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article imageUS takes India to WTO on solar energy

By Shaun Tandon (AFP)     Feb 10, 2014 in Business

The United States said it was taking India to the WTO to open up its solar industry, raising a new dispute weeks after a bitter feud over a diplomat's arrest.

The United States asked for talks under the World Trade Organization to change India's requirements for the use of domestic content as part of the energy-hungry country's ambitious plan to boost solar power.

"This kind of discrimination is against WTO rules and we are determined to stand up for US workers and businesses," US Trade Representative Michael Froman told reporters on Monday.

Froman insisted that the action was consistent with calls by President Barack Obama's administration to work with India on renewable energy. The world's two largest democracies have both identified climate change as a major area for cooperation.

"Domestic content requirements detract from successful cooperation on clean energy and actually impede India's deployment of solar energy by raising the cost," Froman said.

Indian diplomat Devyani Khobragade (R)  accompanied by her father Uttam Khobragade (L)  waves on her...
Indian diplomat Devyani Khobragade (R), accompanied by her father Uttam Khobragade (L), waves on her arrival at a Mumbai airport on January 14, 2014
Punit Paranjpe, AFP/File

Under the WTO process, the Geneva-based body would set up talks between the United States and India to find a solution. If the consultations do not succeed within 30 days, the United States could ask the WTO to set up a panel to settle the dispute.

The move comes after US authorities in December arrested a New York-based Indian diplomat on charges of underpaying her servant and lying on the worker's visa application, setting off one of the worst rifts in years between the countries.

The row abated a month ago when the diplomat, Devyani Khobragade, was allowed to return to India just as she was indicted. Indian lawmakers and commentators accused US authorities of humiliating the diplomat through a strip-search.

Froman said that the Obama administration considered discussion of disputes part of "maturing" trade ties and that Monday's action "in no way detracts from the importance we attach to this relationship" with India.

An attorney at the US Trade Representative's office, speaking on condition of anonymity, said that WTO cases take time to complete and that the timing was not linked to other issues in US-India ties.

Major investment at stake

Under the WTO process  the Geneva-based body would set up talks between the United States and India ...
Under the WTO process, the Geneva-based body would set up talks between the United States and India to find a solution
Fabrice Coffrini, AFP/File

India is the biggest foreign market after Japan for the US solar industry, which supports an estimated 12,000 jobs but whose domestic growth has been in question. The United States has also taken aim at China, accusing Beijing of unfairly subsidizing green technology and dumping certain solar cells into the US market.

Justin Guay of the Sierra Club environmental group said that the latest action had "no rhyme or reason" as it comes at a time that the United States is trying to protect its own solar industry.

"I think it sends a very damaging signal for the industry at a time when, if anything, we should be working to support the industry, essentially, at a war-time footing," he said.

The action marks the second time that the United States has sought WTO consultations over India's solar program. Environmental groups criticized the previous challenge in February 2013, saying that a robust domestic solar industry in India was critical for global efforts to combat climate change.

The two countries held consultations under the WTO last year, but Washington held off on further action as it had hoped that a second phase of India's solar program would address its concerns.

India has some of the world's most ambitious goals for solar energy, with plans for the world's largest plant at Sambhar in the desert state of Rajasthan. Since 2010, India's solar power capacity has grown from just 17.8 megawatts to more than 2,000, with a target of 20,000 megawatts of grid-connected solar power by 2022.

India has reduced costs by using cheap solar technology, mostly from China. The Indian embassy did not immediately return a message seeking comment on Monday's action.

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