INDIA – CERTAIN MEASURES RELATING TO SOLAR CELLS AND SOLAR MODULES REPORT OF THE PANEL
Document: Addendum
Date: 24 February 2016
Document codes: WT/DS456/R/Add.1; WT/DS456/R.
Complainant: U.S.
Respondent: India
Third parties: Brazil, Canada, China, EU, Japan, South Korea, Malaysia, Norway, Russia, Turkey, Ecuador, Saudi Arabia, Taiwan
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. III:4  GATT 1994Art. 2.1  Trade-Related Investment Measures (TRIMs)

INDIA – CERTAIN MEASURES RELATING TO SOLAR CELLS
AND SOLAR MODULES
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Report of the Panel to be found in document

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-1
ANNEX B
ARGUMENTS OF THE PARTIES
UNITED STATES
Contents Page
Annex B-1 First part of the integrated ex ecutive summary of the arguments of the
United States
B-2
Annex B-2 Second part of the integrated execut ive summary of the arguments of the
United States
B-12

INDIA
Contents Page
Annex B-3 First part of the integrated executive summary of the arguments of India B-19
Annex B-4 Second part of the integrated executive summary of the arguments of India B-30

ANNEX C

ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the arguments of Brazil C-2
Annex C-2 Executive summary of the arguments of Canada C-5
Annex C-3 Integrated executive summary of the arguments of the European Union C-8
Annex C-4 Executive summary of the arguments of Japan C-12
Annex C-5 Executive summary of the oral statement of Korea at the meeting of the panel C-17
Annex C-6 Executive summary of the oral statement of Norway at the meeting of the panel C-20
Annex C-7 Executive summary of the third-party su bmission of the Kingdom of Saudi Arabia C-22

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Adopted on 13 October 2014

1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules
and Procedures Governing the Settlement of Disput es (DSU). In addition, the following Working
Procedures shall apply.
General

2. The deliberations of the Panel and the docume nts submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter
"party") from disclosing statements of its own positions to the public. Members shall treat as
confidential information submitted to the Panel by another Member which the submitting Member
has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
3. The Panel shall meet in closed session. The parties, and Members having notified their interest
in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter
"third parties"), shall be present at the meetings only when invited by the Panel to appear before
it.
4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and third party shall have the responsibility for all
members of its own delegation and shall ensure th a t e a c h m e m b e r o f s u c h d e l e g a t i o n a c t s i n
accordance with the DSU and these Working Procedures, particularly with regard to the
confidentiality of the proceedings.
Submissions

5. Before the first substantive meeting of the Panel with the parties, each party shall submit a
written submission in which its presents the facts of the case and its arguments, in accordance
with the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the
second substantive meeting of the Panel, a written rebuttal, in accordance with the timetable
adopted by the Panel.
6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity
and in any event no later than in its first written submission to the Panel. If the United States
requests such a ruling, India shall submit its response to the request in its first written submission.
If India requests such a ruling, the United States shall submit its response to the request prior to
the first substantive meeting of the Panel, at a time to be determined by the Panel in light of the
request. Exceptions to this procedure shall be granted upon a showing of good cause.
7. Each party shall submit all factual evidence to the Panel no later than during the first
substantive meeting, except with respect to evid ence necessary for purposes of rebuttal, answers
to questions or comments on answers provided by the other party. Exceptions to this procedure
shall be granted upon a showing of good cause. Where such exception has been granted, the Panel
shall accord the other party a period of time for comment, as appropriate, on any new factual
evidence submitted after the first substantive meeting.
8. Where the original language of exhibits is not a WTO working language, the submitting party or
third party shall submit a translation into the WTO working language of the submission at the
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised

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as promptly as possible. Any objection shall be accompanied by a detailed explanation of the
grounds of objection and an alternative translation.
9. In order to facilitate the work of the Panel, each party and third party is invited to make its
submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as
Annex 1, to the extent that it is practical to do so.
10. To facilitate the maintenance of the record of the dispute and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the dispute. For example, exhibits su bmitted by the United States could be numbered
US-1, US-2, etc. If the last exhibit in connection with the first submission was numbered US-5, the
first exhibit of the next submission thus would be numbered US-6.
Questions

11. The Panel may at any time pose questions to the parties and third parties, orally or in writing,
including prior to each substantive meeting.
Substantive meetings

12. Each party shall provide to the Panel the list of members of its delegation in advance of each
meeting with the Panel and no later than 5.00 p.m. the previous working day.
13. The first substantive meeting of the Panel with the parties shall be conducted as follows:
a. The Panel shall invite the United States to make an opening statement to present its
case first. Subsequently, the Panel shall invite India to present its point of view. Before
each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies for the interpreters,
through the Panel Secretary. Each party shall make available to the Panel and the other
party the final version of its opening statement as well as its closing statement, if any,
preferably at the end of the meeting, and in any event no later than 5.00 p.m. on the
first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask each other questions or make comments, through the Panel. Each party shall then
have an opportunity to answer these questions orally. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's written questions within a deadline to be determined by the
Panel.
c. The Panel may subsequently pose questions to the parties. Each party shall then have
an opportunity to answer these questions orally. The Panel shall send in writing, within a
timeframe to be determined by it, any questions to the parties to which it wishes to
receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with the United States presenting its statement first.
14. The second substantive meeting of the Panel with the parties shall be conducted as follows:
a. The Panel shall ask India if it wishes to avail itself of the right to present its case first. If
so, the Panel shall invite India to present it s opening statement, followed by the United
States. If the India chooses not to avail itself of that right, the Panel shall invite the
United States to present its opening statement first. Before each party takes the floor, it
shall provide the Panel and other participants at the meeting with a provisional written
version of its statement. In the event that interpretation is needed, each party shall
provide additional copies for the interpreters, through the Panel Secretary. Each party

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shall make available to the Panel and the other party the final version of its opening
statement as well as its closing statement, if any, preferably at th e end of the meeting,
and in any event no later than 5.00 p.m. of the first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask each other questions or make comments, through the Panel. Each party shall then
have an opportunity to answer these questions orally. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's written questions within a deadline to be determined by the
Panel.
c. The Panel may subsequently pose questions to the parties. Each party shall then have
an opportunity to answer these questions orally. The Panel shall send in writing, within a
timeframe to be determined by it, any questions to the parties to which it wishes to
receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with the party that presented its opening statement
first, presenting its closing statement first.
Third parties

15. The Panel shall invite each third party to tr ansmit to the Panel a written submission prior to
the first substantive meeting of the Panel with the parties, in accordance with the timetable
adopted by the Panel.
16. Each third party shall also be invited to present its views orally during a session of this first
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. the previous
working day.
17. The third-party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third-party session and intending to present their views orally at
that session, shall provide the Panel, the parties and other third-parties with provisional
written versions of their statements before they take the floor. Third parties shall make
available to the Panel, the parties and other third parties the final versions of their
statements, preferably at the end of the session, and in any event no later than
5.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. Each third party shall
then have an opportunity to answer these questions orally. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

18. The description of the arguments of the parties and third parties in the descriptive part of the
Panel report shall consist of executive summaries provided by the parties and third parties, which

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shall be annexed as addenda to the report. These executive summaries shall not in any way serve
as a substitute for the submissions of the parties and third parties in the Panel's examination of
the case.
19. Each party shall submit executive summaries of the facts and arguments as presented to the
Panel in its written submissions and oral statements, in accordance with the timetable adopted by
the Panel. These summaries may also include a summary of responses to questions. Each such
executive summary shall not exceed 15 pages. Th e Panel will not summarize in the descriptive
part of its report, or annex to its report, the parties' responses to questions.
20. Each third party shall submit an executive summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panel. This
summary may also include a summary of response s to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
Interim review

21. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel, in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
22. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review, in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.
23. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

24. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all do cuments to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file 2 paper copies of all documents it submits to the
Panel. Exhibits may be filed in 4 copies on CD-ROM or DVD and 2 paper copies. The
DS Registrar shall stamp the documents with the date and time of the filing. The paper
version shall constitute the official version for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, preferably in Microsoft
Word format, either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic
copy is provided by e-mail, it should be addressed to *****@wto.org, and copy
*****.*****@wto.org and *****.*****@wto.org If a CD-ROM or DVD is provided, it
shall be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the first substantive meeting with the Panel. Each third party shall serve any
document submitted to the Panel directly on the parties and all other third parties. Each
party and third party shall confirm, in writing, that copies have been served as required
at the time it provides each document to the Panel.
e. Each party and third party shall file its docu ments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel. A party or third party may submit its documents
to another party or third party in electronic format only, subject to the recipient party or
third party's prior written approval and provided that the Panel Secretary is notified.

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f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.
25. The Panel reserves the right to modify these procedures as necessary, after consultation with
the parties.

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ANNEX B
ARGUMENTS OF THE PARTIES
UNITED STATES
Contents Page
Annex B-1 First part of the integrated ex ecutive summary of the arguments of the
United States
B-2
Annex B-2 Second part of the integrated execut ive summary of the arguments of the
United States
B-12

INDIA
Contents Page
Annex B-3 First part of the integrated executive summary of the arguments of India B-19
Annex B-4 Second part of the integrated executive summary of the arguments of India B-30

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ANNEX B-1
FIRST PART OF THE INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE UNITED STATES
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF THE UNITED STATES
I. INTRODUCTION
1. The stated aim of India's Jawaharlal Nehru National Solar Mission ("JNNSM") Programme is
to promote the use of solar energy. This is a laud able goal that the United States and many other
WTO Members share, and it is not this environmental objective that the United States challenges
in this dispute. Rather, the United States challenges elements of India's program that discriminate
against imported products.

2. In particular, under the JNNSM Programme, In dia enters into power purchase agreements
for electricity from solar power developers ("SPDs "). To enter into these contracts and receive
other incentives, however, SPDs are required to use solar cells and modules made in India ("the
domestic content requirement" or "DCR"). India's DCRs, therefore, accord less favorable
treatment to imported solar cells and modules than to domestic solar cells and modules, as
imported products are prevented from competing under the same conditions as domestically-
produced cells and modules. As such, the JNNSM Programme measures, including individually
executed contracts for solar power projects, are inconsistent with India's obligations under
Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.

II. FACTUAL BACKGROUND
3. India established the JNNSM Programme in January 2010 with the stated goal "of
establishing India as a global leader in solar energy, by creating the policy conditions for its
diffusion across the country as quickly as possible." The JNNSM Programme attempts to achieve
this aim by agreeing to purchase electricity from SPDs at long-term contractually guaranteed rates
and providing other financial benefits to SPDs. Through the JNNSM Programme, India aims to
generate 20,000 MW of grid-connected solar power capacity by 2022. To reach this goal, India is
implementing the JNNSM Programme in three separate "phases."

4. Phase I had the goal of generating 1000 MW of solar power capacity by 2013. Phase I was
divided into two batches: Batch 1 (FY 2010-2011) and Batch 2 (FY 2011-2012). Phase II, which
is currently ongoing, began in October 2013 and is scheduled to close in 2019. To date, India has
rolled out one batch under Phase II. During Phase II (Batch 1), India aims to generate 750 MW of
solar power capacity. India aims to reach the 20, 000 MW target by the end of Phase III, which is
scheduled to run between 2017 and 2022. India has not issued any draft guidelines or detailed
plans for Phase III.

5. Under each phase of the JNNSM Programme, India solicits and evaluates bid proposals from
SPDs to set up "solar power generation projects." India selects certain developers and then enters
into power purchase agreements ("PPAs") with those developers. Under a PPA, India agrees to
purchase the electricity generated from the solar power project of a particular SPD at
contractually-guaranteed long-term rates. India then sells the electricity to downstream
"distribution utilities" for resale to commercial and household consumers. The basic flow of
electricity generated under the JNNSM Programme is as follows:



Government of
India
Solar Power
Developers
Distribution
Utilities
End-use
Consumers
Buys electricity from
SPDs, then sells to
Distribution Utilities
Produces electricity from
solar power, then sells
to India
Buys solar power from
GOI, then sells to
commercial and
household end-users

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6. In addition to meeting various financial and technical conditions, SPDs must agree to satisfy
certain DCRs with respect to the solar cells and modules used to generate solar power in projects
under the JNNSM Programme.

1. Key JNNSM Programme Administrative Entities
7. The Ministry of New and Renewable Energy ("MNRE") is responsible for administering the
JNNSM Programme. NPTC Vidyut Vyapar Nigam Limited ("NVVN") was responsible for
implementing the solar power project selection process under Phase I. NVVN also serves as the
formal counterparty to SPDs in the PPAs ( i.e., the contracts) executed under Phase I. NVVN is a
wholly owned subsidiary of the state-owned National Thermal Power Corporation ("NTPC"). For
Phase II (Batch I), MNRE selected the Solar Energy Corporation of India ("SECI") to carry out the
solar power project selection process and serve as the counterparty to SPDs in PPAs executed
under Phase II (Batch I).

2. Operation of the JNNSM Programme
8. In operating the JNNSM Programme, India ut ilizes a series of instruments and documents
(i.e., JNNSM Programme measures) to set out relevant aspects of the Programme for each phase
and batch, including the DCRs. Each of Phase I (B atch 1), Phase I (Batch 2) and Phase II (Batch
1) is governed by similar set of key documents. Specifically, the JNNSM Programme measures for
each phase include: (1) a Guidelines document; (2) a request for selection ("RfS") document;
(3) a model PPA; and (4) individually executed PPAs.

9. The Guidelines documents set out the re quirements concerning solar power project
eligibility, the bid submission process for SPDs, technical specifications, and contract issuance.
The RfS document, essentially the application that SPDs use to submit bid proposals, sets out
further details regarding the application process, standard terms and conditions applicable to solar
power projects, and technical specifications. Again, each RfS document contains DCRs for each
Phase and Batch. The model PPAs, which incorporate provisions of the Guidelines and RfS
documents by reference, are used to execute individual PPAs with SPDs. The model PPAs, which
form the basis for each executed PPA, incorporate DCRs.

10. As noted, the JNNSM Programme establishes DCRs under Phase I (Batch 1), Phase I
(Batch II), and Phase II (Batch I) for SPDs entering into certain power purchase agreements.
Each of the Guidelines documents states that SPDs' participation in the JNNSM Programme is
strictly conditioned on their compliance with the applicable DCRs.

 The Phase I, Batch 1 Guidelines state: "For Solar PV Projects it will be mandatory for
Projects based on crystalline silicon technology to use the modules manufactured in
India…" Section 2.5(D)

 The Phase I, Batch 2 Guidelines state: "For Solar PV Projects to be selected in second
batch during FY 2011-12, it will be mandatory for all the Projects to use cells and
modules manufactured in India…" Section 2.5(D)

 The Phase II Guidelines state: "Under th e DCR [i.e., "domestic content requirement"],
the solar cells and modules used in the power plant must both be made in India."
Section 2.6(E)

11. The DCRs are restated verbatim in each of the RfS documents. Moreover, as part of bid
applications submitted pursuant to the RfS documents, SPDs were obligated to furnish a "specific
plan" for meeting the applicable DCRs "within 180 days of signing a PPA" under Phase I and within
"210 days of signing a PPA" under Phase II (Batch 1).

12. In order for an SPD to be selected to participate in the JNNSM Programme, to enter into a
PPA, and to receive the guaranteed, long-term rates under the JNNSM Programme, they must
comply with the DCRs of Phase I (Batch 1), Phase I (Batch 2) and Phase II (Batch 1). The
following table summarizes the DCRs for each phase.

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JNNSM PROGRAMME DOMESTIC CONTENT REQUIREMENTS
 Domestic Content Required Exempt from Domestic Content
Requirements
PHASE I
(BATCH 1)  crystalline silicon solar modules
 thin-film solar modules
 solar cells
PHASE I
(BATCH 2)
 crystalline silicon solar modules
 solar cells
 thin-film solar modules
PHASE II  crystalline silicon solar modules
 thin-film solar modules
 solar cells
(NO Exemptions from Domestic Content
Requirement under Phase II)

13. As noted, to have the possibility or advant age of entering into a PPA under the program, a
solar power developer must comply with the requisite domestic content requirements. In addition,
under a PPA entered under both Phases I and II, India (through NVVN and SECI, respectively)
purchases the electricity generated by SPDs at co ntractually guaranteed long-term tariff rates.
These contracts (i.e., the PPAs) remain in effect for a term of 25 years.

3. Individually Executed JNNSM Programme Power Purchase Agreements
14. The measures at issue in this dispute also include the DCRs under the JNNSM Programme
incorporated in individually executed PPAs. NVVN has entered into 36 PPAs with SPDs under Phase
I (Batch 1) and 27 PPAs under Phase I (Batch 2). In addition, SECI has issued Letters of Intent to
enter into PPAs with 47 SPDs under Phase II (Batch 1). As noted above, each PPA is executed
based on a model PPA that incorporates DCRs from the Guidelines and RfS for that Phase and
Batch. Each PPA thus incorporates DCRs.

III. LEGAL ARGUMENT
A. The Domestic Content Requirements in the JNNSM Programme Are
Inconsistent with India's National Treatment Obligation Under Article III:4 of
the GATT 1994
15. The DCRs under the JNNSM Programme measures are inconsistent with India's national
treatment obligations under Article III:4 of the GATT 1994, because, inter alia, the DCRs operate
to accord "less favourable" treatment to imported solar cells and modules than that accorded to
cells and modules of Indian origin. India cannot justify these DCRs by invocation of the
"government procurement" exception under Article III:8(a) of the GATT 1994.

16. The DCRs under the JNNSM Programme measures are inconsistent with India's national
treatment obligations under Article III:4 of the GATT 1994, because (i) imported and domestic
solar cells and modules are "like products"; (ii) they impose "requirements" on SPDs "affecting"
the "internal" "sale," "purchase," or "use" of solar cell and modules; and (iii) they accord imported
solar cells and modules treatment less favorable than to "like products" of Indian origin.

17. Solar cells and modules manufactured domestic ally in India and those imported from the
United States are "like products" within the meaning of Article III:4 of the GATT 1994. Apart from
country of origin, the JNNSM Programme measures make no further distinction between imported
and domestic solar cells and modules. Previous repo rts have found this to be a sufficient basis to
conclude that imported and domestic products are like.

18. Like the measures at issue in those disputes, none of the JNNSM Programme measures note
any difference between solar cells and modules made in India as compared with imported solar
cells and modules. Indeed, in the JNNSM Programme's DCR provisions, the only distinguishing
criterion is between those cells and modules "made in India" or "manufactured in India" versus
cells and modules "sourced from any country." Fu rthermore, in its submissions, India does not
dispute that imported solar cells and modules made in India are "like products" within the meaning
of Article III:4 of the GATT 1994. Accordingly, the Pa nel in this dispute should find that solar cells

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and modules at issue in this case are "like products within the meaning of Article III:4 of the
GATT 1994.

19. The domestic content provisions of the JNNSM Programme measures are "requirements"
that "affect" the "internal" "sale", "purchase," or "use" of solar cells and modules in India within
the meaning of Article III:4 of the GATT 1994.

20. As the panel noted in India – Autos:

GATT jurisprudence . . . suggests two distinct situations which would satisfy the term
"requirement" in Article III:4:
(i) obligations which an enterprise is "legally bound to carry out";
(ii) those which an enterprise voluntarily accepts in order to obtain an advantage
from the government.
21. The JNNSM Programme's domestic content provisions are "requirements" because, under
those provisions, an SPD selected to participate in the program and entering into a PPA will
voluntarily accept an obligation to use solar ce lls and modules manufactured in India. Having
entered into the PPA, the solar power developer is legally bound, by contract, to carry out that
commitment.

22. Specifically, the Phase I and Phase II Guidel ines make clear that the applicable DCRs are
"mandatory." Specifically:

 The Phase I, Batch 1 Guidelines state: "For Solar PV Projects it will be mandatory for
Projects based on crystalline silicon technology to use the modules manufactured in
India…(emphasis added)" Section 2.5(D)
 The Phase I, Batch 2 Guidelines state: "For Solar PV Projects to be selected in second
batch during FY 2011-12, it will be mandatory for all the Projects to use cells and
modules manufactured in India…(emphasis added)" Section 2.5(D)
 The Phase II Guidelines state: "Under the DCR [ i.e., "domestic content requirement"],
the solar cells and modules used in the power plant must b o t h b e m a d e i n I n d i a .
(emphasis added)" Section 2.6(E)
23. The Phase I and Phase II RfS documents – pursua nt to which SPDs submit bid applications –
also make clear that the applicable DCR provisions are mandatory. Specifically:

 The Phase I (Batch 1) RfS document states: "For Solar PV Projects it will be mandatory
for Projects based on crystalline silicon technology to use the modules manufactured in
India…" Section 3(D)
 The Phase I (Batch 2) RfS document states: "For Solar PV Projects to be selected in
second batch during FY 2011-12, it will be mandatory for all the Projects to use cells and
modules manufactured in India…" Section 3(D)
 The Phase II (Batch 1) RfS document states : "For Projects to be implemented under
Part-A (375 MW), both the solar cells and modules used in the Solar Power Projects
must be made in India." Section 3(E)
24. Moreover, as noted above, when submitting a bid pursuant to the RfS documents, SPDs
must "certify" that they will "specify their plan for meeting the requirement for domestic content"
"within 180 days of signing of [a] PPA" under Phas e I and within "210 days of signing of [a] PPA"
under Phase II (Batch 1). By so certifying, SPDs also acknowledge that failure to provide such
specification will be penalized by forfeiture of an earnest money deposit.

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25. Thus, the domestic content provisions are properly viewed as "requirements" because SPDs
submit their bid(s) with full knowledge that participation in the JNNSM Programme is conditioned
on compliance with the domestic content provisions.

26. The DCRs affect the internal sale, purchase, and use of solar cells and modules because
those requirements modify the conditions of competition between solar cells and modules
manufactured in India and those imported.

27. The term "affecting" assists in defining the types of measures that must conform to the
obligation not to accord "less favourable treatment" to like imported products as set out in
GATT 1994 Article III:4. The Appellate Body and panels have found the term "affecting" to mean
having "an effect on", encompassing measures th at modify the conditions of competition between
domestic and imported goods in the market. Th e Appellate Body, in particular, noted that the
term "affecting" in GATT 1994 Article III:4 has "a broa d scope of application", and that it operated
to connect identified types of government action ( i.e., "laws, regulations and requirements") with
specific transactions, activities and uses relating to products in the marketplace ( e.g., "sale",
"purchase", or "use"). Further, the Appellate Bo dy and panels have found measures that "create
an incentive" for domestic over imported goods to "affect", inter alia , the internal "use",
"purchase" or "sale" of those goods.

28. Per the terms of JNNSM Programme measures at issues in this dispute, a SPD satisfies the
applicable DCRs by purchasing and using solar cells and modules made in India. The sale,
purchase, or use of the equipment should be considered "internal" because the requirements apply
inside the customs territory of India and not at the border. The JNNSM Programme measures are
therefore properly viewed as measures "affecting" the "internal sale.…purchase… or use" of solar
cells and modules within the meaning of GATT 1994 Article III:4.

29. The Appellate Body in Korea – Various Measures on Beef determined that "[a]ccording
'treatment no less favourable' means . . . according conditions of competition no less favourable to
the imported product than to the like domestic prod uct." Thus, the focus of this analysis in this
dispute is whether the JNNSM Programme measures modify the conditions of competition in the
relevant market to the detriment of imported products.

30. The DCRs under the JNNSM Programme measures accord less favorable treatment to
imported solar cells and modules than that accorded to like products of Indian origin by
incentivizing the use of Indian-manufactured solar cells and modules, versus imported cells and
modules, and thus modify the conditions of competition in favor of Indian-manufactured cells and
modules to the detriment of imported equipment.

31. As explained above, under the JNNSM Programme, India will enter into PPAs with selected
solar power developers contingent on their agreement to use domestically-produced solar cells and
modules. A solar power developer that opts to use imported solar cells and/or modules is not
eligible to participate in such portion of the program subject to the DCRs. Thus, such a developer
may not enter into a PPA under the program without undertaking the domestic use commitment.

32. Because the JNNSM Programme requires that a SPD use solar cells and modules of Indian
origin in order to enter into a PPA under that part of the program subject to DCRs, the program
thus creates an incentive for SPDs to purchase solar cells and modules made in India. In India –
Autos, the panel found that "the very nature of [an] indigenization requirement generates an
incentive to purchase and use domestic products and hence creates a disincentive to use like
i m p o r t e d p r o d u c t s " , a n d t h a t i t w a s " m o r e t h a n l i k e l y t o h a v e s o m e e f f e c t o n m a n u f a c t u r e r s '
choices as to the origin of parts and components to be used in manufacturing automotive
vehicles", as the manufacturers would "need to take into account the requirement to use a certain
proportion of products of domestic origin." Un der these circumstances, the panel found that the
DCRs at issue clearly modified the conditions of competition of domestic and imported parts and
components in the Indian market in favor of domestic products.

