India – Certain Measures Relating to Solar Cells
and Solar
Modules
AB-2016-3
Report of
the Appellate Body
Addendum
This Addendum contains Annexes A
to D to the Report of the Appellate Body
circulated as document WT/DS456/AB/R.
The Notice of Appeal and the
executive summaries of written submissions contained in this Addendum are
attached as they were received from the participants and third participants.
The content has not been revised or edited by the Appellate Body, except that
paragraph and footnote numbers that did not start at one in the original may
have been re‑numbered to do so, and the text may have been formatted in order
to adhere to WTO style. The executive summaries do not serve as substitutes for
the submissions of the participants and third participants in the
Appellate Body's examination of the appeal.
_______________
LIST OF ANNEXES
ANNEX A
NOTICE OF
APPEAL
Contents
|
Page
|
Annex A-1
|
India's Notice of
Appeal
|
A-2
|
|
|
|
ANNEX B
Arguments
Of The Participants
Contents
|
Page
|
Annex B-1
|
Executive summary of India's appellant's
submission
|
B-2
|
Annex B-2
|
Executive summary of the United States' appellee's
submission
|
B-7
|
ANNEX C
Arguments
of the Third PaRTICIPANTS
Contents
|
Page
|
Annex C-1
|
Executive summary of Brazil's third
participant's submission
|
C-2
|
Annex C-2
|
Executive summary of the European Union's
third participant's submission
|
C-3
|
Annex C-3
|
Executive summary of Japan's third
participant's submission
|
C-5
|
ANNEX D
Procedural
Ruling
Contents
|
Page
|
Annex D-1
|
Procedural Ruling
of 4 May 2016 regarding modification of the dates for the filing of written submissions
|
D-2
|
|
|
|
ANNEX A
NOTICE OF
APPEAL
Contents
|
Page
|
Annex A-1
|
India's
Notice of Appeal
|
A-2
|
|
|
|
ANNEX A-1
India's
NOTICE OF APPEAL*
Pursuant to Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (the "DSU") and Rule 20 of the Working Procedures for Appellate Review (WT/AB/WP/6)
("Working Procedures"), India hereby notifies its decision to appeal
certain issues of law covered by in the panel report in India – Certain Measures relating to Solar Cells and
Solar Modules (WT/DS456/R) ("Panel Report"), and certain
legal interpretations developed by the Panel in this dispute.
Pursuant to Rules 20(1) and 21(1) of
the Working Procedures, India files this Notification together with its
Appellant's Submission with the Appellate Body Secretariat.
For the reasons to be elaborated in its submissions to the Appellate Body, India appeals
the following errors of law and legal interpretation contained in the Panel
Report and requests the Appellate Body to reverse the related findings,
conclusions and recommendations of the Panel, and where indicated, to complete
the analysis.[1]
I The Panel erred in its finding that
Article III:8(a) of the GATT 1994 is not applicable to the DCR measures
1.
India appeals the Panel's conclusion that the DCR measures are not
covered by the derogation under Article III:8(a) of the GATT 1994 for the
following reasons:
i.
The Panel erred in not considering India's arguments that solar cells and
modules are indistinguishable from solar power generation[2], and that in its factual and legal assessment, it is not necessary to
consider whether solar cells and modules qualify as "inputs" for
solar power generation. The basis for the Panel's reasoning was that the Appellate Body in Canada – Renewable Energy / Feed-In Tariff Program, did not consider this issue[3], while ignoring the fact that this issue was not presented for
consideration before the Appellate Body in that dispute.
ii. The Panel erred in its conclusion that discrimination relating to solar cells and
modules under the DCR measures is not covered by the derogation under Article III:8(a)
of the GATT 1994.[4]
2.
India requests the Appellate Body to find that the Panel acted
inconsistently with Article 11 of the DSU in failing to consider and to make an
objective assessment of India's arguments that: (i) solar cells and modules are
indistinguishable from solar power generation, and (ii) solar cells
and modules can be characterized as inputs for generation of solar power.[5]
3.
India further requests the Appellate Body to reverse the Panel's
findings that the derogation under Article III:8(a) of the GATT 1994 is not
available for solar cells and modules since what the Government purchases is
electricity generated from such cells and modules[6] and instead complete the analysis
to find that the DCR measures are covered by the derogation under Article
III:8(a) of the GATT 1994.
4.
Should
the Appellate Body hold that the DCR measures are covered by the derogation under
Article III:8(a) of the GATT 1994, India requests the Appellate Body to
complete the analysis under Article III:8(a) of the GATT 1994 and find that:
i. The DCR measures are laws,
regulations or requirements governing procurement;
ii. The procurement under the DCR measures is made by governmental
agencies;
iii. The procurement under the DCR
measures is of products purchased for governmental purposes;
iv.
The procurement and purchase of products under the DCR measures is not
with a view to commercial resale.
5.
Based on the
above, India requests the Appellate Body to find that the DCR measures are not
inconsistent with Article 2.1 of the TRIMs Agreement and Article III:4 of the
GATT 1994.
II The Panel erred in its finding that the
exception under Article XX(j) of
the GATT 1994 is not applicable to the DCR measures
1.
Should the
Appellate Body uphold the Panel's finding that the DCR measures are not covered
by the derogation of Article III:8(a) of the GATT 1994, India requests the
Appellate Body to find that the Panel erred in its conclusion that the DCR
measures are not justified under the general exception in Article XX(j) of
the GATT 1994.[7]
2.
India also requests the Appellate Body to find that the Panel acted
inconsistently with Article 11 of the DSU in its assessment of India's
arguments on "sufficient manufacturing capacity"[8]; by disregarding India's justification with regard
to the DCR measures, and substituting it with one which had no basis in India's
submissions[9]; and in arriving at various conclusions based on a piecemeal and
selective analysis of two reports without providing India due process rights to
respond to its conclusions.[10]
3.
