INDIA – EXPORT RELATED MEASURES REPORT OF THE PANEL
Document: Addendum
Date: 31 October 2019
Document codes: WT/DS541/R/Add.1; WT/DS541/R.
Complainant: U.S.
Respondent: India
Third parties: Brazil, Canada, China, Egypt, EU, Japan, Kazakhstan, South Korea, Russia, Sri Lanka, Taiwan, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 3.1(a), 3.2  Subsidies and Countervailing Measures (SCM)

INDIA – EXPORT RELATED MEASURES
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to D to the Report of the Panel to be found in document

LIST OF ANNEXES
ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Working Procedures of the Panel 4
Annex A-2 Interim Review 10
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of the United States 35
Annex B-2 Integrated executive summary of the arguments of India 46
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil 59
Annex C-2 Integrated executive summary of the arguments of Canada 63
Annex C-3 Integrated executive summary of the arguments of Egypt 67
Annex C-4 Integrated executive summary of the arguments of the European Union 69
Annex C-5 Integrated executive summary of the arguments of Japan 75
Annex C-6 Integrated executive summary of the arguments of Sri Lanka 78
Annex C-7 Integrated executive summary of the arguments of Thailand 80
ANNEX D
PRELIMINARY RULINGS AND OTHER COMMUNICATIONS FROM
THE PANEL TO THE PARTIES
Contents Page
Annex D-1 Communication dated 22 January 2019 from the Panel to the parties concerning
the issues of a single substantive meeting and a partially open meeting
84
Annex D-2 Communication dated 22 January 2019 from the Panel to the parties concerning
the Panel's terms of reference, the applicability of Article 4 of the SCM Agreement
and the statement of available evidence
92
Annex D-3 Communication dated 16 April 2019 from the Panel to the parties concerning the
Panel's Working Procedures and Timetable
116

ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Working Procedures of the Panel 4
Annex A-2 Interim Review 10

ANNEX A-1
WORKING PROCEDURES OF THE PANEL
Adopted on 22 August 2018
General

1. (1) In this proceeding, the Panel shall follow the relevant provisions of the Understanding
on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In addition, the
following Working Procedures apply.
(2) The Panel reserves the right to modify these procedures as necessary, after consultation
with the parties.
Confidentiality
2. (1) The deliberations of the Panel and the documents submitted to it shall be kept
confidential. Members shall treat as confidential information that is submitted to the Panel
which the submitting Member has designated as confidential.
(2) Nothing in the DSU or in these Working Procedures shall preclude a party or third party
from disclosing statements of its own positions to the public.
(3) If a party submits a confidential version of its written submissions to the Panel, it shall
also provide a non-confidential summary of the information contained in its submissions that
could be disclosed to the public. Non-confidential summaries shall be submitted no later than
ten days after the written submission in question is presented to the Panel, unless the Panel
establishes a different deadline upon written request of a party showing good cause.
(4) Upon request, the Panel may adopt appropriate additional procedures for the treatment
and handling of confidential information after consultation with the parties.
Submissions

3. (1) Before the substantive meeting of the Panel with the parties, each party shall transmit
to the Panel, in accordance with the timetable adopted by the Panel:
a. a first written submission, in which it presents the facts of the case and its arguments;
and
b. a written rebuttal.
(2) Each third party that chooses to make a written submission prior to the substantive
meeting of the Panel with the parties shall do so in accordance with the timetable adopted by
the Panel.
(3) The Panel may invite the parties or third parties to make additional submissions in the
course of the proceeding, including with respect to requests for preliminary rulings in
accordance with paragraph 4 below.
Preliminary rulings
4. (1) The following procedures shall apply if the responding party considers that the Panel
should make a ruling prior to the issuance of the Report that certain measures or claims in
the panel request or the complaining party's first written submission are not properly before
the Panel. Exceptions to this procedure shall be granted upon a showing of good cause.

a. India shall submit any such request for a preliminary ruling no later than in its first written
submission to the Panel. The United States shall submit its response to the request prior
to the substantive meeting of the Panel, at a time to be determined by the Panel in light
of the request.
b. The Panel may issue a preliminary ruling on the issues raised in such a preliminary ruling
request before, during or after the substantive meeting, or the Panel may defer a ruling
on the issues raised by a preliminary ruling request until it issues its Report to the parties.
c. In the event that the Panel finds it appropriate to issue a preliminary ruling prior to the
issuance of its Report, the Panel may provide reasons for the ruling at the time that the
ruling is made, or subsequently in its Report.
d. Any request for such a preliminary ruling by India prio r to the meeting, and any
subsequent submissions of the parties in relation thereto prior to the meeting, shall be
served on all third parties. The Panel may provide all third parties with an opportunity to
provide comments on any such request, either in their submissions as provided for in the
timetable or separately. Any preliminary ruling issued by the Panel prior to the substantive
meeting on whether certain measures or claims are properly before the Panel shall be
communicated to all third parties.
(2) The procedure set out in paragraph (1) is without prejudice to the parties' right to
request other types of preliminary or procedural rulings in the course of the proceeding, and
to the procedures that the Panel may follow with respect to such requests.
Evidence
5. (1) Each party shall submit all evidence to the Panel with its first written submission, except
evidence necessary for purposes of rebuttal, or evidence necessary for answers to questions
or comments on answers provided by the other party. Additional exception s may be granted
upon a showing of good cause.
(2) If any new evidence has been admitted upon a showing of good cause, the Panel shall
accord the other party an appropriate period of time to comment on the new evidence
submitted.
6. (1) Where the original language of an exhibit or portion thereof is not a WTO working
language, the submitting party or third party shall simultaneously submit a translation of the
exhibit or relevant portion into the WTO working language of the submission. The Panel may
grant reasonable extensions of time for the translation of exhibits upon a showing of good
cause.
(2) Any objection as to the accuracy of a translation should be raised promptly in writing,
preferably no later than the next submission or the meeting (whichever occurs earlier)
following the submission which contains the translation in question. Any objection shall be
accompanied by a detailed explanation of the grounds for the objection and an alternative
translation.
7. (1) 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, indicating the submitting Member and the number of each exhibit on its
cover page. Exhibits submitted by the United States should be numbered USA-1, USA-2, etc.
Exhibits submitted by India should be numbered IND -1, IND-2, etc. If the last exhibit in
connection with the first submission was numbered IND-5, the first exhibit in connection with
the next submission thus would be numbered IND-6.
(2) Each party shall provide an updated list of exhibits (in Word or Excel format) together
with each of its submissions, oral statements, and responses to questions.
(3) If a party submits a document that has already been submitted as an exhibit by the
other party, it should explain why it is submitting that document again.

Editorial Guide
8. In order to facilitate the work of the Panel, each party and third party should consider making
its submissions in accordance with the WTO Editorial Guide for Panel Submissions (electronic copy
provided).
Questions

9. The Panel may pose questions to the parties and third parties at any time, including:
a. Prior to the meeting, the Panel may send written questions, or a list of topics it intends to
pursue in questioning orally in the course of the meeting. The Panel may ask different or
additional questions at the meeting.
b. The Panel may put questions to the parties and third parties orally in the course of the
meeting, and in writing following the meeting, as provided for in paragraphs 16 and 21
below.
Substantive meeting

10. The Panel notes the request by the United States for an open or partially open hearing, and
will revert to this issue in due course before the date of that meeting.
11. The parties shall be present at the meetings only when invited by the Panel to appear before
it.
12. (1) Each party has the right to determine the composition of its own delegation when
meeting with the Panel.
(2) Each party shall have the responsibility for all members of its delegation and shall
ensure that each member of its delegation acts in accordance with the DSU and these Working
Procedures, particularly with regard to the confidentiality of the proceeding and the
submissions of the parties and third parties.
13. Each party shall provide to the Panel the list of members of its del egation no later than
5.00 p.m. (Geneva time) three working days preceding the first day of the meeting with the Panel.
14. A request for interpretation by any party should be made to the Panel as early as possible,
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.
15. There shall be one substantive meeting with the parties.
16. The 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.
b. Each party should avoid lengthy repetition of the arguments in its submissions. Each party
is invited to limit t he length of its opening statement to 75 minutes. If either party
considers that it requires more time for its opening statement, it should inform the Panel
and the other party at least 5 days prior to the meeting, and it should also provide, at the
same time, an estimate of the length of its statement. The Panel will accord equal time to
both parties for their statements.
c. After the conclusion of the opening statements, the Panel shall give each party the
opportunity to ask each other questions or mak e comments, through the Panel. Each
party shall then have an opportunity to answer these questions orally.

d. The Panel may subsequently pose questions to the parties.
e. 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.
Before each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its closing statement, if available.
f. Following the meeting:
i. Each party shall submit a final written version of its opening statement no later than
5.00 p.m. (Geneva time) on the first working day following the meeting. At the same
time, each party should also submit a final written version of any prepared closing
statement that it delivered at the meeting.
ii. Each party shall send in writing, within the timeframe established by the Panel prior
to the end of the meeting, any questions to the other party to which it wishes to receive
a response in writing.
iii. The Panel shall send in writing, within the timeframe established by the Panel prior to
the end of the meeting, any questions to the parties to which it wishes to receive a
response in writing.
iv. Each party shall r espond in writing to the questions from the Panel, and to any
questions posed by the other party, within the time -frame established by the Panel
prior to the end of the meeting.
Third party session

17. The third parties shall be present at the meetings only when invited by the Panel to appear
before it.
18. (1) Each third party has the right to determine the composition of its own delegation when
meeting with the Panel.
(2) Each third party shall have the responsibility for all members of its delegation and shall
ensure that each member of its delegation acts in accordance with the DSU and these Working
Procedures, particularly with regard to the confidentiality of the proceeding and the
submissions of the parties and third parties.
19. A request for interpretation by any third party should be made to the Panel as early as
possible, preferably upon receiving the working procedures and timetable for the proceeding, to
allow sufficient time to ensure availability of interpreters.
20. (1) Each third party may present its views orally during a session of the substantive meeting
with the parties set aside for that purpose.
(2) Each third party shall indicate to the Panel whether it intends to make an oral statement
during the third party session, along with the list of members of its delegation, in advance of
this session and no later than 5.00 p.m. (Geneva time) three working days preceding the third
party session of the meeting with the Panel.
21. The third-party session shall be conducted as follows:
a. All parties and third parties may be present during the entirety of this session.
b. The Panel shall first hear the oral statements of the third parties, who shall speak in
alphabetical order. Each third pa rty making an oral statement at the third -party session
shall provide the Panel and other participants with a provisional written version of its
statement before it takes the floor. In the event that interpretation of a third party's oral
statement is needed, that third party shall provide additional copies for the interpreters.

