The European Union, Canada, Brazil, China, and Japan were among those who supported India on Friday in the solar panel dispute with the US at the World Trade Organization (WTO), people familiar with the development said. According to these countries, Washington’s demand for trade retaliatory measures against India is unjustified.
In the face of sharp differences, the matter was referred to arbitration.
At a meeting of the WTO’s dispute settlement body (DSB) on 12 January, the US and India clashed over Washington’s decision to seek trade retaliatory measures without establishing that New Delhi failed to remove local content requirements for manufacturing solar cells and solar modules by the 14 December deadline.
India, which lost the dispute in 2016, had agreed to remove all the inconsistent measures for implementing the Jawaharlal Nehru National Solar Mission, under which government imposed local content requirements for manufacturing solar modules and solar cells.
On 19 December, the US sought permission from the WTO for imposing trade retaliatory measures against India because of New Delhi’s failure to comply with the DSB’s recommendations in the dispute. The US did not provide any evidence to prove its claim that India failed to implement the trade body’s recommendations. Normally, a complainant is required to prove whether the erring member failed to bring its measures in compliance with the WTO rules under Article 21.5 of the dispute settlement understanding before seeking retaliation.
In a sharp response on 3 January, India said the US’s request is “vague” and “invalid” since India “has ceased to impose any measures found inconsistent with the recommendations and rulings of the DSB.”
At the meeting on Friday, the US said “none of the reasons cited by India have any basis in Article 22.6 of the DSU (dispute settlement understanding) and thus cannot prevent the DSB from granting the authorization requested by the United States.” India’s assertions are “irrelevant, and would contradict and undermine the DSU as agreed by Members,” the US maintained.
Further, “India is incorrect that the United States has not sufficiently indicated a level of nullification and impairment or why it considers India has not complied, that there is an obligation on a complaining party to seek to negotiate compensation, or no request under Article 22.2 may be made before procedures are completed under Article 21.5,” the US maintained.
Also, “India’s claim of compliance is unsubstantiated and limited to the mere assertion.” “Therefore, the US has had no opportunity to evaluate any concrete compliance steps taken by India because India identified none,” it argued.
India rejected the US claims, saying it made repeated requests for entering into a sequencing agreement that would suggest how the two parties would proceed in case of non-compliance. “The US has refused to sign a sequencing agreement with India,” India said, suggesting “this goes against the standard practice of WTO members acting in good faith.” “In fact, in a recent dispute against the US’s countervailing measures on certain hot-rolled carbon steel flat products from India, India acceded to US’ request for a sequencing agreement,” India maintained. Further, “if the United States had any doubts or concerns regarding India’s compliance, they could have sought discussions”, India said, suggesting that Washington remained silent on why it believed that there is no compliance.
In short, a compliance panel will prove India’s implementation of the DSB’s recommendations and thereby negate the need for any proceedings for trade retaliatory measures, India said.
The EU maintained that India’s communication of 3 January provided a “strong objection” to the US demand for retaliatory measures. Therefore, the DSB could not agree to the US request for retaliation at Friday’s meeting, the EU said.
Canada maintained the US request will adversely affect the rights of the responding member as it did not provide any proposed level of retaliation. Brazil, China, and Japan also sided with India that the US request lacked legal basis for retaliations since it failed to suggest any specific figure for the retaliatory measures, according to a person present at the meeting.
“The US is known for cherry-picking in trade disputes as it had adopted inconsistent positions time and time again depending on its interests without regard to rules,” said a trade delegate from an industrialized country, who asked not to be identified. “Recently, it had asked Canada not to proceed with a trade dispute raised against several “systemic” issues in the US’ anti-dumping and countervailing measures because of the fear that it would expose the inconsistent practices of the US,” the delegate said.