33. Similarly, the DCRs of the JNNSM Programme clearly modify the conditions of competition
between domestic and imported solar cells and modu les in the Indian market in favor of domestic
equipment. Because the JNNSM Programme has altered the conditions of competition in favor of
Indian-produced solar cells and modules to the detriment of such equipment produced in the

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United States and elsewhere, it thereby accords imported equipment less favorable treatment than
it accords to like products of Indian origin.

34. Moreover, where the DCRs apply the use of imported cells and/or modules is prohibited.
Barring foreign products from some sales opportunities available to domestic suppliers clearly
modifies the conditions of competition to the detriment of imported products.

B. The JNNSM Programme's domestic cont ent requirements for solar cells and
modules cannot be justified by the "government procurement" exception
under GATT 1994 Article III:8(a) because the Indian government does not
procure solar cells and modules through the JNNSM Programme.
35. GATT 1994 Article III:8(a) prov ides an exemption from the national treatment obligation in
Article III:4. The DCRs at issue in this dispute, however, fail to qualify for this exemption because
India acquires electricity under the PPAs whereas the products which are subject to requirements
affecting their sale, purchase, or use are solar cells and modules . These products – electricity
versus solar cells and modules – are not the same nor in a competitive relationship. Put
differently, while India procures electricity under the JNNSM Programme through PPAs, it does not
procure solar cells or modules. Thus, Article III:8(a) cannot serve to exempt a requirement that
discriminates against imported solar cells or modules.

36. This understanding of the exemption under Article III:8(a) was reached by the Appellate
Body in Canada – Renewable Energy / Feed-In Tariff Program , which found that for purposes of
GATT 1994 Article III:8(a), the imported product being discriminated against must be in a
competitive relationship with the domestic product being purchased by the government.

37. Like the measures at issue in Canada – Renewable Energy / Feed-In Tariff Program , under
India's JNNSM Programme, "the product being procured [by India] is electricity, whereas the
product discriminated against for reason of its origin is generation equipment," i.e., solar cells and
modules. Neither solar cells nor solar modules are in a competitive relationship with electricity.
Accordingly, the discrimination relating to solar cells and modules under the JNNSM Programme is
not covered by the derogation of Article III:8(a) of GATT 1994.

IV. CONCLUSION
38. For the reasons stated above, the United States requests that the Panel make the following
findings:

 the DCRs contained in the JNNSM Programme measures, including both Phase I and
Phase II and individually executed PPAs for solar power projects, accord less favorable
treatment to imported solar cells and modules than accorded to like products of Indian
origin, inconsistent with Article III:4 of the GATT 1994; and
 the DCRs contained in the JNNSM Programme measures, including both Phase I and
Phase II and individually executed PPAs for solar power projects, constitute trade-related
investment measures inconsistent with the provisions of Article III of the GATT 1994,
and are therefore inconsistent with Article 2.1 of the TRIMs Agreement.
39. Accordingly, the United States respectfully requests the Panel to recommend that India bring
the DCRs under the JNNSM Programme measures, including both Phase I and Phase II and
individually executed PPAs for solar power projects, into conformity with the GATT 1994 and the
TRIMs Agreement, pursuant to Article 19.1 of the DSU.

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EXECUTIVE SUMMARY OF US OPENING ORAL STATEMENT
AT THE FIRST SUBSTANTIVE MEETING OF THE PANEL
I. The DCRs under Phases I and II of the NSM Program Are Inconsistent with
Article III:4 of the GATT 1994 and Article 2.1 of TRIMs agreement.
40. The DCRs at issue fall squarely within the types of measures included in paragraph 1(a) of
the Annex to the TRIMs Agreement, and are theref ore inconsistent with Article 2.1 of the TRIMs
Agreement. That is, (i) imported solar cells and modules made in India are "like products" within
the meaning of Article III:4 of the GATT 1994; (ii) the DCRs are "requirements" that "affect" the
"internal" purchase or "use" of solar cells and modules in India; or (iii) the DCRs are "trade-related
investment measures" within the meaning of the TRIMs Agreement. These facts – none of which
India disputes – by themselves, establish an inconsistency with Article 2.1 of the TRIMs Agreement
as well as Article III:4 of the GATT 1994. As stated by the Appellate Body in Canada – Renewable
Energy / Canada – Feed-in Tariff, "[b]y its terms, a measure that falls within the coverage of
paragraph 1(a) of the Illustrative List is 'inconsistent with the obligation of national treatment
provided for in [Article III:4 of the GATT 1994]."

41. The United States notes India's specific argument that the DCRs do not accord less favorable
treatment to imported solar cells and modules because the NSM Program does not "confine the
benefits or advantages relating to tariff or any ot her benefits, to SPDs that use only domestically
manufactured cells and modules." But this statement (which appears to envision erroneously that
the only "benefits" or "advantages" are the ra tes under signed contracts) applies only to some of
the SPD projects under the NSM – the portion to which DCRs do not apply. It does not change the
fact that, for the share of projects reserved to those developers who purchase and use domestic
products, there is less favorable treatment for imported products, as the use of imported cells
and/or modules is prohibited . Under Article III, compliance with national treatment for some
transactions does not excuse a Member from its obligation to comply with national treatment for
other transactions.

42. The Appellate Body has made clear that where a measure "modifies the conditions of
competition to the detriment of imported products" that measure operates to accord less favorable
treatment to imported products within the meaning of Article III:4. Even as described by India,
the NSM Program operates so that some SPD contracts prohibit the use of imported solar cells and
modules – that is, only some of them allow the use of imported solar equipment. Barring foreign
products from some sales opportunities available to domestic suppliers clearly modifies the
conditions of competition to the detriment of imported products.

43. Thus, even putting aside the Illustrative List of the TRIMs Annex, under which India's DCRs
are necessarily inconsistent with Article III:4 of the GATT 1994, as well as Article 2.1 of the TRIMs
Agreement, the facts of this dispute also demonstrate that the DCRs do operate to "modify the
conditions of competition to the detriment" of imported solar cells and modules and thereby accord
less favorable treatment to imported products within the meaning of Article III:4 of the
GATT 1994.

II. The DCRs at Issue Are Not Covered by Government Procurement Derogation under
Article III:8(a) of the GATT 1994
44. The Appellate Body has found that Arti cle III:8(a) of the GATT 1994 derogates from
Article III only where the imported product being discriminated against is in a competitive
relationship with the product being purchased. In Canada – Renewable Energy / Canada – Feed-in
Tariff, the Appellate Body found that the government procurement was unavailable to Canada
because the product being procured by the gove rnment was electricity, whereas the product
discriminated against for reason of its origin was generation equipment. The Appellate noted that
the those two products were not in a competitive relationship and, accordingly, found that the
discrimination relating to generation equipment was not covered by Article III:8(a) of the
GATT 1994.

45. Similar to the facts of Canada – Renewable Energy / Canada – Feed-in Tariff , the Indian
government is not purchasing solar cells and modules under the NSM Program, but rather the

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electricity generated through the use of those cells and modules. Therefore, following the logic
clearly articulated by the Appellate Body in Canada – Renewable Energy / Canada – Feed-in Tariff ,
the Article III:8(a) government procurement provision does not apply to the facts of this dispute.
Simply put, Article III:8(a) does not permit India to purchase electricity but discriminate against
imported solar cells and modules.

46. India acknowledges that the Indian government is not purchasing solar cells and modules
under the NSM Program and makes no attempt to argue that solar cells or modules are in a
competitive relationship with electricity. Rather, India asserts that because solar cells and
modules are "integral to the generation of solar power [they] cannot be treated as distinct from
the generation of solar power." On that basis, India posits that the Indian government is
effectively procuring the cells and modules because it is "buy[ing] solar power [i.e., the electricity]
generated from such cells and modules."

47. India's line of reasoning, however, has already been rejected by the Appellate Body in
Canada – Renewable Energy / Canada – Feed-in Tariff . In that dispute, the panel had observed
the generation equipment at issue "[was] needed and used" to produce the electricity, and
therefore there [was] a 'close relationship' between the products affected by the domestic content
requirement (generation equipment) and the produc t procured (electricity)." When reviewing the
findings on appeal, however, the Appellate Body declared that the "connection" between the DCRs
and electricity was insufficient to bring the DCRs within the purview of Article III:8(a). As noted,
the Appellate Body concluded that the government procurement derogation did not cover the DCRs
at issue in Canada – Renewable Energy / Canada – Feed-in Tariff because the government was
procuring electricity, whereas the products being discriminated against were imported solar and
wind power generation equipment. It found ther e was no competitive relationship between solar
power (or wind power) equipment purchased by developers and the electricity purchased by the
government.

48. Likewise, because the Indian government is not procuring solar cells and modules under the
NSM Program, the DCRs pertaining to those cells and modules fall outside the coverage of
Article III:8(a). India has not even tried to demonstrate that solar cells and modules and electricity
are in a competitive relationship. Accordingly, any suggestion that DCRs under the NSM Program
are properly viewed as "laws, regulations or requirements governing procurement" within the
meaning of Article III:8(a) cannot be squared with the Appellate Body's analysis of that provision.

49. India also seeks to avoid the implications of the Appellate Body findings in Canada –
Renewable Energy / Canada – Feed-in Tariff by highlighting certain mechanical distinctions
between the DCRs at issue in that dispute and this one. But the differences it cites are
inconsequential. The Appellate Body based its findings in Canada – Renewable Energy / Canada –
Feed-in Tariff on the observation that the electricity pu rchased by the Government of Ontario did
not compete with the solar and wind power generation equipment purchased by power developers.
The metrics used to determine the "Minimum Required Domestic Content Levels" under Ontario's
FIT Programme were irrelevant to this conclusion. Therefore, the minor differences identified by
India do not detract from the applicability of the Appellate Body's findings to the facts of this
dispute.

50. India has also failed to demonstrate that any alleged procurement is "for governmental
purposes" within the meaning of Article III:8(a). The Appellate Body has identified two ways for
evaluating whether a product is procured for a "governmental purpose" within the meaning of
Article III:8(a). Specifically, the Appellate Body has stated that "the phrase 'products purchased
for governmental purposes' refers to (i) what is consumed [or used] by the government; or (ii)
"what is provided by government to recipients in th e discharge of its public functions." It is clear
from the facts of this dispute that the Indian government is not itself consuming or using the
electricity it procures from SPDs through the NSM Program, and India has not argued to the
contrary. And India also has not demonstrated that the government is providing electricity to
recipients in the discharge the Indian government's public functions.

51. The Appellate Body has clarified that the mere assertion of "governmental aims or
objectives" does not amount to a "governmental purpose" within the meaning of Article III:8(a).
India asserts that its "procurement of solar power…is an act pursuant to the government purpose
of promoting ecologically sustainable growth while addressing India's energy security challenge."
In its submission, however, India has not ex plained why promoting sustainable development

- B-10 -

should be understood as a "public function" as opposed to an important "aim or objective" of the
Indian government. This is another crucial omissi on by India: as noted by the Appellate Body,
"governmental agencies by their very nature pursue governmental aims or objectives." As such,
"the additional reference to 'governmental' in relation to 'purposes' must g o b e y o n d s i m p l y
requiring some governmental aim or objective with respect to purchases by governmental
agencies." Therefore, India has not demonstrated that its procurement of solar power is for a
governmental purpose within the meaning of Article III:8(a).

52. Another reason that the Panel may conclude that India cannot avail itself of the derogation
in Article III:8(a) is that any alleged procurement is "with a view to commercial resale" within the
meaning of Article III:8(a). The Appellate Body has explained that an inquiry into whether a
transaction is with a view to "commercial resale" for purposes of Article III:8(a) "must be assessed
having regard to the entire transaction." With respect to a buyer, the Appellate Body has stated
that "commercial resale" is evident where "the buyer seeks to maximize his or her own interest."

53. The United States observes that many of th e distribution companies (or DISCOMs) to which
India resells solar power are corporatized entities with a fiduciary duty to maximize profits or
returns for shareholder. Indeed, one-quarter of Indian DISCOMs are wholly-private concerns.
Thus, the DISCOMs are properly viewed as "buyer[s] seek[ing] to maximize [their] own interests."
And on that basis, India's sale of the solar power (procured from SPDs) to such entities is properly
viewed as "commercial resale" within the meaning of Article III:8(a). For this reason as well, India
cannot avail itself of the derogation in Article III:8(a).

III. India Has Failed to Demonstrate that the DCRs at Issue Are "Essential" to
Addressing a Short Supply of Solar Cells and Modules within the Meaning of
Article XX(j)
54. India argues that the DCRs at issue are ju stified under Article XX(j) of the GATT 1994.
Article XX(j) allows a Member to take measures that are "essential to the acquisition or distribution
of products in general or local short supply." India, however, has not demonstrated that there is a
short supply of solar cells and modules in India. Indeed, India acknowledges that there is an
"adequate availability" of solar cells and modules on the international market, but does not bother
to explain why India is unable to avail itself of this supply. Moreover, India complains that more
than 90 percent of its solar PV installations rely on imported solar cells and modules – suggesting
that India is experiencing an abundance of solar power generation products, not a "scarcity" or
"limited quantity." In short, India has failed to establish the factual predicate for invocation of
Article XX(j).

55. Moreover, India's view of "products in general or local short supply" as referring to domestic
products rests on a misunderstanding of Article XX(j). This provision is not concerned with the
supply of products of a particular origin, but rather the supply of that product in general or local
situations without respect to origin. The term "products" in Article XX(j) is unqualified by origin
while other provisions of the GATT 1994, which are addressed to products of a particular origin
identify those products explicitly. Therefore, India's interpretation of this provision as relating to a
short supply of domestic products is in error.

56. India has not demonstrated how DCRs could be "essential" to "the acquisition" of those
products. The Appellate Body has observed that the Oxford English Dictionary defines "essential"
to mean "absolutely indispensable or necessary." Therefore, for purposes of Article of XX(j), India
would need to establish that the DCRs are "absolutely indispensable or necessary" to acquiring
solar cells and modules purportedly in short supply. It has not done so.

57. Lastly, India appears to be not so much concerned with its ability to acquire solar cells and
modules than with the apparent dearth of In dian-manufactured solar cells and modules.
Specifically, India argues that the DCRs are designed to "incentivize domestic manufacturing of
cells and modules" and are therefore "essential" to addressing the apparent shortage of Indian-
produced cells and modules. In other words, by India's own acknowledgment, it views the DCRs
as "essential" to encourage local supply (production) and not essential to "the acquisition" of solar
cells or modules.

- B-11 -

IV. India Has Failed to Demonstrate that th e DCRs at Issue Are Necessary to Secure
Compliance with Laws or Regulations Not Inconsistent with the GATT 1994 within
the Meaning of Article XX(d)
58. India argues that the DCRs at issue are measures "necessary to secure compliance with laws
or regulations [not] inconsistent with the provisions of [GATT 1994] …" for purposes of
Article XX(d). The Appellate Body has found that "[a] Member who invokes Article XX(d) as a
justification has the burden of demonstrating that" the measure at issue "is necessary to secure
compliance."

59. First, many of the instruments cited by India appear to be broad policy documents with
non-binding or merely hortatory effect. That is, they do not appear to be laws or regulations with
which India must "comply" within the meaning of Article XX(d). Previous GATT panels have
reasoned that "to comply" means "to enforce obligations" not "to ensure the attainment of the
objectives of laws and regulations." Thus, even if the DCRs are designed to pursue the sustainable
development goals reflected in the cited instruments, that is still insufficient to demonstrate that
the DCRs are necessary to "secure compliance" with the instruments themselves. On this fact
alone, India has failed to demonstrate that the DCRs are necessary to comply with any law or
regulation for purposes of Article XX(d).

60. Second, India has also failed to demonstrate that the DCRs at issue are "necessary" to
comply with the obligations contained in any allegedly binding instruments. India argues that its
DCRs are "necessary" – for purposes of Article XX(d) – because "[t]he DCR Measures contribute to
enforcing the sustainable development commitments undertaken by India, through its laws and
regulations." The Appellate Body has observed that, as a general matter, "necessary" can mean
anything from "indispensable" to simply "makes a contribution to." But for purposes of
Article XX(d), the Appellate Body has made clear that a "necessary measure is…located
significantly closer to the pole of 'indispensable' than to the opposite pole of simply 'making a
contribution to'."

61. Finally, the United State observes that several of the instruments cited by India are
international instruments, not domestic Indian laws or regulations. India has not sufficiently
demonstrated that those instruments have been incorporated into India's domestic legal system.
As India states in its submission, in India "rules of international law are [automatically]
accommodated into domestic law" only if "they do not run into conflict with laws enacted by
Parliament."

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ANNEX B-2
SECOND PART OF THE INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE UNITED STATES
U.S. Second Written Submission

I. Introduction

1. In its first written submission, the United States explained that the DCRs imposed under
India's NSM are inconsistent with Article III:4 of the GATT 1994 and Ar ticle 2.1 of the TRIMs
Agreement because they accord less favourable treatment to imported solar cells and modules as
compared to cells and modules manufactured in India. India's rebuttal submission, statements to
the Panel, and responses to the Panel's questions have done nothing to call this conclusion into
question.

2. India instead attempts to provide defenses under Articles III:8(a), XX(j) and XX(g) of the
GATT 1994, but these arguments are unconvincing. India cannot use Article III:8(a) as defense
because, as the United States has shown, the Government of India is not procuring solar cells and
modules under the NSM Program, but electricity.

3. India's attempts to utilize Article XX also fall short. India's own arguments demonstrate that
there is no general or local short supply of solar cells and modules in India. Even if there were
such a short supply, India has failed to adequately explain why the DCRs at issue are "essential" to
addressing its purported short supply of solar cells and modules.

4. India also contends that its DCRs are "necessary to secure compliance with a law or
regulation" for purposes of GATT Article XX(d). India, however, has not identified any WTO-
consistent law or regulation that requires the imposition of DCRs, much less demonstrated that
DCRs at issue are in any way "necessary" to secure compliance with a law or regulation.

II. India Has Raised No Valid Defense to the U.S. Claims Under GATT 1994 and the
TRIMS Agreement

A. India Has Not Refuted the U.S. Claims that the DCRs at Issue Are
Inconsistent with GATT 1994 Article III:4 and TRIMs Agreement Article 2.1

5. In its first written submission, the United States explained that the DCRs are inconsistent
with Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement. India has not
advanced any meritorious rebuttal to these claims.

6. The Appellate Body has recognized that a measure that falls under paragraph 1(a) of the
Illustrative List is by definition inconsistent with Article III:4 of the GATT 1994. Specifically, the
Appellate Body in Canada – FIT observed that, "[b]y its terms, a measure that falls within the
coverage of paragraph 1(a) of the Illustrative List is ‘inconsistent with the obligation of national
treatment provided for in [Article III:4 of the GATT 1994]'." Thus, the fact that the DCRs "qualify
under the meaning of paragraph 1(a) of the Illust rative List" – as India concedes – provides a
sufficient basis for the Panel to find that the DC Rs are inconsistent with Article III:4 of GATT 1994
and Article 2.1 of the TRIMs Agreement.

7. India has also failed to refute the U.S. substantive argument that the DCRs operate to
accord less favourable treatment to imported solar cells and modules within the meaning of
Article III:4 of the GATT 1994. India argues that th is is not the case because "the benefits or
advantages relating to tariff or any other bene fits" are not confined "to SPDs that use only
domestically manufactured cells and modules." As noted by the United States, however, India's
argument on this score is valid only with respect to the portion of solar power projects to which
DCRs do not apply . For the share of projects reserved for developers that are required to use
domestic cells or modules, there is necessarily "less favorable treatment" for imported cells or
modules, as the NSM measures prohibit use of imported products for those projects.

- B-13 -

8. With respect to the order of analysis of th e two national treatment provisions, the United
States believes that the Panel may properly begin its analysis under either the GATT 1994 or the
TRIMs provision, and in both cases, will reac h the same conclusion – that, for the reasons
described above, India's measures breach its obligations. However, the United State believes that
it may be more efficient for the Panel to begin its analysis under Article 2.1 of the TRIMs
Agreement, before proceeding to review under Ar ticle III:4 of the GATT 1994. This is because as
noted, measures that are inconsistent with Article 2.1 of the TRIMs Agreement are necessarily
inconsistent with Article III:4 of the GATT 1994.

B. The NSM Program's Domestic Content Requirements Are Not Covered by the
Government Procurement Derogation of Article III:8(a) of the GATT 1994

9. India cannot properly invoke the government procurement derogation under Article III:8(a)
to justify the discriminatory DCRs at issue because India is procuring electricity under the NSM
Program, whereas the products subject to discrimin ation are solar cells and modules. Nothing in
the text of Article III:8(a) suggests the "products" subject to the derogation are different from the
"product" being accorded less favorable treatmen t under Article III:4. The Appellate Body in
Canada – FIT similarly found that Article III:8(a) applies only where the imported product
"allegedly being discriminated against [is] in a competitive relationship with the product being
purchased." The United States observes that India has essentially conceded that it is not
procuring solar cells and modules under the NSM Pr ogram. Nor has India attempted to argue that
the electricity it is purchasing is in a competitive relationship with imported solar cells and
modules. On these facts alone, the Panel has a sufficient basis to reject India's invocation of
Article III:8(a).

10. India asserts that "the derogation under Arti cle III:8(a) is available" to cover the DCRs at
issue because the "product being discriminated against [i.e., solar cells and modules] is an integral
input for the generation or production of the product that is finally purchased [ i.e., solar power]".
To support this reasoning, India cites the Appellate Body statement in Canada – FIT that "[w]hat
constitutes a competitive relationship between products may require consideration of inputs and
processes of production used to produce the product."

11. The most straightforward rebuttal to this argument is that India has the facts wrong.
Solar cells and modules are not inputs in the generation of electricity. They are not incorporated
into or otherwise physically detectable in the electricity procured by the Indian government.
Instead, solar cells and modules are more accura tely characterized as capital goods – equipment
like a turbine or a generator. Therefore, cont rary to India's assertions, when it buys solar
electricity, it does not acquire the cells and modules. Rather, as it acknowledges, the cells and
modules remain in the clear custody and ownership of the solar power developers. Therefore, the
legal question of whether Article III:8(a) provides special a rule for "integral inputs" into products
procured by the government is one that the Panel does not have to answer.

12. India further seeks to avoid the implications of the findings in Canada – FIT by highlighting
certain mechanical distinctions between the DCRs at issue in that dispute and this dispute. As
previously noted by the United States, the Appellate Body based its findings in Canada – FIT on
the observation that the electricity purchased by the Government of Ontario did not compete with
the solar and wind power equipment purchased by SPDs. The metrics used to determine the
"Minimum Required Domestic Content Levels" under Ontario's FIT Programme were irrelevant to
this conclusion. Therefore, India's detailing of minor differences between criteria used under FIT
and the NSM does not detract from the applicability of the Appellate Body's findings to the facts of
this dispute.

13. The panel and Appellate Body in Canada – FIT found that FIT Programme's "Minimum
Domestic Content Level" was structured so as to "require[]" solar and wind power developers "to
purchase or use a certain percentage of renewa ble energy generation equipment and components
sourced in Ontario…." That was the critical fact underlying the finding. In this regard, the DCRs
under the NSM are functionally identical – they require solar power developers to purchase or use
domestically sourced renewable energy equipment.

14. India attempts to draw a further distinction between solar cells and modules – which it
characterizes as "integral inputs" to the generation of solar power – and other types of equipment,

- B-14 -

which India refers to as merely "ancillary" (inverters, electrical wiring, etc.). India seems to
suggest that the DCRs at issue in this dispute are legally permissible because they are limited to
so-called "integral" generation equipment like solar cells and modules, in contrast to the DCRs in
Canada – FIT , which also covered merely "ancillary" equipment like electrical wiring, inverters,
mounting systems, etc.

15. The logical import of India's argument is th at, had the Ontario Government limited its DCRs
to solar cells and modules, the DCRs at issue in Canada – FIT would have been properly justified
under Article III:8(a). The United States observes, however, that if India's distinction between
"integral" and "ancillary" equipment was valid, the Appellate Body in Canada – FIT should have
found that the DCRs pertaining the solar cells and modules were covered by Article III:8(a), while
the DCRs pertaining to other "ancillary" equipment were not so justified. It did not do so.

16. For these reasons, the United States respectfully submits that there is no basis to find that
the DCRs at issue in this dispute are covered by the government procurement derogation under
Article III:8(a).

