Relations between the U.S. and India were strained further this week as India responded furiously to a White House request to the World Trade Organization (WTO) to examine Indias trade practices.
With a general election looming and local media stoking tensions over a female Indian diplomats recent arrest and strip search in New York, Prime Minister Manmohan Singh has hardened his stance towards the U.S., instructing government officials to deny WTO representatives access to its trade practices.
The call came earlier this month when the White House grew increasingly exasperated with what it called India’s repeat flouting of international trading standards, with the dispute rooted in the solar industry.
India’s National Solar Mission last year introduced measures for domestic content requirements in the manufacturing of Indian solar projects a move that was initially challenged by the U.S.
Phase II of the solar mission, revealed earlier this year, outlined similar domestic requirements, further invoking the ire of the White House and the U.S. Trade Representative (USTR) office.
"The domestic content requirements for solar power equipment imposed by India in ‘Phase II’ of its National Solar Mission discriminate against U.S. exports by requiring solar power developers to use Indian-manufactured equipment instead of U.S. equipment," said U.S. Trade Representative Michael Froman, who added that the requirements clearly violated WTO rules.
An investigative action was duly lodged with the WTO, with Washington revealing this week that it was filing its second case against Indias solar program, citing that the unfair playing field denied U.S. firms access to the market and harmed Asia’s wider goal of easing its energy shortage and increasing its renewable energy portfolio.
Serial trade offender
Despite generating $63.7 billion in bilateral goods trade last year, relations between India and the U.S. are at a low. There have been 14 WTO cases lodged between the two countries so far, with the the U.S. National Association of Manufacturers (NAM) calling India a serial trade offender. NAM asked the USTR this week to designate India a Priority Foreign Country in its 2014 report.
"This designation appropriately would rank India among the very worst violators of intellectual property rights, and establish a process leading to concrete solutions," read a NAM letter sent to Froman.
In response, India’s government has instructed officials in its solar sector to deny the United States International Trade Commission access allowing the agency to examine its trade practices, and also requested the postponement of a planned visit from U.S. Deputy Trade Representative Wendy Cutler, at least until after April’s general elections.
Rajeev Kher, India’s newly appointed Trade Secretary, has instructed officials on both sides to explore ways to tackle the bilateral dispute through multi-lateral forums, hinting to the White House to look at the wider economic context of trade between the two nations.