India requests the Appellate Body to reverse the Panel's conclusion that
the DCR measures are not justified under Article XX(j) of the GATT 1994 and to
complete the analysis under Article XX(j) to find that:
i. India's lack of manufacturing
capacity of solar cells and modules amounts to a situation of local and general
short supply of such products in India, and that the defence under Article XX(j)
is available to it;
ii. The DCR
measures are essential for addressing the local and general short supply of
solar cells and modules;
iii. The DCR
measures are justified under Article XX(j) of the GATT 1994 because they meet
with the requirements of the chapeau of Article XX.
III Subsidiarily, the Panel erred
in its finding that the DCR Measures are not Justifiable under Article XX(d) of the GATT 1994
1.
Should the Appellate Body find that the derogation under Article
III:8(a) of the GATT 1994 is not available for India, and that the DCR measures
are not justifiable under Article XX(j) of the GATT 1994, then India requests
the Appellate Body to find that the Panel erred in its conclusion that the DCR measures are not justified under the
general exception in Article XX(d) of the GATT 1994.[11]
2.
India requests the Appellate Body to reverse the Panel's conclusion that
the DCR measures are not justified under Article XX(d) of the GATT 1994 and to
complete the analysis under Article XX(d) to find that:
i.
The international and domestic laws and regulations identified by India,
constitute laws and regulations for the purpose of Article XX(d);
ii.
The DCR measures are necessary for securing compliance with the mandate
under India's laws and regulations to achieve ecologically sustainable growth
and sustainable development; and
iii.
The DCR measures
are justified under Article XX(d) of the GATT 1994 because they meet with the
requirements of the chapeau of Article XX.
_______________
ANNEX B
Arguments
Of The Participants
Contents
|
Page
|
Annex B-1
|
Executive summary of India's appellant's
submission
|
B-2
|
Annex B-2
|
Executive summary of the United States'
appellee's submission
|
B-7
|
ANNEX B-1
EXECUTIVE
SUMMARY OF India's APPELLANT'S SUBMISSION
Summary of
Issues under Article III:8(a) of the GATT 1994
(i) The
Panel erred in not considering India's arguments that solar cells and modules are indistinguishable from solar power
generation.
1. India's
submission before the Panel was based on the inherent physical characteristics
of solar cells and modules that make it indistinguishable from the electricity
generated from it. This aspect was not pleaded and therefore not considered by
the Appellate Body in Canada ‒ Renewable
Energy/Canada – Feed-in Tariff Program.
2. In
dismissing India's arguments based on the reasoning that "… the Appellate
Body did not find such considerations germane to its evaluation of electricity
and generation equipment that included solar cells and modules",[12] the Panel ignored the substance of India's arguments on why solar cells
and modules stand on a different footing. The Panel's reasoning indicates that
merely because such arguments were not made, and therefore not considered, in a
separate dispute – the Canada – Renewable
Energy/Canada – Feed-in Tariff Program, it too cannot consider the
same.
(ii) The
Panel erred in its assessment that it is not necessary to consider whether
solar cells and modules qualify as "inputs" for solar power
generation.
3. India
argued that solar cells and modules can also be seen as "inputs for solar
power generation", and reasoned that the Appellate Body report in Canada – Renewable Energy/Feed in Tariff Program, left space
for legal reasoning on the issue of inputs.[13]
4. The
Panel dismissed India's arguments that it is not necessary for it to assess regarding
whether solar cells and modules can be considered as inputs for generation of
solar power, since the Appellate Body in Canada's dispute referred to
"generation equipment" throughout its analysis, and did not
distinguish between "solar cells and modules" and other
"generation equipment".[14] The Panel's reasoning ignores that this argument or reasoning was
not submitted by any of the parties to Canada – Renewable
Energy/Feed-In Tariff Program.
(iii) The
Panel erred in dismissing India's argument that the consequence of sole
reliance on the test of competitive relationship, would be an unduly
restrictive interpretation of Article III:8(a).
5. India
argued that an overly restrictive interpretation of Article III:8(a) will mean
that governments can act only in certain ways to avail of its benefit, such as:
(a) they would need to purchase the solar cells and modules by themselves, and
generate the electricity from it, or (b) purchase the solar cells and
modules, and provide it to solar power developers for power generation.[15] The Panel dismissed this argument, not on any consideration of the
merits of India's arguments under Article III:8(a), but because in its view,
the measure at issue is not distinguishable in any relevant respect from those
considered by the Appellate Body in Canada ‒ Renewable
Energy/Feed-In Tariff Program.[16]
(iv) The
Panel acted inconsistently with its obligations under Article 11 of the DSU to
make an objective assessment of the matter before it in evaluating the issues
under Article III:8(a).
6. The
Panel seems to have simply taken shelter under the Appellate Body's ruling in Canada ‒ Renewable Energy/Feed-in Tariff Program,
and wherever it could not find an answer for a specific issue or argument
within the reasoning in that dispute, it simply dismissed it as a matter that
had not been considered as relevant by the Appellate Body, and for that reason
alone, it too would not consider these arguments.
7. India
requests the Appellate Body to find that this abnegation of responsibility to
make an objective assessment of the facts and arguments before it, amounts to
action inconsistent with the responsibility of a panel under Article 11 of the
DSU to make an objective assessment of the facts of the case, and the
applicability of and conformity with the relevant provisions of the covered
agreements.
(v) Findings
and conclusions with regard to Article III:8(a) of the GATT 1994.
8. India
requests the Appellate Body to reverse the Panel's findings that the derogation
under Article III:8(a) of the GATT 1994 is not available for solar cells and
modules,[17] and complete the analysis to find that the DCR measures are covered by
the derogation under Article III:8(a) of the GATT 1994.
9. Should
the Appellate Body find that the derogation of Article III:8(a) is available
for India's DCR measures, India further requests the Appellate Body to complete
the analysis under Article III:8(a) of the GATT 1994 and find that:
i. The DCR measures are laws, regulations or requirements governing
procurement;
ii. The procurement under the DCR measures is made by governmental
agencies;
iii. The procurement under the DCR measures is of products purchased for
governmental purposes;
iv. The procurement and purchase of products under the DCR measures is
not with a view to commercial resale.