III. India has Failed to Meet the Conditions for Justifying the DCRs at Issue Under
 Paragraphs (j) OR (d) OF Article XX of the GATT 1994

A. India Has Not Demonstrated That It Meets the Prerequisites for Invoking
Article XX(j) of the GATT 1994

17. India seeks to justify its DCRs under GATT Articl e XX(j), but it has failed to satisfy two of the
criteria for that exception – that there is a product in "general or local short supply" and that
India's WTO-inconsistent measures are essential to the acquisition or distribution of that product.
Either of these failings is fatal to India's defense under this provision.

18. India has failed to demonstrate the existence of a short supply of solar cells and modules in
India. In China – Raw Materials , the Appellate Body observed that, in the context of Article XX(j)
of the GATT 1994, the words "general or local shor t supply," refers to a situation where a product
is "available only in limited quantity" or "scarce. India, however, has not demonstrated that solar
cells and modules are in short supply ( i.e., "scarce") either internationally or locally in India.
Specifically, India acknowledges that there is an "adequate availability" of solar cells and modules
on the international market, but has not explained why India is unable to avail itself of this supply
through importation. Moreover, India's assertion that more than 90 percent of its solar PV
installations rely on imported solar cells and modules suggests that it is experiencing an
abundance of solar power generation products, not a "scarcity" or "limited quantity." In short,
India has failed to establish the factual predicate for invocation of Article XX(j).

19. Even if India were experiencing a short suppl y of solar cells and modules, it has failed to
establish that the DCRs at issue are "essential" to the acquisition and distribution of products that
are in short supply. The Appellate Body has obse rved that the Oxford English Dictionary defines
"essential" to mean "absolutely indispensable or necessary." Where a Member is able to acquire
and distribute the product, as appears to be the case for solar cells and modules in India, it is
difficult to envisage how a WTO-inconsistent measure to decrease the availability of that product
domestically (by restricting project for which imports can be used) could be "essential" to the
"acquisition" or "distribution" of that product. A measure that discriminates against imports would
tend to exacerbate difficulties in the acquisition or distribution of a product in short supply by
limiting the potential sources of "supply". Such measures would accordingly be antithetical, rather
than "essential," to the objectives of Article XX(j). India has failed to demonstrate how the
circumstances of its purported short supply situation could operate differently.

20. The United States also considers that, gi ven the element of necessity embodied in the
ordinary meaning of "essential," legal tests developed to evaluated whether measures were
"necessary" within the meaning of other paragraphs of Article XX might inform the analysis under
Article XX(j). The Appellate Body has found in that regard that such an analysis "involves a
process of ‘weighing and balancing' a series of fa ctors, including the importance of the objective,
the contribution of the measure to that objective, and the trade-restrictiveness of the measure."

- B-15 -

21. The Panel need not identify exactly where this balance falls to resolve this dispute, because
the balance of factors with regard to the NSM DCRs does not suggest that they are even
"necessary," let alone "essential":

 The objective. The "objective" in question in a necessity analysis under Article XX of
GATT 1994 is the objective protected under the clause that a Member seeks to invoke.
With respect to Article XX(j), that objectiv e would be the acquisition and distribution
of solar cells and modules, assuming arguendo that they are in short supply. India
has in particular expressed a desire "to ensure domestic resilience in addressing any
supply side disruptions."
 The importance of the objective. The United States does not question that the
acquisition and distribution of solar cells and modules to Indian SPDs, and ensuring
domestic resilience against supply-side disruptions, are important.
 Contribution of the measure to the objective. The NSM DCRs do not appear to
make much of a contribution to the objectives. In the short term, they would tend to
exacerbate a short supply situation by limiting access to imported solar cells and
modules for some solar power projects. In the long term, any capacity added in India
would become part of the global market, and in a short supply situation would tend to
serve the highest paying purchaser, which would not necessarily be in India.
 Trade-restrictiveness of the measure. For projects to which they apply, the DCRs
impose a ban on imports, which is one of the most severe forms of trade restriction.
While they do not apply to all projects fund ed through the NSM, they do cover a large
proportion, and the NSM envisages a dramatic increase in India's solar power
generation capacity. Therefore, even wh en viewed across the totality of Indian
demand for solar cells and modules, the NSM DCRs appear to represent a substantial
restriction on trade.
 Reasonably available alternative measure. There are two WTO-consistent
alternatives. First, India could acquire a "reserve" of solar cells and modules by
importing a surplus for the purpose of stockpiling, which it could then draw down in
the event of a supply shock. Another option would be to secure dedicated import
sources by entering into long-term contracts with foreign suppliers. Either of these
measures would do at least as much as DCRs to address any short-supply situation
that may arise in India and ensure resiliency in the face of supply shocks in a matter
that is consistent with WTO-rules.
In light of these factors, the NSM DCRs are not "necessary" to achieve the objectives of
Article XX(j), and certainly are not "essential."

B. India has Not Demonstrated that it Meets the Criteria to Invoke Article XX(d)
of the GATT 1994

22. India also asserts that the DCRs at issue are measures "necessary ... to secure compliance
with laws or regulations which are not inconsistent with the provisions of this Agreement …" and
therefore justifiable under Article XX(d) of the GATT 1994. The Appellate Body has found that "[a]
Member who invokes Article XX(d) to justify a measure has the burden of demonstrating that" the
measure "is necessary to secure compliance" with a GATT-consistent law or regulation.

23. Article XX(d) does not apply to the DCRs at issue because Article XX(d) does not cover
measures taken by a government to secure its own compliance with its own laws and regulations.
Rather, Article XX(d), by its terms, covers only those measures necessary for a government to
enforce its laws and regulations vis-à-vis persons subject to its jurisdiction, not measures taken to
secure the government's own compliance with its laws and regulations. This interpretation is
supported by the text of Article XX(d) itself, and is consistent with the interpretation of past panels
and the Appellate Body, contrary to India's assertions.

24. As noted above, India cites several domestic and international legal instruments as requiring
it to take certain actions to protect the environment or pursue a sustainable development strategy.

The United States observes, however, that India does not argue that any of the cited instruments

- B-16 -

are enforced (much less enforceable) against its citizens or persons otherwise subject the
jurisdiction of the Indian government. That is, India has not argued that the cited instruments
constitute laws or regulations that persons under its jurisdiction must obey in order to comply with
Indian law. Rather, India explicitly describes these instruments as containing legal obligations that
apply to the Indian government itself.

25. Moreover, assuming, arguendo that Article XX(d) covered Indian laws and regulations that
bind the Government of India itself, none of the instruments cited by India encourage, much less
require, the imposition of DCRs for solar cells and modules. Indeed, several of the cited
instruments read more as broad policy documents with non-binding or merely hortatory effect—
that is, they do not appear to be laws or regu lations that demand legal "compliance" within the
meaning of Article XX(d). Thus, even if DCRs at issue are designed to pursue the sustainable
development goals reflected in the cited instruments, this is still insufficient to demonstrate that
the DCRs are necessary to "secure compliance" with the instruments themselves.

26. Even aside from India's failure to demonstrate that the cited instruments embody legal
obligations with respect to DCRs with which India must comply, India has still failed to establish
that the DCRs at issue are, in fact, "necessary" to secure such compliance within the meaning of
Article XX(d). The thrust of India's argument in relation to Article XX(d), is that the DCRs at issue
are necessary to "develop domestic manufacturing capacity" for solar cells and modules; a
domestic manufacturing base for cells and modules, in turn, will equip India to comply with its
various sustainable development commitments. Specifically, India argues that "The DCR
Measures contribute to enforcing the sustainable development commitment undertaken by India,
through its laws and regulations as discussed ab ove. The Appellate Body has observed that
"necessary" can mean anything from "indispensable" to simply "makes a contribution to." For
purposes of Article XX(d), however, the Appellate Body has made clear that a "necessary measure
is … located significantly closer to the pole of ‘indispensable' than to the opposite pole of simply
‘making a contribution to'." Accordingly, even if the Panel accepts India's assertion the DCRs at
issue "contribute" to India's compliance with the cited instruments, this falls far short of
demonstrating that the DCRs are "necessary" to secure such compliance within the meaning of
Article XX(d).

27. The Appellate Body has also stated that determining whether a GATT-inconsistent measure
is "necessary" under Article XX involves , inter alia , as assessment of whether there are "possible
alternative [GATT-consistent] measures that may be reasonably available to the responding
Member to achieve its desired objective." India appears to have at its disposal reasonably
available WTO-consistent alternative measures. Indeed, India notes two possible alternatives in
its first written submission: (1) maintaining no limitations on foreign direct investment in the solar
technology sector; and (2) reducing import duties on equipment used to manufacture solar cells
and modules. The former would appear to facilitate foreign producers of cells and modules in
setting up manufacturing sites in India while the la tter operates to effectively reduce the cost of
manufacturing cells and modules in India. The United States observes that both of these
alternative measures, as direct induceme nts to manufacturers, would tend to be more effective at
promoting domestic production than DCRs that are targeted at solar power developers.

28. The United States therefore submits that the DCRs at issue are demonstrably not
"necessary" within the meaning of Article XX(d)

U.S.
 OPENING ORAL STATEMENT AT THE SECOND PANEL MEETING

I. Introduction

29. As the United States has noted throughout this dispute, it supports the efforts of WTO
Members to pursue environmental objectives, such as clean energy. In light of the submissions
made by the parties to date, it has become even more apparent that the DCRs adopted by India
that are at issue in this dispute are inconsistent with Article III:4 of the GATT 1994 and Article 2.1
of the TRIMs Agreement. Equally clear is that India's attempts to justify the DCRs under Article XX
of the GATT 1994 are without merit.

- B-17 -

II. The Domestic Content Requirements at I ssue are Inconsistent with Article III:4 of
the GATT 1994 and Article 2.1 of the TRIMs Agreement

30. In its submissions, the United States has explained that the DCRs are inconsistent with
India's national treatment obligations because they modify the conditions of competition in favor of
cells and modules made in India to the detriment of imported cells and modules. Specifically,
India's DCR measures operate to exclude imported solar cells and modules from certain projects
under the NSM Program, while allowing the use of Indian cells and modules in all projects under
the Program. In none of its submissions to date has India attempted to dispute this simple fact.

31. Rather than dispute the facts, India has sought to avoid a finding of a breach of the national
treatment provisions at issue by arguing that the benefits under the NSM Program are "not
confined" to SPDs that use Indian-manufactured cells and modules because some projects permit
the use of imported cells and modules. But, this argument is relevant only to the portion of
projects to which the DCRs do not apply. The United States is not challenging those projects, and
India's compliance with the national treatment provisions with respect to some projects and
products does not excuse its obligation to comply with national treatment with respect to all
projects and products.

III. The NSM Program's Domestic Content Requirements are Not Covered by the
Government Procurement Derogation Under Article III:8(a) of the GATT 1994

32. The government procurement derogation under Article III:8(a) does not apply to the DCRs
because India is procuring electricity under the NSM Program whereas the products facing
discrimination are solar cells and modules. In Canada – FIT , the Appellate Body made clear that
the government procurement derogation applies only where the imported product facing
discrimination and the product purchased by the government are "like products" or in a
competitive relationship.

33. India does not dispute that solar cells and modules are not "like products" with electricity.
And in none of its submissions has India attempte d to argue, much less established, that solar
cells and modules and electricity are in a competitive relationship. These facts alone provide this
Panel with a sufficient basis to reject India's invocation of Article III:8(a).

34. None of India's attempts to rebut this clea r conclusion are persuasive. First, the Panel
should reject India's theory that it is effectively procuring solar cells and modules through its
purchase of the electricity generated by those ce lls and modules. Second, the United States has
also explained why India cannot avoid the implications of the fact that it procures electricity but
imposes discriminatory requirements on generating equipment, by emphasizing mechanical
differences between the DCRs at issue in Canada – FIT and this dispute. Third, as a practical
matter, the DCRs imposed under the India's NSM Pr ogamme are functionally identical to the DCRs
under Ontario's FIT Programme. Fourth, the United States has explained why India's more recent
attempt to characterize solar cells and modules as "inputs" to the generation of solar power is
misplaced and inaccurate. Solar cells and modules are not, in fact, inputs – integral or otherwise –
in the generation of electricity.

35. Moreover, India has not established that any of the alleged procurement is not "with a view
to commercial resale" because the electricity purchased under the NSM Program is resold to retail
and commercial consumers over a competitive market for electricity. This understanding is
consistent with the observation of the Panel in Canada – FIT , which found that electricity
purchased under Ontario's FIT Programme was "introduced into commerce" because it was "resold
to retail consumers through the [local distribution companies] in competition with private-sector
retailers." As noted by the United States, many Indian electricity distribution companies (or
Discoms) are highly corporatized entities with a fiduciary duty to maximize profits or returns for
shareholders. A full one-quarter of Indian Discoms are wholly private concerns. This demonstrates
that the electricity purchased under the NSM Program – just like the electricity purchased under
Ontario's FIT Programme – is sold to consumers ov er a competitive electricity market and thereby
introduced into commerce.

- B-18 -

IV. India Has Failed to Demonstrate that the DCRs at Issue Are Justified Under
Paragraphs (j) or (d) of Article XX of the GATT 1994

36. As the United States has noted, India has not demonstrated that solar cells and modules are
"in short supply" either generally or locally in India within the meaning of Article XX(j) of the GATT
1994. Even though it concedes that it is having no difficulty acquiring solar cells and modules at
the current time, India argues that the DCRs are nonetheless justified because there is a risk that
India could face supply shocks in the future. But Article XX(j), by its very terms, is applicable only
with respect to products that are presently "in short supply" not products that might or could fall
into short supply sometime in the future. Other text in Article XX(j) supports this plain reading.
The reference to "general" and "local" gives two concrete areas or markets in which such current
short supply should exist. And the condition that the measure "shall be discontinued as soon as
the conditions giving rise to them h a v e c e a s e d t o e x i s t" reinforces that the short supply must
currently exist.

37. In its second written submission, India argues that a Member's "lack of domestic
manufacturing" with respect to certain products can constitute a "short supply" of that product for
purposes of Article XX(j). This is the case – per India's reasoning – even if the product is available
through importation. India's view of "products in general or local short supply" as referring to
domestically produced products rests on a misunderstanding of Article XX(j). As the United States
has observed, the term "products" in Article XX(j) is unqualified by origin, indicating that it
addresses supply of that product without respect to origin. In contrast, the provisions of the GATT
1994 that address products of a particular origin iden tify that fact explicitly. Article XX(j) contains
no such specification of the origin of the "products" that are in general or local short supply.
Therefore, India's interpretation of this provision as relating to the acquisition or distribution of
domestic products is in error.

38. Even if India were able to demonstrate that it was currently facing a bona fide short supply
of solar cells and modules, it has still failed to demonstrate that the DCRs are "essential" within
the meaning of Article XX(j). First, as practica l matter, import restrictive measures like DCRs
would tend to be antithetical to, rather than essential to alleviating a short supply, which is the
sole objective of Article XX(j). Second, although the text of Article XX(j) and its use of the term
"essential" suggest a higher threshold for invoking this provision as an affirmative defense than
other Article XX subparagraphs that merely use the phrase "necessary," India has failed to
establish that its measure meets even this lower threshold based on the weighing and balancing of
factors that the Appellate Body has done in past disputes where the question at issue was the
"necessity" of measures within the meaning of Article XX.

39. The United States has also explained that, at any rate, India has reasonably available
alternatives to the DCRs, such as the stockpiling of solar cells and modules or simply eliminating
the DCRs. India has also failed to explain why simply omitting the DCRs would undermine its
ability to obtain an adequate supply of electricity, and in fact, as the United States has shown, this
would likely be a much more effective way of doing so.

40. The United States has explained that Article XX(d) does not apply to the DCRs at issue
because Article XX(d) does not cover measures taken by a government to secure its own
compliance with its own laws and regulations. Moreover, the United States has shown that this
interpretation is supported by the text of Article XX(d) itself, and is consistent with the
interpretation of past panels and the Appellate Body, contrary to India's assertions.

41. India also has at its disposal other tools that would appear to keep India in compliance with
its various international commitments, including, inter alia , more environmental regulation,
promoting the development of other renewabl e energy sources (including geothermal,
hydroelectric, and wind), or promoting the consum ption of energy from renewable energy sources
on a non-discriminatory basis. These alternatives reveal that the DCRs at issue make only an
indirect contribution (at most) to India's compliance with its commitments. As such, the DCRs,
again, can hardly be considered "necessary" within the meaning of Article XX(d).

- B-19 -

ANNEX B-3
FIRST PART OF THE INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDIA
I FACTUAL BACKGROUND
1. The Panel Request of the United States sp ecified domestic content requirements ("DCR
Measures") for solar cells and modules in Phase I (Batches I and II), and Phase II (Batch I) of the
Jawaharlal Nehru National Solar Mission (JNNSM) as the subject matter of the dispute. The United
States claims that the DCR Measures violate India's obligations under GATT Article III:4 and TRIMs
Article 2.1. In its first written submission, the United States also claims that Article III:8(a) of the
GATT 1994 will not apply because the government of India is purchasing electricity, and not solar
cells and modules.

2. India submits that at the heart of this dispute is the basic question on the ability of
governments to design policies and schemes that balances its trade related obligations, while
ensuring development of an indigenous manufacturing base for solar cells and modules with a view
to having better control over its energy security.
1

3. The JNNSM Mission Document explains that: The National Mission is a major initiative of the
Government of India and State Governments to promote ecologically sustainable growth while
addressing India's energy security challenge. It will also constitute a major contribution by India to
the global effort to meet the challenges of climate change.
2

4. India underscores that the DCR Measures are limited in scope, and do not operate as a
prohibition on imports of solar cells and modules. In fact, India acknowledges the strong and
critical role that imports have to play in the growth of its solar power generation, and continues to
encourage and incentivize the same. Imports of solar cells and modules play a predominant role in
India's solar PV sector. Domestically manufactured cells and modules under the DCR Measures
account for only 140 MW out of the total 3110 MW of solar PV installed capacity in India.
3 India
further submits that the DCR Measures do not s eek to maximise self-sufficiency by reducing
imports of solar cells and modules; instead they aim to reduce the risks linked to dependence
solely on imports.

II INDIA'S REQUEST FOR A PRELIMINARY RULING
5. Along with its first written submission, India made a request for a preliminary ruling with a
view to ensuring that the Panel proceedings are limited to the United States' Panel Request. The
United States' first written submissions stated that India is implementing the JNNSM through
"JNNSM Programme measures". The reference to the "JNNSM Programme Measures" exceeds the
terms of reference of the Panel, which, as expl ained in the first paragraph of this summary, was
limited to the DCR Measures in the instruments in Phase I (Batch I and Batch II) and Phase II
(Batch I) of the JNNSM. Along with its first written submission, therefore, India made a request for
a preliminary ruling on the terms of reference of the Panel.

6. The United States has subsequently confirmed that the Panel Request is with respect to the
identified measures as they existed on the date of the establishment of the Panel.
4

7. India's concern however remains that the United States has not modified its request for
findings, which is not limited to the instruments identified in the Panel Request, and instead refers

1 Paragraph 1 of the WTO Agreement recognizes the right of countries to pursue policies consistent with
their respective needs and concerns at different levels of economic development, within the overall context of
the objective of sustainable development, and the need to protect and preserve the environment.
2 Jawaharlal Nehru National Solar Mission: Towards Building Solar India, Ministry of New and Renewable
Energy at p.1 (IND-1).
3 This is based on data as on January 15, 2015
4 United States' response to India's request for preliminary ruling, paras 3, 11 and 12.

- B-20 -

to "domestic content requirements contained in the JNNSM Programme measures, including both
Phase I and Phase II."5

8. The United States has acknowledged that the JNNSM is a broader initiative than the
measures identified in the Panel Request and in its first written submission,
6 but it continues to
refer to the disputed measures as the " JNNSM Programme measures ", and not as the "DCR
measures in the instruments identified in the Pa nel Request". India has therefore requested for a
preliminary ruling on the basis that the precise identification of the measure at dispute constitutes
the very foundation of any dispute, and cannot be vaguely defined. If the United States agrees
that the measures at dispute are the domestic content requirements in the instruments identified
in the Panel Request , then it cannot in the same breath continue to have an open-ended prayer
referring to domestic content requirements contained in the JNNSM Programme measures,
including both Phase I and Phase II.

9. India further submits that, flowing from the basic characterization of the measure at dispute
as 'domestic content requirements' in the legal in struments identified in the Panel Request, any
related or amending or implementing measure would be measures related to or amending or
implementing DCR within the specific instruments identified in the Panel Request (i.e., Phase I,
Batches I and II, and Phase II, Batch I). India reiterates that any one batch cannot be said to
constitute measures that are related to, amendments of, or measures implementing the DCRs in
another batch. Each batch in each phase of JNNSM is independent of the other.
7

III UNITED STATES' CLAIMS ON GATT ARTICLE III:4 AND TRIMS ARTICLE 2.1
10. The United States has argued that different conditions apply to domestic cells and modules
and imported cells and modules, and that this violates GATT Article III:4 and TRIMs Article 2.1.
WTO jurisprudence on Article III:4 is explicit that each of the requirements of that provision need
to be established. It cannot be assumed that any distinction that is based on criteria relating to
nationality or origin of products is incompatible with Article III. Furthermore, regulatory
distinctions between imported and like domestic products are, in themselves, not determinative of
whether imported products are treated less favourably within the meaning of Article III:4.
8

11. India argues that it is necessary to apply the principle explained by the Appellate Body in
Thailand-Cigarettes that "what is relevant is whether the regulatory differences distort the
conditions of competition to the detriment of imported products." 9 The analysis of whether
imported products are accorded less favourable treatment requires a careful examination grounded
in close scrutiny of the fundamental thrust and effect of the measure itself. 10 This would require
further identification or elaboration of its implications for the conditions of competition in order to
properly support a finding of less favourable treatment under Article III:4 of GATT 1994.11

12. Applying the above principle of close scrutiny of the thrust and effect of the measure, as
explained by the Appellate Body in Thailand-Cigarettes, India submits that the predominant role of
imported solar cells and modules in India's solar PV installed capacity needs to be considered. It
should be noted that imports from the United States itself make a significant contribution to India's
solar PV installed capacity, and a recent report of the United States International Trade
Commission has itself noted that JNNSM "had little negative impact on US exports of PV modules
to India".
12

5 United States' first written submission, para 94, reiterated in United States' response to India's
6 United States' response to India's request for preliminary ruling, para 28.
7 In this regard, India also submits that the JNNSM is not a singular programme implemented through a
uniform set of measures, and that it does not mandate any specific methods or approaches to achieve its aims
and objectives.
8 Appellate Body Report, EC-Asbestos, para 100.
9 Appellate Body Report, Thailand-Cigarettes, para 128.
10 Appellate Body Report, Thailand-Cigarettes, para 129, relying on the Appellate Body in US-FSC
(Article 21.5-EC), para 215.
11 Appellate Body Report, Thailand-Cigarettes- para 130.
12 Trade, Investment, and Industrial Policies in India: Effects on the U.S. Economy, United States
International Trade Commission (December, 2014) at p.179 (IND-32). The report also notes that exports by
First Solar (a major manufacturer of solar cells and modules in the US) accounted for more than 60 per cent of
US PV module exports to India in 2011, and more than 75% in 2012.

- B-21 -

13. The bidding conditions under JNNSM Phase I (Batches I and II), and Phase II (Batch I), have
not affected the opportunity for imported solar cells and modules to enter the market, and the
United States has failed to demonstrate that they are subject to less favourable treatment for the
purposes of GATT Article III:4, and consequently, no violation of TRIMs Article 2.1.