c. Each third party should limit the length of its statement to 15 minutes, and avoid repetition
of the arguments already in its submission.
d. After the third parties have made t heir statements, the parties shall be given the
opportunity to pose questions to any third party for clarification on any matter raised in
that third party's submission or statement.
e. The Panel may subsequently pose questions to any third party.
f. Following the third-party session:
i. Each third party shall submit the final written version of its oral statement, no later
than 5.00 p.m. (Geneva time) on the first working day following the meeting.
ii. Each party may send in writing, within the timefram e to be established by the Panel
prior to the end of the meeting, any questions to a third party or parties to which it
wishes to receive a response in writing.
iii. The Panel may send in writing, within the timeframe to be established by the Panel
prior to the end of the meeting, any questions to a third party or parties to which it
wishes to receive a response in writing.
iv. Each third party choosing to do so shall respond in writing to written questions from
the Panel or a party, within a timeframe es tablished by the Panel prior to the end of
the meeting.
Descriptive part and executive summaries

22. The description of the arguments of the parties and third parties in the descriptive part of the
Panel report shall consist of executive summaries provide d by the parties and third parties, which
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.
23. Each party shall submit one integrated executive summary, which shall summarize the facts
and arguments as presented to the Panel during the proceedings.
24. Each integrated executive summary shall be limited to no more than 15 pages.
25. The Panel may request the parties and third parties to provide executive summaries of facts
and arguments presented in any other submissions to the Panel for which a deadline may not be
specified in the timetable.
26. Each third party shall submit an integrated executive summary of its arguments as presented
in its written submission and statement in accordance with the timetable adopted by the Panel. This
integrated executive summary may also include a summary of responses to questions, if relevant.
The executive summary to be provided by each third party shall not exceed six pages. If the
documents comprising a third-party's submission, oral statement and/or responses to questions do
not exceed six pages in total, these may serve as the executive summary of that third pa rty's
arguments.
Interim review

27. 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.
28. 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.
Interim and Final Report
29. The interim report, as well as the f inal report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

30. The following procedures regarding service of documents apply to all documents submitted by
parties and third parties in the course of the proceeding:
a. Each party and third party shall submit all documents to the Panel by submitting them
with the DS Registry (office No. 2047).
b. Each party and third party shall submit two paper copies of its submissions and two paper
copies of its Exhibits to the Panel by 5.00 p.m. (Geneva time) on the due dates established
by the Panel. The DS Registrar shall stamp the documents with the date and time of
submission. The paper version submitted to the DS Registry shall constitute the of ficial
version for the purposes of submission deadlines and the record of the dispute.
c. Each party and third party shall also send an e-mail to the DS Registry, at the same time
that it submits the paper versions, attaching an electronic copy of all docu ments that it
submits to the Panel, preferably in both Microsoft Word and PDF format. All such e -mails
to the Panel shall be addressed to DSRegistry@wto.org, and copied to other WTO
Secretariat staff whose e-mail addresses have been provided to the parties in the course
of the proceeding. Where it is not possible to attach all the Exhibits to one email, the
submitting party or third party shall provide the DS Registry with three copies of the
Exhibits on USB keys, CD-ROMs or DVDs.
d. In addition, each party and third party is invited to submit all documents through the
Digital Dispute Settlement Registry (DDSR) within 24 hours following the deadline for the
submission of the paper versions. If the parties or third parties have any questions or
technical difficulties relating to the DDSR, they are invited to consult the DDSR User Guide
(electronic copy provided) or contact the DS Registry at DSRegistry@wto.org.
e. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve any submissions in advance of the first substantive
meeting with the Panel directly on the third parties. Each third party shall serve any
document submitted to the Panel directly on the parties and on all other third parties. A
party or third party may serve its documents on another party or third party by e-mail or
on a CD-ROM, DVD or USB key only, unless the recipient party or third party has previously
requested a paper copy. Each party and third party shall confirm, in writi ng, that copies
have been served on the parties and third parties, as appropriate, at the time it provides
each document to the Panel.
f. Each party and third party shall submit its documents with the DS Registry and serve
copies on the other party (and th ird parties where appropriate) by 5.00 p.m. (Geneva
time) on the due dates established by the Panel.
g. As a general rule, all communications from the Panel to the parties and third parties will
be via email. In addition to transmitting them to the partie s by email, the Panel shall
provide the parties with a paper copy of the Interim Report and the Final Report.
Correction of clerical errors in submissions
31. The Panel may grant leave to a party or third party to correct clerical errors in any of its
submissions (including paragraph numbering and typographical mistakes). Any such request should
identify the nature of the errors to be corrected, and should be made promptly following the filing
of the submission in question.

ANNEX A-2
INTERIM REVIEW
1 INTRODUCTION
1.1. In compliance with Article 15.3 of the DSU, this Annex sets out the Panel's discussion and
disposition of the requests for review made at interim review stage. As explained below, where the
Panel considered it appropriate, it has modified certain aspects of its Interim Report in light of the
parties' comments. The parties have also made some comments on typographical errors: the Panel
thanks the parties for those comments, has accepted them in their entirety, and does no t discuss
them below. In addition, some other corrections of a typographical nature were made to the Report.
1.2. Due to changes resulting from our review, the numbering of paragraphs and footnotes in the
Final Report has changed from the Interim Report. The text below refers to the numbering in
the Interim Report, with the numbering in the Final Report in parentheses for ease of
reference, if different.
1.3. Below, we first consider India's requests for review, and then the United States'.
2 INDIA'S REQ UESTS CONCERNING THE INTERPRETATION OF A RTICLE 27 OF THE
SCM AGREEMENT
2.1 Presentation of India's arguments
2.1.1 Paragraph 7.24 of the Interim Report
2.1. India asks us to supplement the description of India's arguments at paragraph 7.24 of the
Interim Report. 1 The United States opposes India's request as unnecessary. 2 We had already
reflected the arguments at issue elsewhere in the Interim Report and had considered them in our
assessment of the matter before us. Adding the description of the arguments as requested by India
does not, however, affect the substance of our Report. Therefore, we have decided to make most of
the proposed changes.
2.1.2 Paragraphs 7.40 and 7.59 of the Interim Report
2.2. India argues that it has not asked the Panel to "depart" from giving the terms in Article 27.2(b)
their ordinary meaning and that the Panel has thus mischaracterized India's arguments. 3 India
therefore requests us to revise the description of India's arguments.4 Similarly, India argues that we
have incorrectly described India's arguments in paragraph 7.59 of the Interim Report as requesting
the Panel to "disregard" the text of Article 27.2(b)5, and therefore asks us to delete the first sentence
of that paragraph.
2.3. The United States disagrees with I ndia's requests and argues that India did indeed ask the
Panel to ignore the ordinary meaning of Article 27.2(b).6

1 India's request for review, para. 5.
2 United States' comments on India's request for review, paras. 2-3.
3 India's request for review, para. 7.
4 India's request for review, para. 7.
5 India's request for review, para. 16.
6 United States' comments on India's request for review, paras. 5 and 8.

2.4. We recall that India argued against giving the terms of Article 27.2(b) their "ordinary meaning"7
and against a "literal"8 or "textual"9 interpretation of that provision. India further argued that it was
"the manifest unreasonableness and ambiguity presented in a textual interpretation of Article 27"
that called for recourse to supplementary means of interpretation under Article 32 of the Vienna
Convention.10 In this light, we consider it appropriate to describe India's arguments as requesting
us to "depart" from giving the terms in Article 27.2(b) their ordinary meaning, or from a literal or
textual interpretation of that provision. 11 We therefore reject India's request. We have, however,
included references to India's written and oral submissions where the arguments referred to above
are found (in footnote 86 of the Interim Report) and a clarification in paragraph 7.40 of the Interim
Report that we refer to the SCM Agreement. We have also replaced the term "disregard" with "depart
from" paragraphs 7.59 and 7.71 of the Interim Report.
2.2 The Panel's interpretation of Article 27.2(b) in accordance with the general rule of
interpretation codified in Article 31 of the Vienna Convention
2.2.1 Paragraph 7.39 of the Interim Report
2.5. India requests us to add language at the end of paragraph 7.39 of the Interim Report 12, for it
to read: "[t]he text of Article 27.2(b) does not leave scope for ambiguity in respect of the end date
of that transition period, for other developing country Members".13
2.6. The United States objects to India's request.14
2.7. We agree with the United States that the proposed change would render our finding inaccurate
because it could imply that the text of Article 27.2(b) leaves scope for ambiguity for some but not
for other Members.15 We therefore decline India's request.
2.2.2 Paragraphs 7.45-7.53 of the Interim Report
2.8. India asks us to reconsider our findings in paragraphs 7.45-7.53 concerning Annex VII(b).16 In
doing so, India argues that our findings do not accord developing country Members graduating from
Annex VII(b) the same treatment as afforded to other developing country Members in Article 27.2(b)
and that our findings disregard the mandatory language in Annex VII(b) ("shall be subject to the
provisions which are applicable to other developing country Members"). 17 India also submits that
our interpretation of Annex VII(b) would render that provision ineffective.18
2.9. The United States opposes India's request as simply repeating India's previous arguments with
which the Panel has disagreed in the Interim Report.19

7 India's first written submission, para. 159; second written submission, paras. 10 and 27.
8 India's first written submission, para. 164; second written submission, para. 10, response to Panel
question No. 18; comments on the United States response to Panel question No. 21, first para.; and request
for review, paras. 5 (as regards the proposed change to paragraph 7.24 of the Interim Report), 14, 15, 17,
and 20.
9 India's second written submission, paras. 8, 14, 19, and 31; opening statement at the meeting of the
Panel, para. 15.
10 India's second written submission, para. 31. See also India's first written submission, para. 166;
second written submission, para. 27.
11 We also note that India does not take issue with the same phrase used elsewhere in the
Interim Report, see Interim Report, paras. 7.52 and 7.68.
12 India's request for review, para. 6.
13 Underlining added. The underlined text is the addition requested by India.
14 United States' comments on India's request for review, para. 4.
15 United States' comments on India's request for review, para. 4.
16 India's request for review, para. 12.
17 India's request for review, paras. 8, 10, and 11; opening statement at the Panel's interim review
meeting, paras. 5-7.
18 India's request for review, para. 10; opening statement at the Panel's interim review meeting,
para. 7.
19 United States' comments on India's request for review, para. 6.

