RESTRICTED  
  
WT/DSB/M/386  
 
9 Novem ber 2016  
(16-6132) Page: 1/5 
Dispute Settlement Body  
14 October 2016    
 
MINUTES OF MEETING  
HELD IN THE CENTRE W ILLIAM RAPPARD  
ON 14 OCTOBER 2016  
Chairman: Mr. Xavier  Carim  (South Africa ) 
Prior to the adoption of Agenda , the item concerning the adoption of the Panel Report in the 
dispute on "European  Communities and Certain Mem ber States – Measures Affecting Trade in 
Large Civil Aircraft: Recourse to Article  21.5 of the DSU by the United  States" (DS316) was 
removed from the proposed Agenda following the European  Union's decision to appeal the Report.  
 
 
1  INDIA – CERTAIN MEASURES R ELATING TO SOLAR CEL LS AND SOLAR MODULES  
A.  Report of the Appellate Body (WT/DS456 /AB/R and WT/DS456/AB/R/Add .1) and 
Report of the Pane l (WT/DS456/R and WT/DS456/R/Add .1) 
1.1.  The Chairman  drew attention to the communication from the Appellate Body contained i n 
document WT/DS456/12 transmitting the Appellate Body Report in the dispute: "India – Certain 
Measures Relating to Solar Cells and Solar Modules", which had been  circulated on 
16 September  2016, in document WT/DS456/AB/R and Add.1. The Chairman reminded 
delegations that the Appellate Body Report and the Panel Report pertaining to this dispute had 
been circulated as unrestricted documents. As Members were aware, Article  17.14 of the DSU 
required that: "An Appellate Body report shall be adopted by the DSB an d unconditionally accepted 
by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body 
report within 30  days following its circulation to Members. This adoption procedure is without 
prejudice to the right of Members to  express their views on an Appellate Body report".  
1.2.  The representative of the United  States  said his country was pleased to propose the adoption 
of the Panel and Appellate Body Reports in this dispute involving domestic content requirements 
for solar cells and modules under India's National Solar Mission. The United  States thanked the 
Panel, the Appellate Body, and the Secretariat assisting them for their hard work in this dispute. 
The findings of inconsistency by the Panel, as upheld by the Appellate Body, and the 
recommendations that followed from those findings pursuant to Article  19.1 of the DSU, were the 
means by which panels and the Appellate Body assisted the DSB in making its recommendations 
and rulings. And it was those DSB recommendations and ruling s that would assist the parties in 
achieving a positive solution to their dispute, through a mutually agreed solution or withdrawal of 
the measure, as envisioned in Article  3.7 of the DSU.  
1.3.  The United  States emphasized that it strongly supported India's eff ort to promote the 
generation and use of solar power in India. The United  States looked forward to a continued 
partnership with India in the global fight against climate change. However, as had been noted by 
the United  States over the course of this disput e, discriminatory policies in the clean energy sector 
– such as India's domestic content requirements – undermined efforts to promote the generation 
of clean energy by requiring the use of more expensive and less efficient equipment.  
1.4.  The United  States said that it would like to draw  attention to several key findings included in 
these Reports. First, the Panel had found – and the Appellate Body had affirmed – that India's 
domestic content requirements were inconsistent with India's national treatment obligat ions under WT/DSB/M/386  
 