Sequence of Analysis: GATT Article III:4 and TRIMs Article 2.1
14. The United States' claim begins with Articl e III:4 of GATT and then moves to Article 2.1 of
the TRIMs Agreement. Based on the European Union's third party submission, the Panel has raised
the question of whether Article 2.1 of the TRIM s Agreement is the more specific provision for
consideration of the facts of this dispute. India su bmits that the specific claim made by the United
States (i.e., claim under GATT Article III:4, and a consequent claim under TRIMs Article 2.1),
would need to be the basis on which the Panel proceeds with its analysis.13
15. India also submits that TRIMs Article 2.1 is not a more specific provision, in that it does not
add to or subtract from GATT obligations, but merely serves to clarify that Article III:4 may cover
investment related matters.14 This is clear from the wording of TRIMs Article 2.1, which states that
any TRIM that is inconsistent with the provisions of Article III or Article XI of GATT, 1994 , shall not
be applied by a Member.
16. India further submits that the Appellate Body in interpreting Article 2 and the Illustrative List
of the TRIMs Agreement in Canada-Renewable Energy/ Canada- Feed-in Tariff Programme has
stated that "Paragraph 1(a) of the Illustrative List in the Annex to the TRIMs Agreement did not
obviate the need for the Panel to undertake an analysis of whether the challenged measures are
outside the scope of application of Article III:4 of the GATT, 1994." 15
17. In conclusion, owing to the fact that the United States has itself not made a standalone
claim under the TRIMs Agreement, and has linked the finding on TRIMs Article 2.1 to a finding of
violation under GATT Article III:4, 16 and in view of WTO jurisprudence that a finding under the
TRIMs Agreement does not obviate the need for an analysis of the measure under GATT
Article III:4, India respectfully submits that the Panel should first analyze consistency with GATT
Article III:4, and then analyze whether the measure violated TRIMs Article 2.1.
IV APPLICABILITY OF THE DEROGATION UNDER GATT ARTICLE III:8(A)
18. Without prejudice to India's arguments that the DCR Measures do not violate Article III:4 of
GATT 1994 and TRIMs Article 2.1, India respectful ly submits that the measures at issue are
justifiable under Article III:8(a) of GATT 1994 (under which the Government is allowed to derogate
from principles of national treatment in the co ntext of procurement for government purposes and
not for commercial resale).

19. The United States has argued that the deroga tion of GATT Article III:8(a) will not apply to
the present dispute. They have relied on the Appellate Body ruling in Canada-Renewable Energy/
Canada- Feed-in Tariff Programme, to support their argument.

20. India respectfully disagrees, and submits that the United States' analysis is over-simplistic.
The reasoning by the Appellate Body cannot be read out of context to fit into all sets of facts and
circumstances that are sought to be pleaded under Article III:8(a). As noted by the Appellate Body
in Japan-Alcoholic Beverages II, WTO rules are not so rigid or so inflexible as not to leave room for
reasoned judgments in confronting the endless and ever-changing ebb and flow of real facts in real
cases in the real world.
17

21. The key factual distinction between the Canada-Renewable Energy/ Canada- Feed-in Tariff
Programme and the facts before this Panel, are the nature of products in question:

13 United States first written submission, para 94
14 Panel Report, EC-Bananas III, para 7.185
15 Appellate Body Report, Canada-Renewable Energy/ Canada- Feed-in Tariff Programme, para 5.26.
16 United States' first written submission, para 94.
17 Appellate Body Report, Japan-Alcoholic Beverages, at p.31.

- B-22 -

 In Canada's case, electricity generation facilities needed to comply with "Minimum
Required Domestic Content Levels" in the development and construction of their
facilities. The "Domestic Content Level" of a facility participating in either stream of the
FiT Programme was calculated pursuant to a methodology that identified a range of
different "Designated Activities" and an associated "Qualifying Percentage." The focus of
the domestic content requirements under Canada's programme was therefore not
limited to inputs that are integral to renewable energy generation, and instead pertained
to a wider category of materials and activities relevant for the development and
construction of the power plant.
 In the facts before this Panel, the focus of the domestic content requirements is on the
generation of solar power from Indian manufactured solar cells and modules. Solar cells
and modules basically convert the energy of light directly into electricity by the
photovoltaic effect. Solar cells and modules do not have any purpose other than
generating solar power. They are therefore in tegral to the generation of solar power,
and cannot be treated as distinct from the generation of solar power.
22. It is important to note that the Appellate Body in Canada-Renewable Energy/ Canada- Feed-
in Tariff Programme has stated that:
"What constitutes a competitive relationship between products may require
consideration of inputs and processes of production used to produce the product. In
its rebuttal of Canada's claim under Article III:8(a), the European Union acknowledges
that the cover of Article III:8(a) may also extend to discrimination relating to inputs
and processes of production used in respect of products purchased by way of
procurement. Whether the derogation in Article III:8(a) can extend also to
discrimination of the kind referred to by the European Union is a matter we do not
decide in this case."18 (Emphasis added).
23. Flowing from the logic of the afore-mentioned observation by the Appellate Body, it may be
possible to envisage circumstances wherein the discrimination is on inputs used for producing a
product that it finally purchased. The Appellate Body acknowledges that there may be situations
wherein the products purchased are quite different from the inputs that have been discriminated
upon, and that it is not conclusively deciding on such situations.
19 The Appellate Body thereby left
room for interpretation based on the facts before a panel, and in doing so, it implicitly recognized
that "competitive relationship" between produc t being discriminated against and product being
purchased, is not a single inflexible rule to be applied in all circumstances for consideration under
Article III:8(a).
24. The solar PV cell/module converts the energy of sunlight directly into electricity through the
photovoltaic effect. India's submission is that solar cells and modules are integral to the generation
of solar power, and cannot be treated as distinct from solar power.
20 Solar cells and modules are
integral inputs which generate the solar power. In fact, other than cells and modules, all other
equipment used in a solar PV generation plant (inverters, electrical wiring, etc.) can be
characterized as ancillary equipment.
25. To give full effect and meaning to Article III:8(a), India respectfully submits that when a
product being discriminated against is an integral input for generation or production of the product
that is finally purchased, the derogation under Article III:8(a) should be available for such
products.
26. India also reasons that to deny the characte rization of "government procurement" to India's
method of procuring solar cells and modules mere ly because the Government does not physically
acquire or take custody of the solar cells and modules, and instead chooses to buy the solar power
generated from such cells and modules, would in advertently narrow the scope and intent of GATT
Article III:8(a).

18 Appellate Body Report, Canada-Renewable Energy/ Canada- Feed-in Tariff Programme, para 5.63.
19 Ibid.
20 India's first written submission, paras 110- 111.

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The procurement is governed by "law, regulation or requirement"

27. India accordingly requests the Panel to complete the analysis under Article III:8(a). In this
regard, India submits that the instruments and documents governing the bidding process for the
selection of SPDs under Batch I and Batch II of Phase I of the JNNSM, and under Batch I of Phase
II of the JNNSM, are a set of well-defined framew ork of requirements governing procurement of
solar power generated from solar cells and modules.
21 These would therefore qualify as "law,
regulation or requirement governing procurement" for the purposes of Article III:8(a).

The procurement is by government agencies

28. The procurement is by NVVN and SECI, wh ich, as the United States also agrees, 22 are
government agencies implementing Phase I (Bat ches I and II) and Phase II (Batch I) of the
JNNSM.

The procurement is for governmental purposes

29. The procurement by NVVN and SECI is for the governmental purpose of promoting
ecologically sustainable growth while addressing In dia's energy security challenge. India has also
explained that "promoting ecologically sustaina ble growth" and "addressing the energy security
challenge" cannot be seen as distinct from each other, and that ecologically sustainable growth is
fundamental to India's strategy to address energy security.23

30. The public functions that India seeks to di scharge through the procurement process is to
enable generation and distribution of electricity generated from solar cells and modules.
24 The
government of India's role with regard to ensuring access to renewable solar electricity is a natural
corollary of the overall challenges for India to cater to the economic development requirements of
its population in an environmentally sustainable manner.

The procurement is not with a view to commercial resale or with a view to production of goods for
commercial sale

31. Neither NVVN nor SECI are engaged in the commercial resale of the solar power procured;
rather through the bundling scheme implemented under Phase I (Batch I and Batch II), and the
viability gap funding (VGF) scheme under Phase II (Batch I), the Government ensured that the
price of sale of solar power to Discoms was at a level that would enable distribution to consumers
at an affordable price. But for the bundling scheme and the VGF scheme being built into the
process of procurement of solar power (through the involvement of NVVN and SECI respectively),
the rate at which the power would have been purchased by Discoms from SPDs and sold by
Discoms to consumers would have been significantly higher. The JNNSM Mission Document
recognized this and emphasized the need for go vernment intervention and suitable schemes to
bring down the costs of solar power.
25 The intervention by the Government in designing the
procurement programmes incorporating bundling and VGF, therefore, essentially ensured that the
s a l e o f p o w e r i s n o t l i n k e d t o t h e c o s t s o f g e n e r a t i o n o f s u c h p o w e r , s i n c e t h a t w o u l d h a v e
essentially made it unviable for Discoms to purchase such power, or for consumers to pay for the
same.

V GENERAL EXCEPTIONS TO GATT OBLIGATIONS
32. Should the Panel find that the DCR Measures are inconsistent with the provisions of
GATT 1994 and TRIMs invoked by the United States, India submits, in the alternative, that any
such inconsistency would be justified under Article XX(j) and Article XX(d) of GATT 1994.

21 India's first written submission, paras 76-83.
22 United States' Response to Panel Question, paras 4-9.
23 India has also explained that the state's role with regard to ensuring access to renewable energy is a
natural corollary of the overall challenges for the state to cater to the economic development requirements of
its population in an environmentally sustainable manner. The JNNSM Mission Document succinctly summarizes
the challenge of the Government as stemming from its tackling of crippling electricity shortages, rising price of
electricity, and the gradual shift towards imported coal to meet its energy demand, which in turn will only lead
to further increase in electricity prices: para 140, India's first written submission.
24 India's first written submission, paras 136-143.
25 India's First Written Submission, para 154.

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India's Policy Objectives

33. The DCR Measures need to be seen in the context of the overall energy scenario and the
challenges that India is currently facing: energy deficit, increasing demands for energy, and its
dependence on fossil fuels and imported materials for its energy requirements. Any dependence on
imports brings with it risks associated with supply side vulnerabilities and fluctuations. India has
an obligation to ensure energy access for its population in an ecologically sustainable manner. It
therefore needs to ensure that its move to renewable energy is achieved in a way that does not
make the generation of such power solely depend ent on import of solar cells and modules which
are intrinsic to solar power generation.

34. The key policy objectives that India seeks to achieve through the DCR Measures are:

(i) Energy Security and Sustainable Development; and
(ii) Ecologically sustainable growth, while addressing the challenges of climate change.

35. An essential corollary to the energy security objective, is the need for ensuring control over
the country's energy destiny. India understands that this will require security of supply of energy
products such as solar cells and modules which are critical components intrinsic to solar power
development. As explained earlier, India's solar PV installations predominantly rely on imported
cells and modules. This exposes India to the risks of market fluctuations in international supply.
Government intervention is required in order to minimize dependence on imports cells and
modules, and ensure domestic resilience in addressi ng any supply side disruptions. It is important
for India's pursuit of its objective of energy se curity, and ecologically sustainable growth, to
improve its resilience to the uncertainties arising from a dependence on imports of solar cells and
modules which are integral to solar PV power generation. The only manner in which this can be
addressed is by ensuring that there is adequate domestic manufacturing capacity.

36. India acknowledges that security of suppl y does not mean that it needs to locally
manufacture all of its requirements for solar cells and modules; but that it needs to have
manufacturing capacity that can effectively reduce the risks linked to import dependence. It is for
this reason that India's policies have a significant focus on encouraging imports; while ensuring
the development of indigenous manufacturing.

37. Renewable energy such as 'solar' cannot be stockpiled and stored in the same manner as
fossil fuels. From the energy security perspective, therefore, what is important is that a country
has the inherent capacity to develop renewable energy in order to secure its long-term supply.
India believes that the development of its solar manufacturing capacity is essential in order for it
to ensure resilience in its ability for continued production of solar cells and modules that can
generate solar power, and develop a bank of knowledge and resources to enable such
manufacturing.

38. India also needs to ensure ecologically su stainable growth, fundamental to which is the
concept of sustainable development, in that Indi a's energy requirements to fuel its economic
growth would need to be achieved in a sust ainable manner. The WTO Agreement has in its
preamble incorporated sustainable development as one of the guiding principles. It recognizes that
the objective of sustainable development will be pursued by countries, guided by their own needs
and concerns depending on their levels of economic development.
26

39. Against the above background of India's policy objectives, we outline the basic line of
reasoning that India seeks to advance in relation to the general exceptions available under
Articles XX(j) and XX(d) of GATT 1994.

The DCR Measures are justifiable under Article XX(j)
40. Article XX(j) allows WTO Members to take measures that are essential to the acquisition or
distribution of products in general or local short supply. This provision essentially requires
answering three questions:

 Whether the measure seeks to address the general or local short supply of a product;

26 Paragraph 1, WTO Agreement.

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 Whether the measure is essential for the acquisition or the distribution of such product;
and
 Whether the measure complies with the elements in the proviso to Article XX(j).
41. India respectfully submits that Article XX(j) would encompass situations wherein a product
available internationally is still in short supply in certain local markets, and the United States
agrees with this proposition.27

42. India argues that "general or local short supply" would occur in circumstances wherein the
product is not produced or manufactured in a particular market. However, India's submission is
not that Article XX(j) is an exception available to address any situation where a country's
indigenous manufacturing capacity for any product is low. Article XX(j) cannot transform itself to a
magic wand that would allow countries to impose import restrictions for any and all products which
it cannot produce or manufacture by itself.

43. India submits that any justification for invoking Article XX(j) would need to rest on whether
a measure is essential to redress such a situation of genera l or local short supply. The element
regarding " essential to " signifies the relationship between a measure and its objective of
acquisition or distribution of products in genera l or local short supply. India's DCR Measures needs
to be examined in the context of the overall ob jectives of energy security and ecologically
sustainable growth for which acquisition or distribution of indigenously manufactured solar cells
and modules is essential.

44. The United States has argued that short supply for the purposes of Article XX(j) cannot exist
when a product can be imported, but also acknowledges that a product available internationally
can still be in short supply in certain local markets. India submits that Article XX(j) could not have
meant that short supply will not be considered to exist when products can be imported since in a
globalized world, no product will be in short supply as it can always be imported. Such an
interpretation would render the whole of Article XX( j) redundant. In fact, the very essence of use
of the words "general or local short supply" in th e m a in p a r t o f Ar t ic le XX( j ) a n d " in t e r n a t io n a l
supply" in the proviso to Article XX(j) indicates that situations of "general or local short supply" will
occur even when there is international supply of a product.

45. The United States has argued that Articl e XX(j) should be limited only to emergency
situations. This however ignores the fact that during the review process that resulted in retention
of Article XX(j) in its current form, specific references to shortages resulting from the war, or
maintenance of government stocks, were deleted.
28 In fact under GATT, the only provision which
allows specific exceptions relating to a war is GATT Article XXI, which explicitly makes reference to
the term "war". In its current form in which Article XX(j) has been incorporated into the GATT,
there is nothing in its language that suggests that it is limited in any manner to specific situations.

46. Article XX(j) therefore needs to be understood in terms of its contemporary relevance. India
argues that the current relevance of Article XX(j) needs to take into account the evolution of
circumstances: the spectre of scarcity and shortages that may have been relevant only in
situations of 'war' or 'post-war' during the 1940s and 50s, needs to be seen in the present times in
the context of evolution of circumstances whereb y energy security and sustainable development
are important concerns globally. Winning the climate change war and effectively addressing the
challenges of energy security, while ensuring ec ologically sustainable economic growth, are the
new challenges for the 21st century world. In such a scenario, the need to have liberalized trade
and dismantle trade barriers, has to be balanced with the ability of a country to secure its energy
security through domestic manufacturing capacity of certain key products such as solar cells and
modules which are material to addressing a country's overall objective of energy security.

47. Japan has argued that Article XX(j) would apply only in the context of export restraints.
29
India has highlighted in this regard that nothing in the language or context of Article XX(j) would
suggest such a limitation. Article XI:2(a) and Article XX(i) are GATT provisions that are sought to

27 United States' Response to the Panel's Questions, para 33.
28 Article XX, GATT, Analytical Index: Guide To GATT Law And Practice (Updated 6th Ed. 1995) at
p. 593, relying on L/334, and Addendum, adopted on 3 March 1955, 3S/222, 230, para. 41.
29 Japan's third party submission, paras 15-18.

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be confined to export restraints, and their language is explicit in this regard. It would not be
appropriate to read into Article XX(j) words that would confine and narrow its meaning and scope.

48. The United States has further argued that Article XX(j) does not explicitly refer to origin
related discrimination, and that this indicates th at it addresses supply of that product without
respect to origin.
30 India notes in this regard that the United States' argument would imply that
Article XX(j), and other clauses of Article XX which are also silent on the issue of origin, can never
be applied to a situation which discriminates be tween domestic and imported products. A natural
corollary to this would mean that Article XX cannot be used to justify a violation of the National
Treatment obligation under Article III, which necessarily includes instances of origin-based
discrimination. Such an interpretation defeats the very purpose of Article XX, which is an exception
available in the context of inconsistency with any provision of GATT 1994.

49. India also submits that the concept of "s hort supply" under Article XX(j) would include
situations of existing short supply, as well as ri sks to short supply. In this regard, India further
submits that sole dependence on imported solar cells and modules brings risks associated with
supply side vulnerabilities and fluctuations. In or der to achieve energy security, India needs to
achieve domestic resilience to such risks. India respectfully submits that development of its solar
manufacturing capacity is essential in order for it to ensure resilience in its ability for continued
production of solar cells and modules that can generate solar power, and develop a bank of
knowledge and resources to enable such manufacturing. India also relies on a study by the World
Bank to explain the risks associated which notes that dependence on foreign financing for India's
solar projects is fraught with risks arising from mismatches in currency flows, as the revenues of
the solar projects are all denominated in Indian Rupees while overseas debt servicing is in foreign
currency. Furthermore, India has highlighted the un certainties in solar PV manufacturing industry
worldwide, resulting primarily from the fact that PV remains a policy-driven business, where
political decisions influence considerably the potential market off-take.
Elements of Article XX(j) proviso
50. Two elements have to be established in the context of the proviso to Article XX(j): (a) the
measure shall be consistent with the principle that all contracting parties are entitled to an
equitable share of the international supply of su ch products; and (b) such measures shall be
discontinued as soon as the conditions giving rise to them have ceased to exist.

51. The determination of what is 'equitable' to all the contracting parties in any given set of
circumstances will depend upon the facts in those circumstances."
31In this regard, India has
explained that the DCR Measures do not in any manner adversely impact the equitable entitlement
to the product by other Members, and hence this element of the proviso is complied with.
52. Inherent in the second element of the proviso to Article XX(j) is the expectation of reaching
a point in time when conditions giving rise to the short supply have ceased to exist. India does not
intend for the DCR measures to be maintained indefinitely. In fact, it has put in place systems of
review and evaluation to assess the evolution of th e JNNSM. As explained, India's overall strategy
also comprises of multiple interacting measures including measures to incentivise imports. The
importance of the values relating to ecologically sustainable growth and energy security, and the
overall strategy of encouraging trade, while carving out policy space for building India's indigenous
capacity, needs to be viewed holistically by the Panel in making its assessment.
The DCR Measures are justifiable under Article XX(d)

53. India respectfully submits that developing and maintaining the DCR Measures is integral to
its compliance with both domestic and international law obligations to ensure ecologically
sustainable growth while addressing India's ener gy security challenge, and ensuring compliance
with its obligations relating to climate change. India's domestic law obligations are those embodied
in the Electricity Act read with the National Electricity Policy, and the National Climate Change
Action Plan. India's international law obligations are those embodied in various international
instruments, including, but not limited to the WTO Agreement, the United Nations Framework
Convention on Climate Change, the Rio Declaration on Environment and Development (1992), and

30 United States' responses to the Panel's Questions, para 39.
31 eport of the Working Party "D"on Quantitative Restrictions. GATT/CP.4/33, 18 March 1950.

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the Rio+20 Document: 'The Future We Want', adop ted by the United Nations General Assembly in
2012. India's DCR Measure has been designed to secure compliance with the afore-mentioned laws
and regulations which are themselves not GATT inconsistent.

54. Developing and maintaining the DCR Measures is integral to India's compliance with
obligations under the afore-mentioned instruments to ensure ecologically sustainable growth while
addressing India's energy security challenge, and ensuring compliance with its obligations relating
to climate change. India understands the term "ecologically sustainable growth" to mean
"economic growth in an ecologically sustainable manner". India submits that environment and
development cannot be looked at in isolated compartments, and that environmental protection,
economic development, and social development are the three interdependent dimensions of
sustainable development.
32

55. Seen in this context, India submits that the concept of "sustainable development" as
embodied under the UNFCCC, the Rio documents, and the Preamble to the WTO Agreement,
encompasses within it the concept of 'ecologically sustainable growth'. India further clarifies that
ecologically sustainable growth is fundamental to India's strategy to address its energy security
objective as well, and they cannot be seen as distinct from each other. The laws and regulations
with which compliance is sought to be secure d for the purposes of Article XX(d), encompass
obligations relating to sustainable development. In contributing to the realization of India's
obligations of sustainable development (and hence ecologically sustainable growth), the DCR
Measures directly contribute towards meeting India's energy security challenge.

56. India also respectfully submits that merely because the legal instruments specified by it do
not prescribe specific implementation measures, and instead leave open flexibility for India to
design its implementation measures, does not mean they constitute an objectives that need not be
complied with, or that compliance with such obligations need not be secured.

57. India further explains that under the Constitu tion of India, acts of the executive are not
confined to areas where there is a pre-existing la w. Acts of the union executive extend to aspects
over which the Parliament has the power to enact laws. This means that the Government can suo
moto take implementing actions to secure compliance with India's international law obligations
under the afore-mentioned instruments. They therefore have direct effect in the domestic legal
system in India. Acts of the Government in implementing international law obligations pursuant to
treaties and resolutions that India has adhered to at the international level, have been recognized
under Indian law as constituting implementation of those obligations.

No Reasonable Alternatives to achieve India's Policy Objectives

58. It is important to underscore that India is not seeking to restrict all imports of cells and
modules, or limit the imports of auxiliary equipmen t required for the generation of solar power. In
implementing the DCR Measures, India is seeking to develop a functional local manufacturing base
for cells and modules, which are the essential components in a solar PV generation plant, thereby
ensuring a sustained supply of the same in the event of disruptions in imports. India is doing so in
a measured manner by weighing and balancing the importance of having a steady flow of imports
and developing a manufacturing base so that in the event imports were to be impacted for any
reason, it will continue to have the ability to sustain its solar energy programme. In this regard,
particular note needs to be taken of India's measur es relating to incentivising imports, which have
been discussed in India's submissions.

59. India further respectfully submits that at this point in time, India does not have any
reasonably available alternatives to achieve its ob jective of energy security. Building a domestic
manufacturing base for solar cells and modules is both essential and necessary for it to achieve
domestic resilience to the fluctuations and uncertainties associated with imports. India does not
have the resources to give direct subsidies to the domestic manufacturers of cells and modules.
India has weighed and balanced its various priorities, and in sum, its limited use of the DCR
Measures, while incentivising imports, provides the best possible manner in which its policy
objectives can be achieved.

32 This has also been recognized recently in the Rio+20 Outcome Document "The Future We Want",
which emphasizes the need for sustained and inclusive economic growth, social development and
environmental protection and thereby ensure overall benefits.

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The DCR Measures are consistent with the requirements of the Chapeau to Article XX

60. India reiterates the settled position under US-Gasoline that the focus of the chapeau to
Article XX is not so much on the questioned me asure or its specific contents, but rather the
manner in which that measure is applied. 33 The measures falling under the particular exceptions
must be applied reasonably with due regard both to the legal duties of the party claiming the
exception and the legal rights of the other parties concerned. 34 Accordingly, India submits that the
focus of the Panel's review of its measures und er the chapeau of Article XX should be on the
manner of application of the measures rather than on the specific contents of the measure.
61. As noted by the Appellate Body in US-Shrimp, the task of interpreting and applying the
chapeau is essentially the delicate one of locating and marking out a line of equilibrium between
the right of a Member to invoke an exception under Article XX and the rights of the other Members
under varying substantive provisions of the GATT 1994, so that neither of the competing rights will
cancel out the other and thereby distort and nullify or impair the balance of rights and obligations
constructed by the Members themselves in that Agreement. 35 The location of the line of
equilibrium, as expressed in the chapeau, is not fixed and unchanging; the line moves as the kind
and the shape of the measures at stake vary and as the facts making up specific cases differ. 36
India respectfully submits that this line of equilibrium under the current facts needs to be located
in the factual scenario that clearly demonstrates that imports of solar cells and modules play a
significant role in India, and that the DCR Me asures are applied in a very limited manner to
achieve its legitimate policy objective.
62. In this regard, India demonstrates that the DCR Measures under Batch I and Batch II of
Phase I and Batch I of Phase II are measures applied in good faith, without circumventing its
obligations towards other WTO Members, including the United States. India highlights that it is
applying the measure in a careful and limited manner, with due regard to encouraging imports of
solar cells and modules. India's endeavour has been to ensure that the measure is applied in a
limited and reasonable manner, to protect India's legitimate interests, and not as one that
circumvents its WTO obligations towards the United States and other Members. It has not been
applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination. Neither is
it a disguised restriction on international trade.
63. India's submission is that any assessment of the requirements of the chapeau of Article XX
would require an analytical process that involves putting all the variables of the situation together
and evaluating them in order to make an overal l assessment. The trade restrictiveness of India's
policies towards solar cells and modules need to be looked at as a whole to understand that India's
measure is not at all acting as a ban on imports of solar cells and modules. On the contrary,
imports of solar cells and modules play a significan t part in India's solar PV generation capacity,
and the DCR measure has been applied in a very narrow manner to achieve certain legitimate
policy objectives. At the same time, with a view to minimizing the risks of dependence on imports,
it seeks to encourage the development of domestic manufacturing of solar cells and modules; but
this is not being done in a manner that presents any threat to imports.
CONCLUSIONS
64. For the reasons stated above, India requests the Panel to conclude that the DCR Measures
do not accord less favourable treatment to imported solar cells and modules than the treatment
accorded to like products of Indian origin, and hence these are not inconsistent with Article III:4 of
GATT 1994, and Article 2.1 of the TRIMs Agreement.
65. Should the Panel uphold the United States ' claims under Article III:4 of GATT 1994, and
Article 2.1 of the TRIMs Agreement, India requests the Panel to find that the derogation under
Article III:8(a) of GATT 1994 is applicable to the DCR Measures.