Summary of
Issues under Article XX(j) of the GATT 1994
10. Should
the Appellate Body uphold the Panel's finding that the DCR measures are not
covered by the derogation under Article III:8(a) of the GATT 1994, India
requests the Appellate Body to find that the Panel erred in its conclusion that
the DCR measures are not justified under the general exception in Article XX(j)
of the GATT 1994.
(i) The
Panel erred in its legal interpretation of the terms "general or local
short supply" used in Article XX(j).
11. The
Panel erred in its interpretation by not reading "short supply" in
Article XX(j) in the context of the specific terms used in that provision,
i.e., "general or local", and instead, adopted a piecemeal approach
that interpreted the words "general or local" in isolation of the
words "short supply". The Panel concluded that "short
supply" in "a general or local market" would occur when the
supply in such market does not meet the demand for the concerned product.[18] The Panel imputed new words into the provision, the effect of which was
a rewording of the first sentence of Article XX(j) as follows:
"essential to the acquisition or distribution of products when the
quantity of available supply of a product does not meet the demand in the
relevant local or general geographical area or market".
12. The
use of the terms "general or local" to qualify the words "short
supply" is a clear reflection of intent to qualify the source of the
supply as "general or local" as opposed to "international
supply" as reflected in the proviso to Article XX(j). The words
"short supply" in Article XX(j) cannot therefore be read without
imparting meaning to the full phrase: "general or local short supply".
13. The
term "supply" encompasses within it what is actually produced, and thereby available for purchase. The amount of
any commodity actually produced at the general or local level therefore needs
to be considered for assessing "general or local short supply."
14. The
Panel further erred in its assessment of the negotiating history of Article
XX(j)[19], since it failed to consider a crucial event in 1947 when the original
wording of the provision: "equitable distribution of products in short
supply", was replaced with "general or local short supply". The
concept of equitable distribution as relevant for "international
supply" was shifted as a proviso to the main provision. The Panel failed
to note that the use of the terms "general or local short supply"
contemplates short supply that is distinct from situations that can be
addressed by "international supply". If the intention of the negotiators
was to refer to international short supply in the first sentence of Article
XX(j), this could have been achieved by qualifying the phrase "short
supply" with "international or with nothing at all.
15. The
Panel's interpretation that Article XX(j) cannot be used in situations where
the local or general demand can be met from all sources including imports,[20] would render Article XX(j) incapable of being used as a tool for import
restraints. For Article XX(j) to be applicable effectively in situations of both
export and import restraints, the source of supply at the general or local level,
would need to be considered.
16. India
requests the Appellate Body to reverse the interpretation of the terms
"general or local short supply" as evolved by the Panel, as having no
basis in the text of the provision, and running counter to settled principles
of interpretation as laid out in Article 31 of the Vienna Convention on the Law
of Treaties. India further requests the Appellate Body to complete the analysis
based on interpretation of the ordinary meaning of the terms used in Article XX(j)
and find that the situation of lack of manufacturing of solar cells and modules
therefore constitutes "general or local short supply" under Article
XX(j).
(ii) The
Panel erred in its assessment that the DCR measures are not essential for the
acquisition of solar cells and modules.
17. In
its assessment of whether or not the DCR measures are essential under Article XX(j),
the Panel erred in characterizing India's DCR measure as one which can assure
that Indian SPDs "have access to a continuous and affordable supply of the
solar cells and modules."[21] The Panel's conclusion had absolutely no basis in the facts and
arguments before it. India's justification for the DCR measures was that the
measures are essential because they reduce the risks linked to predominant
dependence on imports.
18. The
difference is crucial: India's DCR measures is not about
"affordable supply of solar cells and modules" to Indian SPDs; but
that the energy security objective in India's solar policy requires India to
reduce the risks linked to predominant dependence on imports. India requests
that the Appellate Body to reverse the Panel's findings and conclusions based
on its erroneous assessment, and complete the analysis with regard to the justification
of the DCR measures.
19. The
Panel notes that the question of whether the acquisition or distribution of
products is essential for fulfilment of a policy objective, is irrelevant.[22] India disagrees, for the reason that the "acquisition or
distribution" for the purpose of Article XX(j) cannot be seen in isolation
of why such acquisition or distribution is essential. India requests the Appellate Body to reverse
the Panel's findings and find that acquisition under Article XX(j) cannot be
justified merely by existence of short supply; but by a justification of why
such acquisition is essential to redress the short supply, which can be done
only with reference to a policy objective, which in India's case is achieving
energy security and ecologically sustainable development.
20. The
Panel erred in its assessment that for assessing contribution of the DCR
measures, it needs to assess whether all Indian manufactured cells and modules
are exclusively consumed by Indian SPDs.[23] India requests the Appellate Body to reverse this finding and instead
find that the contribution of the DCR measures needs to be assessed in the
context of how they seek to address the issue of risks of import dependency;
and not from the perspective of exclusive use by Indian SPDs.
21. The
Panel has noted some of the arguments relating to the parties' arguments on the
issue of reasonably available alternatives for the purpose of Article XX of the
GATT 1994. In this regard, India has presented in its submissions a few
critical elements that the Panel has not recorded, to enable the Appellate Body
to complete the analysis regarding the availability of alternatives.
(iii) The
Panel acted inconsistently with Article 11 of the DSU.
22. India
also requests the Appellate Body to find that the Panel acted inconsistently
with Article 11 of the DSU in in misinterpreting India's arguments on
"sufficient manufacturing capacity";[24] by disregarding India's justification for the DCR measures, and
substituting it with one which had no basis in India's submissions;[25] and in arriving at various conclusions based on a piecemeal and
selective analysis of two reports, without providing India due process rights
to respond to its conclusions.[26]
(iv) Findings
and conclusions with regard to Article XX(j) of the GATT 1994.
