Abstract
Both India, a developing country and Canada, a developed country, suffered serious setbacks when the WTO invalidated their program to harvest solar energy to produce electricity. The main issue in both the cases was the domestic content requirement, i.e. solar power developers must purchase their capital equipment to produce electricity from local sources, if they want to sell their electricity to the Government at guaranteed prices. The countries exporting these capital equipment challenged this domestic content requirement mainly under Article III of the GATT, 1994. India and Canada tried to justify their measures under Article III: 8(a) of the GATT which protects government procurement from challenge under Article III:4. Finally, it turned out to be the tussle between free trade and protection of infant industries. As it always happens under the WTO, the free traders won. The paper explains this tussle and the implications thereof in legal terms.
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