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  Article  III:4 of the GATT  1994 and Article  2.1 of the TRIMs Agreement. And the Panel and 
Appellate Body had rejected India's argument that its domestic content requirements could be 
justified under the government procurement exemption of Article  III:8(a) of the GATT  1994. This 
finding made clear that Article  III:8(a) did not apply when a Member purchased one product, but 
discriminated against another, wholly different product.  
1.5.  Second, the Panel had found, and the Appellate Body had upheld, that I ndia had failed to 
establish that its domestic content requirements were justified under Article  XX(j) o f the  
GATT  1994, which permitted Members to adopt WTO -inconsistent measures that were "essential to 
the acquisition or distribution of products in gener al or local short supply". The Panel and Appellate 
Body had rejected India's argument that solar cells and modules were in "short  supply" in India on 
account of India's lack of domestic manufacturing capacity for solar cells and modules. Rather, a 
product was in "short supply" under Article  XX(j) when the quantity of available supply of a 
product, from all sources, did not meet demand in a relevant geographical area or market.  
1.6.  Third, the Panel had found, and the Appellate Body had upheld, that India had fai led to 
demonstrate that its domestic content requirement measures were justified under Article  XX(d) of 
the GATT  1994, which permitted Members to adopt WTO -inconsistent measures that were 
necessary to "secure compliance" with "laws or regulations" that wer e not themselves 
WTO-inconsistent. The Panel and Appellate Body had found that – with the exception of a single 
instrument – none of the domestic or international instruments identified by India constituted 
"laws or regulations" with which India had to "se cure compliance" with in the meaning of 
Article  XX(d) . The Panel and Appellate Body had also found that none of the domestic instruments 
identified by India set out a legal obligation to promote sustainable development.  
1.7.  Having upheld the Panel's findings un der Article  III:8(a), Article  XX(j) and Article  XX(d) , the 
Appellate Body properly did "not consider it necessary" to examine India's claims under other legal 
elements under those provisions as reaching those issues was not necessary to resolve the 
dispute .1 
1.8.  The United  States also noted that the Report contained a separate opinion. In general, the 
United  States considered it a positive step for the members of a Division to explore and explain 
where they had not been able to come to one view on a particular legal issue. In the case of this 
particular opinion, however, the United  States did not see how it related to an issue raised in this 
appeal. Accordingly, the United  States said that it would appear to be another example of 
obiter  dicta, a problem to which  the United  States had drawn the attention of the DSB in the 
recent past. As the United  States had also expressed in the past, particularly at a time when 
workload issues were increasingly affecting the time -table for the resolution of disputes, including 
appeals, a focus on those legal issues necessary to resolve the dispute would enhance the efficient 
functioning of the dispute settlement system. The United  States thanked both the Panel and the 
Appellate Body for the legal findings in these Reports.  
1.9.  The r epresentative of India said that his delegation wished to thank the Panel, the Appellate 
Body and their respective Secretariats for the considerable time and effort that they had devoted 
to this dispute. With respect to the Reports to be adopted at the pre sent meeting, the 
United  States had challenged the domestic content requirements in certain schemes of the 
National Solar Mission (Phase  I, Batches  1 and 2, and Phase  II, Batch  1) that had been undertaken 
by two Government agencies.  
1.10.   The dispute involved th e scope of policy space available to WTO Members for undertaking 
government procurement as a derogation from the National Treatment Principle of the GATT  1994. 
The Appellate Body's ruling, confirming the Panel's ruling, was that, in order for Article  III:8(a) of 
the GATT  1994 to apply, the foreign product discriminated against must necessarily be in a 
competitive relationship with the product purchased by way of procurement.2 
1.11.   In India's view, such a narrow interpretation of Article  III:8(a) of the GATT 1994  meant 
that, in order to be able to potentially justify discrimination against imported solar cells and 
modules as "government procurement" under Article  III:8(a) of the GATT 1994, a WTO Member 
would need to necessarily purchase those solar cells and modul es. It could not simply purchase the 
                                                