23. India
requests the Appellate Body to reverse the Panel's conclusion that the DCR
measures are not justified under Article XX(j) of the GATT 1994 and to complete
the analysis under Article XX(j) to find that:
i. India's lack of manufacturing capacity of solar cells and modules
amounts to a situation of local and general short supply of such products in
India.
ii. The DCR measures are essential for addressing the local and general
short supply of solar cells and modules, and these are justified under Article
XX(j) of the GATT 1994 because they meet with the requirements of the chapeau
of Article XX.
Summary of
Issues under Article XX(d)
24. Should
the Appellate Body find that the DCR measures are not justifiable under Article
XX(j) of the GATT 1994, then India requests the Appellate Body to find that the
Panel erred in its conclusion that the DCR measures are not justified under the
general exception in Article XX(d) of the GATT 1994.
25. India's
defence was premised on its need to secure compliance with instruments of both
international and domestic law which mandate it to take appropriate actions for
securing ecologically sustainable growth and sustainable development. The Panel
erred in its assessment that none of these instruments justify the use the DCR
measures to secure compliance with them.[27]
26. With
regard to the instruments of international law, the Panel erroneously concluded
that because the government, through its executive wing, takes actions pursuant
to implementation obligations arising from instruments of international law,
these instruments have no "direct effect" in India, and cannot be
considered as laws or regulations for the purposes of Article XX(d).[28] This ignores the fundamental aspect that it is because international
law has direct effect, that the executive wing of the government is required to
take implementation action in the first place.
27. The
Panel rejected the domestic law instruments identified by India constitute "laws
and regulations" because they are in the nature of action plans and policies,
rather than laws enacted by the legislature.[29] This ignores that the legal framework in India comprises of both
binding laws, as well as policies and plans that provide the framework for
executive action.
28. India
requests the Appellate Body to reverse the Panel's findings that the
international and domestic laws and regulations identified by India, are not
laws and regulations for the purpose of Article XX(d). India further requests
the Appellate Body to complete the analysis to find that the legal instruments
identified by India constitute laws and regulations for the purpose of
Article XX(d) of the GATT 1994, and further that the DCR measures are
necessary for securing compliance with the mandate under these laws and
regulations regarding ecologically sustainable growth and sustainable
development.
Annex b-2
Executive
summary of the United States' appellee's submission[30]
1. India does not appeal the
Panel's finding in India – Solar Cells that
the requirement under the Jawaharlal Nehru National Solar Mission ("JNNSM")
that certain suppliers of electricity use Indian solar cells and modules (the "DCR
measures") are prima facie
inconsistent with Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs
Agreement. Its appeal is limited to the Panel's rejection of various
defenses that India raised under Article III:8(a), Article XX(j), and
Article XX(d) of the GATT 1994.
2. The Panel correctly
rejected India's efforts to defend the WTO inconsistency. First, India
asserted that the DCR measures were laws, regulations, or requirements
governing the procurement by governmental agencies of products purchased for
governmental purposes, and that Article III:8(a) took them outside the scope of
Article III. The Panel found, however, that because India procured electricity under the DCR measures, the exemption under
Article III:8(a) did not apply to India's discrimination against a different
product, solar cells and modules.
3. Second, India
sought refuge in the Article XX(j) exception for measures essential to the acquisition
of products in general or local short supply. The Panel rejected this argument
because it concluded that Indian solar power developers' ("SPDs")
ready access to imported solar cells meant there was no general or local short
supply that would justify resort to Article XX(j).
4. Third, India argued
that the DCR measures qualified for the Article XX(d) exception because they
were necessary to secure compliance with various Indian obligations under
international agreements related to ecologically sustainable growth and
sustainable development. The Panel rejected this argument because Article XX(d)
applies to measures to secure compliance with a Member's domestic
laws and regulations, and India had not established that these international
commitments had direct application in India's domestic legal system.
5. India asserts on appeal both
that the Panel made legal errors in its evaluation of India's defenses and
that it failed to carry out its duties under Article 11 of the DSU. As general
matter, India's Article 11 appeals rely on allegations that the Panel failed to
"consider" certain evidence or arguments proffered by India. The fact
that a panel does not address every piece of evidence presented by a party does
not give rise to a claim of error under Article 11.[31] Nor does Article 11
impose an obligation on a panel to address in its report every argument raised
by a party. For these reasons, India has not identified any way in which the
Panel failed to make an objective assessment of the matter before it. There is
accordingly no basis to reverse the Panel's findings under Article 11.
6. India's legal arguments
fare no better. The Panel found that India's discrimination against imported
solar cells and modules cannot be justified under Article III:8(a) of GATT 1994
because solar cells and modules are not among the "products purchased"
by India under the DCR measures at issue in this dispute. The Panel's finding
follows the reasoning laid out by the Appellate Body in Canada – Renewable Energy / Feed-In Tariff Program when it
found that Article III:8(a) does not apply when a Member procures one product,
but discriminates against a different product.[32] Specifically, the Panel
found that (1) the "product purchased" by the government under the
DCR measures is electricity, whereas the products facing discrimination under
those measures are generation equipment, namely solar cells and modules; and
(2) electricity and solar cells and modules are not in a competitive
relationship. India acknowledged that the government does not actually purchase,
physically acquire, or take title or custody of any solar cells or modules
under its DCR measures. Thus, the governmental procured of electricity did not
excuse India from its national treatment obligations under Article III with
respect to solar cells and modules.
7. On appeal, India asserts
that the Panel failed to consider its argument that electricity is
indistinguishable from solar cells and modules. The Panel, however, explicitly
addressed that argument, and found it inapposite in light of the broader
conclusion that India could not be understood to have procured solar cells and
modules for purposes of Article III:8(a) when it never actually purchased,
acquired, or had possession of them.