2.10. We share the United States' view that India repeats at interim review stage a rguments that
it has already made during the proceedings and that we have considered and rejected in the Interim
Report.20 We therefore decline India's request.
2.2.3 Paragraphs 7.50-7.51 of the Interim Report
2.11. India requests that the Panel reconsider its findings in paragraphs 7.50-7.51 concerning the
different types of flexibilities afforded to developing and least -developed country Members under
Articles 27.2(a) and (b) and Annexes VII(a) and (b).21 India submits that the Panel's findings result
in less or no flexibility for developing country Members graduating from Annex VII(b) compared to
the other developing country Members falling under Article 27.2(b). 22 India also argues that the
Panel's interpretation renders Annex VII(b) ineffective and is ir reconcilable with the object and
purpose of the SCM Agreement.23
2.12. The United States opposes India's request as simply repeating India's previous arguments
with which the Panel has disagreed in the Interim Report.24
2.13. We consider that India, again, repeats at interim review stage arguments that it has already
made during the proceedings and that we have carefully considered and rejected in the Interim
Report.25 We therefore decline India's request but have nevertheless slightly modified
paragraph 7.50.
2.2.4 Paragraphs 7.62-7.64 of the Interim Report
2.14. With respect to paragraphs 7.62 -7.64 of the Interim Report, India submits that the Panel
failed to address the "main contradiction" between the second sentence of Article 27.5 and
Article 27.2(b) which, according to India, would arise from the Panel's findings in case a developing
country Member graduates from Annex VII(b) after having reached export competitiveness with
respect to a particular product.26 According to India, the Panel's interpretation would lead to differing
timelines for phasing out export subsidies on products that have reached export competitiveness
and for eliminating all other export subsidies.27 India therefore asks us to reconsider our findings.28
2.15. The United States oppose s India's request as simply repeating India's previous arguments
with which the Panel has disagreed in the Interim Report.29
2.16. We have expressly considered and rejected India's arguments concerning the alleged
"contradiction" in the Interim Report. 30 India now adds that "the Panel has not elaborated on the
basis of such a finding [that the alleged contradiction is based on a misreading of Article 27.5] as
Article 27.5 does not qualify the term 'referred to Annex VII'".31 We refer India to paragraph 7.62 of
the Interim Report, where we explained that on graduating, a Member ceases to be one "referred to
in Annex VII". We reject the proposition that after graduation, a Member drops out of Annex VII(b)
but remains "a developing country Member which is referre d to in Annex VII" for purposes of
Article 27.5. Such a reading seeks to introduce a contradiction that does not exist in Article 27 and
Annex VII.
2.17. India also repeats its argument that the interpretation we have espoused ignores that subsidy
programmes often encompass a range of products, with the result that a product could benefit from

20 United States' comments on India's request for review, para. 6; Interim report, paras. 7.42-7.52.
21 India's request for review, para. 15.
22 India's request for review, para. 14.
23 India's request for review, para. 15.
24 United States' comments on India's request for review, para. 7.
25 Interim report, paras. 7.49, 7.51-7.52, and 7.65-7.68.
26 India's request for review, paras. 17 and 18; opening statement at the Panel's interim review
meeting, paras. 8-9.
27 India's request for review, paras. 17 and 18; opening statement at the Panel's interim review
meeting, para. 9.
28 India's request for review, para. 19; opening statement at the Panel's interim review meeting,
para. 9.
29 United States' comments on India's request for review, para. 9.
30 Interim Report, paras. 7.60-7.64.
31 India's request for review, para. 18.

the 8-year period under Article 27.5 while other export subsidies under the same subsidy programme
would need to be withdrawn immediately upon graduation from Annex VII(b).32 In the
Interim Report, we have not separately addressed this particular aspect of India's arguments
because it is based on the same erroneous premise that the Article 27.5 phase -out period survives
graduation from Annex VII(b).
2.18. For the same reason, we now reject India's request.
2.3 Recourse to supplementary means of interpretation
2.19. With respect to paragraph 7.73 of the Interim Report, India repeats its request for the Panel
to have recourse to supplementary means of interpretation i n accordance with Article 32 of the
Vienna Convention.33
2.20. The United States objects to India's request. To the United States, recourse to supplementary
means of interpretation is unnecessary because the textual interpretation of the terms in
Article 27.2(b) does not leave their meaning ambiguous or obscure, or lead to manifestly absurd or
unreasonable results.34
2.21. We re-affirm our findings in paragraph 7.72 of the Interim Report and thus continue to be of
the view that recourse to supplementary me ans of interpretation is not required on grounds of
ambiguity, obscurity, absurdity, and unreasonableness resulting from the interpretation according
to Article 31 of the Vienna Convention.
2.22. We also remain convinced that it is not necessary for us to have recourse to supplementary
means of interpretation to confirm the meaning resulting from the application of Article 31, as set
out in paragraph 7.73 of the Interim Report.
2.23. This notwithstanding, we note India's repeated request "urg[ing] the Pa nel to resort to …
supplementary means of interpretation in order to confirm the meaning resulting from Article 31 of
the Vienna Convention". 35 We find that consideration of the negotiating history of Article 27.2(b)
and Annex VII(b), as demanded by India, does not lead to a different interpretative outcome.
2.24. India relies on a draft text by the Chairman of the Negotiating Group for the SCM Agreement
circulated on 6 November 1990 (the draft Chair text of 6 November 1990). 36 For certain countries,
including India, Annex VIII in this draft text, which later became Annex VII of the SCM Agreement,
provided for certain reduction commitments in respect of export subsidies to be undertaken when
GNP per capita reached USD 1,000 per year.37 India submits that these countries therefore did not
need to eliminate their export subsidies immediately upon graduation. Rather, once graduated, they
would become subject to reduction commitments to phase out export subsidies. 38 In India's view,
this reflected the intent of the drafters to give certain countries, including India, an additional

32 India's request for review, para. 18. See also India's second written submission, para. 25.
33 India's request for review, para 20; opening statement at the Panel's interim review meeting,
para. 10.
34 United States' comments on India's request for review, para. 10.
35 India's request for review, para 20. See also India's opening statement at the Panel's interim review
meeting, para. 10.
36 Draft Chair text of 6 November 1990, (Exhibit IND-4) (dated 7 November 1990); this document refers
to the draft Chair text MTN.GNG/NG10/W/38/Rev.3 of 6 November 1990.
37 In the draft Chair text of 6 November 1990, the exclusion from the application of the prohibition on
export subsidies referred to Annex VIII, which, in turn, set forth ceilings for the level of permissible export
subsidies of the listed developing countries. More specifically, Annex VIII provided a country-specific list of
progressively decreasing levels of permitted export subsidies. The commitments in respect of export subsidies
were divided into three time periods (Periods 1-3). Over up to the three time periods, they provided for
decreasing levels of permitted export subsidy rates defined as a percentage of an initial export subsidy rate.
For certain countries, including India, Annex VIII did not specify time periods and corresponding levels of
permitted export subsidy rates. For these countries, Annex VIII referred to Note 1 according to which the
relevant country would undertake a reduction commitment in terms of progressively decreasing levels of
permitted export subsidy rates over up to three time periods when that country's GNP per capita reached
USD 1,000 per year.
38 India's first written submission, para. 177.

transition time upon graduation. 39 India posits that this intent must be taken into account when
interpreting Article 27.2(b) and Annex VII(b).40
2.25. We note that the draft Chair te xt of 6 November 1990 was one of several revisions of the
draft text of the SCM Agreement.41 It introduced in its Annex VIII the mechanism of reduction
commitments on which India now relies. 42 The Draft Final Act circulated on 20 December 1991,
however, replaced the previous text of Article 27.2(b) and Annex VIII with the text that corresponds
to the ultimately adopted Article 27.2(b) and Annex VII of the SCM Agreement, and which does not
provide for an additional transition period for graduating Annex VII(b) Members.43
2.26. It may therefore be that the draft Chair text of 6 November 1990 contained a proposal for a
mechanism and reflected an intention that was "distinctly different" 44 from the requirement for
Members listed in Annex VII(b) to immediately elimi nate export subsidies upon graduation.
Nevertheless, in contrast to the previous draft text of Article 27.2(b) and the corresponding Annex,
the Draft Final Act of 20 December 1991 and the text ultimately adopted differ from the draft of
6 November 1990 specifically with respect to the issue of the graduation mechanism for Annex VII(b)
Members.
2.27. There is no apparent reason to give an earlier draft (that of 6 November 1990) greater weight
over a subsequent draft (that of 20 December 1991) to interpret the text that was ultimately
adopted.45 Rather, the fact that the draft Chair text of 6 November 1990 is "distinctly different" from
the subsequent draft and, more importantly, from the text ultimately adopted, cautions against
importing terms and concepts from the 6 November 1990 draft into the SCM Agreement as finally
adopted.46
2.28. We recall that "the purpose of treaty interpretation under Articles 31 and 32 of the Vienna
Convention is to ascertain the "common intention" of the parties"47, not of one or some parties. The
negotiating history discussed above does not establish a common intention of the parties in favour
of granting an additional transition period for graduating Annex VII(b) Members, and instead
indicates that such an option failed to garner consensus support. Thus, even considering the
negotiating history, we find that it does not support India's position. To the contrary, it confirms our
interpretation of Article 27.2(b).