33 Appellate Body Report, US-Gasoline, at p.20.
34 Appellate Body Report, US-Gasoline, at p.21.
35 Appellate Body Report, US-Shrimp, para 159.
36 Ibid.

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66. Should the Panel find that the DCR Measures are inconsistent with the provisions of GATT
and TRIMs, India requests the Panel to find that any such inconsistency would be justified under
Article XX(j) and/or Article XX(d) of GATT 1994.

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ANNEX B-4
SECOND PART OF THE INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDIA
I INTRODUCTION
1. In its second written submission, India sought to address the following specific elements in
response to the issues raised by the United States as well as questions raised by the Panel:

a. The sequence of analysis between GATT Article III:4 and TRIMs Article 2.1;
b. Interpretation of the elements of GATT Article III:8(a);
c. Interpretation of the exception under Article XX (j);
d. Interpretation of the exception under Article XX (d); and
e. Applying the principles of the chapeau to Article XX.
2. These aspects were further elaborated in India's opening and closing statements at the
second substantive meeting. India seeks to outline below the summary of its arguments.

II GATT AND THE TRIMS AGREEMENT
3. India highlighted that the Appellate Body in the Canada-Renewable Energy dispute explained
that Article 2.2 and the Illustrative List must be understood as clarifying to which TRIMs the
general obligation in Article 2.1 applies and agreed with the principle stated by the panel in that
case that Article 2.2 of the TRIMs Agreement does not impose any obligations on Members, but
rather informs the interpretation of the prohibition set out in Article 2.1.
1 India respectfully
submits that Article 2.2 and the Illustrative List cl arify the types of measures that, if found to be
trade-related investment measures, are subject to the obligation in Article 2.1. In undertaking an
evaluation under Article 2.1 of the TRIMs Agreement, the Panel would necessarily need to come to
a view about the merits of the U.S. allegations regarding GATT Article III:4.

4. Accordingly, in undertaking an evaluation under Article 2.1 of the TRIMs Agreement, the
Panel will necessarily have to come to a conclusion on the merits of the United States' claims
regarding GATT Article III:4, which involves satisfac tion of three elements: that the imported and
domestic products at issue are 'like products'; that the measure at issue is a 'law, regulation, or
requirement affecting their internal sale, offering for sale, purchase, transportation, distribution, or
use'; and that the imported products are accorded 'less favourable' treatment than that accorded
t o l i k e d o m e s t i c p r o d u c t s . C o n t r a r y t o w h a t is being suggested by the United States, these
elements cannot be presumed to exist by the mere presence of a measure that falls within the
Illustrative List to the TRIMs Agreement.

III GATT ARTICLE III:8(A)
Scope of Article III:8(a)

5. The United States has argued that India canno t resort to GATT Article III:8(a) because India
acquires electricity under the PPAs, whereas the products which are subject to requirements
affecting their sale, purchase, or use are solar cells and modules , and these products are not the
same, nor are they in a competitive relationship. India has however explained that the Appellate
Body in the Canada-Renewable Energy/ Canada-Feed-in-Tariff Programme dispute clarified that,
whether the derogation in Article III:8(a) can extend also to discrimination relating to inputs and
processes of production, is a matter, which it is not deciding upon.
2 India has submitted that the

1 Appellate Body Report, Canada-Renewable Energy/ Canada- Feed-in Tariff Programme, para 5.26, and
fn 449 to para 5.26.
2 Appellate Body Report, Canada-Renewable Energy/ Canada-Feed-in-Tariff Programme, para 5.63

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Appellate Body reasoning needs to be applied in view of the facts before the Panel which offer it
the opportunity to consider principles that would apply with reference to GATT Article III:8(a)
when the discrimination is with reference to inputs used in a product that is purchased.

6. In the context of the facts before the Panel, a mechanical application of the Appellate Body's
findings focusing only on the test of competitive relationship between the product discriminated
against and the product being purchased, will not address the distinct nature of facts before it. In
this regard, India has emphasized that the Panel needs to consider the important differences
between the prevailing factual matrix and that which was applicable under the Canada-Renewable
Energy dispute. Under the present circumstances the domestic content requirements are
applicable only to solar cells and modules, as opposed to the Canada case where domestic content
requirements were applicable cumulatively on a wide range of equipment and services required to
construct and maintain a solar power generation system.

7. India has explained that solar cells and mo dules are semi-conductor devices that produce
electricity when light falls on them. When light energy strikes the solar cell, electrons are knocked
loose from the atoms in the semiconductor material, and this is what manifests itself as electricity.
The reason this happens is because of the inherent property of the semi-conductor materials in
cells and modules, which enables them to absorb photons of light and release electrons. When
these free electrons are captured, an electric current results which is used as electricity.

8. A key question that arises is whether there is any difference at all between solar cells and
modules and other components of a solar PV gene ration system? India emphasizes that there is
indeed an important difference, in that the solar cells and modules are integral inputs for the
generation system as explained above; whereas all other components of a PV generation plant
such as inverters, mounting systems or any other electrical hardware can be classified as ancillary
equipment. Solar modules comprise of materials that have the ability to convert sunlight directly
into electric current through the photovoltaic process. Ancillary equipment such as an inverter is
required, only when the electricity so generated has to be converted from direct current to
alternating current (DC to AC). Therefore, if solar cells and modules are removed from the system,
no electricity would be generated. However, if we eliminate an inverter or for that matter any
other item, the solar cells and modules would continue to generate electricity.

Government Purpose

9. The United States has argued that India has "failed to demonstrate that the alleged
procurement is for government purposes within the meaning of Article III:8(a)." India respectfully
submits that it is absurd to assume that India is merely pursuing an "aim or objective"- as
suggested by the United States, and not dischar ging important public functions. India has
explained that the public functions sought to be performed is that of ensuring the provision of
affordable solar power for its population, and achiev ing sustainability in the same by ensuring that
there is no excessive dependence on imports of solar cells and modules which are critical
components for generation of solar energy. In dia's argument on existence of governmental
purpose and public functions is as follows:

 The procurement by the government relies on implementation of the schemes of bundling
and viability-gap funding (VGF) in Phase I (Batches I and II) and Phase II (Batch I) respectively,
which ensures that the price of solar power is re duced and made affordable for the consumer. The
clear and specific public function sought to be discharged is that of ensuring solar power
development and enabling affordable access to solar power. It is only due to the intervention by
the government of India in designing and implem enting Phase I (Batches I and II), and Phase II
(Batch I), by incorporating bundling and VGF, that made it possible to ensure that affordable and
ecologically sustainable solar power is available to its population.
 That the government of India is discharging spec ific public functions is also evident from the
fact that it has specifically designated NVVN an d SECI to implement Phase I (Batch I and II), and
Phase II (Batch I) respectively. In their capacities as the implementing agencies, these entities are
discharging the public function of ensuring a st able supply of energy and contributing towards
energy security. NVVN and SECI are governmental agencies that have been given the mandate to
discharge the specific public functions of making solar power affordable to consumers by
implementing Phase I (Batch I and II), and Phase II (Batch I) of the JNSSM Mission.

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 Further, the public functions to ensure that the development of solar power is sustainable,
and does not become excessively dependent on imports of solar cells and modules, is being
achieved by implementation of domestic conten t requirements as a part of the procurement
process to ensure that part of the electricity purchased is generated from use of domestically
manufactured solar cells and modules.

No Commercial Resale

10. India has also explained that the executio n of these important public functions were " not
with a view to commercial resale." In other words, the government did not contemplate or
perceive any commercial resale in the transaction in the design of the batches under consideration
before this Panel. Fundamental to India's implementation of the JNNSM Phase I (Batch I) and
Phase II (Batch II), was the design of the Bundling and the VGF schemes. These schemes involved
the government's dedicated contribution of the government's unallocated quota of thermal power
(in Bundling), and funds from the National Clean En ergy Fund in VGF, to enable the sale of solar
power to discoms at a significantly low cost. In the absence of Bundling in Phase I, the price of
solar power to discoms would have been in the range of Rs.12/kWh in Batch I and Rs.8.77/kWh in
Batch II, as opposed to the actual sale price to discoms of Rs.4.14/kWh to Rs.4.81/kWh, that was
achieved in Phase I. Similarly, under Phase II, absent VGF, the price at which solar power could
have been procured would have been Rs. 8.75/kWh, as opposed to Rs. 5.45/kWh. India has also
explained that any higher costs of procurement wo uld have resulted in Discoms charging higher
amounts from consumers, thereby defeating the ov erall public function of ensuring affordable
access to solar power.

11. The United States, during the second substant ive meeting of the Parties, confirmed that it
agrees with the description of the Bundling an d VGF schemes, but failed to acknowledge the
important role of these schemes in making expensive solar power affordable and accessible for
consumers. Instead, it seeks to deliberately take a myopic view of the procurement process by
stating that the sale by NVVN and SECI to discoms is a separate transaction that needs to be
looked at in isolation to arrive at an assessment of 'commercial resale'. Such reasoning is not
supported by the basic guidance set out by th e Appellate Body which underscored that the
transaction needs to be looked at in its entire ty. From the seller's, i.e., NVVN's and SECI's
perspective, India has explained that had they be en independent sellers driven by market forces,
they would not have had access to Bundling and VGF which enabled them to fulfil the Government
mandate of sale of power to discoms at a price substantially lower than the prevailing price of solar
power.

12. India has also underscored the fact that neither Bundling nor VGF were available in the
Canada-Renewable Energy dispute. These schemes fundamentally alter the nature and extent of
government involvement in the transaction, and the economics of the transaction, and cannot be
ignored.

13. As noted by the Appellate Body in the Canada-Renewable Energy/ Canada-Feed-in-Tariff
Programme dispute, the assessment of what constitutes a "commercial resale" must look at the
transaction from the seller's perspective and at whether the transaction is oriented at generating a
profit for the seller. The answer in the facts of this dispute is a clear- No. As emphasized by India,
neither NVVN nor SECI has profit as a motive in entering into the relevant transactions under
Phase I and Phase II. In fact, both were not provided any fees or remuneration to conduct the
entire bidding process- they were mandated to conduct the same as governmental agencies. Both
NVVN and SECI are therefore merely vehicles for implementation of the public function of ensuring
affordable solar power through Bundling and VGF. In the design and implementation of the
batches under consideration, they are not acting as independent entities which can determine the
market price of what they are procuring and selling.

IV THE EXCEPTION UNDER ARTICLE XX(J)
Meaning of General or Local Short Supply

14. The United States has argued that India has not demonstrated that there is a short supply of
solar cells and modules in India since these can be imported. The essence of India's argument is
that by the use of the terms "local" and "general" to qualify "short supply" in Article XX(j), the
intent of the negotiators clearly was to encompass situations where a product available

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internationally is still in short supply in certain local markets, or generally within a country or a
region. Article XX(j) addresses the scenario where short supply exists in certain markets despite
availability of imports. And one of the situations when this would occur is when there is lack of or
low domestic manufacturing. As India has explained, this is reflected in the wording of three
crucial terms in Article XX(j): "local or general short supply" in the main part of Article XX(j), and
"international supply" in the proviso to Article XX(j).

15. The United States' argument on the other ha nd renders the phrase "general or local short
supply" in Article XX(j) redundant. 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. However the negotiators chose to
refer to "general or local short supply", which clearly indicates that the provision pertains to short
supply that is distinct from "international short supply". This becomes evident when examined in
the context of the negotiating history of Article XX(j), which reveals that the initial text which read
"equitable distribution among the several consuming countries of products in short supply ", was
replaced by the current text which is phrased as an exception to which countries can have
recourse to, in order to deal with situations of "general or local short supply".

16. The United States has also argued that Arti cle XX(j) needs to be confined to an assessment
of emergency situations. India submits that the fact that Article XX(j) in its ordinary meaning does
not refer to 'emergencies' and that the provision was retained without the need for further review,
indicates that the application of Article XX(j) is not limited to war or emergency situations. India
has also pointed out that where a provision In fact under GATT, the only provision which allows
specific exceptions relating to a war, is GATT Article XXI, which explicitly makes reference to the
term "war". Article XXI also specifies "emergency in international relations" and Article XIX dealing
with "Safeguards" specifies in its title "emergency action in imports of specific products". Where
GATT negotiators sought to limit a provision to situations of war or emergency, they have explicitly
stated so, in so many words. These words cannot be imported into Article XX(j) to limit its ambit.

17. The United States also claims that India's vi ew of "products in general or local short supply"
as referring to domestically produced products , rests on a misunderstanding of Article XX(j),
because the term "products" is unqualified by origin. India has argued that GATT Article XX applies
as 'general exceptions' to all of GATT obligations. WTO jurisprudence has established that
Article XX of GATT, 1994 can be invoked to justify discriminatory treatment of domestic products
and like imported products to the extent that the 'necessity' test, or the 'essential' test, as well as
the conditions of the chapeau, are met. As noted by the Appellate Body in US-Shrimp, "Paragraphs
(a) to (j) comprise measures that are recognized as exceptions to substantive obligations
established in the GATT, 1994 because the domestic policies embodied in such measures have
been recognized as important and legitimate in character."
3

18. In the facts of this dispute, United States has alleged discrimination under GATT Article III:4
(and TRIMs Article 2.1) on the ground that India's measures allegedly provide favourable
treatment to domestically manufactured products; and then it seeks to argue that Article XX(j)
cannot be applied as an exception because the langua ge of Article XX(j) is not qualified by origin.
Such reasoning turns the entire range of exceptions under Article XX on its head since it alleges
that Article XX(j) can be available as an exception only for certain types of discrimination.

19. It is clear through the ordinary meaning of Article XX, including the provisions of
Article XX(j), that they operate as general exceptions applicable to all substantive obligations
undertaken under the GATT, 1994 and related agreements. In fact, except for Article XX(i), none
of the provisions of Article XX are qualified by origin. It is significant to understand the wording
Article XX(i), in this context as, it specifically relates to export restrictions on domestic materials in
certain specified circumstances, and its proviso specifically mandates that the restrictions shall not
depart from non-discrimination provisions of GATT. Like Article XI:2(a), Article XX(i) is clearly
limited to use of export restraints on domestic products in certain specified circumstances. Clearly,
no country can put import restraints on domestic materials. On the other hand, the wording of
Article XX(j), as in the case of Article XX(a), (b), (d ) or (g), is neutral with regard to the type of
GATT inconsistencies that can be justified under it. Consequently, Article XX of GATT can be
invoked to justify discriminatory treatment of domest ic products and like imported products to the
extent that the 'necessity' test (as used in sub-clau ses (a), (b), (d)), or the 'essential' test (in (j)),

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or requirement of relatedness (as used in sub-clause (g)) are met. For this reason, merely because
Article XX(j) does not specify origin related application, does not mean it cannot be used to justify
discrimination under Article III. There can be no a priori exclusion to the nature of inconsistencies
that Article XX(j) can be applied to.

Meaning of "Essential"

20. The United States also argues that an "essential measure," within the meaning of
Article XX(j), is a measure that is "absolutely indispensable" or "absolutely necessary." India has
explained that this test is satisfied because the DCR Measures are indeed essential for achieving
India's policy objective of energy security. India has also demonstrated that it has weighed and
balanced its various priorities and the risks relati ng to excessive dependence on imports of solar
cells and modules. India believes that the DCR Measures implemented in a limited manner,
provide the best possible way in which its policy objectives can be achieved.

21. India has emphasized that the DCR Measures are limited in scope, and do not operate as a
prohibition on imports of solar cells and modules. On the contrary, the DCR Measures need to be
seen as part of an overall comprehensive strategy comprising of multiple interacting measures,
which, as the United States acknowledges, includes measures to incentivize imports, and enable
flow of investments into the country. The importance of the values relating to ecologically
sustainable growth and energy security, and the overall strategy of encouraging trade, while
carving out policy space for building India's indigeno us capacity, needs to be viewed holistically by
the Panel in making its assessment regarding the WTO consistency of the DCR Measures.

22. India underscores that security of supply does not mean that it needs to locally manufacture
all of its requirements for solar cells and modules; but that the Government's intervention seeks to
reduce the risks linked to excessive dependence on imports of solar cells and modules, and ensure
domestic resilience in addressing any supply side disruptions.

23. India's overall strategy comprises of multiple interacting measures including measures to
incentivize imports. As India has explained, the im portance of the values relating to ecologically
sustainable growth and energy security, and the overall strategy of encouraging trade, while
carving out policy space for building India's indigeno us capacity, needs to be viewed holistically by
the Panel in making its assessment. As noted by the Appellate Body observed, that "the more vital
or important [the] common interests or values pursued the easier it would be to accept as
necessary measures designed to achieve those ends."
4 India submits that this same principle
would apply to the test of whether the DCR Measures are essential under Article XX(j).

Risks related to import dependence

24. India's basic argument is that the lack of do mestic manufacturing capacity of solar cells and
modules constitutes "local or general short supply" in India, as used in the present tense. India
has further clarified that relying predominantly on imports of solar cells and modules constitutes
an unreasonable risk of exposure to the geopolitical and financial risks associated with
predominant dependence on imports. India cannot afford to wait for imports to completely be
affected by supply side vulnerabilities, before it contemplates the action of setting up domestic
manufacturing facilities for solar cells and modules. If remedial measures such as the DCR
Measures are allowed to be instituted only at the time when the international supply of solar cells
and modules is affected, it would negate the purp ose of the exception under Article XX(j), as India
would not be capable of meeting its requirements without having the ability to manufacture solar
cells and modules.

25. Manufacturing facilities for solar cells and modules cannot spring up overnight. Inherent in
the nature of India's legitimate policy objectives, is the need for India to have an inherent capacity
to develop renewable energy in order to secure its long-term supply. India has substantiated its
arguments with evidence to demonstrate that the gl obal solar PV manufacturing industry is indeed
volatile and subject to possible shortfall in supply of cells and modules. India has explained that it
cannot afford to be complacent; otherwise it will be too late to take any remedial action. It needs
to build its manufacturing base for its own energy security.

4 Appellate Body Report, EC-Asbestos, para 172.

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Addressing the Proviso to Article XX(j)

26. The focus of the first part of the proviso to Article XX(j) is on "equitable share in the
international supply", which means, in the present context, Members' access to international
supply of solar cells and modules. This remains unaffected in the facts of this case, and hence this
requirement of the proviso is satisfied.

27. The second part of the proviso requires that the measure "shall be discontinued as soon as
the conditions giving rise to them have ceased to exist". This means that the measure sought to
be justified under Article XX(j) is a temporary measure. It is significant to note that the proviso to
Article XX(j) does not prescribe any specific timelines to assess what is "temporary". India
therefore respectfully submits that the characteri stics of the product in short supply, and reasons
pertaining to its short supply, would inform a country's determination of the duration for which the
measures needs to be maintained in accordance with Article XX(j).

28. In the facts of this dispute, India has submi tted in its previous submissions that it does not
intend for domestic content requirements to be applied indefinitely. Inherent in the proviso to
Article XX(j) is the expectation of reaching a point in time at which conditions giving rise to the
short supply have ceased to exist. In the facts of this case, the DCR Measures are clearly finite
measures pertaining to 140 MW in Phase I (Batches I and II), and 375 MW Phase II (Batch I).
These are clearly and by their very design, temporary and limited measures confined to specific
batches only.

29. India emphasizes that it does not intend for domestic content requirements to cater to
supply of cells and modules for the the entire target of the JNNSM which has been set at 100 GW
of solar power. As explained, India is taking various measures to incentivize domestic
manufacturing. At the same time, India has determined DCR measures to be essential to the
acquisition of solar cells and modules, which constitute integral inputs for solar power generation.
As India attempts to achieve ecologically sustai nable growth and energy security, it needs to
ensure that the generation of solar energy, on which it aims to increasingly depend, is not under
the influence of externalities that it has no control over. In this regard, India has carefully
designed the DCR Measures in a manner that does not seek to maximize self-sufficiency by
reducing imports of solar cells and modules; instead they aim to reduce the risks linked to
predominant dependence on imports. This weighi ng and balancing of some degree of domestic
capacity, and incentivizing continued imports is a function of national policy choice that India seeks
to continue, while ensuring compliance with its WTO obligations.

30. India is further undertaking regular review and evaluation of the domestic manufacturing
capacity with a view to assessing the growth in such capacity. Overall, its focus is to develop some
indigenous capacity while encouraging imports of cells and modules.

V THE EXCEPTION UNDER ARTICLE XX(D)
31. The United States has stated that "by its terms, Article XX(d) appears to cover only those
measures necessary for a government to enforce its laws and regulations vis-à-vis persons subject
to its jurisdiction, not measures taken to secure the government's own compliance with its laws
and regulations." The United States does not provide any authority or explanation for this
statement.

32. India underscores that the terms used in Article XX(d) is necessary to secure compliance
with laws or regulations which are not inconsistent with the provisions of this Agreement; and not
enforcement of laws and regulations vis-à-vis persons subject to its jurisdiction, as asserted by the
United States.

33. Few disputes have considered the ambit of Article XX(d), and none of these have concluded
that "to secure compliance" refers only to situations requiring enforcement of laws and regulations
vis-à-vis persons within a country's jurisdiction. While enforcement of laws and obligations vis-à-
vis persons constitutes one of the instances that amounts to "secure compliance", it does not in
any way circumscribe the wider meaning and ambit of "secure compliance"- which needs to be
given its ordinary and contextual meaning.

- B-36 -

34. The Appellate Body in Mexico-Soft-drinks has interpreted the nature of compliance required
under Article XX(d), and noted that: "In our view, a measure can be said to be designed 'to secure
compliance' even if the measure cannot be guaranteed to achieve its result with absolute
certainty. Nor do we consider that the 'use of coercion' is a necessary component of a measure
designed 'to secure compliance'. Rather, Article XX(d) requires that the design of the measure
contribute 'to secure compliance with laws or regulations which are not inconsistent with the
provisions of GATT 1994.'5 (emphasis added).

35. India therefore concludes that while enfo rcement of laws and obligations, through
compulsion can be one of the ways in which Article XX(d) is sought to be implemented; but this is
not the only way in which a country can seek to "secure compliance" with its laws, rules and
regulations. The term "secure compliance with laws, rules or regulations" necessarily encompasses
situations which may not require coercive implementation, and situations where a government
seeks to implement obligations as set forth under the legal framework.

DCR Measures are Necessary for implementation of India's obligations

36. Developing and maintaining the DCR Measures is integral to India's compliance with both
domestic and international law obligations to ensure ecologically sustainable growth while
addressing India's energy security challenge, and ensuring compliance with its obligations relating
to climate change. India's domestic law obligations are those embodied in the Electricity Act read
with the National Electricity Policy, and the National Climate Change Action Plan. India's
international law obligations are those embodied in various international instruments, including,
but not limited to the WTO Agreement, the Unit ed Nations Framework Convention on Climate
Change, the Rio Declaration on Environment and Development (1992), and the Rio+20
Document: 'The Future We Want', adopted by the United Nations General Assembly in 2012.