8. India also asserts that
the Panel failed to consider its related argument that solar cells and modules
are inputs into the electricity procured by India, and that this relationship
makes Article III:8(a) applicable to discrimination against the cells and
modules. Again, the Panel explicitly considered this argument. But it found that
India's DCR measures were indistinguishable "in any relevant respect"
from the DCRs that the Appellate Body found to fall outside the coverage of
Article III:8(a) in Canada – Renewable Energy
/ Feed-In Tariff Program. The Panel thus discerned no reason why the
Appellate Body's interpretation of Article III:8(a), as developed and
articulated in Canada – Renewable Energy / Feed-In Tariff
Program, should not guide the Panel's examination of India's
DCR Measures.
9. In light of these findings,
the Panel found it unnecessary to assess India's DCR measures under the
remaining elements of Article III:8(a). India requests that if the Appellate
Body reverses the Panel on the threshold question, it complete the Panel's
analysis with respect to these issues.
10. However, the findings of the
Panel and undisputed facts cited by India do not support the conclusions it
advocates. The procurement of electricity does not satisfy the "governmental
purpose" criterion of Article III:8(a) because government agencies are
only incidental users of the electricity purchased, and India has provided no
basis to conclude that the sale to commercial entities and private households
is a governmental purpose. In addition, the direct purchasers of the power are
profit-making entities, and they resell the electricity to consumers seeking to
maximize their own interest, precluding a conclusion that the government
purchases are "not with a view to commercial resale."
11. The Panel also rejected
India's arguments with respect to Article XX(j) of the GATT 1994, which
provides that nothing in the GATT 1994 shall be construed to prevent the
adoption or enforcement by any Member of measures "essential to the
acquisition or distribution of products in general or local short supply."
The Panel correctly found that, in light of India's ready access to imported
solar cells and modules, India could not defend its DCR measures under Article
XX(j) of the GATT 1994 as "essential" for the "acquisition of
products in short supply."
12. India argued that solar cell
and modules are in "local short supply" in India because it "lack[s]
manufacturing capacity of solar cells and modules." The Panel concluded
that the phrase "products in general or local short supply" refers to
a situation in which the quantity of available supply of a product, from all
sources, does not meet demand in a relevant geographical area or market."
It observed that India did not dispute that there was a sufficient quantity of
solar cells and modules available in India from all sources (i.e., imported and
domestically manufactured) to meet the demand of India consumers.
13. On appeal, India alleges
that the Panel erred by finding that a product cannot be in "general or
local short supply" for a Member if its consumers can acquire the product
through importation. However, Article XX(j), by its terms, is concerned solely with
situations involving the ability to acquire the product in purported short
supply. It does not differentiate between domestic production and importation
for determining whether supply is "short". Thus, where the consumers
of a Member are satisfying demand for a product through importation or through
a combination of importation and local production, that product cannot be in "general
or local short supply" within the meaning of Article XX(j). The Panel was
therefore correct to conclude that solar cells and modules are not "products
in general or local short supply" in India.
14. India also asserts that the
Panel made several legal errors in its "limited analysis" of whether
India's DCR measures are "essential" within the meaning of Article
XX(j). The Panel observed that "the relevant question under Article XX(j)
is whether [India's] DCR measures are 'essential to the acquisition' of
products in short supply, [] not whether the acquisition of those products is
in turn essential for the achievement of some wider policy objective." On
appeal, India argues that this issue must "be seen in the context of the
policy objectives of such acquisition." India's assertion is without merit
because Article XX(j), by its terms, is concerned with whether the measure at
issue is "essential to the acquisition"
of a product, not whether the product itself – or even acquisition of the
product – is essential.
15. Finally, the Panel also
rejected India's arguments regarding Article XX(d), which provides that nothing
in the Agreement shall be construed to prevent the adoption or enforcement by
any Member of measures "necessary ... to secure compliance with laws or
regulations which are not inconsistent with the provisions of this Agreement."
India cited several international and domestic instruments as "laws or
regulations" for purposes of Article XX(d). The Panel correctly found that
none of these instruments (with the exception of Section 3 of India's
Electricity Act) were "laws or regulations" within the meaning of
Article XX(d). With respect to Section 3 of the Electricity Act, the Panel
found that India had failed to demonstrate that its DCR measures were measures
to "secure compliance" with legal provisions of that Act. In light of
these findings, the Panel found it unnecessary to examine whether the India's
DCR measures were "necessary" within the meaning of Article XX(d).
16. On appeal, India contends
that the Panel erred in finding that the international instruments cited by
India do not have direct effect in India, and that the domestic instruments
cited by India do not constitute "laws and regulations" within the
meaning of Article XX(d). India's assertions are without merit.
17. India does not dispute that
the executive branch in India must take certain "implementing"
actions before international law obligations enter into legal effect in India,
but argues that the international instruments do have "direct effect"
because "the legislature is not required to legislate on a domestic law
incorporating the international law into domestic law." However, the
Appellate Body's findings in Mexico – Soft Drinks
clarify that where a "regulatory act" is necessary for an
international obligation to have domestic effect, that obligation is not in and
of itself part of a Member's laws and regulations for purposes of Article XX(d).
As that is the case with India's executive "implementing"
measures, India's argument presents no basis to reverse the Panel's finding.
18. The Panel found that the
domestic law instruments cited by India, with one exception, - are not "law
and regulations" for purposes of Article XX(d) because India cited only "hortatory,
aspirational and declaratory language" that is not "legally enforceable."[33] India argues on appeal
that the Panel erred because these measures, while non-binding are nonetheless
part of India's legal system, and that although they do not prescribe
specific action, they do "mandate achieving ecologically sustainable growth,"
which is more than a mere "objective."[34] These assertions do not
undermine the Panel's conclusions. Panels have consistently found that "to
secure compliance," within the meaning of Article XX(d), means to enforce obligations under laws and regulations," not "to
ensure the attainment of the objectives of
the laws and regulations."[35] The most India
shows in its appeal is that these domestic measures lay out important, and even
critical, objectives. That does not make them the type of laws and regulations
to which Article XX(d) applies.