39 India's first written submission, para. 178; response to Panel question No. 23, second para.
41 The text originally circulated in MTN.GNG/NG10/W/38 on 18 July 1990 and first revised in
MTN.GNG/NG10/W/38/Rev.1 on 4 September 1990 did not yet contain a special and differential treatment
provision equivalent to Article 27 of the SCM Agreement, nor a corresponding Annex. The second revision
circulated in MTN.GNG/NG10/W/38/Rev.2 on 2 November 1990 introduced Article 27 in the form reflected in
the subsequent draft of 6 November 1990 but contained only a placeholder for Annex VIII.
42 Following the draft of 6 November 1990, the Draft Final Act circulated on 3 December 1990 kept the
text of Article 27 and Annex VIII unchanged. (Draft Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations - Revision, MTN.TNC/W/35/Rev.1 (3 December 1990)).
43 Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations,
MTN.TNC/W/FA (20 December 1991).
44 India's second written submission, para. 33.
45 In this context, we note that the Chairman of the Negotiating Group on Subsidies and Countervailing
Measures reported that there remained disagreement on Article 27 in the draft of 6 November 1990 and that,
in general, "[i]t was clear that the Group was not in a position to reach final Agreement on the text" (Note by
the Secretariat on the meeting of 6 November 1990 of the Negotiating Group on Subsidies and Countervailing
Measures, MTN.GNG/NG10/24 (29 November 1990), p. 3).
46 Indeed, in contrast to the Article 27.2(a) approach for least-developing countries, which remained the
same, the final version of Article 27.2(b) and Annex VII(b) introduced a different approach to special and
differential treatment for developing countries falling under Article 27.2(b). The approach in the draft Chair text
of 6 November 1990 was characterized by country-specific, staggered reduction commitments. The subsequent
and ultimately adopted version of Article 27.2(b) endorsed a country-neutral, uniform eight-year transition
period. Note 1 in the draft Chair text of 6 November 1990 and Annex VII(b) in the final text connected with the
respective approaches to special and differential treatment in the relevant versions of Article 27.2(b): upon
graduation, Note 1 made applicable the "commitment approach" under Article 27.2(b) and Annex VIII of the
draft Chair text of 6 November 1990, while Annex VII(b) renders applicable the transition period of
Article 27.2(b) of the SCM Agreement.
47 Appellate Body Report, China – Publications and Audiovisual Products, para. 405.

3 INDIA'S REQUESTS CONCERNING THE DESCRIPTION OF THE MEASURES AT ISSUE
3.1 Export Oriented Units and Sector-Specific Schemes
3.1. Paragraph 7.134 of the Interim Report sets out examples of the sanctions envisaged under the
EOU/EHTP/BTP Schemes in the event a Unit fails to ensure positive NFE or fails to ab ide by other
obligations under the schemes. The Interim Report describes one such sanction as "criminal liability".
India submits that the appropriate terminology is "penal action". 48 India makes the same request
for paragraphs 7.141, 7.487 (7.486), and 7.492 (7.491), and footnotes 716 (718) and 720 (722) of
the Interim Report. The United States has not commented on India's request. The Panel has
therefore replaced "criminal liability" with "penal action" in the paragraphs and footnotes at issue.
3.2 Special Economic Zones Scheme
3.2. India requests the following addition to paragraph 7.143 of the Interim Report (in the section
containing a brief description of the SEZ Scheme)49:
A SEZ is a separate geographical region which provides for more liberal economi c
measures to be applicable to the Unit s set up within it, as compared to the rest of
India.236 The rest of India excluding the SEZs is defined as the "Domestic Tariff Area",
and the SEZ Scheme recognizes the transfer of inputs and finished goods between t he
SEZ Units and the Domestic Tariff Area.237
3.3. The United States points out that the first part of the language suggested by India is "just
India's characterization of the scheme". 50 The United States also observes that the second part of
the suggested language is not supported by the factual record.51
3.4. Considering India's request, the United States' comments, and the language actually contained
in the evidence that India relied on in the passages of its submissions cited in its request, we have
added the following new paragraph after paragraph 7.143 of the Interim Report:
India has submitted that an SEZ is a "distinct" FN1"geographical region which provides
for more liberal economic measures to be applicable to the Unit set up within it, as
compared to the rest of India".FN2 Further, India has pointed out that the SEZ Act defines
the "domestic tariff area" (DTA) as the whole of India excluding SEZs, and that "export"
for purposes of the SEZ Act includes not only "the taking of goods … out of India, from
a[n SEZ]" and the supply of goods between different Units FN3 within an SEZ, but also
the supply of goods from the DTA to a Unit or developerFN4 within an SEZ.FN5
FN2 India's first written submission, para. 326; request for review, para. 23. See also Annex A -2,
paras. 3.2-3.4.
FN3 See para. 7.149 [para. 7.148 in the Interim Report] below, defining SEZ "Units".
FN4 See para. 7.147 [para. 7.146 in the Interim Report] below, defining SEZ "developers".
FN5 India's first written submission, para. 326; request for review, para. 23. Sections 2(i) and 2(m)
of the SEZ Act. See also Annex A-2, paras. 3.2-3.4.
4 INDIA'S REQUESTS CONCERNING THE LEGAL STANDARD UNDER FOOTNOTE 1 OF THE
SCM AGREEMENT
4.1 Meaning of "exemption" and "remission"
4.1. Footnote 1 of the SCM Agreement refers to "exemption(s)" and "remission(s)". India disagrees
with the Panel's understanding of the respective meaning of these two terms and, as a consequence,

48 India's request for review, paras. 21-22.
49 India's request for review, para. 23.
50 United States' comments on India's request for review, para. 11.
51 United States' comments on India's request for review, para. 12.

requests changes to paragraphs 7.168 (7.169), 7.172 (7.173) and footnote 281 (286) of the
Interim Report.52
4.2. First, India observes that footnote 58 of the SCM Agreement defines "remission or drawback"
as including "exemption", and that Annexes I(g), (h), and (i) "can involve" both exemptions and
remissions.53 The Panel agrees with these observations, and notes that they are already reflected in
footnote 281 (286) of the Interim Report. Indeed, as also already noted in the Interim Report, the
relevant clauses of Annex I set out the same disciplines for exemptions and remissions, so that while
the mechanism for granting an exemption and remission will differ, the two are subject to the same
substantive constraints under footnote 1 read together with Annex I.
4.3. Second, and apparently as a consequence, India disagrees with the following statement of the
Panel in paragraph 7.168 (7.169) of the Interim Report54:
We understand the difference between these two groups of measures to be that, in the
case of exemptions, the duty or tax liability never arises, whereas, in the case or
remissions, the liability first arises, but is later remitted, including by returnin g the
payment if one was already made.55
4.4. Instead, according to India:
[T]he point of difference … is that while the first part [of footnote 1, on exemptions,]
applies to taxes or duties on exported products , the second part [of footnote 1, on
remissions] applies not to taxes or duties on the exported product itself, but to taxes
and duties on inputs that are used … in the production of the exported product or duties
or taxes levied on the production/distribution of the exported product.56
4.5. In its proposed definition, India draws a distinction between "the exported product itself", on
the one hand, and taxes and duties "on inputs" into, or "on the production/distribution" of, that
product. India appears to consider that as a matter of definition, e xemptions under footnote 1 are
only granted with regard to taxes levied on the product "itself" in the final form in which it is
exported, whereas remissions under footnote 1 are only granted with regard to taxes and duties
imposed on inputs used in the pr oduction of an exported product, and with regard to taxes levied
on the production or distribution of that product.
4.6. We disagree with India's arguments. Footnote 1 refers to the "exemption of an exported
product from duties or taxes borne by the like product when destined for domestic consumption",
and to the "remission of such duties or taxes". The use of the term "such" makes it clear that the
difference does not lie in the object of taxation (the product as "itself" exported, versus inputs into
its production).57 To the contrary, in both cases: first, the exemption or remission relates to "an
exported product"; and, second, reading footnote 1 together with Annex I makes it clear that there
are several ways in which an exemption or omission may relate to an exported product within the
meaning of footnote 1, one such way being that there is an exemption from duties or taxes, or a
remission of the same, on inputs consumed in the production of the exported product.58 Therefore,
we disagree that only exemptions relate to the "exported product itself", and we also disagree that

52 India's request for review, paras. 24-29 (on para. 7.168 (7.169) and fn 281 (286) of the
Interim Report) and 33 (on para. 7.172 (7.173) of the Interim Report).
53 India's request for review, para. 25. India therefore considers there to be contradictions between the
Panel's reasoning and footnote 58, as well as within the Panel's reasoning, and between that reasoning and
Annex I and a prior panel report. India's request for review, paras. 24-26. The United States considers
India's arguments on such contradictions to be "meritless". (United States' comments on India's request for
54 India's request for review, paras. 24, 26, and 28. India also asks the Panel to delete the portion of
fn 281 (286) of the Interim Report that mentions this distinction. Ibid. para. 29.
55 Fns omitted.
56 India's request for review, para. 27. (underlining added)
57 In asking the Panel to reject India's request for review, the United States similarly reasons that "[t]he
'such' makes it clear that the remission also refers to remission of 'duties or taxes borne by the like product
when destined for domestic consumption'. Both parts of footnote 1 relate to the exemption or remission of
duties or taxes borne on the exported product". (United States' comments on India's request for review,
para. 18.)
58 See also Table 2, Step 3, of the Interim Report.

