'Trade Rules Trump Climate': WTO Deals Blow to India's Solar Program

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'Trade Rules Trump Climate': WTO Deals Blow to India's Solar Program

Providing local green jobs no match for US challenge using powerful trade rules

A solar panel sits in a field in Mathura, Uttar Pradesh, India.  (Photo: Asian Development Bank/flickr/cc)

In an outcome described as an outrage and a blow for local green jobs, the World Trade Organization ruled Wednesday in favor of the United States in its challenge to India's rapidly growing solar energy program.

It marks "a step in the wrong direction, away from the climate progress that the global community committed to achieve in December’s Paris climate agreement," according to Ilana Solomon, director of the Sierra Club’s Responsible Trade Program.

The U.S. had initiated its challenge to part of India’s National Solar Mission in Feb. 2013. The problem, as the U.S. saw it, was the part of India’s National Solar Mission requiring solar power developers to use solar cells and modules that are made in India rather than in the U.S. or other another country. The WTO dispute settlement panel agreed with the U.S. that this locally-favoring requirement is "inconsistent" with and "not justified" by WTO rules.

And India's solar mission meant lost profits for the United States.  As the office of the U.S. trade representative stated following the ruling, "Since India enacted these domestic content requirements in 2011, U.S. solar exports to India have fallen by over 90 percent."

In addition, as Solomon and Ben Beachy, senior policy advisor with Sierra Club's Responsible Trade Program, write,

Though India argued that the program helps the country to meet its climate commitments under the United Nations Framework Convention on Climate Change (UNFCCC), the WTO rejected that argument. Indeed, the ruling boldly states that domestic policies seen as violating WTO rules cannot be justified on the basis that they fulfill UNFCCC or other international climate commitments. In effect, the WTO has officially asserted that antiquated trade rules trump climate imperatives.

The ruling sparked a similar reaction from Bill Waren, senior trade analyst at Friends of the Earth. "The government of India reasonably provided some preferences for local producers of solar energy in order to convert from a carbon economy to a green economy. The WTO decision, finding India’s solar energy program a violation of international trade law, is an outrage. Trade law trumps the Paris climate accord," he stated.

There's something in the air...

The Obama administration, for its part, welcomed the WTO decision as a "victory" and said it sent a warning shot.

"This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory 'localization' policies," U.S. Trade Representative Michael Froman said in a statement.

One thing Froman and environmental groups agree on is that the ruling is of particular importance in light of the Trans-Pacific Partnership (TPP) trade pact, which President Obama is pushing Congress to approve.

"This win underscores not just how aggressive and successful the Obama Administration has been in terms of enforcing our current trade agreements, but also the resolve with which we will enforce the high standards negotiated in TPP, whether it's with regard to labor, intellectual property rights or the environment," Froman stated.

Sierra Club, however, says that the WTO decision should be a warning for lawmakers to reject the TPP.

"Indeed," Beachy and Solomon write, "the text of the controversial deal replicates the very rules that the WTO used against India's solar program today. While many in Congress oppose the TPP, if the deal were to pass, we could see even more trade cases against clean energy initiatives. Congress should view this ruling as further confirmation that a vote against the TPP is a vote for green jobs and climate action."

The Calcutta Telegraph reports that India is likely to appeal the ruling, which it has 60 days to do.

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