1 Appellate Body Report, para.  5.155. 
2 "India – Solar Cells " (AB), paragraphs  5.24 and  5.36. WT/DSB/M/386  
 
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  electricity generated from those products; even when those cells and modules were exclusively 
used for the electricity generated for supplies to the Government. India said it was deeply 
disappointed that the Appellate B ody had chosen to simply reiterate its reasoning in the " Canada – 
Renewable Energy  / Feed-in Tariff" dispute, without adequate consideration of the unique nature 
and role of solar cells and modules in solar power generation.  
1.12.   During its proceedings, the App ellate Body had engaged both the parties and other 
participants on various scenarios. These ranged from measures mandating the use of domestically 
manufactured ink in pens that were purchased by the Government, to domestically manufactured 
paper in noteboo ks that had been purchased by the Government, to domestically manufactured 
cloth in army uniforms that had been purchased by the Government. However, with the Appellate 
Body's reiteration of the Panel's ruling, it appeared that there was effectively no roo m for the 
government procurement exception under Article  III:8(a) of the GATT  1994, unless there was a 
purchase by the Government, through procurement, of the very product that was discriminated 
against despite the uniqueness of the product.  
1.13.   India also not ed that neither the Panel nor the Appellate Body had delved beyond this 
threshold issue of "competitive relationship", and had not decided on the remaining elements of 
Article  III:8(a) of the GATT  1994, i.e. whether the procurement had been for government 
purposes and not with a view to commercial resale. However, India highlighted that the Panel had 
noted that it was undisputed that the government agencies – NVVN and SECI  – administered 
schemes that were designed to enable the sale of electricity, at reduc ed cost, to downstream 
intermediaries and final consumers.  
1.14.   Apart from its arguments on the concept of government procurement, India had appealed 
against certain errors of law and legal interpretation developed in the Panel Report with respect to 
Article  XX(j) and Article  XX(d) of the GATT  1994. India said it would also like to make some 
general observations on the Panel's and Appellate Body's findings in relation to the interpretation 
of these provisions.  
1.15.   India noted that Article  XX(j) of the GATT  1994 had been interpreted for the very first time 
in WTO jurisprudence. India acknowledged that each of the General Exceptions under Article  XX of 
the GATT  1994 was meant to be used in clear and well -defined circumstances, and by carefully 
weighing and balancing th e trade restrictiveness of a measure. India was disappointed however, 
that the Appellate Body's interpretation of the standards for applicability of Article  XX(j) of 
the GATT  1994 effectively confined any meaningful use of this provision to export restrain ts and 
not import restraints.  
1.16.   The Appellate Body had acknowledged the distinction that India had pointed out between 
the text of Article  XX(j) of the GATT  1994 and the text of Article  XX(i) and Article  XI:2(a) of 
the GATT  1994. The text of the latter two A rticles both specifically referenced export restraints. 
However, the Appellate Body had concluded that these textual differences were not sufficient to 
justify the use of the provision for export or import restraints or both. The failure to specifically 
address the circumstances in which Article  XX(j) of the GATT  1994 could be used as an effective 
and legitimate tool of import restraint would remain a significant limitation in any possible future 
use of the Article  XX(j) exception.  
1.17.   India said it was disappo inted that, like the Panel, the Appellate Body had not deemed it 
relevant to give meaning and effect to the terms "general" and "local" as qualifiers to the term 
"short supply" under Article  XX(j) of the GATT  1994. Instead, the Appellate Body had concluded  
that the relevant test for applicability of Article  XX(j) was whether the quantity of "available" 
supply from both domestic and international sources, in a relevant geographical market, was 
sufficient to meet the general or local "demand" in the market. T he Panel's reasoning, as had been 
upheld by the Appellate Body, was that an assessment of whether there was a situation of 
"products in general or local short supply" should not focus exclusively on supply that was 
"general" or "local", but on the availabi lity of a product to meet the "general" or "local" demand in 
a market.3 
1.18.   The Appellate Body appeared to have acknowledged that a lack of domestic production, 
especially in developing countries, could increase their vulnerability to supply disruptions, as 
                                                