37. India's DCR Measure has been designed to secure compliance with the afore-mentioned laws
and regulations which are themselves not GATT inconsistent. Developing and maintaining the DCR
Measures is integral to India's compliance with obligations under the afore-mentioned instruments
to ensure ecologically sustainable growth while ad dressing India's energy security challenge, and
ensuring compliance with its obligations relating to climate change. India understands the term
"ecologically sustainable growth" to mean "economic growth in an ecologically sustainable
manner". India submits that environment and de velopment cannot be looked at in isolated
compartments, and that environmental protection, economic development, and social development
are the three interdependent dimensions of sustainable development.
6

38. Seen in this context, India submits that the concept of "sustainable development" as
embodied under the UNFCCC, the Rio documents, and the Preamble to the WTO Agreement,
encompasses within it the concept of 'ecologically sustainable growth'. India further clarifies that
ecologically sustainable growth is fundamental to India's strategy to address its energy security
objective as well, and they cannot be seen as distinct from each other. The laws and regulations
with which compliance is sought to be secure d for the purposes of Article XX(d), encompass
obligations relating to sustainable development. In contributing to the realization of India's
obligations of sustainable development (and hence ecologically sustainable growth), the DCR
Measures directly contribute towards meeting India's energy security challenge.

39. India also respectfully submits that merely because the legal instruments specified by it do
not prescribe specific implementation measures, and instead leave open flexibility for India to
design its implementation measures, does not mean they constitute an objective that need not be
complied with, or that compliance with such obligations need not be secured.

40. India has also explained that under the Consti tution of India, acts of the executive are not
confined to areas where there is a pre-existing la w. Acts of the union executive extend to aspects
over which the Parliament has the power to enact laws. This means that the Government can suo
moto take implementing actions to secure compliance with India's international law obligations
under the afore-mentioned instruments. They therefore have direct effect in the domestic legal
system in India. Acts of the Government in implementing international law obligations pursuant to

5 Appellate Body Report, Mexico-Taxes on Soft Drinks, para 74.
6 This has also been recognized recently in the Rio+20 Outcome Document “The Future We Want”,
which emphasizes the need for sustained and inclusive economic growth, social development and
environmental protection and thereby ensure overall benefits.

- B-37 -

treaties and resolutions that India has adhered to at the international level, have been recognized
under Indian law as constituting implementation of those obligations.

VI NO REASONABLY AVAILABLE ALTERNATIVES
41. India has discussed the alternatives proposed by the United States, and demonstrated how
none of the alternatives proposed achieve India's desired level of protection as addressed by the
DCR measures. A mere theoretical possibility of alternatives which imposes an undue burden on
India without taking into account ground realities and capabilities would not constitute reasonably
available alternatives. India has made a careful assessment of alternatives before it and has
adopted the present set of measures keeping in view its sovereign right to achieve a certain level
of protection, and emphasized that having an indigenous manufacturing base and the inherent
capacity and human skills to manufacture solar cells and modules, is important for India to ensure
resilience against supply-side disruptions.

42. India has also explained that most of the 'alt ernatives' proposed by the United States are in
fact already being adopted by India and these include: (a) 100% foreign direct investment; (b)
excise and custom duty exemptions and concessions on solar cells and modules to encourage their
imports, as well exemptions on other capital equipment used in the generation of solar power; and
(c) enhancing the targets for solar power generation which can incentivize the setting up of
manufacturing facilities for solar cells and modules in India. India views these as part of a
comprehensive policy comprising a multiplicity of interacting measures.

43. India has also explained that domestic content requirements are the only way in which India
can achieve the objective of energy security by creation of a manufacturing base for solar cells and
modules. Other 'alternatives', as cited by the United States, are only incentives, which India is in
fact already adopting. An incentive, by its ve ry nature, can only act as a motivation or
encouragement; it cannot ensure with any certainty that private entities in fact are motivated and
encouraged to commence manufacturing in India. But India cannot leave a goal as critical as
energy security, to the chance and expectation that domestic manufacturing facilities will in fact be
set up in India to ensure the country's resilience to the uncertainties of imports of solar cells and
modules that are so intrinsic to solar power development.

44. With regard to the United States' argument that 'stockpiling' of cells and modules is a
possible alternative, India has explained that in view of rapid evolution of technology, it makes
little logical sense for India to even consider stockpiling of solar cells and modules as a viable
option. It will only result in sunk investment in a technology that would be unviable for it to
'stockpile' and use over a period of time.

VII ADDRESSING THE CHAPEAU REQUIREMENTS OF ARTICLE XX
45. As noted by the Appellate Body in US-Shrimp, the task of interpreting and applying the
chapeau is essentially the delicate one of locating and marking out a line of equilibrium between
the right of a Member to invoke an exception under Article XX and the rights of the other Members
under varying substantive provisions of the GATT 1994, so that neither of the competing rights will
cancel out the other and thereby distort and nullify or impair the balance of rights and obligations
constructed by the Members themselves in that Agreement.
7 The location of the line of
equilibrium, as expressed in the chapeau, is not fixed and unchanging; the line moves as the kind
and the shape of the measures at stake vary and as the facts making up specific cases differ. 8
India respectfully submits that this line of equilibrium under the current facts needs to be located
in the factual scenario that clearly demonstrates that imports of solar cells and modules play a
significant role in India, and that the DCR Measures are applied only in a very limited manner to
achieve its legitimate policy objective, while having due regard to encouraging imports of solar
cells and modules.

46. In the facts of this dispute, to achieve the policy objective of energy security and
ecologically sustainable growth, India needs to buil d its domestic ability to respond to disruptions
in supply of a critical component of solar energy, viz., cells and modules. It is for this reason that
India needs to have an inherent capacity and human skills to develop solar cells and modules. This

7 Appellate Body Report, US-Shrimp, para 159
8 Ibid.

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rationale for its policy needs to be taken into acco unt by the Panel, and not a quantification of its
degree of self-reliance.

47. India does not hold the view that ther e is a quantitative threshold for finding " arbitrary or
unjustifiable discrimination". In fact, the Appellate Body in Brazil-Retreaded Tyres has noted that
assessment of the chapeau does not require exclusive focus on the effect of the discrimination; but
that instead the focus should be, as discussed in the response to question (b), on the cause or
rationale for the discrimination.
9 At the same time, the Appellate Body noted in that case that in
certain cases, the effects of the discrimination may be a relevant factor, among others, for
determining whether the cause or rationale of the discrimination is acceptable or defensible and,
ultimately, whether the discrimination is justifiable.
10 The assessment of whether discrimination is
arbitrary or unjustifiable should be made in the light of the objective of the measure.11

48. Applying this reasoning, India's submission is that any assessment of the requirements of
the chapeau of Article XX would require an analytical process that involves putting all the variables
of the situation together and evaluating them in order to make an overall assessment. The trade
restrictiveness of India's policies towards solar cells and modules need to be looked at as a whole
to understand that India's measure is not acting as a ban on imports of solar cells and modules.
On the contrary, imports of solar cells and modules play a significant part in India's solar PV
generation capacity, and the DCR measure has been applied in a very narrow manner to achieve
certain legitimate policy objectives. At the same time, with a view to minimizing the risks of
dependence on imports, it seeks to encourage the development of domestic manufacturing of solar
cells and modules; but this is not being done in a manner that presents any threat to imports.

49. The DCR measures do not constitute a " disguised restriction to trade ", to the extent that
they are not concealed or unannounced. India submits that it releases draft guidelines for
comments from stakeholders, and each set of guidelines under Phase I, Batch I and Batch II, and
Phase II, Batch I have been subject to the learni ngs from the previous guidelines. Furthermore,
keeping in view the Appellate Body's reasoning under US-Gasoline, the kinds of considerations
pertinent in deciding whether the application of a particular measure amounts to "arbitrary or
unjustifiable discrimination", may also be taken into account in determining the presence of a
"disguised restriction" on international trade.
12 Therefore, as noted above, the DCR measures do
not constitute an arbitrary or unjustifiable discrimination, or disguised restriction to trade.

- C-1 -

ANNEX C

ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the arguments of Brazil C-2
Annex C-2 Executive summary of the arguments of Canada C-5
Annex C-3 Integrated executive summary of the arguments of the European Union C-8
Annex C-4 Executive summary of the arguments of Japan C-12
Annex C-5 Executive summary of the oral statement of Korea at the meeting of the panel C-17
Annex C-6 Executive summary of the oral statement of Norway at the meeting of the panel C-20
Annex C-7 Executive summary of the third-party su bmission of the Kingdom of Saudi Arabia C-22

- C-2 -

ANNEX C-1
EXECUTIVE SUMMARY OF THE ARGUMENTS OF BRAZIL
1 PRELIMINARY RULING REQUEST
1. Brazil considers that it is for the panel to determine the appropriate scope of its own
jurisdiction, following the requirements of Article 6 of the DSU. Brazil suggests that this Panel
should carefully consider its own terms of reference in this dispute, with a view toward protecting
the effectiveness of the WTO dispute settlement process and ensuring an effective resolution of
the dispute.

2. Prior jurisprudence has delimited the scope of measures with regard to their existence at the
time of the establishment of the panel. The Appellate Body in EC – Chicken Cuts
1 established a
general rule where "t]he term 'specific measures at issue' in Article 6.2 suggests that, as a general
rule, the measures included in a panel's terms of reference must be measures that are in existence
at the time of the establishment of the panel.", whereas, in EC — Selected Customs Matters 2, the
Appellate Body summarized the two exceptions to the requirement that measures be in force at
the time of the establishment of the panel, as identified in its prior jurisprudence: "[…] a legal
instrument enacted after the establishment of the panel that amends a measure identified in the
panel request, provided that the amendment do es not change the essence of the identified
measure" and a measure 'whose legislative basis has expired, but whose effects are alleged to be
impairing the benefits accruing to the requesting Member under a covered agreement' at the time
of the establishment of the panel"

3. In Brazil's view, for implementing measures and measures not yet in force at the time of the
panel's establishment to fall within the jurisdiction of the Panel, they must partake of the same
nature or essence of the measures at issue. As the Panel in China – Raw Materials
3 in deciding its
jurisdiction stated, "[…] the Panel is entitled to examine measures that existed at the time of its
establishment as well as measures that came into effect after that date if they are of the same
essence as the original ones that formed the basis of the Panel's terms of reference."

4. This seems to be an adequate balance betw een due process concerns and the possibility of
respondents to turn changing measures into "moving targets"
4. Thus, a panel cannot make
general, abstract decisions with regard to its jurisdiction vis-à-vis future measures or
amendments. The analysis must be done in a case-by-case basis, as a wide range of substantive
issues must be taken into account in order to see if they are of the same "essence" of the original
measures.

Article III:8(a)

5. Article III:8(a) establishes a limit on the obligations set out in Article III, removing from
their scope: "[…] laws, regulations or requirements governing the procurement by governmental
agencies of products purchased for governmental purposes" as long as they are "[…] not with a
view to commercial resale or with a view to use in the production of goods for commercial sale."
Measures falling within this provision are not subject to and therefore cannot be considered
inconsistent with the provisions of that Article.

6. That was clearly established by the AB in the Canada – Renewable Energy case where it
stated that "The opening clause of Article III:8(a) uses the term 'apply' in the negative, thus
precluding the application of the other provisions of Article III to measures that meet the
requirements of that paragraph.
5" It went further to characterize Article III:8(a) as "[…] a

1 EC – Chicken Cuts, Appellate Body Report, para. 156.
2 EC – Selected Customs Matters, Appellate Body Report, para. 184.
3 China – Raw Materials, Panel Report, para. 7.15.
4 Chile – Price Bands, Appellate Body Report, para. 144.
5 Canada Renewable Energy, Appellate Body Report, para. 5.56

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derogation from the national treatment obligation of Article III for government procurement
activities falling within its scope6."

7. In this sense, the Appellate Body gave a ce rtain guidance as to the interpretation of the
provision, in stating:
"We consider that Article III:8(a) should be interpreted holistically. This requires
consideration of the linkages between the different terms used in the provision and
the contextual connections to other parts of Article III, as well as to other provisions
of the GATT 1994. At the same time, the principle of effective treaty interpretation
requires us to give meaning to every term of the provision.
8. It is Brazil's understanding that this "holistic" interpretation, by the very meaning of the
word, should not be restrictive, but should give meaning to the terms and phrases of the
provision, bearing in mind the policy space which states retained in their governmental
procurement when adhering to the GATT.
9. Brazil believes that the holistic interpretation to Article III:8(a) should be used as well in
order to determine which situations and which products should be considered governmental
purchases on a case-by-case basis.
Relationship between Article III:4 of the GATT and 2.1 of TRIMS
10. Brazil does not concur that in all cases TR IMs should be automatically applied first. Brazil
considers that the appropriate order of analysis for a Panel to follow in this case would be to begin
with Article III:4 of the GATT, then examine wh ether the measure at issue is covered by the
limitations contained in Article III:8 and, finally, whether it is justified by the general exceptions of
Article XX. Only then, if the measure is found to be inconsistent with the GATT, the Panel should
determine whether the measure is also one of the ty pes exemplified by the Illustrative List of the
TRIMs Agreement and reach the corresponding findings, if necessary.
Article XX(j)
Short supply
11. In Brazil's understanding, "products in general or local short supply" is a concept that must
be analysed in the context of the measures – and products - at issue, and in light of the purpose of
Article XX(j) as a whole. As concerns products, one could say that the "more essential", or
"important", or necessary", or indispensable" products are, the easier they may be considered in
"short supply", even at a higher level of availability than less essential products.
12. In addition, the notion of "short supply" in Article XX(j) must relate to a temporary
phenomenon, as suggested by the requirement th at measures justified by paragraph (j) be
discontinued "as soon as the conditions giving rise to them have ceased to exist". A permanent
natural phenomenon, in this sense, should not be justified under Article XX(j) – in fact,
Article XX(b) would rather come to mind. In sum, the determination of relative availability of the
products at issue must be made in light of abnorm al variations in its supply, due to economic or
non-economic factors. Even though natural disasters or wars come easily to mind, other factors
such as critical market failures should not be discarded aprioristically as justifications for
Article XX(j).
13. With that said, an imminent risk of a product becoming in short supply may allow for
countries to adopt measures less drastic than those required when a shortage is already
underway.
Essentiality
14. With regard to the "essential to" test, Brazil considers that the words connecting the
Chapeau of Article XX and the specific situations covered by the paragraphs reflect distinct degrees

6 Canada Renewable Energy, Appellate Body Report, para. 5.56

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of proximity between the policy objective pursued and the measure it justifies. At one extreme,
paragraphs (c), (e) and (g) suggest a looser rela tionship between the measure and the objective,
since it uses the term "relating to". Conversely, paragraphs (a), (b) and (d) require a much closer
nexus, as the term "necessary to" indicates and the Appellate Body has abundantly explained. The
term "essential to" suggests an even closer relation between the measure and the objective,
especially in terms of effectiveness and lack of alternatives. "Essential", in the context of
Article XX(j), is something that is both necessary and indispensable.
15. Brazil believes, furthermore that Article XI:2(a) may provide relevant context for the
interpretation of the term "essential". In the questi on at issue, their differences are highlighted. In
Article XI:2(a), the term "essential" qualifies the term "product"; therefore, according to the panel
in China – Raw Materials , the analysis is a determination of whether a particular product is
"essential" to a Member (para. 7.282). On the other hand, "essential" in Article XX(j) qualifies the
acquisition or distribution of products, not the pr oducts themselves. Therefore, the measure falling
under Article XX(j) should be read as being absolutely necessary or indispensable" (id.,
para. 7.275) for the acquisition and distribution of products, without any judgement with regard to
the product itself and its essentiality.

Equitable Share
16. Brazil believes that the "equitable share" is a reflection of the general principle that when a
restriction is put into place, "[…] Members' access to goods and materials should reflect as closely
as possible the situation that would prevail in the absence of these restrictions". However, as
Article XX lists exceptions to the obligations under the GATT, one could say that a measure falling
under Article XX(j) must be mindful of such principle, but need not ensure "equal or strictly non-
discriminatory allocation" , as it would alter its condition of "exception". The proper
interpretation of XX(j), in this sense, should be similar to that of the requirement "restrictions on
domestic production or consumption" under paragraph XX(g). While these restrictions must exist
in order to for the measure fall within the purview of Article XX(g), they need not be exactly the
same as those imposed to imported products.
Temporarily applied
17. Brazil finds the interpretation given by the Appellate Body in China – Raw Materials
7 to the
term "temporarily", in Article XI:2(a), to be of relevance to the question at issue. The Appellate
Body stated that
"In our view, a measure applied "temporarily" in the sense of Article XI:2(a) is a
measure applied in the interim, to provide relief in extraordinary conditions in order to
bridge a passing need. It must be finite, that is, applied for a limited time".
The Appellate Body8 also recalled that temporarily is understood to be "irrespective of
whether or not the temporal scope of the measure is fixed in advance."
18. Just as those measures under Article XI:2(a), measures falling under Article XX(j) must be
temporary, taken "in order to bridge a passing ne ed". Whereas there is no pre-defined limit under
Article XI:2(a), paragraph (j) seems to establish that the measure must end when the conditions
which gave rise to the shortages have ceased to exist. It is important to note, however, that while
the final limit for the measure is "pre-defined" (tha t is, the cessation of the conditions which gave
rise to the shortage), the temporal scope of a measure taken under Article XX(j) cannot be
pre-defined, as it is dependent upon the condition mentioned above.

7 China – Raw Materials, Appellate Body Report, para. 330.
8 China – Raw Materials, Appellate Body Report, para. 331.

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ANNEX C-2
EXECUTIVE SUMMARY OF THE ARGUMENTS OF CANADA
I. ARTICLE III:8(A) OF THE GATT 1994
1. Article III:8(a) of the GATT provides, under certain conditions, an exclusion for procurement
measures from the obligations in Article III. For a measure to fall within the ambit of
Article III:8(a), it must be a "law, regulation or requirement governing procurement by
government agencies of products purchased".
2. In Canada – Renewable Energy/Canada – Feed-in-Tariff Program , the Appellate Body looked
at the scope of the term "products" found in other parts of Article III to inform the interpretation of
the phrase "products purchased" under Article III:(8)(a) (para. 5.63). It found that the products
subject to less favourable treatment under Articl e III and the products purchased pursuant to a
measure covered by Article III:8(a) must be the same or in a competitive relationship
(para. 5.63). The Appellate Body added that "[w]hat constitutes a competitive relationship
between products may require consideration of inputs and processes of production used to
produce the product" (para. 5.63).
3. Canada considers that direct inputs used in the production of a product, and incorporated
into the product, should be taken into account in assessing, as the Appellate Body suggests
(para. 5.63), whether there is a competitive relationship between products purchased and the
products subject to domestic content requirements. Direct inputs can materialize into a physical
characteristic of the product that is explicitly sought in the procurement. Direct inputs that are
incorporated into the product and are physically detectable can also represent an integral part of
the product. Article III:8(a) should not, however, extend further up the supply chain to cover
discriminatory measures such as those governing the origin of the machinery or the location of the
facility used to produce the direct inputs.
4. Just as Article III:8(a) can exclude a procurement that affords less favourable treatment to
an imported product, it should also exclude less favourable treatment under a procurement that is
accorded to an imported product based on the direct inputs incorporated into the product. In such
a scenario, the product subject to the less favourable treatment is the imported product that
contains imported inputs, whereas the product being purchased is the domestic product with
domestic inputs. These products would be in a competitive relationship with each other.
5. Canada considers that the solar cells and solar modules at issue in this dispute do not
constitute direct inputs incorporated into the solar power being purchased. Solar cells and solar
modules should therefore not be taken into account in assessing whether there is a competitive
relationship between the products that are purchased and the products subject to the domestic
content requirements.
II. ARTICLE III:4 OF THE GATT 1994 AND AR TICLE 2.1 OF THE TRIMS AGREEMENT
6. In this dispute, the correct analytical sequ ence begins with an examination of whether the
measure falls within the scope of Article III:8(a). If the measure falls within the scope of
Article III:8(a), it is not subject to the obligations under Article III.
7. A measure that is not inconsistent with Article III:4, perhaps because it is a measure under
Article III:8(a), would not be inconsistent with Article 2.1 of the TRIMs Agreement. If
Article III:8(a) does not apply, the Panel should then assess whether the measure is inconsistent
with Article III:4. The measure violates Article 2.1 if it is inconsistent with Article III:4 and it is a
trade-related investment measure (TRIM) under the TRIMs Agreement, such as the measures
contained in the Illustrative List. However, the fact that a measure is on the Illustrative List is not
dispositive of a violation of Article 2.1. A violation of Article III:4 must still be shown in order to
demonstrate a violation of Article 2.1.

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8. Article 2.1 of the TRIMs Agreement is not a mo re specific provision than GATT Article III:4.
Article 2.1 is a specific provision only to the extent that it applies to a particular set of measures,
i.e. trade-related investment measures. The panels in Canada – Autos (paras. 10.63 - 10.64) and
India – Autos (para. 7.157) have rejected the argument that Article 2.1 is the more specific
provision. The panel in Canada – Renewable Energy / Canada – Feed-in Tariff Program also
rejected this argument (para. 7.120), which was upheld by the Appellate Body (para. 5.33).

III. ARTICLE XX(J) OF THE GATT 1994
A. The measure must be "essential"
9. A measure falling under the scope of Article XX(j) must be "essential to the acquisition or
distribution of products in general or local short supply". The product that is in short supply does
not have to be essential to the WTO Member adopting the measure. Rather, the measure must be
essential to the acquisition or distribution of products in general or local short supply.
10. The Appellate Body in China – Raw Materials (para. 326) applied the dictionary definition of
the term "essential" in GATT Article XI:2(a) as meaning "[a]bsolutely indispensable or necessary".
This suggests a higher standard than a measure th at is "necessary" to fulfill a policy objective
under Article XX(a), (b) or (d). A stronger connection or relationship between the measure and
the policy objective sought is required under Article XX(j) than a measure that is "necessary" to
fulfil a policy objective.
11. Article XX(j) does not require a measure to be essential to achieve the stated objectives of
the measure. Instead, Article XX(j) covers a measure that is essential for a very specific and
identified purpose: for acquiring or distributing pr oducts that are in general or local short supply.
Canada considers that there is no sufficient nexus, let alone a rational connection, between a
measure that restricts the purchase of solar cells and solar modules to those of domestic origin
and a measure that aims to facilitate the acquisition or distribution of solar cells and solar modules
in India.
12. Similar to the necessity test under other subp aragraphs in Article XX, the "essential to" test
under subparagraph (j) should still involve weighing and balancing the importance of the objective,
the contribution of the measure to that object ive and the trade-restrictiveness of the measure,

followed by a comparison of the measure with less trade-restrictive alternatives.
B. The products are in "general or local short supply"
13. The Appellate Body in China – Raw Materials (para. 325) has interpreted the phrase "in
short supply" as meaning "available only in limited quantity, scarce". For Article XX(j) to apply, a
product would need to be subject to limited availability.
14. India argues that the phrase "general or loca l short supply" must be interpreted in the light
of contemporaneous circumstances so that its lack of manufacturing capacity of solar cells and
solar modules would amount to a situation of gene ral or local short supply. India's measures do
not seem, however, to be directed at addressing a situation of shortage of supply or limited
availability. Rather, they are directed at increasing the supply of domestically-produced solar cells
and solar modules.
15. As recalled by the panel in China – Rare Earths (para. 7.359), Article XX(j) was drafted to
handle special circumstances, i.e. shortages caused by war and other emergencies. The panel
found that access to goods and materials subject to certain restrictions on trade should "reflect as
closely as possible the situation that would prevail in the absence of these restrictions"
(para. 7.359)
 and that the overarching goal or concern of provisions such as Article XX(j) is to
"reduce distortion in trade flows caused by such restrictions and ensure that Members maintain
their relative position vis-à-vis each other with respect to their market shares and access to goods
and materials" (para. 7.359). Canada considers a measure that creates new trade distortions for
the sole purpose of benefiting domestic prod uction would undermine the overarching goal
expressed by the panel in China – Rare Earths.

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C. The measure must be discontinued as soon as the "conditions giving rise to
them have ceased to exist".
16. Article XX(j) requires that the measure must be discontinued as soon as the "conditions
giving rise to them have ceased to exist". If a measure is essential to the acquisition or
distribution of products in general or local short supply, it must be removed once the conditions
that made the measure essential have subsided. This requirement provides overall context for
interpreting Article XX(j). The Appellate Body in China – Raw Materials (para. 328) noted that the
characteristics of the product that are subject to the measure, as well as factors pertaining to the
critical situation, can inform the duration of time when a WTO Member can maintain that its
measure conforms with Article XI:2(a) – a provision whose elements are analogous to those in
Article XX(j).
17. India's goal to become self-reliant and more resilient against the uncertainties arising from a
dependence on imports appears to be a long-term one for which there is no ascertainable point of
achievement. The reasons for the alleged short supply are due primarily to economic factors and
market forces. The elimination of India's dependence on solar cells and solar modules of foreign
origin is unlikely in the short-term as 90 percen t of the market is controlled by imports. The
absence of domestic production cannot constitute a condition that can give rise to a temporary
trade-restrictive measure under Article XX(j).

