* Trade spat between giants of developing, developed world
* “Local content requirements” at heart of argument
* U.S. challenged India’s solar programme restrictions
GENEVA, April 17 (Reuters) - India has asked the United States to justify apparent trade restrictions in renewable energy projects, a challenge to a major critic of its own trade policies that may deepen divides between giants of the developing and developed world.
India is concerned that incentives offered to U.S. companies to use local labour and products might break global trade rules, it said in a filing to the World Trade Organization published on Wednesday.
Its request for information - sometimes a precursor to a formal trade dispute - came two months after the United States launched a similar dispute about incentives offered to local suppliers in India’s solar industry.
Both sets of allegations focus on the use of “local content requirements” that encourage companies to use local inputs in their projects, which can amount to discrimination against foreign firms and a breach of international trade law.
Local content requirements have been in the spotlight since Japan and the European Union challenged Canada over a renewable energy promotion scheme run by the province of Ontario.
In that case, a panel of WTO adjudicators agreed with them. Although the case is still due for a final appeal ruling by May 6, it has triggered a hunt for other discriminatory clauses worldwide, led by the United States, the European Union and Japan.
Their scrutiny has fallen upon capital-intensive industries in big developing markets, where they could potentially force open markets worth billions of dollars to their own companies.
Aside from the huge but struggling solar sector, the three rich trading powers have questioned the validity of local content rules in Indonesia’s telecoms, mining, oil and gas sectors and Nigeria’s energy industry.
They are also suspicious of Brazil’s tax rules, such as a 30 percentage points hike in sales tax on cars that do not meet a 65 percent local content threshold, they said in a statement circulated by the WTO on Wednesday.
They had similar concerns about Brazil’s treatment of telecoms and semiconductors.
In its WTO filing published on Wednesday, India said the existence of the U.S. requirements “raises concerns about their compatibility” with global trade rules.
India asked the United States to provide full details of state, regional and local renewable energy programmes that had local content requirements and listed four schemes about which it had specific questions.
It cited Michigan’s renewable energy legislation, Los Angeles’ solar incentive programme, California’s self generation programme and incentives for commercial and residential solar power offered by Austin Energy in Texas. (Reporting by Tom Miles; Editing by Andrew Heavens)
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