* U.S. files second case at World Trade Organization
* Says Indian laws discriminate against U.S. solar producers
* Experts say case has been years in the making
* Latest irritant in troubled bilateral relationship
By Krista Hughes and Frank Jack Daniel
WASHINGTON/NEW DELHI, Feb 10 The United States
on Monday said it would take India to the World Trade
Organization to gain a bigger foothold for U.S. manufacturers in
its fast-growing solar products market, adding another irritant
to an already strained relationship.
The Obama administration said it was filing its second case
at the WTO over the domestic content requirements in India's
massive solar program, which aims to ease chronic energy
shortages in Asia's third-largest economy.
U.S. Trade Representative Michael Froman said making Indian
solar developers use locally made equipment discriminated
against U.S. producers and could hinder the spread of solar
"Domestic content requirements detract from successful
cooperation on clean energy and actually impede India's
deployment of solar energy by raising its cost," Froman said.
It is the second time in a year that Washington has sought a
consultation at the WTO - the first stage in a dispute process
that can lead to sanctions - over India's Jawaharlal Nehru
National Solar Mission.
The ongoing trade spat between the two allies follows the
recent arrest and strip search of a female Indian diplomat in
New York in connection with visa fraud charges.
The arrest sparked fury in India, prompted retaliatory
measures against U.S. diplomats there and plunged U.S.-India
relations to their lowest point since India tested a nuclear
device in 1998.
The USTR issued its first challenge to India's solar program
last February when it formally requested consultations over its
first stage. The program aims to double India's renewable energy
capacity by 2017.
U.S. officials had hoped a second phase of the program would
address Washington's concerns, but now fear the harm to American
producers would likely be even greater because the rules were
expanded in October to cover so-called thin film technology that
comprises the majority of U.S. solar product exports to India.
India hit back at the initial U.S. accusations in April,
asking Washington to justify its own incentives offered to U.S.
companies that use local labour and products in renewable energy
and water projects. The Indian embassy in Washington was not
immediately available for comment on the latest trade action.
India has argued its solar policies are legal under WTO
government procurement rules that permit countries to exempt
projects from non-discrimination obligations.
YEARS IN THE MAKING
Froman said the action did not undermine the value that the
United States placed on its relationship with India, saying:
"Today's action addresses a specific issue of concern and in no
way detracts from the importance we attach to this
relationship." Attorneys for the USTR said later such cases took
months to prepare.
U.S. solar trade groups cheered the move and said the United
States had been patient in its discussions with India.
"The U.S. government spent two years talking with India
trying to encourage them to move away from the local content
requirement before initiating the first action roughly a year
ago," said John Smirnow, vice president of trade and
competitiveness for the Solar Energy Industries Association.
"We are almost three years in the making of the U.S. trying
to get India to move back from this local content requirement."
U.S. environmental groups have urged the Obama
administration to back off any WTO action, arguing that building
up India's solar power industry will help it cut high greenhouse
But the administration has come under growing pressure from
lawmakers and business groups to take a tougher stance on
perceived Indian protectionist measures and intellectual
property rights abuses by Indian drug companies.
India is widely perceived in Washington as a serial trade
offender, with U.S. companies unhappy about imports of
everything from shrimp to steel pipes they say threaten jobs.
The U.S. International Trade Commission is scheduled to hold
a hearing into complaints of trade barriers erected by India on
Wednesday and Thursday.
There are 14 past or current World Trade Organization cases
between India and the United States, whose bilateral trade in
goods measured $63.7 billion last year, not including the latest