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ANNEX C-3
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION
I. INTRODUCTION
1. The European Union considers the objective of promoting renewable energy to be legitimate.
WTO Members should actively support it, for instance, by granting subsidies consistent with the
covered agreements, but they cannot misuse it in order to shield domestic industries to the
detriment of imported goods, specifically by imposing domestic content requirements.
II. INDIA'S REQUEST FOR A PRELIMINARY RULING
2. Regarding India's request for a preliminary ruling, the European Union is of the view that the
Panel may take into account the existence of the Draft Guidelines as part of its assessment of the
consistency of the measures at issue. Moreover, should those Guidelines be adopted during these
proceedings, the Panel would be entitled to make fi ndings about their consistency. Finally, even if
the Panel were to restrict its findings to, for example, Phase I and Phase II, Batch 1, a finding of
inconsistency would surely be relevant for future stages as well.
3. In addition, it should be pointed out that domestic content requirements seem to be
required by the Guidelines and other documents adopted within the National Solar Mission. They
do not simply result from case-by-case administrative discretion.
III. CLAIMS UNDER THE TRIMS AGREEMENT AND UNDER THE GATT 1994
3.1. Order of analysis
4. In response to the Panel's Question 1(a), the European Union believes that the analysis of
the measures at issue should begin with the TRIMs Agreement, read in conjunction with the
GATT 1994.
5. Though it is closely related to the GATT 1994, the TRIMs Agreement was designed to be the
centre of gravity for the analysis of trade-related investment measures. Article 2.1, as informed by
Article 2.2 and the Illustrative List, is more specific and detailed than Article III:4 of the
GATT 1994 in this context. According to Appellate Body's findings in EC-Bananas III , it should
therefore normally be applied first. Applying the national treatment obligation in Article 2.1 of the
TRIMs Agreement means, however, by necessity, that Article III of the GATT is applied at the
same time. This was the approach followed by the panel in Canada-FIT Programme.
6. Regardless of the order of analysis, however, the European Union considers that the Panel
should make independent findings on the compatibility of the measures at issue with the TRIMs
Agreement and/or the GATT 1994.
3.2. Article 2.1 of the TRIMs Agreement
7. The Appellate Body in Canada – FIT Programme confirmed that TRIMs falling within the
Illustrative List and thus under Article 2.2 of the TRIMs Agreement, and which do not fall within
Article III:8 of the GATT 1994,
 are inconsistent both with Article 2.1 of the TRIMs Agreement and
Article III:4 of the GATT.
8. Paragraph 1(a) of the Illustrative List applies to measures that require the purchase or use
by an enterprise (in this case, a solar power developer) of products of domestic origin (in this
case, solar cells and modules manufactured in India), compliance with which is necessary to obtain
an advantage (in this case, to conclude long-term power purchase agreements with contractually
guaranteed rates). Thus, in the European Union's view, the measures at issue squarely fall under
paragraph 1(a) of the Illustrative List. The domestic content requirements are specified by spelling

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out particular products. The fact that they may not apply to all the envisaged new generation
capacity does not change this assessment.
3.3. Article III:4 of the GATT 1994
9. In the European Union's view, the measures at issue would be incompatible with Article III:4
of the GATT 1994 even in the absence of more sp ecific provisions of the TRIMS Agreement. Solar
cells and modules manufactured in India and else where are indisputably like products, and the
measures at issue are clearly a "law, regulation or requirement" affecting the "internal sale,
offering for sale, purchase, transportation, distribution or use" of goods. Finally, according to the
Appellate Body report in Korea—Various Measures on Beef , less favourable treatment exists
whenever a measure modifies the conditions of competition to the disadvantage of imported like
products, regardless of the actual effects of the contested measure in the marketplace".
10. The European Union notes that Article III:4 prohibits incentives to favour domestic products,
such as the rule linking tax benefits to the use of domestic goods in US-FSC, the incentive to
purchase domestic automobile parts in India – Auto, or indeed the domestic content requirements
for renewable energy projects in Canada – FIT Programme.
IV. ARTICLE III:8 OF THE GATT 1994
11. In Canada – FIT Programme , the Appellate Body found that Article III:8(a) of the
GATT 1994 did not apply to domestic content requirements imposed on generation equipment
used by renewable energy producers, because the product being procured was electricity.
Generation equipment and electricity are not in a competitive relationship.
12. On this point, the measures at issue are fully analogous to those in Canada – FIT
Programme. Regardless of whether domestic content requirements cover all or only some of the
types of equipment that are used to generate elec tricity, that equipment would still not be in a
competitive relationship with electricity.
13. Moreover, in response to India's Question 2, the European Union does not share India's view
that, in addition to purchasing activities, Article III:8(a) covers a separate category of measures
that can be described as "procurement". In order for Article III:8(a) to apply, there needs to be
both purchasing and procurement. In order to benefit from Article III:8(a), it is not enough for a
government to simply purchase certain products on an ad hoc basis. In addition to that, the
purchase must be performed in the context of pr ocurement, i.e. a binding structure of laws and
regulations.
V. ARTICLE XX OF THE GATT 1994
5.1. Article XX(J) of the GATT 1994
14. The jurisprudence on Article XX(j), read in co ntext of Articles XI:2(a), XII and XVI:3 of the
GATT 1994, as well as various statements made by the Contracting Parties, speak to the relatively
limited circumstances in which that subparagraph can be invoked.
15. Article XX(j) of the GATT 1994 has so far been interpreted as relevant to shortages in the
supply of products after wards and natural disasters. As the European Union has pointed out in its
answers to Questions 3 and 4 of the Panel, as we ll as to Question 3 from India, that provision
seems to largely, although perhaps not exclusively, concern export restrictions. It does not refer to
situations of potential or hypothetical future shortages in the supply of a product, but rather to
actual or at least imminent situations of shortage. In addition, while Article XX(j) does not only
refer to "essential" products, the use of the term "essential" in relation to the measure at issue,
speaks against frivolous reliance on that provision that fails to take into account the importance of
the product concerned.
16. The scope of this particular exception seems therefore to the European Union to be narrower
than as India describes it. In essence, India argues that the measure at issue is necessary to
increase the market share of domestically produced solar cells and modules. In general terms, the
European Union points out that the fact that there may be a low capacity to produce a product in a

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Member's territory does not in and of itself mean that there is a shortage of that product in that
territory.
17. More specifically, it is difficult to see how imposing domestic content requirements on solar
energy projects is connected to the acquisition or distribution of products in short supply. Firstly, it
is not clear what product is said to be in short supply and why. Solar cells and modules appear to
be readily available globally and locally, and even if they were not, it is unclear how measures
restricting their importation could alleviate the alleged shortage in supply. If anything, they would
have the opposite effect.
18. As discussed in the European Union's answer to Question 5 from the Panel, the proviso to
Article XX(j) refers to the "equitable share" of all Members of the "international supply" of the
products concerned. The notion of an equitable share in the supply of products means that, in case
of justifiable (primarily, export) restrictions in a situation of shortage, the regulating Member
should ensure that the access of certain other Members to that product is not unfairly foreclosed.
The provision does not speak of an "equitable share" of Members in the global or local production
of a product. In that connection, the European Union recalls the findings of the Panel in China –
Rare Earths that the overarching goal of the proviso to Article XX(j) is to reduce, not increase
distortion in trade flows.
19. Finally, the phrase "shall be discontinued as soon as the conditions giving rise to them have
ceased to exist" in the proviso to Article XX(j) shows that "local or general short supply" should be
understood as a contingent and narrowly defined event of a temporary nature, and implies that a
measure can only be justified under Article XX(j) if the regulating Member has an idea, when
adopting the measure, of when and/or how the shortage will be resolved.
5.2. Article XX(D) of the GATT 1994
20. Article XX(d) entails two requirements: (i) the measure must be designed to secure
compliance with a national law or regulation which is not in itself incompatible with the
GATT 1994; and (ii) the measure must be necessary to ensure such compliance.
21. As the European Union pointed out in its answer to the Panel's Question 6, Article XX(d)
could justify certain measures taken by a government as tool for applying or enforcing another
(GATT-consistent) measure of that same government, assuming that the latter measure takes the
form of a specific legal requirement imposed on the basis of domestic law and otherwise fulfils the
requirements of Article XX.
22. This provision, however, requires India to identify a specific legal obligation, and then
explain why domestic content requirements are necessary in order to comply with it. It does not
suffice to cite the general objectives of certain laws (such as, for example, the Electricity Act's
reference to the optimal use of renewable energy). Policy documents or broad declaratory
measures (such as the National Electricity Policy) are not covered by Article XX(d). As for
international law instruments, India must demonstrate that they are incorporated domestically or
directly effective. In this sense, the European Union recalls the findings of several panels that
measures which merely secure compliance with the objectives of a law or regulation, rather than
with the laws or regulations themselves, do not fall within the purview of Article XX(d) of
GATT 1994.
23. In addition, even if it were possible for India to claim that the measures at issue are
"designed to secure compliance" with general object ives such as the security of energy supply or
sustainable development instead of specific legal obligations in the context of Article XX(d) of the
GATT 1994, it would still bear the burden of showing that they are in fact apt to secure compliance
with them.
24. The European Union also notes the Appellate Body Report in Mexico—Taxes on Soft Drinks ,
finding that a measure that is not suitable or capable of securing compliance with the relevant laws
or regulations will not meet the necessity requirement.

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5.3. Necessity
25. As discussed above, the European Union does not consider the measures at issue to be in
the scope of either Article XX(j) or Article XX(d). Even if they were, however, they would seem to
fall short of the necessity requirement under each. In connection with the Panel's Question 3(b),
the European Union notes that both subparagraphs require a close nexus between the measure at
issue and a legitimate regulatory objective, one using the term "essential" and the other
"necessary". In general terms, this difference in wording should be given meaning. In the
European Union's view, however, whatever the pr actical consequences of the difference may be,
they do not seem to be decisive in this dispute.
26. Under either of the subparagraphs of Arti cle XX, a comparison between the challenged
measure and possible alternatives should be undertaken in most cases. There are, however,
circumstances in which such a comparison may not be required. This includes, for example, cases
where a measure does not fall within the scope of the cited exception or contribute to its stated
objective at all.
27. Several remarks should be made with regard to the necessity of the specific measures at
issue. Firstly, whether "indigenous manufacturing" of electricity from renewable sources is in fact
needed for the security of energy supply is a separate issue from the alleged necessity of
"indigenous manufacturing" of solar cells and modules. Secondly, domestic content requirements
can actually endanger security of supply. Thirdly, it seems to the European Union that there is any
number of reasonably available, less trade restrictive and possibly more effective alternative
measures, such as subsidies to the research an d development of renewable energy technologies
consistent with the covered agreements.
5.4. The chapeau of Article XX of the GATT 1994
28. Finally, the measures at issue also seem to fall short of the requirements of the chapeau of
Article XX. The analysis of whether discrimination is arbitrary or unjustifiable within the meaning of
the chapeau should focus on the actual cause or rationale of the discrimination, and not of the
overall set of policies in the context of which discrimination takes place. The actual rationale of the
domestic content requirements at issue does no t seem to be sustainable development and the
security of energy supply, but benefitting do mestic manufacturers. As the Appellate Body
established in Brazil – Retreaded Tyres , their current impact in the marketplace is irrelevant to
that assessment.
VI. CONCLUSION
29. The European Union considers that this case raises important questions on the interpretation
of various provisions of the TRIMs Agreement and the GATT 1994. The European Union requests
the Panel to carefully review the scope of the clai ms in light of the observations made in this
submission.

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ANNEX C-4
EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN
I. INTRODUCTION
1. Japan welcomes the opportunity to present its views as a third party in this dispute due to
its systemic interest in the proper interpretati on of the General Agreement on Tariffs and Trade
1994 ("GATT 1994"). Japan addresses below the prop er legal interpretation of the "government
procurement" exception in Article III:8(a), the national treatment obligation in Article III:4, as well
as the general exceptions in Articles XX(d) and (j) cited by India. Japan respectfully requests that
the Panel take Japan's views into consideration.
II. ARGUMENTS
A. Article III:8(a) of the GATT 1994 Operat es as an Exception to Article III and
Requires Government Purchases "For" Governmental Purposes
2. On the proper interpretation of Article III:8( a) of the GATT1994, as a preliminary matter,
Japan submits that Article III:8(a) operates as an exception to a violation of Article III of the
GATT1994. The measures that fit the description contained therein, i.e., "laws, regulations and
requirements governing the procurement by gove rnmental agencies of products purchased for
governmental purposes and not with a view to commercial resale or with a view to use in the
production of goods for commercial sale", do not fall outside the scope of Article III. Those
measures are not inconsistent with Article III even though these measures would be contrary to
one of the other provisions of Article III, for ex ample, where imported products are not "accorded
treatment no less favourable than that accorded to like products of national origin".
3. Japan concurs with the United States that the "government procurement" exception under
Article III:8(a) does not apply here.
1 That is, the Appellate Body interpreted "products purchased"
in Article III:8(a) to mean that, as a threshold issue, if the product discriminated against under
Article III:4 of the GATT1994 is not in a competitive relationship with the product allegedly
purchased under Article III:8(a), the derogation of Article III:8(a) does not apply. 2 Here, just as
in Canada – Renewable Energy/Feed-in Tariff Program , the product discriminated against by India
for reason of its origin is generation equipment (i.e., solar cells and modules), while the product
allegedly purchased or procured is electricity. India does not purchase or procure solar cells and
modules under the Jawaharlal Nehru National Solar Mission ("JNNSM") Programme, despite its
arguments to the contrary.
3
4. In case the Panel declines to find that Article III:8(a) is inapplicable for the reason given by
the United States, Japan urges the Panel to fully consider the meaning of the term "purchased for
governmental purposes" in Article III:8(a). The Panel should recognize the importance of a true
and genuine connection between the "purchase" by a governmental agency and the "governmental
purpose" at issue. An interpretation of Article III:8(a) within the context of Article III:4 should
ensure that the exclusion for products "purchased for governmental purposes" is not so expansive
that it allows WTO Members to avoid their obligations under Article III simply by assigning a
"governmental purpose" to a particular trade-restrictive measure, e.g., by requiring a product to
be distributed to consumers through a governmental agency allegedly for the purpose of ensuring
the stable supply of such product or the supply of such product at an affordable price or of
promoting certain domestic industry. Only purchases objectively necessary to achieve a
"governmental purpose" should be considered as those " for" governmental purposes and thus, be
included within the scope of Article III:8(a). In this line, Japan considers that the requirement
"not with a view to commercial resale" serves to exclude from the scope of the Article III:8(a)
exception the purchase of products to be resold for profit for the purpose of obtaining government
revenue. It is obviously a "governmental purpose" to obtain governmental revenue, but if this

1 See United States' first written submission, paras. 74-79.
2 Appellate Body Report, Canada – Renewable Energy/Feed-In Tariff Program, para. 5.79.
3 See India's first written submission, paras. 112-114.

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were included within the scope of Article III:8(a), a Member could completely circumscribe its
national treatment obligations under Article III:4 simply by requiring that a product be distributed
through a governmental agency to consumers. Such an interpretation is not supported by the
most relevant context of Article III:8(a), i.e., Article III:4.
5. Japan submits that purchases of electricity by the Government of India under the JNNSM
Programme cannot be viewed as "purchase[s] [by a governmental agency] for governmental
purposes". As characterized by India, the governmental purposes behind the domestic content
requirement measures in Phases I and II of the JNNSM Programme
4 are to "ensur[e] availability of
affordable solar power to consumers" and "to ensure that development of solar power does not
become dependent on imports of cells and modules,"
5 which India then recasts as "promoting
ecologically sustainable growth while addres sing India's energy security challenge". 6 In order to
ensure the availability of affordable solar power to consumers, the Government of India could have
provided a subsidy to electricity companies or consumers for the supply or use of solar power, and
did not need to purchase solar power generated through domestically manufactured solar panels.
In the same vein, in order to ensure that th e development of solar power does not become
dependent on imports of cells and modules, the Government of India could have provided
subsidies to manufacturers of such cells and modu les, and again, did not need to purchase solar
power.
7
6. Finally, the measures at issue in the present dispute are indistinguishable from those at
issue in Canada – Renewable Energy/Feed-in Tariff Program for purposes of assessing whether
they are purchases "for" governmental purposes as well. In Canada – Renewable Energy/Feed-in
Tariff Program , as Japan had argued, Ontario's alleged purchase of electricity under the FIT
Programme and Contracts was not necessary to achieve its stated purpose of securing a stable
supply of electricity from clean sources.
8 Similarly, here, to ensure the availability of affordable
solar power to consumers or to ensure that the development of solar power does not become
dependent on imports of cells and modules, the go vernment of India also need not purchase solar
power.9
B. "Less Favourable Treatment" Under Article III:4 of the GATT 1994 Exists When a
Measure Incentivizes the Use of Local Goods
7. The United States submits that the domestic co ntent requirements in Phases I and II of the
JNNSM Programme are inconsistent with Article III:4 of the GATT 1994 because they accord less
favorable treatment to imported solar cells and modules as compared to Indian-made solar cells
and modules.10 As a preliminary matter, Japan believes that the analysis of the measures at issue
should begin under Article III:4, not under Article 2.1 of the TRIMs Agreement. In this regard,
Japan agrees with the United States that the domestic content requirement measures at issue
facially create "requirements" to use local goods and are therefore inconsistent with Article III:4.
8. Further, Japan submits that, even in the hypo thetical case where the use of Indian goods
were not technically "required" by the JNNSM Programme, the fact that the Programme's domestic
content provisions incentivize the use of local goods partially affords "less favourable treatment" to
imported goods and thereby still violates Article III:4.

4 India submits in its preliminary request that the United States intentionally expands the terms of
reference of the Panel through the reference to the JNNSM Programme rather than using the specific reference
to the domestic content requirement measures in Phases I and II of the JNNSM Programme. Japan is of the
view that there seems to be no disagreement between the Parties that domestic content requirements under
Phase I (Batch 1), Phase I (Batch 2) and Phase II (Batch 1) of the JNNSM are at issue. The term "domestic
content requirement measures in Phases I and II of the JNNSM (Programme)" or simply "domestic content
requirements" in this submission is used to express the above common understanding.
5 India's first written submission, para. 142.
6 India's first written submission, para. 143.
7 Japan is aware of India's argument that subsidies allowed under Article III:8(b) are not an
economically feasible option and thus there is no measure that could potentially be as effective as DCR in
achieving the objective of incentivizing local manufacturing of cells and modules (See India's first written
submission, p. 91.). Japan is not persuaded by India's contention.
8 See Appellate Body Reports, Canada – Renewable Energy/Feed-In Tariff Program, para. 2.70.
9 Japan's third party submission, para. 5.
10 See United States' first written submission, para. 45.

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9. Japan submits that the standard under Article III:4 is broader than the identification of a
requirement to use local goods. At the crux of the Article III:4 analysis is whether the measure at
issue – be it a requirement or more subtle regu lation – accords "less favourable treatment" to
imported goods. An incentive to use domestic goods by virtue of a domestic content provision, as
exists under the JNNSM Programme, is sufficient to establish that a measure accords "less
favourable" treatment within the meaning of Article III:4.
10. The "less favourable treatment" analysis hinges upon whether the domestic content
requirement measures under the JNNSM Programme modify the conditions of competition in the
relevant market to the detriment of imported products.11 By requiring the use of India-origin solar
cells and modules, domestic content requirement measures under the JNNSM Programme
necessarily create incentives, or a purchasing preference, among solar project developers. Thus,
the provisions affect conditions of competition in a way that disadvantages imported solar cells and
modules as compared with like goods of Indian origin, thereby according "less favourable
treatment" to imported goods.
11. In India – Autos , the panel examined measures requiring Indian car manufacturers to
purchase Indian parts and components to achieve a level of indigenization of components up to a
minimum level of 50% in the third year or earlier and 70% in the fifth year or earlier in order to
obtain import licenses. The panel found that "the very nature of the indigenization requirement
generates an incentive to purchase and use domestic products and hence creates a disincentive to
use like imported products " , a n d t h a t i t w a s " m o r e t h a n l i k e l y t o h a v e s o m e e f f e c t o n
manufacturers' choices as to the origin of parts and components to be used in manufacturing
automotive vehicles", as the manufacturers would "need to take into account the requirement to
use a certain proportion of products of domestic origin".
12 Under these circumstances, the panel
found that imported products could not compete on an equal footing with Indian-origin parts and
components, and therefore, the indigenization re quirement clearly modified the conditions of
competition of domestic and imported parts and components in the Indian market in favor of
domestic products.
13
12. Similarly, domestic content requirement measures under the JNNSM Programme generate
an incentive to purchase and use domestically produced renewable energy generation equipment
and hence create a disincentive to use imports of such equipment manufactured outside of India.
Under these circumstances, imported products could not compete on an equal footing with Indian-
origin equipment, and therefore, the domestic content requirement measures clearly modified the
conditions of competition of domestic and imported equipment in the Indian market in favor of
domestic products. Thus, whether or not less favorable treatment is the result of an explicit
requirement, India has altered the conditions of competition in favor of India-produced renewable
energy generation equipment to the detriment of such equipment produced elsewhere. Japan
submits India's assertions to the contrary in its first written submission – including that "imported
cells and modules have a dominant share of the market"
14 – do not address the fact that India's
measures create incentives that affect negatively the conditions of competition for imported goods.
Accordingly, in addition to the United States' re asons, in Japan's view, India's domestic content
requirement measures under the JNNSM Programme violates Article III:4.
C. Neither Article XX(j) Nor Article XX(d) Should Be Interpreted to Exempt Import
Substitution Measures
13. In its first written submission, India argues that, should the Panel find that its measures are
inconsistent with Article III of the GATT 1994 (and the TRIMs Agreement), any inconsistencies
would be justified under the general exceptions of Article XX(j) or Article XX(d) of the
GATT 1994.
15 Japan is deeply concerned about the position advanced by India which would
greatly expand and distort the appropriate scope of these exceptions. For the reasons described
below, Japan urges the Panel to reject India's interpretation.

11 See Appellate Body Report, Korea – Various Measures on Beef, para. 135. See also Panel Report,
Turkey – Rice, para. 7.232.
12 Panel Report, India – Autos, para. 7.201(emphasis added).
13 See Panel Report, India – Autos, para. 7.202 (emphasis added).
14 India's first written submission, para. 93.
15 India's first written submission, para. 165.

- C-15 -

1. Article XX(j) Is Limited to Export Restrictions in "Emergency Situations", and
Cannot Justify Import Substitution Measures
14. Beginning with Article XX(j) of the GATT 1994, Japan considers that India's attempt to use
this general exception to justify an import substitution measure, specifically through the
mechanism of a domestic content requirement, must fail. Japan submits that, by its terms and in
context of the GATT 1994, Article XX(j) addresses export measures that restrict access to, and
secure an equitable share of, the supply of a produc t. This is contrary to India's position, which
assumes that the article is referring to import restrictions.
15. Article XX(j) provides a general exception for measures "essential to the acquisition or
distribution of products in general or local short supply". 16 The term "products" is not qualified in
any way. Thus, there is no language in Article XX(j) that restricts the scope of the term "products"
to only domestically manufactured products. Rather, it is plain that the term "products" covers
both domestically manufactured and foreign manufactured imported products. Moreover, the
proviso to Article XX(j) references "the international supply of such products" indicating that the
term "products" should capture products manufactured globally.
16. India appears to assume that the term "products" may cover only domestic products and
therefore Article XX(j) may be used to justify impo rt restrictions. However, there is no basis for
that assumption. Japan considers that the text of Article XX(j) leads to the understanding that the
term "products" references products manufactu red globally, and the consequences of such
understanding should be that Article XX(j) cannot be used to justify an import substitution
measure due to the alleged limited domestic manufacture of a product.
17. Further, Japan notes that Article XX(j) sets forth "the principle that all Members are entitled
to an equitable share of the international supply of such product". According to this text, it is
difficult to envisage a situation where import restrictions may pose an obstruction to Members'
access to "an equitable share of the international supply of [such] product".
18. Article XX(j) still has a raison-d'etre, which is different from Article XI:2(a) of the
GATT 1994, even when it permits only export re strictions. Japan submits that Article XI:2(a)
allows a Member to employ an export restriction to prioritize domestic demand in a rather limited
situation, or for a limited product scope. The Appellate Body found in China – Raw Materials that
"the kinds of shortages that fall within Article XI:2(a) are more narrowly circumscribed than those
falling within the scope of Article XX(j)".
17 Further, under Article XI:2(a), it is the product at issue
that must be "essential" to the exporting Member, while under Article XX(j), it is the measure at
issue that must be "essential" to the acquisition or distribution of products in general or local short
supply. Finally, Japan does not understand Article XI:2(a) to have been prepared to address
"temporary situations arising out of … war", like Article XX(j).
18
19. Japan's position that Article XX(j) addresses ex port measures is borne out by the drafting
history of Article XX(j). The report on discussions in the London session of the Preparatory
Committee on the Charter of the International Trade Organization discussed what became
Article XX(j) in the context of "a post-war transitional period [when] it should be permissible to use
[quantitative] restrictions to achieve the equitable distribution of products in short supply …".
19
When the GATT 1947 contracting parties reviewed in 1960 the continuing need for the provision,
they agreed "that it would be appropriate to retain such provisions to enable contracting parties to
meet emergency situations which may arise in the future". 20 Logically, the measures that the
GATT 1947 contracting parties considered were those that they would need to take to restrict
exports to meet "emergency situations".