3 "India – Solar Cells " (AB), paragraph s 5.69 and  5.71. WT/DSB/M/386  
 
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  compared to developed countries, and that such factors could be relevant in assessing the 
availability of a product when assessing whether a product was in "general or local short supply".4 
However, the Appellate Body had subsequently recalled the Panel's fi nding that such vulnerability 
needed to be demonstrated through actual disruptions in the supply of imported cells and 
modules.5 This effectively meant that any policy measure under Article  XX(j) of the GATT  1994 
could only be an after -thought; and not one  that could prevent the rise of situations of general or 
local short supply.  
1.19.   The other general exception invoked by India was Article  XX(d) of the GATT  1994. While  
prior jurisprudence on Article  XX(d) of the GATT  1994 existed, the Appellate Body had enunci ated 
several tests that would be relevant for a panel to consider. But the enunciation of these 
principles, in India's view, was not without ambiguity. On the one hand, the Appellate Body had 
noted that it "does not consider that the scope of 'laws or regu lations' is limited to instruments 
that are legally enforceable (including, e.g. before a court of law), or that they need to be 
accompanied by penalties and sanctions to be applied in situations of non -compliance".6 However, 
the Appellate Body had also no ted, in the same paragraph, that a panel should consider the 
degree to which an instrument containing the alleged rule was normative in nature, and that 
therefore it was relevant "for a panel to examine whether a rule is legally enforceable, as this may 
demonstrate the extent to which it sets out a rule of conduct or course of action that is to be 
observed within the domestic legal system of a Member. It also may be relevant for a panel to 
examine whether the instrument provides for penalties or sanctions t o be applied in situations of 
non-compliance".  
1.20.   The Appellate Body, while laying down the six criteria for assessing applicability of 
Article  XX(d) of the GATT  1994, had specified, in criteria  (iii), the legal enforceability of a rule  – for 
example before a  court – in effect suggesting that non -binding soft law approaches could not be 
sufficient for establishing a defence under Article  XX(d) of the GATT  1994.7 
1.21.   In the final analysis, the Appellate Body had stated that India's domestic content 
requirements (DC R) for solar cells and modules, as they were currently designed, were not 
compatible with WTO  norms. But the Report had not questioned the relevance of having domestic 
manufacturing capacities for achieving India's policy objectives relating to climate cha nge, energy 
security and sustainable development. India was therefore making a close assessment of the WTO 
ruling, and would ensure careful structuring of future measures in order to achieve its policy 
objectives in a WTO -compatible manner.  
1.22.   India said it w ould like to emphasize to the DSB a fact which it had been consistently 
highlighting throughout the dispute proceedings. That India saw the incentivization of imports of 
solar cells and modules and the development of domestic manufacturing capacities as tw o sides of 
the same coin. Both developments needed to occur in parallel. India was committed to achieving 
this in a manner that respected the rules of international trade. India's continued incentives for 
import of solar cells and modules, and the investme nt incentives for attracting foreign direct 
investment in this sector, were well -documented, and played a significant role in India's solar 
industry. Having ratified the Paris Climate Change Agreement, India had demonstrated its 
steadfast commitment to ens uring continued efforts to promote renewable energy. India looked 
forward to the cooperation of all WTO Members to ensure a sustainable way in which to achieve 
the targets that Members had all committed to.  
1.23.   To conclude, India was evaluating the Reports of the Panel and the Appellate Body carefully. 
India was committed to framing the future design of its solar mission schemes, relating to 
domestic content, consistently with the findings of the Panel and the Appellate Body. While it was 
obvious that India did  not agree with all the findings and conclusions of the Appellate Body and the 
Panel, it acknowledged that the Reports would be adopted by the DSB at the present meeting. 
Pursuant to Article  21.3 of the DSU, India would, within the next 30  days, inform the  DSB of its 
intentions with respect to implementation of the recommendations and rulings that the DSB would 
adopt at the present meeting.  
                                                
4 "India – Solar Cells " (AB), paragraph  5.72. 
5 "India – Solar Cells " (AB), paragraph  5.76. 
6 "India – Solar Cells " (AB), paragraph  5.109.  
7 "India – Solar Cells " (AB), paragraph  5.113.  WT/DSB/M/386  
 
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  1.24.   The representative of the European  Union  said that his delegation welcomed the 
clarifications provided by the Appellat e Body in its Report with respect to the interpretation of 
certain provisions of the GATT  1994, setting down disciplines on domestic content requirements. 
In particular , the EU welcomed the clarifications with regard to  Article III:8(a) of the GATT  1994, 
Article XX(d) of the GATT  1994 and Article  XX(j) of the GATT  1994. As per the comment made by 
the United  States regarding separate opinions, the EU wished to underscore that the A ppellate 
Body members had a right to issue separate opinions and  noted  that su ch opinions were 
anonymous. However, the EU did not share the concerns expressed by the United  States with 
respect to the substance of the separate opinion.  
1.25.   The DSB took note  of the statements and adopted  the Appellate Body Report contained in 
document WT/ DS456/AB/R and Add.1 and the Panel Report contained in document WT/DS456/R 
and Add.1, as modified by the Appellate Body Report.  
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