U.S. challenges India's solar program restrictions at WTO

A worker installs photovoltaic solar panels at the Gujarat solar park under construction in Charanka village in Patan district of Gujarat April 14, 2012.

WASHINGTON (Reuters) - The United States on Wednesday filed a challenge with the World Trade Organization over elements of India's national solar program, which it said discriminates against foreign solar products in violation of a core global trade rule.

The case comes as a number of governments, including the United States, are supporting development of clean energy to reduce dependence on fossil fuels and to cut greenhouse gas emissions blamed for global climate change.

"Let me be clear: the United States strongly supports the rapid deployment of solar energy around the world, including with India," U.S. Trade Representative Ron Kirk said in a statement announcing the request for consultations with India, which is the first step in bringing a WTO dispute.

"Unfortunately, India's discriminatory policies in its national solar program detract from that successful cooperation, raise the cost of clean energy, and undermine progress toward our shared objective," Kirk said.

The U.S. action targets India's national solar program, the Jawaharlal Nehru National Solar Mission.

That program, launched in 2010, appears to discriminate against U.S. solar equipment by requiring solar energy producers to use Indian-manufactured solar cells and modules and by offering subsidies to those developers for using domestic equipment instead of imports, the U.S. trade office said.

"What we're talking about here is the most fundamental principle of non-discrimination at the core of the whole trading system," a U.S. trade official told Reuters, speaking on condition he not be identified.

That principle requires countries to treat foreign goods and services the same way they treat domestic goods and services, the U.S. official said.

U.S. lawmakers praised the action, which they said addressed a trend seen in China, Argentina and other countries.

"India isn't playing by the rules, and USTR is right to go to the WTO to hold it accountable for its local content requirements," House of Representatives Ways and Means Committee Chairman Dave Camp said.

Indian government officials were not immediately available in Washington or WTO headquarters in Geneva for comment.

GOVERNMENT PROCUREMENT EXCEPTION

India has argued its solar policy measures are legal under WTO government procurement rules that permit countries to exempt projects from non-discrimination obligations.

The European Union and Japan have criticized that stance in committee discussions at the WTO, and U.S. officials said they were confident it would not stand up under a WTO review.

Cases challenging local content rules have received a boost since the WTO ruled against Canada's requirements for a green energy plan in Ontario province.

Canada filed an appeal on Wednesday in that case, which was brought by Japan and the EU.

The U.S request for consultations with India at the WTO follows years of raising the issue with India in bilateral meetings, U.S. trade officials said.

Under WTO rules, the United States can ask for a dispute settlement panel to hear its complaint if consultations with India do not resolve the matter within 60 days.

The U.S. trade official said he still hoped the two sides could resolve the dispute without a fight at the WTO.

"We certainly believe it is a possibility" because being the target of a WTO complaint can persuade countries to re-examine their stance, the official said.

The United States recently imposed punitive duties on solar cells and modules from China to offset what it said were unfair pricing and government subsidies.

China has not challenged those measures at the WTO.

(Reporting by Doug Palmer in Washington and Tom Miles in Geneva; Editing by Vicki Allen, Eric Beech and Stacey Joyce)