only remissions relate to "inputs" (or to indirect taxes on the production/distribution of the exported
product), as proposed by India as a matter of interpretation.
4.7. We therefore reject India's request that we modify paragraph 7.168 (7.169) and
footnote 281 (286).
4.8. For the reasons just examined in paragraph 4.5. above, India also asks that we modify
paragraph 7.172 (7.173) of the Interim Report, where Annexes I (g), (h) and (i) are described as
referring to the exemption and remission of certain taxes and duties "on exported products". 59
However, for the reasons set out in paragraph 4.6. above, we disagree with India's interpretation
and we therefore also reject India's req uest regarding paragraph 7.172 (7.173) of the
Interim Report.
4.2 Description of Annex I(h)
4.9. India requests that we modify our description of the first part of Annex I(h), in paragraph 7.175
(7.176) of the Interim Report, by using exactly the languag e used there. 60 The United States
agrees.61 We have modified the text of paragraph 7.175 (7.176) of the Interim Report accordingly.
5 INDIA'S REQUESTS CONCERNING THE PANEL 'S ASSESSMENT OF THE EXPORT
ORIENTED UNITS AND SECTOR-SPECIFIC SCHEMES
5.1 The exemption from customs duties: the scope of the Panel's findings
5.1. India asks us to revise the section on "[t]he nature of certain goods covered by the exemptions"
from customs duties under the EOU/EHTP/BTP Schemes, spanning paragraphs 7.195-7.215 (7.196-
7.216) (Section 7.6.2.1.1) of our Interim Report.62 India also requests us to revise accordingly our
conclusions in paragraphs 7.233 (7.236) and 8.1(a) of the Interim Report.63
5.2. According to India, while finding that the exemption is also available to goods other than capital
goods, the Panel has then "restricted its evaluation to capital goods". 64 India asks us to review our
findings and modify them in essentially two ways, namely (1) by specifying that our findings only
relate to "capital goods", and (2) by adding that in all other respects, the EOU/EHTP/BTP Schemes
meet the conditions of footnote 1 of the SCM Agreement.65
5.3. The United States asks us to reject India's request. 66 Among other things, the United States
notes that when aspects of a measure are WTO-inconsistent, the measure as a whole is in breach,
and that "[t]o the extent India considers that it need only modify … aspects of a measure in order
to come into compliance, that is an issue that would be relevant with respect to com pliance and
does not affect the Panel's recommendation under Article 19 of the DSU with respect to the
measure".67
5.4. For the reasons set out in the following paragraphs, we reject India's request.
5.5. As outlined in the Interim Report, the United Sta tes articulated a number of ways in which it
considered that the customs duty exemption under the EOU/EHTP/BTP Schemes did not meet the
third element in our analysis under footnote 1, i.e. the limitation of the exemption to inputs

59 India's request for review, paras. 30-32. The United States requests the Panel to reject
India's request, noting that "[p]aragraph 7.172 summarizes the provisions of Annex I, items (g)-(i), and then
the Panel provides a detailed description, with the language directly taken from the provisions themselves, of
how each of the relevant Annex I provisions operate". (United States' comments on India's request for review,
para. 21.)
60 India's request for review, para. 33.
61 United States' comments on India's request for review, para. 24.
62 India's request for review, paras. 34-39. The text in quotation marks is not reproduced in the request
for review and is instead the title of the heading of the section whose review India requests. See also
India's opening statement at the Panel's interim review meeting, paras. 12-17.
63 India's request for review, paras. 46 and 86.
64 India's request for review, para. 36.
65 India's request for review, paras. 39, 46, and 86.
66 United States' comments on India's request for review, paras. 25-29.
67 United States' comments on India's request for review, para. 28.

consumed in the productio n of the exported product. 68 Having considered both parties' views, we
were persuaded by some of the United States' arguments69, but not by others.70
5.6. The section of the Interim Report that India takes issue with describes one of the two grounds
on which we were persuaded that the customs duty exemption under the Schemes is not limited to
inputs consumed in the production of the exported product. As its title says, the section in question
addresses "[t]he nature of certain goods covered by the exemptions". To summarize, in that section,
we find that the exemptions are available, first, for a number of goods that India's measures label
as "capital goods"; having examined the definition of "capital goods" in the relevant measures, we
have found that these a re incapable of constituting "inputs consumed in the production of the
exported product".71 Second, in the same section, we find that certain other goods, in addition to
those labelled as "capital goods" in the Indian measures, are also of a nature that mak es them
incapable of constituting "inputs consumed in the production of the exported product", including for
example raw materials for making capital goods for use within a Unit, and prototypes.72
5.7. In another section, different from that referred to by India, we have also addressed the fact
that the Schemes allow for the exemption from customs duties of "any other item", not expressly
listed in the Schemes.73 We found that the Schemes fail to meet the third element in our analysis
under footnote 1 also t o the extent that the competent authority approves, under th e relevant
provision, the duty-free importation of other items that are also incapable of being "inputs consumed
in the production of the exported product".74
5.8. As noted above, India's first request is that we indicate that our findings are limited to capital
goods. We consider, however, that we have been sufficiently precise in indicating the scope of our
findings, by reference to the provisions of the Indian legislation and regulations, and t o the
definitions and lists of goods found therein. 75 "Capital goods", per se, is not a notion belonging to
the SCM Agreement. As remarked in the Interim Report, the parties appeared to have slightly
different understandings of the scope of "capital goods", a divergence that it was not for the Panel
to resolve, because the question for the Panel was whether the goods actually covered by the
challenged measures were "inputs consumed in the production of the exported product".76 Moreover,
India's measures themselves describe some of the goods that we have found not to qualify as "inputs
consumed in the production of the exported product" as belonging to a category "other[]" than
capital goods.77 Therefore, we consider that changing our Report to describe our findings as limited
to "capital goods" is neither necessary nor accurate.
5.9. To recall, India's second request is that we add that, in all respects other than capital goods,
the challenged customs duty exemption meets the conditions of footnote 1.78 However79, within the
framework set for us by the DSU and by our terms of reference, we consider that our task in
assessing a violation complaint is to ascertain, based on the arguments of the parties, whether and
to what extent the complainant has established the claimed inconsistencies. India argues that we
have ignored those goods that are capable of being inputs consumed in the production of the
exported product, and suggests that we have therefore "generaliz[ed] that all duty -free items

69 Interim Report, paras. 7.203 (7.204), 7.215 (7.216), and 7.217 (7.218).
71 Interim Report, paras. 7.196-7.201 (7.197-7.202).
72 Interim Report, paras. 7.197 (7.198) and 7.202 (7.203), and fn 322 (327).
73 Interim Report, para. 7.216 (7.217).
74 Interim Report, para. 7.217 (7.218) referring to Section 6.04(f) of the HBP.
75 Interim Report, paras. 7.196 (7.197), 7.197 (7.198), 7.201 (7.202), 7.202 (7.203), 7.215 (7.216),
and 7.217 (7.218), and fn 322 (327).
76 Interim Report, fn 317 (322).
77 Interim Report, para. 7.197 (7.198).
78 India asks us to add the following language to para. 7.215 (7.216) of the Interim Report: "[f]or other
inputs incorporated in the exported product [footnote reference to HBP Sections 6.04(a) and (f)], the duty
exemption meets the conditions of footnote 1 read together with Annex I(i) to the SCM Agreement".
(India's request for review, para. 39.) India requests a similar addition to para. 7.233 (7.236) of the
Interim Report.
79 In addition to our objections to India's proposed language on "capital goods", set out in the previous
paragraphs.

allowed to be imported under the EOU/EHTP/BTP Schemes are like capital goods". 80 We have not.
Our finding of inconsistency is based on, and limited to, the reasoning set out in our Report.
5.2 The exemption from customs duties: India's arguments on a "quantitative analysis"
under Annex II of the SCM Agreement
5.10. India asks us to review paragraph 7.213 (7.214) of the Interim Report, where, according to
India, we have wrongly taken the view that "India presupposes … the existence of … a scheme that
meets the first three requirements of the test under footnote 1 of the SCM Agreement". 81 The
United States submits that this is a correct characterization of India's argument and that we should
reject India's request for review.82
5.11. As reflected in paragraph 7.211 (7.212) of the Interim Report, India repeatedly argued that
to establish that the EOU/EHTP/BTP Schemes, EPCG Scheme, MEIS, and DFIS do not meet the
conditions in footnote 1 of the SCM Agreement, the United States had to undertake a "data-driven"
analysis in accordance with Annex II. In the paragraph India is now asking us to review, we point
out that such an analysis 83 presupposes that the first three of the steps in our examination of
footnote 1 are met. We remain of this view and we therefore reject India's request.
5.3 The exemption from central excise duty: assessment under footnote 1 of the
SCM Agreement
5.12. India requests the Panel to review its analysis of the exemption from central excise duty under
footnote 1 of the SCM Agreement, and to find that the exemption meets the conditions in the
footnote.84 The United States disagrees.85 The parties and the Panel also had an exchange regarding
this request for review during the interim review meeting of the Panel with the parties.86
5.13. To recall, in the Inter im Report we noted that pursuant to Sections 6.08(a)(i) and (v) of
the FTP, when an EOU/EHTP/BTP Unit sells finished goods to the DTA, such sales are subject to
central excise duty if the finished good itself is subject to central excise duty.87 Therefore, when the
finished good is not subject to central excise duty, these provisions do not provide for the reversal
of any central excise duty exemption availed on inputs consumed in the production of the finished
good.88
5.14. During the interim review, howeve r, India clarified that pursuant to the FTP, sale by an
EOU/EHTP/BTP Unit in the DTA also triggers the obligation on the part of such Unit to pay any central
excise duty initially foregone on excisable inputs consumed to produce the goods in question.89
5.15. Specifically, India referred to Section 6.08(a)(vi) of the FTP, which provides for "refund of any
benefits under Chapter 7 of the FTP availed by the EOU/supplier as per the FTP, on the goods used
for manufacture of the goods cleared into the DTA". India pointed out that Chapter 7 of the FTP, and
in particular Section 7.03(c) thereof, provides that domestic suppliers of EOU/EHTP/BTP Units,
among others, may obtain a refund of central excise duties on sales to such Units; alternatively,
such suppliers may avail themselves of an exemption on sales to Units and therefore not pay the

80 India's request for review, paras. 36-37. See also opening statement at the Panel's interim review
meeting, para. 16.
81 India's request for review, para. 40.
82 United States' comments on India's request for review, para. 30.
83 The subject of "presupposes" in the sentence in question is "the … analysis", not "India", contrary to
what is stated in India's review request. Interim Report, para. 7.213 (7.214).
84 India's request for review, paras. 41-46, and 86. The latter request (in para. 86) relates to
paras. 8.1(a) and 8.2 of our Interim Report.
85 United States' comments on India's request for review, paras. 31-33.
86 India's opening statement at the Panel's interim review meeting, paras. 21-22; responses to Panel
questions Nos. 93-101; and United States' comments on India's responses to Panel questions Nos. 93-101.
87 Interim Report, para. 7.231 (7.232).
88 Interim Report, para. 7.231 (7.232).
89 India's opening statement at the Panel's interim review meeting, para. 21.

