US appeals against WTO ruling favouring India in renewables case

Amiti Sen New Delhi | Updated on August 15, 2019 Published on August 15, 2019

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The US has appealed against a WTO panel ruling favouring India. In its complaint, India had alleged that local content requirements and subsidies for the renewable energy sector in several American states were discriminatory and against multinational rules.

The appeal, which was discussed at the WTO’s Dispute Settlement Body (DSB) meeting on Thursday, however, may not be taken up by its the global organisation’s Appellate Body, as it could become dysfunctional in December.

A WTO panel had ruled in June in favour of India, which claimed that subsidies and mandatory local content requirements in 11 renewable energy programmes in eight American states — Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota — are inconsistent with global trade rules.

The panel had asked Washington to bring the states in conformity with US obligations under the “national treatment” rules that require foreign entities to be treated at part with domestic producers.

Judges’ appointment

“By appealing against the panel ruling and also not allowing Appellate Body judges to be appointed, the US is literally bringing the dispute settlement mechanism of the WTO to a grinding halt. Something needs to be done by the WTO Secretariat and members soon to ensure that the Appellate Body keeps functioning after December, too,” a government official said.

The US has been blocking the appointment of judges in the Appellate Body claiming there are ‘systemic issues’ that need to be sorted out. From December 11, the Appellate Body will cease to have the mandatory three members required for its working and may thus become dysfunctional.

Sugar subsidies row

Another important decision taken by the DSB was to agree to the second requests from Australia, Brazil and Guatemala for the establishment of panels to rule on India’s sugar subsidies. New Delhi, however, declined requests from the three to set up a single dispute panel.

“India declined requests from the three complainants for a single panel to review the complaints jointly on the grounds that they are similar, arguing that each case was distinct,” a Geneva-based official told BusinessLine.

The complainants had alleged that India’s subsidies for its producers exceeded its WTO spending limit of 10 per cent for the product. India’s response is that its sugar subsidies are permissible under WTO rules.

“The DSB will now set up three separate panels...and the cases will be fought separately,” the official explained.

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Published on August 15, 2019
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