19. The Panel found India's
reference to Section 3 of the Electricity Act unavailing because that provision
requires the government to prepare a National Electrical Policy and tariff
policy, and the DCRs do nothing to enforce this legal requirement.[36] India states on appeal
that it did not mean to cite this law on its own, but as one element of
legislative scheme encompassing the other cited measures that collectively "mandate"
action to achieve "ecologically sustainable growth."[37] Thus, India does not
directly appeal the Panel's findings with regard to Section 3.
20. In the event the Appellate
Body reverses the Panel's "law or regulations" finding, India has
requested the Appellate Body to complete the Panel's analysis with respect to
whether India's DCRs measures are "necessary" within the meaning
of Article XX(d) India, however, has failed to establish that its DCR measures
even "contribute to" India's "compliance" with any of the legal
instruments that it identifies, much less that the DCRs measures are "necessary"
to secure compliance. Therefore, it has failed to identify any basis for the
Appellate Body to find the DCR measures to be "necessary."
_______________
ANNEX C
Arguments
of the Third PaRTICIPANTS
Contents
|
Page
|
Annex C-1
|
Executive summary of Brazil's third
participant's submission
|
C-2
|
Annex C-2
|
Executive summary of the European Union's
third participant's submission
|
C-3
|
Annex C-3
|
Executive summary of Japan's third
participant's submission
|
C-5
|
Annex
C-1
Executive Summary of Brazil's Third Participant's
Submission
1. Brazil addresses in this submission an
issue central to the policy space Members have in connection to government
procurement: the scope of Article III:8(a) of GATT 1994, and discusses the
relevant findings of the Appellate Body in Canada – Renewable Energy
/ FIT.
2. Brazil understands that the Appellate Body
did not accept Canada's arguments that the FIT Programme qualified under
the terms of Article III:8(a), basically because the product purchased by the
Canadian agency "[was] not the same as the product that [was] treated less
favourably", and they were not in a competitive relationship. Brazil
emphasizes the fact that there is no finding by the Appellate Body in the Canada – Renewable Energy / FIT case with regard to the
inclusion of inputs or production processes under Article III:8(a).
3. Brazil considers that there is no reason to
exclude a priori the possibility that the
purchase of inputs may be covered by the derogation under Article III:8(a).
Brazil understands that the competitive relationship test does not apply in all
cases. The purchase of inputs to be assembled into a final product purchased by
a government may be tantamount to the purchase of the final good. If the
Appellate Body considers that the products at issue in the present dispute are
inputs necessary to produce the products purchased by governmental agencies for
governmental purposes, under Article III:8(a), then it should also take into
account the possibility that the purchase of those inputs may also be within
the purview of Article III:8(a).
Annex
C-2
Executive summary of the European Union's third Participant's
submission[38]
1. India makes several
allegations of error, mainly based on Article 11 of the DSU, with respect to Articles III:8(a), XX(j) and XX(d) of the GATT 1994.
2. At the outset, the European
Union recalls that, as clarified by the Appellate Body, Article 11 of the DSU
obliges panels to make "an objective assessment of the matter before
it'". Since India's claims of error are based on Article 11 of the
DSU, the Appellate Body should consider first and foremost whether the alleged
failure to "consider" some of India's arguments before the Panel
reaches the level of a violation of Article 11 of the DSU.
3. With respect to Article
III:8(a) of the GATT 1994, the Panel appears to have based its findings on the
fact that it was not persuaded that the measures at issue are distinguishable
from those in Canada – FIT. In doing so, the
Panel rejected some of the arguments raised by India in the present appeal. To
the extent that the Appellate Body agrees with the Panel's ultimate finding,
the European Union does not see that the alleged lack of examination of certain
arguments would amount to an error under Article 11 of the DSU.
4. In this context, the
Appellate Body may want to recall its previous finding in Canada – FIT
that Article III:8(a) of the GATT 1994 did not apply to DCRs imposed on
generation equipment used by renewable energy producers, because the product
being procured was electricity. Those products are not in a competitive
relationship. The European Union considers that the situation in the present
case is identical and that the Appellate Body should reach the same
conclusions, regardless of whether DCRs cover all or only some of the types of
equipment used to generate electricity.
5. The European Union further
disagrees with India's formalistic reliance on footnote 523 of the Appellate
Body Report in Canada – FIT, relating to
discrimination with respect to inputs. When procuring products, governments may
impose certain conditions on inputs or methods of production which add to and
are connected to the basic nature of the product purchased. However, the view
that the relevant test is of "competitive relationship", as outlined
by the Appellate Body, not of "close relationship". Article III:8(a)
does not permit the inclusion of origin-related discriminatory requirements in
the procurement of goods with respect to other goods which are not the
subject-matter of the actual procured product in question and bearing no
competitive relationship.
6. The European Union further
disagrees with India's interpretation of the distinction made by the Appellate
Body in Canada – FIT between "procurement"
and "purchase". Under Article III:8(a), the connection between
"procurement", the "requirements" that "govern"
procurement, and the "products purchased" is vital in order to avoid
an interpretation of Article III:8(a), like the one suggested by India, that
could lead to circumvention of the national treatment obligation.
7. The European Union also
disagrees that the procurement under the DCR measures is for all products
purchased "for governmental purposes", such as energy security. The
terms "governmental purposes" or the "needs of the government"
do not refer to public policy objectives as such, but rather to the purchase of
goods that will be used by a government, for its own consumption or use in the
performance of its functions.
8. Finally, the European Union
disagrees with India's interpretation of the phrase "and not with a view
to commercial resale or with a view to use in the production of goods for
commercial sale". The European Union does not share either India's
reliance on any absence of profitability as relevant for the last element in Article
III:8(a).
9. India also maintains that
the Panel erred in finding that the DCR measures were not justified under the
general exception in Article XX(j).