central excise duty in the first place, in which case there is no need for the Government to provide
them with a refund.90
5.16. India further explained that the reference in Se ction 6.08(a)(vi) to the refund of benefits
under Chapter 7 "availed by the EOU/ supplier" is meant to capture precisely the situation where a
benefit was initially availed by a supplier, as is the case for central excise duties on inputs procured
by Units: the suppliers are liable for such duties 91, although the benefit is passed on to the Unit,
which does not have to pay a price that includes central excise duty. 92 Thus, India explained that
pursuant to Section 6.08(a)(vi), any exemption from or refund of ce ntral excise duty on inputs
consumed in producing a good sold on the DTA is "subject to refund" 93, and that it is the Unit that
must provide that refund.94
5.17. We find India's explanation to be supported by the evidence on the record (indeed by the FTP,
which has featured prominently in the parties' arguments and in our analysis) and in particular by
Section 6.08(a)(vi) of the FTP.
5.18. The United States raises a number of objections. First, the United States argues, in several
ways, that the exemption i t is challenging is provided to EOU/EHTP/BTP Units under Chapter 6 of
the FTP, and therefore cannot be undone by the refund of a benefit granted to a supplier under
Chapter 7 of the FTP.95 However, India has explained, as set out above, that in a transaction between
a domestic supplier and an EOU/EHTP/BTP Unit purchasing inputs from the domestic supplier, the
provision for a central excise duty exemption in favour of the Unit, and for a central excise duty
exemption or refund in favour of the supplier, are t wo sides of the same coin. Moreover, the link
between Chapters 6 and 7 of the FTP, and between Units and suppliers, is made in Chapter 6 itself,
and specifically in Section 6.08(a)(vi), which provides for a refund of "benefits under Chapter 7 …
availed by the EO[Unit]/supplier …".
5.19. Second, the United States argues that Section 7.02 of the FTP does not list, among the
transactions covered by Chapter 7 (i.e. "deemed exports"), sales by EOU/EHTP/BTP Units to
the DTA96, and is therefore not applicable to such sales. India, however, is not asserting that.
Instead, India is pointing out that the transactions covered by Chapter 7 include the supply of goods
by domestic manufacturers to EOU/EHTP/BTP Units97 - i.e. the transactions in which Units purchase
inputs from the DTA.
5.20. In light of India's explanation of the record evidence on which our analysis has been based,
we have therefore reconsidered 98 our findings in paragraph 7.231 (7.232) of the Interim Report,
and the findings that presuppose those in par agraph 7.231 (7.232). We have thus revised
paragraph 7.231 (7.232-7.235) to conclude that the United States, which bears the burden of proof,
has not shown that the EOU/EHTP/BTP Schemes fail to limit the central excise duty exemption to
inputs consumed in the production of the exported product. As a consequence, we have also revised
paragraphs 7.232 (7.235) and 7.233 (7.236), sections 7.7.2 and 7.10.2, and paragraphs 8.1
and 8.2, of the Interim Report.

90 India's responses to Panel questions Nos. 95 and 101; Sections 7.02 and 7.03(c) of the FTP (as
contained in the second part of Exhibit USA-3).
91 India's response to Panel question No. 97.
92 India's response to questioning from the Panel at the interim review meeting (ca. 12.20-12.23 pm).
93 Section 6.08(a)(vi) of the FTP.
94 India's response to Panel question No. 99.
95 United States' comments on India's responses to Panel questions Nos. 95-97 and 99-100.
96 United States' comments on India's response to Panel question No. 96, paras. 9 and 12-15.
97 Section 7.02(A)(b) of the FTP.
98 See Panel Report, US – Tuna II (Mexico), para. 6.3:
[I]n our view, requests to review precise aspects of the Panel's report may legitimately include
requests for "reconsideration" of specific factual or legal findings, provided that such requests are
not based on the presentation of new evidence.
See also Panel Report, EC – Large Civil Aircraft, para. 6.231.

5.4 Export contingency: in general
5.21. India argues that we have failed to take into account its arguments on the (absence of) export
contingency of the EOU/EHTP/BTP Schemes. 99 According to India, while the Panel "has correctly
identified that EOU/EHTP/…BTP Units are to export the entirety of their product ion, (except
permissible sales to DTA)" 100, it has failed to take into account that the aim of the positive NFE
requirement is to "ensure[] business prudence", in particular by ensuring that the value of the
imported inputs does not exceed the value of the exported products.101 India therefore requests us
to review section 7.10.2 of the Interim Report.
5.22. The United States takes the view that "the Panel carefully considered India's arguments and
rejected them".102 The United States also addresses those arguments on the merits.103
5.23. In our Interim Report, we have identified104, and addressed105, India's argument that the NFE
requirement is meant to ensure business prudence. We therefore reject India's request for review.
5.5 Export contingency: of the central excise duty exemption
5.24. India asks us to review our findings on the export contingency of the central excise duty
exemption under the EOU/EHTP/BTP Scheme s.106 However, as a result of India's request to
reconsider our analysis of that same exemption und er footnote 1 of the SCM Agreement, we no
longer proceed to assess whether that exemption is export contingent.107
6 INDIA'S REQUESTS CONCERNING THE PANEL 'S ASSESSMENT OF THE DUTY-FREE
IMPORTS FOR EXPORTERS SCHEME
6.1 Condition 10
6.1. Under DFIS, Condition 10 (line item 104) exempts food tenderizers for use in the processing
of seafood products for export. In the Interim Report, we found that Condition 10 does not meet the
conditions of footnote 1 because the evidence submitted by the United States in Exhibit USA -90
indicated that at least one type of tenderizer involves a tool for mechanical tenderization, which
would therefore not be physically incorporated into the processed seafood product, and is also not
"energy, fuels, and oil".108
6.2. India requests us to reconsider our finding in respect of Condition 10 because, in India's view,
the evidence submitted by the United States pertains to mechanical meat tenderizers that cannot
be used in the production of seafood products.109

99 India's request for review, para. 47; opening statement at the Panel's interim review meeting,
para. 27.
100 India's request for review, para. 47.
101 India's request for review, paras. 48-49; opening statement at the Panel's interim review meeting,
para. 28.
102 United States' comments on India's request for review, para. 35.
103 United States' comments on India's request for review, paras. 36-37.
104 Interim Report, para. 7.489 (7.488) ("[r]egarding the NFE requirement, India argues that it …
ensures that Units act with commercial prudence and without operating at a loss"). India now adds the concern
that Units would otherwise be subject to antidumping duties, which does not however add to the substance of
its arguments. (India's request for review, para. 48.)
105 Interim Report, paras. 7.495-7.496 (7.494-7.495).
106 India's request for review, paras. 50-52; opening statement at the Panel's interim review meeting,
paras. 23-26.
107 See para. 5.20. above.
108 Interim Report, para. 7.253 (7.256).
109 India's request for review, paras. 53-54 and 86. The requests relate to paras. 7.253 (7.256), 8.1(d)
and 8.2 of our Interim Report. See also India's opening statement at the Panel's interim review meeting,
paras. 31-32.

6.3. The United States opposes India's request, observing both that it is unsupported by evidence
and that interim review would not be "the proper point at which to make new factual assertions or
introduce new evidence".110
6.4. We recall that during the proceedings we asked the parties to indicate, among the items eligible
under the challenged duty exemptions in Customs Notification No. 50/2017, which were capital
goods.111 In response, the United States asserted that food tenderizers, included in list 1 of Customs
Notification No. 50/2017, were capital goods and referred to a website, later submitted as
Exhibit USA-90, in support. 112 As we noted in footnote 404 (410) of the Interim Report, India
remained silent with regard specifically to food tenderizers. India also neither respo nded to the
United States' assertion that food tenderizers are capital goods, nor objected to the probative value
of the United States' evidence in its comments on the United States' response. 113 India's factual
assertions at interim review stage are untimely. We therefore reject India's request.
6.2 Condition 36
6.5. Regarding Condition 36, pertaining to the importation of carpet samples, India now invokes,
(1) the International Convention to Facilitate the Importation of Commercial Samples and
Advertising Materials, 1952 (Convention), which "allows for duty free importation of commercial
samples subject to certain conditions"114, and (2) an Indian measure dated 1994, which was neither
submitted nor referred to before and which according to India a ffords exemptions from customs
duties also to importers who do not export.115 On this basis, India asks us to reconsider our findings
on Condition 36.116
6.6. The United States submits that we must reject India's request because "India points to no
record evidence or any legal argument addressing the Panel's findings" at issue.117
6.7. While invoking the Convention, India has made no argument as to how it relates to the
Panel's analysis under the WTO Agreement in general and footnote 1 of the SCM Agreement in
particular.
6.8. In any event, the Convention being part of international law, we have taken the step of
consulting it 118 and we note that it envisages the duty -free importation of samples in
two circumstances, namely: when they are of negligible value, an d when their admission is
temporary (with a view to soliciting orders of goods to be supplied from abroad to the territory of
temporary admission, and then re-exporting the sample).119 There is no mention, in DFIS, of these
conditions. Instead, DFIS ties the duty-free importation of samples to the value of exports of carpets
made in the previous year.

110 United States' comments on India's request for review, para. 40.
111 Panel question No. 80.
112 United States' response to Panel question No. 80, Appendix 2, p. 59, fn 208.
113 India argues that "[w]hile [it] did not specifically highlight [that mechanical (meat) tenderizers
cannot be used in the production of seafood products] in its comments on responses provided by the United
States to the Question 80 posed by the Panel, India assumed that the Panel would not base its finding on an
incorrect exhibit, that does not relate to the product under consideration". (India's opening statement at the
Panel's interim review meeting, para. 32.) We note however that Exhibit USA-90 expressly refers to
tenderizers for meat, "[l]et it be red meat consisting of beef, pork, lamb, venison, etc., poultry comprising of
chicken, turkey, ducks, etc., or seafood like fish, shrimp, crabs, etc." (Exhibit USA-90, p. 1 (emphasis added))
On its face, the evidence submitted by the United States therefore appears pertinent to the issue before us and
India did nothing at the appropriate stage of the proceedings to convince us of the opposite.
114 India's request for review, para. 55. See also India's opening statement at the Panel's interim review
meeting, para. 33.
115 India's request for review, paras. 55-57.
116 India's request for review, paras. 55-57 and 86. The latter request (in para. 86) relates to
paras. 8.1(d) and 8.2 of our Interim Report.
117 United States' comments on India's request for review, para. 41.
118 International Convention to Facilitate the Importation of Commercial Samples and Advertising
Material, done at Geneva (7 November 1952), available at:
https://treaties.un.org/doc/Treaties/1955/11/19551120%2000-56%20AM/Ch_XI_A_05p.pdf (accessed
15 September 2019).
119 Convention, Articles III and IV.