16 Emphasis added.
17 Appellate Body Reports, China – Raw Materials, para. 325.
18 Note by the Director-General, Article XX – Sub-Paragraph (j), L/3276, 2 December 1969, para. 2
(citation omitted).
19 Analytical Index of the GATT, p. 592, quoting London Report, p. 11, para. III.C.1(b).
20 Analytical Index of the GATT, p. 594, quoting the Decision of the CONTRACTING PARTIES at the
Sixteenth Session, BISD 9S/17.

- C-16 -

20. Even assuming that India's interpretation is correct, and that Article XX(j) applies to import
substitution measures, the facts before the Panel hardly suggest that the products at issue are in
short supply in India.
21. But even if the products were in short supply locally, the Panel should reject the application
of Article XX(j) where the limitation on local supply is due to the scope of local manufacturing
capacity, particularly as India asserts that its domestic content requirements are essential to
achieving broader policy objectives such as energy security or sustainable development which does
not appear to be relevant to "the acquisition or distribution of products in … local supply". First,
India cannot support the notion that its domestic content requirements are essential to achieve its
stated policy objectives so as to cope with a short supply situation, given that GATT-consistent
alternative measures – encouraging imports of the products at issue or offering subsidies to
domestic producers – are readily available to increase the supply of solar cells and modules to
promote energy production. Second, shifting incentives to increase domestic production would not
normally increase supply quickly enough to reli eve the kinds of "emergency situations" that the
GATT 1947 contracting parties had in mind when they decided to maintain Article XX(j) in the
1960s.
22. Finally, India also bears the burden of establishing that its domestic content requirement
measures conform with the chapeau of Article XX of the GATT 1994. In other words, even if India
has demonstrated that its measures satisfy the requirements of paragraph (j), the measures must
also "not be applied in a manner which would constitute arbitrary or unjustifiable discrimination
between countries where the same conditions prevail or a disguised restriction on international
trade". Some paragraphs of India's first written submission address the chapeau; however India
has offered very little or almost no defense of its domestic content requirement measures under
the chapeau. India has not even attempted a sincere effort to demonstrate that its measures
meet its burden with respect to the chapeau. Accordingly, India failed to demonstrate how a
Member could justify the use of import substitution measures – essentially protectionist policies –
under the chapeau of Article XX.
2. Local Content Requirements Are Not "Necessary" Measures that Qualify
Under Article XX(d)
23. Japan submits that the Panel should also reject India's defense under Article XX(d) of the
GATT 1994, which is limited to measures "necessary" to secure compliance with other, WTO-
consistent requirements. While it may be WTO-consistent to promote local production, it is not
necessary to impose import substitution measures to do so. As noted above, a Member may
afford production subsidies to domestic producers. Further, Japan notes that the phrase "to
secure compliance" in Article XX(d) has been interpreted to mean "to enforce compliance",
21 and
based on that interpretation, Japan does not believe Article XX(d) permits India to undertake a
measure that enforces India's own compliance with WTO-consistent laws or regulations. Finally,
the term "laws or regulations" in Article XX(d) refers to domestic laws or regulations, and includes
international law only insofar as that international law is implemented in a Member's domestic laws
or regulations.
22
III. CONCLUSION
24. Japan respectfully requests the Panel to take these comments into account in interpreting
the relevant provisions of Articles III and XX of the GATT 1994.

21 Panel Report, Mexico – Taxes on Soft Drinks, para. 8.175. See also GATT Panel Report, EEC – Parts
and Components, para. 5.18.
22 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 69.

- C-17 -

ANNEX C-5
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF KOREA
AT THE MEETING OF THE PANEL*
Mr. Chairman and Members of the Panel,
1. The Republic of Korea ("Korea") appreciates th is opportunity to present its views as a third
party. Korea would like to focus its statement on two systemic issues: the order of analysis,
raised through the Panel's advanced question, and the Panel's terms of reference, raised through
the India's request for a preliminary ruling.
2. With respect to the Panel's advanced question on the order of analysis, Korea is mindful in
sharing the EU's view in paragraph 24 of its third party written submission that it began its
analysis under paragraph 1(a) of the Illustrative List of the TRIMS Agreement because paragraph
1(a) is more specific than Article III:4 of the GATT 1994 is. In the footnote 30 of its submission,
the EU cited paragraph 5.32 of the Appellate Body Report in Canada – Feed-In Tariff Program to
support its approach. However, it is not clear to us how the footnote 30 works in support of the
EU's approach.
3. Korea does not believe that this Panel must follow the order of analysis employed in Canada
– Feed-In Tariff Program. Rather, with respect to the order of analysis, Korea would like to remind
the Panel of the Appellate Body's guidance in Canada- Wheat Exports and Grain Imports . The
Appellate Body in that dispute stated that "… in each case it is the nature of the relationship
between two provisions that will determine whether there exists a mandatory sequence of analysis
which, if not followed, would amount to an error of law. In some cases, this relationship is such
that a failure to structure the analysis in the proper logical sequence will have repercussions for
the substance of the analysis itself…."
1
4. Also, in addressing the sequence of Article XVII:1(a) and (b) of the GATT 1994, the
Appellate Body continued that "[a]s a general principle, panels are free to structure the order of
their analysis as they see fit. In so doing, panels may find it useful to take account of the manner
in which a claim is presented to them by a complaining Member. Furthermore, panels may choose
to use assumptions in order to facilitate resolution of a particular issue or to enable themselves to
make additional and alternative factual findings and thereby assist in the resolution of a dispute
should it proceed to the appellate level."
2
5. Although there is no specific rule in the DSU of how to sequence the claims raised by a
complainant, a panel is required to "structure the analysis in the proper logical sequence," as the
Appellate Body directed in the previous dispute. In this regard, Korea would like to note that the
Appellate Body guided panels to "take account of the manner in which a claim is presented to
them" by a complainant. In addition, the Appellate Body stated that "panels may choose to use
assumptions or make additional and alternative factual findings, if necessary for prompt and
effective resolution of a dispute." The proper logical sequence, in Korea's view, should address the
core issues raised by the complainant that must be resolved in order to settle the dispute promptly
pursuant to Articles 3.3 and 3.7 of the DSU.
6. Korea further notes that a false assumption made by a panel and ensuing false order of
analysis may engender false judicial economy, which will diminish the rights and obligations of the
parties to the dispute. Although the Appellate Body allowed a discretionary power to a WTO panel
in structuring the order of analysis, the panel must structure its order of analysis so as to
effectively address the claims raised by the complainant. Particularly, a panel must consider the
manner in which a claim is presented to them by a complainant. In this specific dispute, the

* Korea requested that its oral statement serve as its executive summary.
1 Appellate Body Report, Canada — Wheat Exports and Grain Imports (WT/DS276/AB/R), para. 109.
2 See Appellate Body Report, Canada — Wheat Exports and Grain Imports (WT/DS276/AB/R),
para. 126.

- C-18 -

United States first raised a detailed claim of discrimination pursuant to Article III:4 of the GATT
1994. Korea sees no reason to reverse the manner of presentation made by the United States.
7. Furthermore, Article 2.1 of TRIMS states that "[w]ithout prejudice to other rights and
obligations under GATT 1994, no Member shall apply any TRIM that is inconsistent with the
provisions of Article III or Article XI of GATT 1994." An ordinary reading of Article 2.1 does not
invite us to start the analysis from Article 2.1 of the TRIMS Agreement. It seems more logical that
one may first analyze the consistency of Article III or Article XI, and then move forward next
question of whether a specific measure violated Article 2.1. This seems to be the complainant's
manner of presentation.
8. In sum, in Korea's view, this Panel is no t required to follow the sequence adopted in Canada
– Feed-In Tariff Program. A panel must structure the order of analysis on a case by case basis, as
guided by the Appellate Body. The United States first provided a detailed argument with respect
to Article III:4 of the GATT 1994 and then cont inued its arguments on Article 2.1 of TRIMS
Agreement, followed by the claim under the Annex to the TRIMS Agreement. Considering the
Appellate Body's guidance and the manner in which the United States presented its claim, the
sequencing suggested by the EU, does not seem to be appropriate in this dispute.
9. Next, with respect to India's request for a preliminary ruling, Korea would like to refresh the
notion that the fundamental principle of the WTO dispute settlement procedures is to reach a
positive resolution promptly.
10. In the present dispute, India argued that "JNNSM Programme" or "JNNSM Programme
measures" is not a measure challengeable before the Panel. India provided two reasons. First,
the term, "JNNSM Programme," is not identified in the panel request but first appeared in the
United States' first written submission. Second, the nature of the JNNSM is dynamic and evolving,
and thus is not an established measure to be challenged.
11. In principle, a panel request must be the basis for respondent's defense and the panel's
analysis, unless there is successful request for a pr eliminary ruling by the respondent. As noted
by the previous panels and the Appellate Body, on e of the main functions of panel request is to
provide adequate notice for respondent to make it s case. Obviously, respondent can legitimately
challenge complainant's panel request if it does not identify proper measures at issue and legal
basis sufficient to present the problem clearly.
12. Although there is no provision in the DSU governing the preliminary ruling procedures,
panel's working procedures specify and address the process if necessary. Generally, request for a
preliminary ruling must be done before or upon su bmitting first written submissions. If not raised
at that stage, it should be assumed that responde nt accepted the terms of reference as structured
by complainant.
13. Having said that, Korea would like to express a concern on the problem of 'moving target.'
Korea wishes that the dynamic and evolving natu re of the JNNSM as claimed by India would not
negatively affect the fundamental principle of the WTO dispute settlement procedures.
14. As the Appellate Body in Chile – Price Band System endorsed the approach taken by the
panel in Argentina – Footwear (EC), if an amended measure remains essentially same, it would be
appropriate to rule on the current measure in force "to secure a positive solution to the dispute
and to make sufficiently precise recommendations and rulings so as to allow for prompt
compliance."
3 Of course, the Appellat e Body in EC – Chicken Cuts has cautioned on the broad
terms of reference so as to prevent frivolous catc h-all provision in the panel request. In that
dispute, the Appellate Body distinguished the measures from its decision in Chile – Price Band
System and stated that "the notion of measures having the 'same effect' is too vague and could
undermine the requirement of specificity and the due process objective enshrined in Article 6.2."4
15. In its panel request, the United States identified specific measures "as well as any
amendments, related measures, or implementing measures." 5 Whether or not 'JNNSM

3 See Appellate Body Report, Chile – Price Band System (WT/DS207/AB/R), paras. 142-143.
4 See Appellate Body Report, EC – Chicken Cuts (WT/DS269,286/AB/R), paras. 158-160.
5 Request for the Establishment of a Panel by the United States, 15 April 2014 (WT/DS456/5).

- C-19 -

Programme' or 'JNNSM Programme measures' is any amendments, related measures, or
implementing measures would be a question of fact . Korea considers, however, that mere change
of name should not be decisive in determining whether a measure is included within the terms of
reference. In determining the scope of terms of reference, this Panel must carefully consider the
WTO jurisprudence with respect to the problem of 'moving target.'
16. This concludes Korea's oral statement. Thank you.

- C-20 -

ANNEX C-6
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF NORWAY
AT THE MEETING OF THE PANEL*
Mr. Chair, Members of the Panel,

1. Norway welcomes this opportunity to present its views on the issues raised in these panel
proceedings. Norway did not present a written th ird party submission to the Panel, and will
therefore in this oral statement briefly set out its views on one legal issue; the applicability of the
GATT Article III:8(a).1
2. The United States claims that the JNNSM Programme's domestic content requirements for
solar cells and solar modules are contrary to India's obligations under the GATT Article III:4, and
that the measures cannot be justified by the "government procurement" derogation under the
GATT Article III:8(a). India disagrees with these claims.
3. According to the GATT Article III:8(a), Article III "shall not apply to laws, regulations or
requirements governing the procurement by gove rnmental agencies of products purchased for
governmental purposes and not with a view to commercial resale or with a view to use in the
production of goods for commercial sale".
4. In Canada – Renewable Energy/Feed-In Tariff Program , the Appellate Body found that "the
product of foreign origin allegedly being discriminated against must be in a competitive
relationship with the product purchased", in order for the derogation of Article III:8(a) to apply.
2
In that case, the products discriminated against because of their origin were generation
equipment, while the product procured was electricity. The Appellate Body thus found that these
products were not in a competitive relationship with each other. Accordingly, the relevant
measures were not covered by Article III:8(a).
5. On this basis, the United States asserts that solar cells and solar modules (the products
discriminated against) are not in a competitive relationship with electricity (the products
procured). The United States thus argues that the local content requirements relating to solar cells
and solar modules of the JNNSM Programme are not covered by the derogation of Article III:8(a).
3
6. Norway finds this line of argument to be persuasive. As the Appellate Body has held, the
crucial question is whether the relevant products are in a competitive relationship with each other.
Norway agrees with the European Union that India's arguments aim at distinguishing the present
case from that of Canada – Renewable Energy/Feed-In Tariff Program, based on the whether the
products discriminated against are directly used in the generation of power or not. 4 India, as
Norway understands it, seems to argue that it is sufficient for the application of Article III:8(a) for
the products to be somehow related to each other. This would however undermine the relevant
criteria set out by the Appellate Body, which qualified the type of relationship relevant for the
application of the provision. Some form of relationship connected to the production process is not
enough; there needs to be a competitive relationship between the products in question. As stated
by the European Union; a different interpretation would indeed open the doors for discrimination
by proxy.5
Mr. Chair, Members of the Panel,

* Norway requested that its oral statement serve as its executive summary.
1 The General Agreement on Tariffs and Trade 1994 ("the GATT").
2 Appellate Body Reports, Canada – Certain Measures Affecting the Renewable Energy Generation
Sector, Canada – Masures Relating ot the Feed-In Tariff Program, WT/DS412/AB/R, WT/DS426/AB/R, adopted
24 May 2013, para. 5.79.
3 United States' First Written Submission, paras. 78-79.
4 European Union's Third Party Written Submission, paras. 37.
5 European Union's Third Party Written Submission, para. 38.

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7. Having cited past Appellate Body practice, Norw ay would like to recall the role of precedents
in the WTO dispute settlement system. The Appellate Body has underlined "that adopted panel and
Appellate Body reports create legitimate expectations among WTO Members and, therefore, should
be taken into account where they are relevant to any dispute. Following the Appellate Body's
conclusions in earlier disputes is not only appropriate, it is what would be expected from panels,
especially where the issues are the same. This is also in line with a key objective of the dispute
settlement system to provide security and predic tability to the multilateral trading system." 6
Norway would add that following previous reports also ensures fewer disputes and preserves both
the system and the systemic function of the Appellate Body.
Mr. Chair, Members of the Panel,
8. This concludes Norway's statement here today. I thank you for your attention.

6 Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology,
WT/DS350/AB/R, adopted 2 June 2009, para. 362 (emphasis added).

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ANNEX C-7
EXECUTIVE SUMMARY OF THE THIRD-PARTY SUBMISSION
OF THE KINGDOM OF SAUDI ARABIA*
I. INTRODUCTION
1. The Kingdom of Saudi Arabia has joined as a third party in this dispute to provide its views
on systemic issues relating to the interpretation of the "chapeau" of Article XX of the General
Agreement on Tariffs and Trade 1994 ("GATT"). Th e Kingdom takes no position on the merits of
the claims that are based on the particular facts of this case.
II. THE CHAPEAU OF GATT ARTICLE XX ESTABLISHES STRICT CONDITIONS FOR THE
JUSTIFICATION OF A MEASURE
2. The analysis under the chapeau of Article XX requires careful scrutiny of a challenged
measure in strict relation to the criteria of th e chapeau because it acts as an independent and
express limiting condition on a Member's right to justify the measure under one of the enumerated
exceptions. As stated by the Appellate Body, "[t]he language of the chapeau makes clear that
each of the exceptions in paragraphs (a) to (j) of Article XX is a limited and conditional exception
from the substantive obligations contained in the other provisions of the GATT 1994, that is to say,
the ultimate availability of the exception is subjec t to the compliance by the invoking Member with
the requirements of the chapeau".
1
3. The chapeau also serves an important interest – "to ensure that Members' rights to avail
themselves of exceptions are exercised in good faith to protect interests considered legitimate
under Article XX, not as a means to circumvent one Member's obligations towards other WTO
Members".
2 The Appellate Body recently added that "[t]he function of the chapeau of Article XX of
the GATT 1994 is to prevent the abuse or misuse of a Member's right to invoke the exceptions
contained in the subparagraphs of that Article". 3 The chapeau thus demands strict application of
the three standards therein: "first, arbitrary discrimination between countries where the same
conditions prevail; second, unjustifiable discrimination between countries where the same
conditions prevail; and third, a disguised restriction on international trade".
4
4. The chapeau thus sets a separate, three-part test that a measure must meet. This test is
higher than that of provisional justification under the Article's exceptions, and it must be assessed
independently of such justification.
5 As stated by the Appellate Body, "the ultimate availability of
the exception is subject to the compliance by th e invoking Member with the requirements of the
chapeau".6
III. THE CHAPEAU OF GATT ARTICLE XX RE QUIRES A CONTEXTUAL ASSESSMENT OF
THE MEASURE IN QUESTION
5. The Kingdom is further of the view that in judging whether a challenged measure satisfies
the chapeau of Article XX, a panel should underta ke a fact-specific contextual assessment of the
measure in question. As stated above, the chapeau is a critical element of any Article XX analysis,
but its strict disciplines are not fixed and instead vary according to the specific facts of a particular

* Saudi Arabia requested that its third party submission serve as its executive summary.
1 Appellate Body Report, US – Shrimp, para. 157. (emphasis original)
2 Appellate Body Report, Brazil – Retreaded Tyres, para. 215; Appellate Body Report, US – Gasoline,
p. 22.
3 Appellate Body Report, EC – Seal Products, para. 5.297.
4 Appellate Body Report, US – Shrimp, para. 150.
5 Appellate Body Report, US – Gasoline, pp. 22-23 ("The burden of demonstrating that a measure
provisionally justified as being within one of the exceptions set out in the individual paragraphs of Article XX
does not, in its application, constitute abuse of such exception under the chapeau, rests on the party invoking
the exception. That is, of necessity, a heavier task than that involved in showing that an exception, such as
Article XX(g), encompasses the measure at issue").
6 Appellate Body Report, US – Shrimp, para. 157.

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dispute. Among those facts are the measure's application, policy objectives and underlying
economic conditions.
6. The chapeau first of all entails a thorough examination of a challenged measure's actual
application. According to the Appellate Body, "[t]he focus of the chapeau, by its express terms, is
on the application of a measure already found to be inconsistent with an obligation of the
GATT 1994 but falling within one of the paragraphs of Article XX". 7 An analysis of this application
necessarily entails the conditions in which a measure has been applied, not merely the measure in
the abstract.
7. Furthermore, the Appellate Body has stated that a panel must determine a "line of
equilibrium between the right of a Member to invoke an exception under Article XX and the rights
of the other Members under varying substantive pr ovisions (e.g., Article XI) of the GATT 1994, so
that neither of the competing rights will cancel out the other and thereby distort and nullify or
impair the balance of rights and obligations co nstructed by the Members themselves in that
Agreement".
8 This "line of equilibrium" is not static but contextual; it may vary "as the kind and
the shape of the measures at stake vary and as the facts making up specific cases differ".9
8. A contextual analysis also is inherent in one of the chapeau's express conditions: "arbitrary
or unjustifiable discrimination between countries where the same conditions prevail". 10 The "line
of equilibrium" therefore depends on the extent to which the conditions prevailing in different
countries are "relevantly the same".11 The Appellate Body has found that "the identification of the
relevant 'conditions' under the chapeau should be understood by reference to the applicable
subparagraph of Article XX under which the me asure was provisionally justified and the
substantive obligations under the GATT 1994 with which a violation has been found".
12 I t i s
relevant then to consider "the design, architecture, and revealing structure of a measure in order
to establish whether the measure, in its actual or expected application, constitutes a means of
arbitrary or unjustifiable discrimination between countries where the same conditions prevail".
13
9. The Kingdom is of the view that among the conditions related to whether "the same
conditions prevail" include, for example, the structure of a Member's economy, that is, the level of
development, diversification or industrialization of the economy. These conditions and others
inform the contextual assessment to be made of the level of compliance with the chapeau in a
particular case and therefore where the "line of equilibrium" should be established.
14
10. These and other factors also inform a panel's assessment of whether discrimination is
arbitrary or unjustifiable, which "usually involves an analysis that relates primarily to the cause or
the rationale of the discrimination". 15 In this regard, one of the most important factors identified
by the Appellate Body in the assessment of arbitrary or unjustifiable discrimination is "the question
of whether the discrimination can be reconciled with, or is rationally related to, the policy objective

7 Appellate Body Report, Brazil – Retreaded Tyres, para. 215. (emphasis added) See also Appellate
[T]he application of a measure may be characterized as amounting to an abuse or misuse of an
exception of Article XX not only when the detailed operating provisions of the measure prescribe the arbitrary
or unjustifiable activity, but also where a measure, otherwise fair and just on its face, is actually applied in an
arbitrary or unjustifiable manner. The standards of the chapeau, in our view, project both substantive and
procedural requirements.
8 Appellate Body Report, US – Shrimp, para. 159.
9 Ibid.
10 In order for a measure to be applied in a manner that would constitute "arbitrary or unjustifiable
discrimination between countries where the same conditions prevail", and thus fail to satisfy the chapeau, the
Appellate Body has stated that three elements must exist: (i) the application of the measure must result in
discrimination; (ii) the discrimination must be arbitrary or unjustifiable in character, and; (iii) the
discrimination must occur between countries where the same conditions prevail. Appellate Body Report, US –
Shrimp, para. 160.
11 Appellate Body Report, EC – Seal Products, para. 5.299.
12 Ibid. para. 5.301.
13 Ibid. para. 5.302.
14 The Kingdom notes that in EC – Seal Products, the Appellate Body did consider, although it did not
retain, an argument by the EU related to "the different level of development in the organisation of the
marketing structures achieved by the Inuit communities in Greenland as compared to the Canadian Inuit
communities". See ibid. para. 5.317.
15 Appellate Body Report, Brazil – Retreaded Tyres, para. 225.

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with respect to which the measure has been provisionally justified under one of the subparagraphs
of Article XX". 16 The Appellate Body also has stressed, however, that a challenged measure's
policy objective is not the sole factor to be exam ined, and that "depending on the nature of the
measure at issue and the circumstances of the case at hand, there could be additional factors that
may also be relevant to that overall assessment".17
11. The Kingdom is therefore of the view that specific circumstances of the Member imposing
the measure – for example its level of economic de velopment or the sophistication of its trade and
regulatory regimes – may be relevant when assessing whether discrimination is "arbitrary or
unjustifiable" and where the contextual "line of equilibrium" should be drawn in a dispute.
Members' rights and obligations under the WTO Agreements, as well as their expectations toward
other Members, vary according to both the Agreem ents' provisions and also the context in which
those provisions are applied. This context necessarily informs a judgment as to whether a
challenged measure satisfies the chapeau.
12. Taken together, the chapeau creates a strict but contextual standard – one that is higher
than that of provisional justification under the Article's exceptions, and one that must be assessed
independently of such justification.
18 The chapeau is a crucial element in verifying the legitimacy
and ultimate WTO-consistency of a measure provisionally justified under one of the paragraphs of
Article XX, that must be subject to a stand-alone assessment along the lines defined by the
Appellate Body. At the same time, the chapeau's strict standard is not static and instead depends
on a measure's context.
IV. CONCLUSION
13. This dispute addresses important interpretive issues under GATT Article XX which would
benefit from further clarification in light of the present dispute. The Kingdom respectfully requests
the Panel to consider its views on the interpretive issues set out above.

Article XX(g), encompasses the measure at issue").