10. Some of India's allegations
of error connected to Article XX(j) of the GATT 1994 pertain to Article 11 of
the DSU. The Appellate Body should thus consider whether the alleged failure to
consider some of the arguments raised by India, or the alleged
mischaracterisation of India's arguments, reaches the level of a violation
of Article 11 of the DSU.
11. Article XX(j) does not
entitle WTO Members to an "equitable share" in the global or local production of a certain product. Rather, it enables them to
adopt certain measures in order to address general or local shortages in the
availability of that product. With that in mind, the connection drawn by the
Panel between the reference to the supply of a
product in Article XX(j) and the demand for such
a product appears appropriate. A separate issue is where,
i.e. in what geographical area, a product is said to be in short supply. In
that respect, the Panel has rightly adopted a flexible interpretation of the
terms "general or local" in Article XX(j).
12. India faults the Panel's
analysis of whether the DCR measures are essential with mistakenly finding that
their objective to ensure that "Indian SPDs have access to a continuous
and affordable supply of the solar cells and modules", instead of
achieving "energy security, sustainable development and ecologically
sustainable growth". The European Union agrees, in principle, that the
broader objective informs the more specific objective, and that this should be
reflected in the analysis. However, in the context of an analysis of necessity
or "essentiality" of a measure under Article XX of the GATT 1994, the
narrower the regulatory objective, the likelier it is that the invoking party
will prevail.
13. With respect to the
international instruments, it appears that India does not take issue with the
Panel's interpretation of the legal requirements of Article XX(d) but rather
with the Panel's factual assessment. If this understanding is correct, the
European Union considers that such a claim would not be properly before the
Appellate Body, since India does not appear to have raised an allegation of
error under Article 11 of the DSU.
14. With respect to the domestic
instruments, the European Union comments on the Panel's general
interpretation of the terms "laws or regulations" in Article XX(d).
15. The Appellate Body in Mexico – Taxes on Soft Drinks found that "laws and
regulations" refers simply to "rules that form part of the domestic
legal system of a WTO Member". The Appellate Body has also not
demanded absolute certainty regarding the efficiency of the measure or the use
of coercion. The European Union is thus not convinced that the terms "laws
or regulations" should only cover "legally enforceable rules of
conduct" or "mandatory rules applying across-the-board."
Domestic laws or regulations may be adopted either by the legislative or by the
executive. They may have different kinds of legal effects and need not be fully
binding in all situations, yet nevertheless require various governmental bodies
of the Member concerned to take compliance action. Finally, it may be
appropriate to read several laws or regulations together, even when those laws
or regulations are adopted by different levels or branches of government.
Annex c-3
Executive summary of Japan's third participant's
submission[39]
1. Japan
addresses in its
third participant submission the proper legal interpretation of the "government
procurement exemption" in GATT 1994 Article III:8(a), as well as the general exceptions in
GATT 1994 Article XX(d) and (j) invoked by India.
2. As for the scope of the term "products purchased" under Article III:8(a)
of the GATT the Panel correctly determined in this dispute that, just as in Canada –
Renewable Energy/Feed‑in Tariff Program, the product discriminated
against by India, by reason of its origin, is generation
equipment (i.e., solar cells and modules), while electricity is the "product purchased". Contrary to India's position, solar
cells and modules and electricity are distinguishable. There is no basis to characterize
solar cells and modules as "inputs" for solar power generation.
3. Japan submits that even if the Panel were to find that electricity
and solar cells and modules were the "products purchased", purchases of electricity by the Government of India under the JNNSM
Programme cannot be viewed as purchases "for governmental purposes"
under Article III:8(a).
4. Article
XX(j) cannot be applied to the
DCR Measures. According to the terms, context, as well as negotiating history
of Article XX(j), this article addresses only export measures that restrict
access to, and secure an equitable share of, the supply of a product.
5. India's argument that the acquisition of
solar cells and modules is "essential" to India's policy
objective of energy security is premised on the false proposition that
"general or local short supply" applies to the lack of domestic
manufacturing capacity and simply assumes that the DCR measures are for the acquisition of a product in short supply. The
"acquisition" of the products is the objective with which the
"essential" relationship with the DCR must be established; the
"acquisition" of the products need not be shown to be "essential"
to some other broader policy objectives.
6. As regards reasonably available
alternatives, even if one were to assume that, in ensuring that the development
of solar power would not be entirely dependent on the importation of cells and
modules, India were pursuing a legitimate policy objective for purposes of GATT
1994 Article XX, it could have provided WTO-consistent subsidies to
manufacturers of such cells and modules instead of imposing DCR requirements.
7. Article
XX(d) cannot be applied to the DCR Measures either. First, the fact
that an international instrument "forms the basis for executive
action" in a WTO Member does not determine whether such instrument has
direct effect on the domestic legal system of that Member. Second, whether a
particular domestic instrument constitutes "laws or regulations"
under Article XX(d) is a matter of WTO law.
_______________
ANNEX D
Procedural Ruling
Contents
|
Page
|
Annex D-1
|
Procedural Ruling of 4 May 2016 regarding
modification of the dates for the filing of written submissions
|
D-2
|
|
|
|
ANNEX D
PROCEDURAL
RULING of 4 May 2016
1. On 20 April 2016, India filed a Notice of Appeal in the above
proceedings. In accordance with Rule 26 of the Working Procedures for
Appellate Review (Working Procedures), a Working Schedule for Appeal was
drawn up by the Appellate Body Division hearing this appeal and circulated to
the participants and the third parties on 22 April 2016.
2. On 2 May 2016, the Division received a letter from the United States
requesting an extension of the deadline for
the filing of its appellee submission in these proceedings. The United States
noted that its appellee submission in another pending
appellate proceeding, namely, United States –
Anti-Dumping and Countervailing Measures on Large Residential Washers from
Korea (DS464), is also due on 9 May 2016, i.e. the same day as
for the filing of its appellee submission in the present proceedings. Referring
to the size of the appeals in these two disputes, the United States indicated
that its submissions may be significant in scope. The United States also
pointed to the large number of print copies of its appellee submissions to be
prepared for the Divisions and to be served on the participants and third
parties in these two disputes. The United States
therefore requested that the deadline for the filing of the appellee submission
be extended by one day, such that it would be due on 10 May 2016.
