Info Service on WTO and Trade Issues (Jun16/14)
23 June 2016
Third World Network
US for "sustainable procurement policies" by others
Published in SUNS #8264 dated 17 June 2016
Geneva, 16 Jun (D. Ravi Kanth) - Despite an aggressive pursuit of
subsidy and local content policies in its own renewable energy programs
at the federal and sub-federal levels, the United States has called
for implementing "sustainable procurement policies" that
are consistent with "international trade obligations" in
the World Trade Organization rulebook.
The US proposal on "sustainable procurement policies" has
exposed the continued "double-standards" and "hypocrisy"
on the part of the world's second largest polluter, according to trade
diplomats familiar with the development.
On Monday (13 June), the US submitted a two-page proposal to the WTO's
committee on the plurilateral agreement on government procurement.
The proposal has underscored the need for fostering a clean energy
economy to accomplish several objectives such as reducing energy-use
from direct and indirect activities, conserving and protecting water
resources, eliminating waste and pollution, leveraging acquisitions
to foster markets for sustainable technologies and environmentally
preferable materials and so on.
To achieve these objectives, the US has spelled out four major requirements
for members to follow at the WTO so as to ensure that sustainable
procurement policies are consistent with international trade obligations.
The requirements include:
(i) Ensuring that imported products are not treated less favourably
than like domestic products or imported products from other countries;
(ii) Taking into consideration international standards - and basing
national standards upon them if appropriate;
(iii) Developing standards based on performance criteria rather than
design criteria when appropriate;
(iv) Ensuring foreign suppliers have access to conformity assessment
procedures on the same basis as other domestic and foreign suppliers
of like products.
In effect, the US is suggesting that "international standards"
and standards-based criteria of international trade obligations shall
take precedence over rules that are currently being negotiated as
part of the Paris climate change agreement.
The US-advocated sustainable energy policies will require countries
to jettison their indigenous renewable energy initiatives and implement
a "mercantilist" trade policy framework regardless of the
disparities in the levels of development.
The US proposal has come at a time when India has challenged in appeal
a WTO panel ruling that overly struck down the domestic content requirements
adopted by India for promoting solar cells and solar modules for producing
The panel's ruling put paid to a WTO member's efforts to develop local
industries for solar cells and solar modules on account of its international
obligations on climate change.
India had justified its local content measures by invoking the United
Nations Framework Convention on Climate Change (UNFCCC) under the
exceptions provided in GATT Art. XX (d).
Significantly, New Delhi has also cited its solar content requirements
by taking recourse to the so-called "government procurement carve-out"
under GATT Article III:8(a).
This provision enables a WTO member to do away with national treatment
(treating imports on par with domestically produced like products)
But the panel struck down India's policies for promoting solar energy
on the ground that they violated India's national treatment obligations.
It dismissed India's claims on the ground that they violated the General
Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on
Trade-Related Investment Measures (TRIMs).
Against this backdrop, the US proposal on sustainable procurement
policies has almost coincided with the ongoing India-US solar spat
at the WTO's Appellate Body.
The AB is yet to give a ruling whether the panel erred in its interpretation
of the specific "government procurement carve-out" as argued
by India in its complaint.
Prior to the India-US dispute, the WTO's AB had upheld claims raised
by the European Union and Japan against Canada over the allegedly
trade-distorting incentives and preferential pricing-arrangements
offered by two of Canada's provinces using domestic content for renewable
As for the US proposal on sustainable procurement policies, it is
common knowledge that Washington has continued to pursue its own subsidy
and local content requirement programs at federal and sub-federal
For example, in a submission made before the committee on subsidies
and countervailing measures on 18 April 2013 (G/SCM/Q2/USA/59), India
had asked the US many questions on its subsidy programs to promote
India had said that it "is concerned that some of these subsidy
schemes have provisions relating to local or domestic content requirements
which raises issues of consistency with Article 3.2 read with Article
3.1 (b) of the ASCM. There are issues of consistency with TRIMs Agreement
read with relevant provisions of GATT 1994 as well."
The five-page Indian questionnaire on the US' subsidies and local
content requirements include "specific renewable energy sector
subsidy programs of the four States in the United States, namely the
States of Delaware, Minnesota, Massachusetts and Connecticut."
Consider the "Delaware: Solar Renewable Energy Credits"
which says that "a Retail Electricity Supplier or a Rural Electric
Cooperative shall receive an additional 10% credit toward meeting
the RPS for solar or wind energy installations sited in Delaware,
provided that a minimum of 50% of the cost of the renewable energy
equipment, inclusive of mounting components, relates to Delaware manufactured
The US was asked to explain about the local content requirement in
the Delaware program and clarify "as to how this provision is
not in violation of Article 3.2 read with Article 3.1 (b) of the ASCM."
India had also grilled the US on "Minnesota: Xcel Energy - Solar
Rewards Program and MN Made PV Rebate Program" which enables
customers "to access the Minnesota Bonus PV Solar Rebate Program."
The Minnesota program states that "to qualify for the Minnesota
Bonus incentive program, an applicant must: ... Install qualified
"Minnesota Bonus" PV modules as defined by state statute."
Similar programs such as "Massachusetts: Commonwealth Solar II
Photovoltaic Rebate Program" and "Connecticut: The Residential
Solar Investment Program" were also pursued along with various
The US until now has not provided substantive answers to these queries.
So far, the US renewable energy programs based on subsidies and local
content requirements have not been challenged.
Although the Indian energy minister P. Goyal had hinted that New Delhi
will take the US to task on its trade- distorting renewable energy
programs, India has not raised any dispute against the US.
In his recent visit to the US, the Indian Prime Minister Narendra
Modi had entered into an agreement with President Barack Obama on
The US has agreed to participate in the global solar initiative launched
by India at the Paris meeting last December.
But it is not clear whether such cooperation with the US will be helpful
for developing countries which have to harmonize their renewable energy
programs according to the rules set by the US, a trade diplomat said.