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A case for accepting the WTO ruling
The World Trade Organisation’s (WTO) Appellate Body has declared certain domestic content requirements (DCRs) in India’s Jawaharlal Nehru National Solar Mission (JNNSM) illegal. Under JNNSM, whose goal is to make India “a global leader in solar energy”, the government enters into long-term electricity purchase contracts with eligible solar power developers (SPDs), assuring them guaranteed prices for 25 years. This government-procured electricity is then sold to distribution companies who, in turn, sell it to consumers. However, only those SPDs who source certain types of solar cells and modules domestically are eligible. The objective evidently is to favour domestic solar cells and modules over imported ones. It was this DCR measure that the U.S. challenged in the WTO. There are three dimensions in this case that need a closer look: the legal issues, environmental impact, and India-U.S. trade relations.
Subject to limited exceptions, the WTO treaty prohibits countries from discriminating against goods based on origin or destination. This core non-discrimination commitment is given effect through several legal provisions, including the one that outlaws domestic laws that make it necessary for an enterprise to purchase or use products of domestic origin to obtain an advantage. According to the Appellate Body, India’s DCR measure in JNNSM violates this rule and the general prohibition against discrimination between imported and domestic products.
India argued that its DCR measures should be excused because they fall under three exceptions. The first is under Article III.8 of the General Agreement on Tariffs and Trade (GATT) that renders the rule against discrimination inapplicable to government procurement. The Appellate Body rejected this. Relying on the previous WTO jurisprudence in Canada, the Renewable Energy/Canada — Feed-in Tariff Programme case, it held that for a measure to fall under Article III.8, the product procured should be in a competitive relationship with the product being discriminated against. Since the government procured electricity while the discrimination was against solar panels, this test of competitive relationship is not satisfied.
The second is under Article XX(j) of GATT that allows a country to adopt measures ‘essential’ to the acquisition or distribution of products in general or local ‘short supply’. India argued that since the domestic production of solar modules is limited, these products are in ‘short supply’. The Appellate Body disagreed and held that whether a product is in ‘short supply’ has to be determined by looking at supply from all sources, not just domestic. On this basis, the Appellate Body said there is no shortage of supply of solar panels.
The third is under Article XX(d), which allows countries to adopt measures ‘necessary to secure compliance with laws or regulations’ that are not inconsistent with GATT. However, India failed to show a domestic law or an international legal norm with direct application in India, compliance with which necessitated the DCR.
Two questions are pertinent here. First, does this ruling stifle India’s efforts to move towards clean energy? No, because the ruling is not against JNNSM but only against use of DCR measures. So, the government can continue with JNNSM by allowing the SPDs the free choice to either import solar cells and modules or buy from domestic industry.
Second, does this ruling reflect WTO’s bias towards free trade over environment? No, because Article XX of GATT clearly recognises a country’s sovereign right to regulate not just for environmental objectives but also for health, public morals, and so on. However, the WTO treaty limits the policy choices available to WTO members as to how to achieve these goals. The fundamental principle is that inequitable costs of pursuing these goals should not be unilaterally transferred to other WTO member countries. So, for example, if multiple options are available to achieve an environmental purpose, the least trade restrictive one that is reasonably available to the state must be chosen. Similarly, to pursue environmental objectives, a country cannot adopt measures that result in arbitrary or unjustified discrimination or constitute disguised restriction on trade.
India-U.S. trade relations
Today, India-U.S. trade stands at over $100 billion annually. Both countries aspire to increase this to $500 billion by “breaking down barriers to movement of goods and services”, as stated in the India-U.S. Joint Statement of June 2016. However, the solar panel case paints the opposite picture where new barriers are being erected. In fact, it is not just this dispute. Currently, in four ongoing disputes at the WTO, the two countries accuse each other of raising trade barriers.
One, India has recently, similar to the US challenge, filed a case against the U.S. at the WTO challenging the DCRs and subsidies provided by eight U.S. states in the renewable energy sector. India should have done this when the U.S. challenged India’s DCR measures in 2013. That might have given India some scope to negotiate for a bilateral settlement. Two, in March this year, India filed a case against the U.S. for its alleged violation of its WTO commitments by imposing increased fees on certain applicants for L-1 and H-1B categories of non-immigrant visas. Three, the U.S. has requested the WTO to allow it to suspend concessions to the tune of $450 million annually against India for India’s alleged failure to comply with the WTO ruling in the poultry case. India’s ban on imports of poultry products from the U.S. on concerns related to Avian influenza was held illegal by the WTO in 2015. Four, in another 2014 case related to imposing countervailing duty measures by the U.S. on certain hot rolled carbon steel flat products from India, India accuses the U.S. for not complying with the WTO ruling yet.
The solar panel case is a sober reminder that India should not pursue protectionist measures outlawed by the WTO under the garb of pursuing clean energy goals. India should comply with this ruling. Else, under WTO law, the U.S. will erect new trade barriers against India. Compliance will be in India’s interest because mandatory domestic sourcing irrespective of costs might make solar power generation unfeasible, thus impairing India’s own objective. India should not commit the mistake of replacing the illegal DCR measures with WTO-prohibited subsidies to safeguard solar manufacturing, as the Ministry of New and Renewable Energy has indicated, because these subsidies might trigger more WTO cases against India. Interests of domestic solar companies need to be divorced from clean energy goals.
Prabhash Ranjan is an assistant professor of law at the South Asian University. Views are personal.
