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A female solar engineer from Rajasthan, India - just one of many who could have benefitted from the work to create the National Solar Mission. Photo: Knut-Erik Helle via Flickr (CC BY-NC 2.0)
A female solar engineer from Rajasthan, India - just one of many who could have benefitted from the work to create the National Solar Mission. Photo: Knut-Erik Helle via Flickr (CC BY-NC 2.0)
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World Trade Organisation smashes India's solar panels industry

Dipti Bhatnagar & Sam Cossar-Gilbert

28th February 2016

The World Trade Organisation (WTO) has found India's huge solar initiative 'guilty' of breaking trade rules, write Dipti Bhatnagar & Sam Cossar-Gilbert, because it gives domestic manufacturers a small 10% quota for the supply of panels, leaving up to 90% for foreign competitors. It's a warning for perils of the entire WTO system, and of even harsher trade rules like those in TPP, TTIP and CETA.

If India or other developing countries cannot enact policy to support the creation of domestic industries, it is substantially less likely green policies will ever see the light of day.

On Wednesday the 24th February, it ruled against India's National Solar mission, which aims to rapidly increase the country's renewable energy and bring energy to millions of people by generating 100 gigawatts of solar energy annually by 2022.

The reason? A small portion of the program would have actively supported the creation of local renewable energy jobs.

This is hard to believe given the director of the WTO, Roberto Azevêdo, recently said "The challenge is not to stop trading but to ensure that trade is an ally in the fight against climate change." Yet with this decision the WTO is effectively driving a financial bulldozer through India's homegrown solar panel factories.

The ink is barely dry on the already weak UN Paris Climate agreement, but clearly trade still trumps real action on climate change. This is in spite of a report by Friends of the Earth International which found that transferring the world's energy to 100% renewables, could be possible within 15 years.

The case was thrown out because India wanted to support its own people

In 2013 the United States initiated a case in the WTO against India's Solar Mission, because the government-funded program included what they believed to be a 'discriminatory' domestic content clause, requiring that a paltry 10 % of the solar cells be produced nationally.

India tried to defend their case by arguing it was part of their commitment to UN sustainable development initiatives and international climate agreements. Yet this cry fell on deaf ears.

The WTO found strongly against India's National Solar Mission, and is now trying to reach a settlement with the US. India may now have to adjust its solar mission to comply with WTO trade rules or risk sanctions. The local renewable energy industry is obviously worried about the effect of this ruling.

Yet for the ideological corporate traders this is a win for the 'efficient green economy'. US Trade Representative Michael Froman stated, "This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory 'localization' policies."

The US Solar Energy Industries Association also stated " the WTO ruling is a step in the right direction and hopefully will remove any obstacles to a constructive US presence in India's solar market"

A dangerous and self-serving position used to justify attacking common sense renewable energy policy in a developing country which has other competing priorities including serving its people. Irononically, many US states also use similar buy-local clauses to support their solar industry. Climate change is one of the biggest examples of market failure and cannot be left to big business to solve. Governments must be free to implement sound climate policy.

At a time of mass global unemployment, one of the main reasons why governments and the general public do or will support a transition to clean energy is if it creates jobs. If India or other developing countries cannot enact policy to support the creation of domestic industries, it is substantially less likely green policies will ever see the light of day.

The car industry has enormous power and influence, not just because people drive cars, but because car manufacturing creates jobs. Countries producing high levels of renewable energy, like Germany, also seek to accompany their energy transition with policies that create renewable energy jobs.

This WTO ruling sets a dangerous precedent for countries wanting to support homegrown renewable energy initiatives.

Not the first time trade agreements have blocked environmental policy

Trade agreements are often stumbling blocks for action on climate change. Current trade rules limit governments' capacity to support local renewable energy, undermine clean technology transfer and empower fossil fuel companies to attack climate protection in secret courts. Trade policies are preventing a sustainable future.

In 2012, the WTO ruled against Ontario's innovative Green Energy Act, which intended to help boost renewable technologies and clean-energy jobs. Similar to the Indian case, part of the program included a 'feed-in-tariff' that supported local suppliers. The policy was changed to comply with WTO rules.

In just the last three months, Ecuador was ordered to pay $1 billion dollars for canceling a petrol contract under a Bilateral Investment Treaty, and TransCanada announced it would sue the US government in a trade tribunal for $15 billion for rejecting Keystone XL pipeline to transport dirty Tar Sands.

As ludicrous as this sounds, this is allowed to happen because corporations can use so-called investor protections in trade agreements to sue governments for introducing rules that protect citizens' health, rights the environment, or the climate.

The Indian WTO ruling highlights the severe dangers posed by more wide-ranging trade agreements like the Trans Pacific Partnership (TPP), Trade in Services Agreement (TiSA) and Transatlantic Trade, Investment Partnership (TTIP), which will liberalize trade in dirty fossil fuels and restrict government options even further.

In the face of a growing climate emergency, we need a trade system that helps rather than hinders the development of sustainable societies, by supporting local economies, sustainable jobs, a clean environment and more responsible energy.

 


 

Dipti Bhatnagar is Climate Justice & Energy Co-coordinator for Friends of the Earth International, based in Maputo. Tweets at @diptimoz.

Sam Cossar-Gilbert is the Economic Justice Resisting Neoliberalism Program Coordinator for Friends of the Earth International based in Paris. Tweets at @samcossar.

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