Introduction – Cogs of the same wheel – Trade and FDI
From where do we get the much-assumed co-relation between trade and Foreign Direct Investment (FDI)? Let us draw from the theory of Grazia Ietto-Gillies who opined that the reason for the growth of FDI and MNCs were rooted in neoclassical economics based on macro-economic principles. These theories were based on the classical theory of trade in which the motive behind the trade was a result of the difference in the costs of production of goods between two countries, focusing on the low cost of production as a motive for a firm’s foreign activity. The relation between trade and FDI flows from this. Analytical work has recently been developed by OECD in order to explore the nature of these links in quantitative terms. Read More »
Recently, the World Trade Organization (WTO) celebrated its 20th anniversary, and several events were held in different places around the globe commemorating this historic event. One of them being a round of conferences held in Cancun, Mexico, from December 2nd to December 4th called “Latin American and the Future of International Trade Law” also known as WTO20LATAM. The event reunited trade lawyers, academics and government officials from Latin America, US, and Europe, as well as five Appellate Body Members. The discussions were of a very high quality, as experts gave powerful insights that were later complemented with the opinions of an appellate body member.
The Chairman of the Panel in ‘India — Certain Measures Relating to Solar Cells and Solar Modules’ has informed the Dispute Settlement Body (‘DSB’) that the final Panel Report is expected to come out next month.
The United States has challenged certain measures of India relating to domestic content requirements under the Jawaharlal Nehru National Solar Mission (“NSM”) for solar cells and solar modules. Brazil; Canada; China; European Union; Japan; Korea, Republic of; Malaysia; Norway; Russian Federation; Turkey; Ecuador; Saudi Arabia, Kingdom of; Chinese Taipei are third parties to the dispute.
The NSM was launched in 2010 with an ambitious target of deploying 20,000 MW of grid connected solar power by 2022. It aimed at reducing the cost of solar power generation in the country through aggresive Research & Development and domestic production of certain critical components. Therefore, the idea was to encourage domestic production of solar panels and modules.
According to the United States, under NSM, the solar power developers are granted certain benefits such as guaranteed long term tariffs for electricity (in the form of power purchase agreements under NSM or with NTPC Vidyut Vyapar Nigam Limited) if they purchased and used solar cells and solar modules of domestic origin.
The United States’ position is that these domestic content requirements are inconsistent with Article III:4 of the GATT 1994 (National Treatment); Article 2.1 of the TRIMs Agreement( National Treatment and Quantitative Restrictions) and Articles 3.1(b), 3.2, 5(c), 6.3(a) and (c), and 25 of the SCM Agreement (Prohibition on Subsidies, Causing of Adverse Effects through Subsidies, Notification of Subsidies).Read More »