconsistent elements of its “Demonstration Bases-Common Service Platform” export subsidy program.  Those prohibited export subsidies were being given to manufacturers and producers across seven economic sectors and dozens of sub-sectors located in more than one hundred and fifty industrial clusters throughout China, thereby creating unfair competition for American workers and businesses.
       
    • In February 2016, the WTO panel found in favor of the United States in a dispute challenging India’s “localization” rules discriminating against imported solar cells and modules under India’s National Solar Mission.  The WTO panel agreed that India’s domestic content requirements discriminate against U.S. solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules, in breach of international trade rules. 
       
    • In July 2015, the United States prevailed in a WTO challenge to China’s compliance actions following WTO findings in 2012 that China’s duties on high-tech steel were inconsistent with WTO rules.  Those WTO-inconsistent duties contributed to over $250 million in annual export losses for American steel exporters.  The U.S. compliance challenge was the first time any WTO Member had initiated a WTO proceeding to challenge a claim by China that it had complied with adverse WTO findings.
       
    • In June 2015, the WTO found in favor of the United States in a dispute challenging India’s ban on various U.S. agricultural products – such as poultry meat, eggs, and live pigs – allegedly to protect against avian influenza.  The WTO agreed with the United States that India’s ban breached numerous international trade rules, including because it was imposed without sufficient scientific evidence and was not based on international standards, which confirm that importing U.S. products is safe.
       
    • In January 2015, the WTO found that Argentina’s import licensing requirements and other import restrictions breach international trade rules.  These restrictions potentially affect billions of dollars in U.S. exports each year, including exports of energy products, electronics and machinery, aerospace equipment, pharmaceuticals, precision instruments, medical devices, motor vehicle parts, and agricultural products.
       
  • Enforcement extends far beyond formal disputes. The Obama Administration has opened markets for American workers, farmers, and businesses by taking tough stands to resolve unwarranted trade barriers with trading partners. For example, in the last two years alone, we have negotiated agreements that expand beef exports to Mexico and pork exports to Malaysia. We also successfully engaged with the Philippines – including through the Special 301 process – to enhance protection of intellectual property rights. These and similar actions have helped expand exports and level the playing field for American goods and services.

More Information about the United States’ Victory for U.S. Solar Exports

In February 2016, the WTO issued the panel report in the case brought by the United States regarding “India – Certain Measures Relating to Solar Cells and Solar Modules”.  The WTO panel agreed with the United States that India’s domestic content requirements discriminate against U.S. solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules, in breach of international trade rules.  In April, India sought review of the report of the panel by the WTO Appellate Body.

The Appellate Body affirmed the Panel’s finding that India’s domestic content requirements (DCR measures) under its National Solar Mission are inconsistent with India’s national treatment obligations under Article III:4 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article 2.1 of the Agreement on Trade-related Investment Measures (TRIMs Agreement).  Because an Indian solar power developer may bid for and maintain certain power generation contracts only by using domestically-produced equipment, and not by using imported equipment, India’s requirements accord “less favorable” treatment to imported solar cells and modules than that accorded to like products of Indian origin. 

The Appellate Body rejected all of India’s defensive arguments.  In particular, the Appellate Body upheld the Panel’s finding that India’s DCR measures are not justified under the government procurement derogation of Article III:8(a) of the GATT 1994 because the Indian government does not itself procure solar cells or modules under the NSM.  The Appellate Body upheld the Panel’s finding that India’s DCR measures could not be justified under Article XX(j) of the GATT 1994, because the Indian government had failed to establish that solar cells and modules were “in short supply” in India.  The Appellate Body also upheld the Panel’s finding that India’s DCR measures are not justified under Article XX(d) of the GATT 1994, because India failed to demonstrate that its DCR measures are in fact “measures to secure compliance with laws or regulations which are not inconsistent with the provisions of [the GATT 1994].”

Under WTO rules, at the request of any party to the dispute, the panel and appellate reports would be adopted by the WTO within 30 days of circulation of the Appellate Body report.