3. On 3 May 2016, we invited India and the third
parties to comment by 12 noon today on the United States' request. We received no objections to the United States' request. Norway
submitted that if the United States' request were granted, the deadline for the
filing of third participants' submissions should similarly be extended to
ensure that third participants can contribute in an informed and efficient
manner in the appellate proceedings.
4. We consider the reasons
identified by the United States, in particular the need for the United States
to file appellee submissions in two separate appeal
proceedings on the same day, to be relevant factors in our assessment of "exceptional
circumstances, where strict adherence to a time‑period … would result in a manifest
unfairness" pursuant to Rule 16(2) of the Working Procedures. As a further relevant consideration, we note that India
and the third participants have not raised any objection to the United States' request.[40]
5.
In these circumstances, the Division has decided to extend the deadline for the
United States to file its appellee submission by one day to Tuesday, 10 May 2016.
6.
Furthermore, we recall that the third participants' submissions
under the original Working Schedule would have been due on Wednesday, 11 May
2016, i.e. one day after the revised deadline for the filing of the appellee's
submission. In order to provide the third participants sufficient time to
incorporate reactions to the appellee submission into their third participants'
submissions, the Division has decided, pursuant to Rule 16 of the Working
Procedures, to extend the deadline for the filing of the third participants'
submissions and third participants' notifications to Thursday, 12 May 2016.
__________
* This Notice, dated 20 April
2016, was circulated to Members as document WT/DS456/9.
[1] Pursuant to Rule 20(2)(d)(iii) of the Working Procedures, this
Notice of Appeal provides an indicative list of the paragraphs of the Panel
Report containing the alleged errors of law and legal interpretation by the
Panel in its report, without prejudice to India's ability to rely on other
paragraphs of the Panel Report in its appeal.
[2] Panel Report, paras. 6.24, 7.114 and 7.116.
[3] Panel Report, paras. 7.116-7.135,
particularly paras. 7.116, 7.118, 7.123, 7.125, 7.126, 7.128.
[4] Panel
Report, paras. 7.100-7.187, particularly paras. 7.135 and 7.187.
[5] Panel Report,
para. 6.24, paras. 7.116-7.135, particularly paras. 7.116, 7.118, 7.123, 7.125, 7.126, 7.128.
[6] Panel Report, paras.7.135 and 7.187.
[7]
Panel Report, paras. 6.30-6.31, paras. 7.188-7.265, paras. 7.337-7.390,
particularly paras. 7.189, 7.190, 7.207, 7.218, 7.236, 7.237, 7.265, 7.337-7.342,
7.346, 7.350, 7.354, 7.360-7.368, 7.380, 7.382, 7.389 and 7.390.
[8] Panel Report, para.
7.226.
[9] Panel Report, paras. 7.189, 7.190,
7.237, 7.337-7.342, 7.350, 7.351, 7.354, 7.360-7.363, 7.366‑7.368 and 7.380.
[10] Panel Report, paras. 7.364-7.365
and para. 7.367.
[11]
Panel Report, paras. 7.284-7.333, paras. 7.337-7.390, particularly paras.
7.298-7.301, 7.318, 7.319, 7.333, 7.337-7.342, 7.350, 7.354, 7.360-7.368,
7.380, 7.382, 7.389 and 7.390.
[12] Panel Report, para. 7.128.
[13] Appellate
Body Report, Canada-Renewable Energy/Canada-
Feed-in Tariff Programme, para 5.63.
[14] Panel Report, para. 7.126.
[15] India's first written submission, paras. 117-119.
[16] Panel
Report, para 7.134.
[17] Panel Report, paras.7.135 and 7.187.
[18] Panel Report, para.7.207.
[19] Panel report,
paras. 7.209-7.213.
[20] Panel Report, para. 7.236.
[21] Panel
Report, paras. 7.189, 7.190, 7.337-7.342, 7.350, 7.351, 7.354, 7.360-7.363,
7.366-7.368 and 7.380.
[22] Panel
Report, para. 7.346.
[23] Panel Report, para 7.366.
[24] Panel Report, para 7.226.
[25] Panel Report,
paras. 7.189, 7.190, 7.237, 7.337-7.342, 7.350, 7.351, 7.354, 7.360-7.363,
7.366‑7.378 and 7.380.
[26] Panel Report, paras. 7.364-7.365 and para. 7.367.
[27] Panel Report, para. 7.333.
[28] Panel Report, paras. 7.298, 7.301.
[29] Panel
Report, para. 7.318.
[30] Pursuant to the Guidelines in Respect of
Executive Summaries of Written Submissions, WT/AB/23 (March 11,
2015), the United States indicates that this executive summary contains a total
of 2,146 words (including footnotes), and this U.S. appellee submission (not
including the text of the executive summary) contains 21,480 words (including
footnotes).
[31] China Rare Earths (AB), para. 5.178.
[32] See Canada – Renewable Energy / Feed-In Tariff
Program, para. 5.63.
[33] India – Solar Cells (Panel), para. 7.313.
[34] India's appellant submission, paras. 174-175.
[35] Canada – Wheat Exports and Grain Imports (Panel),
para. 6.248.
[36] India – Solar Cells (Panel), para. 7.330.
[37] India – Solar Cells (Panel), para. 7.173.
[38] Total words of the submission (including footnotes but excluding
the executive summary) = 12,227; total words of the executive summary = 1,182.
[39] Pursuant to the Guidelines in Respect of Executive Summaries of
Written Submissions, WT/AB/23 (March 11, 2015), Japan indicates that this
executive summary contains a total of 435 words, and Japan's Third Participant
Submission contains 4508 words (including footnotes).
[40] See in this regard Appellate Body Report, Chile – Price Band System (Article 21.5 – Argentina), para. 11.