6.9. Therefore, we see no basis to accept India's request for review based on the Convention.
6.10. Regarding India's 1994 measure, this falls squarely with in the category of new evidence,
which moreover India could have but has not submitted before, and which it is not appropriate to
consider at interim stage.120
6.11. We therefore reject India's request relating to Condition 36.
7 INDIA'S REQUESTS CONCERNING THE PANEL'S ASSES SMENT OF THE MERCHAN DISE
EXPORTS FROM INDIA SCHEME
7.1 Reference period for FOB value of exports
7.1. India points out that paragraph 7.270 (7.273) of the Interim Report indicates that the value of
MEIS scrips is a fixed percentage of the FOB value of exports during "the previous year". India
explains that scrips are based on the FOB value of the exports but are "not cumulatively provided
for an entire year".121 India therefore requests the Panel to remove the reference to " the previous
year" from paragraph 7.270 (7.273). The United States did not comment on this request.
7.2. The Panel has therefore removed the references to "the previous year" from paragraph 7.270
(7.273) of the Interim Report, as requested by India.
7.2 MEIS scrips as a direct transfer of funds
7.3. India asks us to "reconsider [our] findings" in paragraphs 7.433 (7.432) to 7.439 (7.438) of
the Interim Report122, which are part of our assessment of whether MEIS involves a "direct transfer
of funds" withi n the meaning of Article 1.1(a)(1)(i) of the SCM Agreement. While India does not
expressly indicate the changes it is seeking, the gist of the request appears to be that we should
find that the provision of MEIS scrips belongs, at least in part, to the category of revenue foregone123
and that, moreover, it is excluded from the definition of a subsidy by virtue of footnote 1 of the
SCM Agreement.124 The United States requests us to reject India's request.125
7.4. There are several prongs to India's review request . Factually, India relies on the fact that
MEIS scrips may be used to pay for customs duties, excise duties, and certain other government
dues, a fact which, India says, the Panel "acknowledges".126 Indeed, we do not only "acknowledge"
this fact: this fact i s an important part of the basis on which we have held that scrips are "funds"
within the meaning of Article 1.1(a)(1)(i).127 Thus, pointing to this fact does not warrant a revision
of our reasoning, which we will not repeat here.
7.5. India then misquotes us as "not[ing] … that 'MEIS scrips, when used to pay for customs duties,
do operate as remitting import charges'".128 In the relevant passage of our Report however, we say,
addressing an argument by India: "Even assuming that MEIS scrips, when used …".129
7.6. Next, India submits that we have contradicted ourselves by noting that the subparagraphs of
Article 1.1(a)(1) are not mutually exclusive, but then only finding that MEIS scrips fall under
subparagraph (i), on direct transfer of funds.130 India also submits that when "government revenue
such as taxes, duties collected by the government" are involved, the only applicable clause is

120 E.g. Appellate Body Report, EC – Sardines, para. 301.
121 India's request for review, para. 58.
122 India's request for review, para. 63. The request in its entirety is set out ibid. paras. 59-63.
123 India's request for review, paras. 59-62. The United States describes India's request as "claim[ing]
that some unidentified aspect of the MEIS duty scrips fall within subparagraph (ii)", on revenue foregone.
(United States' comments on India's request for review, para. 42.)
124 India's request for review, para. 58.
125 United States' comments on India's request for review, paras. 42-46.
126 India's request for review, para. 61.
127 Interim Report, paras. 7.431 (7.430) and 7.433 (7.432).
128 India's request for review, para. 60, referring to Interim Report, para. 7.289 (7.292), in the
Panel's assessment of MEIS under footnote 1 of the SCM Agreement.
129 Interim Report, para. 7.289 (7.292) (emphasis added). See also United States' comments on
India's request for review, paras. 43-44.
130 India's request for review, paras. 59 and 61-62.

subparagraph (ii) of Article 1.1(a)(1), not subparagraph (i). 131 These two arguments are in
themselves somewhat contradictory, bec ause the first seems to suggest that India considers the
subparagraphs not to be mutually exclusive, whereas the second argument seems to suggest India
considers them mutually exclusive. Be that as it may, regarding the non -exclusivity of the two
subparagraphs, we have already explained that for our finding under Article 1.1(a)(1)(i) to stand,
we need not "exclude that aspects of the measure may fall under subparagraph (ii)". 132 Regarding
the inapplicability of subparagraph (ii) to measures involving taxes, we recall that while MEIS scrips
are instruments that can be used to pay for government dues (and indeed, that is the basis of their
monetary value), they are notes provided to recipients as a reward for their exports and are freely
transferable.133 They therefore bear substantial differences from a situation in which a Government
merely foregoes taxes owed by the subsidy recipient.
7.7. Finally, India appears to suggest that footnote 1 of the SCM Agreement applies to MEIS
scrips.134 We have extensively addressed India's arguments in this regard in the relevant section of
our Interim Report135, and India has advanced nothing that warrants reviewing that analysis.
7.3 Amendments to MEIS
7.8. India requests changes to paragraphs 7.277 (7.280) and 7.279 (7.282), a nd footnote 430
(436) of the Interim Report, on the basis of a 2016 amendment to the MEIS list of country groups
that was not on the Panel's record and that neither party had previously mentioned in these
proceedings.136 The United States notes that this is "information that is not in the record from …
almost two years before the start of this dispute", and that the introduction of new evidence at the
interim stage "is not appropriate".137
7.9. The paragraphs and footnote that India requests us to review are p art of our reasoning
regarding India's argument that MEIS scrips are in fact a remission of indirect taxes on products
exported in the past.
7.10. There, we noted that the value of the scrips, which the relevant legal instruments describe as
a "reward", was determined by multiplying the value of past exports by the "rate(s) of reward" 138
set out in Appendix 3B.139 We found that nothing in the record evidence indicated that the award of
MEIS scrips was based on indirect taxes paid in connection with the export ed products 140, and
similarly nothing in the record evidence indicated that the rates of reward were in fact determined
on the basis of such indirect taxes.141 We further noted that India changed those rates from time to
time: in one such example laid before u s, from December 2017, we again found no reference to
indirect taxes paid in connection with the exported products playing any role in setting the rates.142
And we also observed that in the edition of the measure that the parties had laid before us, for some
products, MEIS rewarded past exports at different rates depending on the country of export –
another fact that was hard to reconcile with the proposition that MEIS scrips merely refunded indirect
taxes already paid on past exports.143

131 India's request for review, para. 62. The United States "cannot decipher" the latter argument, and
also notes that India's premise, that the "sole purpose [of MEIS scrips] is to offset/refund the indirect taxes
already paid by the exporter", was rejected by the Panel. (United States' comments on India's request for
review, para. 45.)
132 Interim Report, para. 7.438 (7.437).
133 See e.g. Interim Report, paras. 7.160-7.163 (7.161-7.164) and 7.432 (7.431).
134 India's request for review, para. 60.
135 Interim Report, section 7.6.5 (paras. 7.265-7.291 (7.268-7.294).
136 India's request for review, paras. 64-65; opening statement at the Panel's interim review meeting,
para. 34.
137 United States' comments on India's request for review, para. 47.
138 Section 3.04 of the FTP.
139 Interim Report, para. 7.276 (7.279).
140 Interim Report, para. 7.278 (7.281).
141 Interim Report, para. 7.279 (7.282).
142 Interim Report, para. 7.280 (7.283).

7.11. India's request for review relates to this last point, i.e. the provision for different reward rates
depending on the country of export. India now argues, relying on ne w evidence, that in the list
of MEIS rates dated April 2016, there is no such variation among reward rates.144
7.12. We do not see what difference this would make to our conclusions but, in any event, this
Indian legal instrument from 2016 is new evidence, which it is not appropriate for us to consider at
interim review stage.145
7.4 Use of MEIS scrips in connection with failures to fulfil export obligations
7.13. India requests us to review paragraphs 7.269 (7.272), 7.287 (7.290), 7.431 (7.430)
and 7.433 (7.432) of our Interim Report to modify the description of certain uses that MEIS scrips
can be put to.146 The United States does not comment on India's request.
7.14. To recall, the FTP explicitly provides that MEIS scrips can be used to pay for customs duties
(basic and additional), excise duties, and to pay for certain other charges vis-à-vis the Government
in case of "defaults" in export obligations or "shortfall" in export obligations.147
7.15. With reference to payment for shortfalls in export obligations, India explained earlier in these
proceedings that this occurs when the beneficiar ies of certain other government schemes (the
exemption or remission scheme , and EPCG, under Chapters 4 and 5 of the FTP) export less than
they undertook to: in that case, they have to pay (ex post) customs duties on the "unutilized" goods
imported under those schemes.148
7.16. On this basis, India asks us to add, wherever we refe r to payment for shortfalls in export
obligations, that the payment in question consists of "basic customs duty and additional customs
duty".149 We have made certain edits to the language used in our Report in light of India's request,
as set out in the subsections below.
7.4.1 Paragraph 7.160 (7.161) of the Interim Report
7.17. India did not refer to this paragraph in its request for review. However, this is where the
description at issue first appears. We have made certain changes to this paragraph, to which we will
cross-refer in the paragraphs that India requested us to review.
… "Duty Credit Scrips", … are paper -based notes that can be used to pay for (i) basic
and additional customs duties on the importation of goods 264, (ii) central excise duties
on domestically procured goods265, and (iii) certain other charges and fees owed to the
Government, such as basic and additional customs duties and fees owed as a
consequence of failing to fulfil one's in case of a shortfall266 in export obligations under
other schemes.267 …
266 The difference between a participating company's actual export performance for a year and its
export obligation.

