The World Trade Organization is giving some environmentalists a reason to say “I told you so.”
On Wednesday, the WTO, the international body that enforces trade law, said that India’s solar power subsidy violated trade rules. The program -- which has helped India’s solar industry get off the ground and become one of the fastest growing in the world -- required new projects be built with parts made in India. Despite India’s argument that the local product requirement was crucial to India's meeting its commitment under the Paris Climate Agreement, the WTO ruled that requirement unfairly discriminated against U.S. solar manufacturers.
This is exactly the kind of decision that has many environmentalists worried about the Trans-Pacific Partnership, the sweeping and controversial trade agreement President Barack Obama signed in February. The agreement has not yet been approved by Congress. Dozens of environmental organizations expressed deep concerns about the TPP.
Friends of the Earth called the decision "an outrage" in a release. The group said that India “reasonably provided some preferences for local producers of solar energy in order to convert from a carbon economy to a green economy."
The Sierra Club called the decision a “step in the wrong direction” and said it could easily apply to U.S. subsidies for renewable energy: "Almost half of U.S. states have programs that, like India’s, offer incentives for renewable energy production that creates local, green jobs. The U.S. should drop this case to avoid undermining climate protections abroad and at home.”
The American appeal to the WTO only covered a small part of India's solar policy, said U.S. Trade Representative Press Secretary Andrew Bates. "The single measure that the Obama Administration took issue with required the use of more expensive and less efficient solar equipment -- thereby raising the cost of generating clean energy across India," Bates said. In its submission to the WTO, the USTR's office cited an Indian solar industry group estimate that the domestic requirement increased prices by 15 to 16 percent.
President Obama, Bates noted, has supported India's solar policy since it was launched in 2010. Obama's language at the time included a caveat alluding to disagreement about the made-in-India requirements.
The WTO decision won’t have a major impact on India’s ability to meet its climate goals, said Anjali Jaiswal, director of the The Natural Resources Defense Council India Initiative. Yes, the Indian solar industry will now be undercut by a huge volume of cheaper solar products made in China and the U.S., she told HuffPost, but India was always going to import large amounts of solar hardware to meet its goals because of limited supply domestically. “When you look at, overall, the domestic content requirement, it affects about 10 percent of India’s [solar] industry,” Jaiswal noted.
Jaiswal agreed that the trade rule dispute seemed like a throwback: “Some of the arguments are Reagan-era arguments that we see. And those are largely business interests protecting their business interests.”
Now, she said, self-interest is being deployed to meet India’s solar goals.
UPDATE: This piece has been updated with comment from the U.S. Trade Representative.