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WTO appellate body rules against India in solar case with US (Relevant for GS Prelims, Mains Paper II and III)

Highlights
•    India lost its appeal at the World Trade Organization in a dispute over solar power.
•    The appeal ruling is final and India will be expected to bring its laws into compliance with the WTO rules.

India lost its appeal at the World Trade Organization in a dispute over solar power , failing to overturn a US complaint that New Delhi had discriminated against importers in the Indian solar power sector.

What was the appeal?
In April, India had appealed against WTO’s panel ruling that the country’s power purchase agreements with domestic solar firms are inconsistent with international norms.

Judgment by Appellate body
The WTO’s appeals judges upheld an earlier ruling that found India had broken WTO rules by requiring solar power developers to use Indian-made cells and modules. The appeal ruling is final and India will be expected to bring its laws into compliance with the WTO rules.

Reasons stated 
Under WTO rules, countries are not allowed to discriminate against imports and favour local producers, but in the past five years countries keen to support their own manufacturers have frequently resorted to local content requirements, while keeping a sharp eye out for their use by others.

Local content requirements are not only contrary to WTO rules, but actually undermine the 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.

In the earlier ruling, which was issued in February this year, the judges said India could not claim exemptions on the basis that its national solar power sector was included in government procurement, nor on the basis that solar goods were in short supply.

About Appellate Body
The appellate body is a standing body of seven persons. It listens to the appeals from reports issued by panels in disputes involving WTO members. The body can uphold, modify or reverse legal findings and conclusions of a panel and its reports, once adopted by the Dispute Settlement Body, must be accepted by the parties.

Background
United States first launched the dispute in February 2013, involved an increasingly common target of trade disputes – solar power, with an increasingly common complaint – local content requirements.



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