Keywords: WTO ruling, World Trade Organisation, domestic content requirements
Cities at crossroads : Discourage disposable products, plan solid waste management system
The article discuss about the multi-stakeholder approach to tackle the menace of growing solid waste in cities.
- We refer to garbage generated in our cities as “municipal solid waste” and we talk of its “management”— collection, segregation, recycling, processing to recover value and scientific disposal.
- It seems to have little to do with us personally. When we take a technocratic approach, we psychologically distance ourselves from the menace. And yet garbage is a personal threat to all of us and the challenge will only become greater in future as more people move to the cities as urbanisation and rising incomes bring changing lifestyles which usually means more waste.
- In cities like Tokyo, San Francisco and Singapore reduction of waste and recycling of waste received as much emphasis in their scheme of things as resource recovery from waste and its scientific disposal.
- They carried out intense campaigns to win people’s support in reducing the waste generated and also in segregating waste at its source of generation into categories such as wet (biodegradable) waste, dry waste, plastic, paper, glass, etc., to facilitate recycling.
- Waste of different types is collected, recycled/processed by the municipal governments using a range of technological options for resource recovery. Finally, what remains is scientifically disposed of in landfills.
- Engagement of the community in segregation of waste at the source along with well-functioning drainage and sewerage networks facilitate a smooth process of solid waste management in these cities.
- In India too, solid waste management needs to be planned and implemented alongside well-maintained drainage and sewerage networks and with the active participation of the communities.
- JNNURM (Jawaharlal Nehru Urban Renewal Mission) made a long overdue start in addressing the challenges of water and sanitation in Indian cities, and this agenda is being carried forward by Swachh Bharat (Clean India) and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
- Swachh Bharat addresses one-half of the problem—solid waste management, freedom from open defecation, and street cleaning. The other half—drainage and sewerage networks and waste water treatment—comes under AMRUT.
- While the outreach campaign on Swachh Bharat must continue to seek active participation of the communities in cleaning up our cities, it is extremely important to plan and implement Swachh Bharat and AMRUT within the framework of a city development plan as two arms of one mission which will deliver Swasth Bharat.
- The solid waste management component of the Smart Cities Mission should be viewed as a bonus.
- Many people understand that we need more toilets, including community toilets, to ensure that there is no open defecation.
- But there is not an adequate realisation that we need connectivity to sewerage networks and sewage treatment and/or decentralised septage management to ensure proper sanitary conditions for Clean India. Swacch Bharat and AMRUT together must address this challenge.
- Many people understand the connection between solid waste management and health in terms of the consequences of unattended heaps of dry garbage which become a home for flies and other vermin.
- However, there is another aspect that is not well understood, that is what happens when unscientific solid waste management combines with poor drainage and dumping of untreated sewage into drains which are meant to carry storm water during rains.
- The result is choked drains which are full of stagnant water breeding mosquitoes and resulting in the spread of water-borne diseases like malaria, dengue, chikungunya, etc.
- This is why we need integrated planning and implementation of solid waste management, drainage, sewerage and decentralised septage management networks for Clean India.
- A special challenge is posed by plastic waste which has been increasing very rapidly in Indian cities.
- When plastic is present in exposed garbage dumps, rains create little pools of stagnant water which get caught in the plastic waste, which breeds mosquitoes and spread disease.
- The problem is compounded when garbage and/or street sweepings including plastic are swept into municipal storm water drains, again choking the drainage system.
- It is therefore not enough to sweep the streets clean with brooms but also ensure that the waste is not dumped into the drains.
- We need to strengthen our institutions of service delivery if the funds are to be utilised properly. But all of this will not amount to much if we, as a community, treat this as someone else’s problem to solve for us.
- Resident welfare associations have a major role to play in creating awareness of the damaging impact of our approach to domestic waste.
- They can help in changing mindsets of residents towards segregating garbage at the household level, discouraging throwing of plastic waste on the streets and reporting cases of monsoon drains clogged with garbage.
- The municipal authorities should supply to each resident welfare association a list of dos and don’ts which the association could disseminate among its members.
- In India, we have a valuable tradition of recycling paper, glass, metals, etc. which needs to be preserved. We also need to inculcate a culture which encourages reuse and discourages disposable products if a reusable substitute is available.
- There are a number of good practices on waste management in Indian cities but the challenge lies in gearing up for change and being part of the change.
- Challenges from growing waste.
- Government programmes to tackle it.
- Need of multi-stakeholder approach.
- Other measures/suggestions.
Troubled waters [ editorial on indus water treaty troubled waters ]
It is clear that the Centre didn’t think through its next steps when it declared with a grand flourish, amplified by frenzied television headlines, that the Prime Minister would “review” the Treaty. But it did limit the potential damage by bringing down the heated rhetoric with a rational analysis on the Treaty. It would be wise if India proceeds with a sense of pragmatic caution in making further statements on Pakistan — for instance, revoking the MFN status will hardly punish Pakistan’s economy given the low levels of bilateral trade. Terrorist attacks such as the one at Uri require a combination of measured but firm responses, rather than weighing every option in full public view. India cannot also ignore the fact that the Uri attack has exposed the need to shore up its defences. As India has realised time and again, its response to provocation must carry the message that the country is dependable and not given to irrational, irresponsible actions that its neighbour is often prone to.
Keywords: India-Pakistan water treaty, Indus water treaty, India-Pakistan bilateral ties