144 India's request for review, para. 64; opening statement at the Panel's interim review meeting,
para. 34.
145 E.g. Appellate Body Reports, EC – Sardines, para. 301; EC – Selected Customs Matters, para. 259;
and Panel Reports, Russia – Railway Equipment, paras. 6.45-6.46; Korea – Radionuclides, para. 6.8.
146 India's request for review, paras. 66-69.
147 Sections 3.02 and 3.18 of the FTP.
148 India's response to Panel question No. 61. The Panel's question used the term "shortfall". The Panel
however understands that India's explanation referred both to defaults and shortfalls in export obligations,
which are referred to in Sections 3.18(a) and (b) of the FTP, respectively.
149 India's request for review, para. 69. However, we note that the language "payment of … shortfall
in EO [export obligation]" appears in Section 3.18(b) of the FTP. Further, we note that on the face of
Sections 3.02(iv) and 3.18(b) of the FTP, the back payment of customs duties is not the only use to which
MEIS scrips can be put under these provisions; this, together with a preference for shorter formulations,
accounts for most of the differences between the language proposed by India and our chosen language.

7.4.2 Paragraph 7.269 (7.272) of the Interim Report
7.18. India asks us to reflect the fact that paying for a shortfall in export obligations entails paying
for customs duties on past imports. Paragraph 7.269 (7.272) is expressly non -exhaustive
("including"). We have left in a single reference to "customs … duties", without distinguishing the
situation of the back payment of customs duties as a result of a default or shortfall in export
obligations, and we have added a cross-reference to paragraph 7.160 (7.161) of the Interim Report.
… The recipient of the scrips can then use them to offset certain liabilities vis-à-vis the
government, including the payment of customs and excise duties431 and of shortfalls in
export obligations under other schemes432 ….
431 Sections 3.02 and 3.18 of the FTP. For a fuller description, see para. 7.161 above.
432 Sections 3.02(iv) and 3.18 of the FTP
7.4.3 Paragraph 7.287 (7.290) of the Interim Report
7.19. Since this is a description of India's arguments, we have edited this paragraph using the exact
language appearing in one of the cited passages of India's second written submission
(paragraph 117).
India argues that when MEIS scrips are used to pay for customs duties on importation,
or for shortfalls to regularize a default in an export obligation, this "results in" a
remission of import charges that meets the conditions of footnote 1 read together with
Annex I(i).461
7.4.4 Paragraph 7.431 (7.430) of the Interim Report
7.20. While leaving this paragraph unchanged, we have edited the footnote.
First, scrips may be used to pay for (a) basic and additional customs duties applying on
importation under the 1975 Customs Tariff Act (with some exclusions), (b) excise duties
on goods purchased domestically, and (c) certain other fees and charges owed to the
Government, such as charges for failing to fulfil on e's export obligations under certain
other Government schemes.624
624 Sections 3.02 and 3.18 of the FTP. See para. 7.161 above. As reflected there, such charges for
failing to fulfil one's export obligations include the back payment of customs duties.
7.4.5 Paragraph 7.433 (7.432) of the Interim Report
7.21. We do not see the need to modify the relevant portion of this paragraph, given the more
detailed descriptions already present earlier in the report, which this paragraph merely sums up.
… scrips can be used to pay for customs duties and other liabilities vis-à-vis the
Government …
7.4.6 Footnote 463 (468) of the Interim Report
7.22. We have clarified the language of this footnote, to which India refers in its comments.150
Sections 3.02(i), 3.02(iv) and 3.18(a) of the FTP expressly provide that MEIS scrips can
be used to pay for customs duties. In addition, also rRegarding payments for shortfalls
in export obligations pursuant to Section 3.18(b) of the FTP, India appears to argue that
paying for such shortfalls ultimately results in paying customs duties on goods imported
under the schemes at issue and therefore "results in a remission of these import

150 India's request for review, para. 68.

charges". (India's second written submission, para. 117 ). See also India's response to
Panel question No. 61. …
7.5 The use of MEIS scrips as a remission or not
7.23. In Section 7.6.5.2, we addressed India's argument to the effect that when MEIS scrips are
used to pay for customs duties, they result in a remission that is consistent with A nnex I(i) of the
SCM Agreement. In footnote 464 of the Interim Report , we noted the contrast between this
argument and India's repeated statements that the use of MEIS scrips to pay for customs duties
does not result in the remission of those duties. India asks us to delete the footnote, on the basis
that the statements at issue were made in the context of the alternative argument that the
MEIS scrips are consistent with Annex I(g) and Annex I(h), and that the two arguments are
"mutually exclusive".151 The United States takes the view that footnote 464 "accurately reflects"
India's position and asks us to reject India's request for review.152
7.24. We disagree with India's reasoning in its request for review. While a litigant may put forward
different legal arguments as alternative, the facts presumably remain the same. It is thus at its own
peril that a litigant makes contradictory statements of fact in the context of alternative legal
arguments.
7.25. At the same time, the observations in footnote 464 of the Interim Report are not required to
sustain our findings, and we therefore accede to India's request to delete the footnote.
8 INDIA'S REQUESTS CONCERNING THE PANEL 'S ASSESSMENT OF THE SPECIAL
ECONOMIC ZONES SCHEME
8.1 The notion of "exports" in the SEZ Scheme
8.1. India recalls its explanations that "the definition of the term 'export' under the SEZ Scheme is
wider than the understanding of exports under SCM Agreement", and argues that this argument
"has not been considered".153 India therefore "urges the Panel to provide a detailed consideration of
this argument", and to review paragraphs 7.150 (7.151), 7.515 (7.514) and 7.531 (7.530) of the
Interim Report.154 For the same reason, India also asks us to review paragraph 7.529 (7.528) of the
Interim Report.155
8.2. The United States takes the view that we have addressed this argument in the Interim Report
and therefore asks us to reject India's request.156
8.3. Contrary to what India contends in its request for review, we have considered India's argument
that "export" within the meaning of the SEZ Scheme includes more than taking goods out of India
to a third country.
8.4. We have set out the relevant facts, namely (i) the items included in the definition of exports
under Section 2(m) of the SEZ Act 157, (ii) the items that can be relied upon to achieve a positive
NFE pursuant to the SEZ Rules 158, (iii) the relationship between these two lists of items 159, and
(iv) the fact that, in both cases, such items are not limited to taking goods out of India.160 We have

151 India's request for review, paras. 70-74.
152 United States' comments on India's request for review, para. 49.
153 India's request for review, para. 75; opening statement at the Panel's interim review meeting,
para. 36.
154 India's request for review, paras. 75-76.
155 India's request for review, para. 83.
156 United States' comments on India's request for review, paras. 50-52, with reference to
India's request for review of paragraphs 7.150 (7.151), 7.515 (7.514), and 7.531 (7.530). Regarding this
same request, the United States also comments on the merits of the arguments in line with paragraph 7.525
(7.524) of our Interim Report. Ibid. para. 51. Regarding India's request to review para. 7.529 (7.528), the
United States argues it is unsupported. (United States' comments on India's request for review, para. 55.)
159 Interim Report, fn 766 (768). As set out there, the list of "additional" items in Rule 53 of the
SEZ Rules includes, but is more extensive than, the list in Section 2(m) of the SEZ Act.

referred to India's arguments, based on these facts, that the measure is therefore not export
contingent.161 And we have then addressed and rejected India's arguments on the merits.162
8.5. On this basis, we disagree with the contention on which India's request is b ased, i.e. that we
did not consider India's arguments on the scope of the notion of "exports" under the SEZ Scheme.
8.6. In its request for review of paragraphs 7.150 (7.151), 7.515 (7.514) and 7.531 (7.530), India
also emphasizes that the definition of e xports in the SEZ Act "influences the 'export promotion'
objective of the SEZ Scheme".163 To the extent India considers this argument to be different from
the argument on export contingency, which, as just mentioned, we have considered and addressed
in our report, we find the argument puzzling. To recall, the items included in the definition of exports
provided in the SEZ Act are, in addition to the taking of goods out of India, the export of services,
and the supply of goods to SEZs or between SEZs. 164 We do not see how, or to what effect165, this
should influence our understanding of "the 'export promotion' objective of the SEZ Scheme".166
8.7. We therefore reject India's request for review in its entirety.
8.2 The Panel's consideration of the objectives of the SEZ Scheme
8.8. India asks us to review our findings regarding the existence of revenue foregone in
paragraphs 7.364 (7.363), 7.380 (7.379), and 7.403 (7.402) in light of its description of the
SEZ Scheme as creating distinct geographica l areas "to increase the production capacity and
employment potential of the SEZ Units, and consequently economic development of region".167 The
United States submits that we have already considered these objectives.168
8.9. We found the evidence to establis h that export promotion was a "central" 169 objective of the
SEZ Scheme, and we noted that India argued that, in addition, the objectives of the scheme included
the generation of additional economic activity, investment, and employment, and the maintenance
of India's sovereignty. 170 We then took these objectives into account in our assessment of the
existence of revenue foregone.171 We have thus already addressed the considerations that India is
raising, and we therefore reject India's request.
8.3 Export contingency of the SEZ Scheme
8.10. India asks us to review paragraphs 7.525 (7.524) and 7.531 (7.530) of the Interim Report
because, according to India, we have applied the wrong legal standard to assess export
contingency.172
8.11. We refer to our findings in paragraphs 7.523-7.534 (7.522-7.533) of the Interim Report. What
India takes issue with is the fact that we have found there to be export contingency even though it

161 Interim Report, para. 7.515 (7.514).
162 Interim Report, para. 7.525 (7.524).
163 India's request for review, paras. 75-76. This aspect of India's arguments in its interim review
request appears to relate to the Panel's finding that the preamble of the SEZ Act refers to "the promotion of
exports and … matters connected therewith and incidental thereto" as objectives of the Scheme. See
Interim Report, para. 7.150 (7.151).
164 Interim Report, fn 766 (768), referring to Section 2(m) of the SEZ Act. Further, as noted in fn 766
(768) and para. 7.524 (7.523) of the Interim Report, yet other supplies are included in the calculation of net
foreign exchange under Rule 53 of the SEZ Rules. However, this particular aspect of India's interim review
argument (about the measure's "objectives") appears to be related to the definition of exports per se rather
than to the items comprising net foreign exchange.
165 To recall, aside from our discussion of de jure export contingency (which turns on the conditions
triggering the subsidies, rather than on the "objective" of the Scheme as such), the context in which we
considered the objectives of the SEZ Scheme in our substantive analysis was our assessment of the existence
of revenue foregone under Article 1 of the SCM Agreement.
166 India's request for review, para. 75.
167 India's request for review, para. 77.
168 United States' comments on India's request for review, para. 53.
169 Interim Report, paras. 7.352-7.353 (7.351-7.352).
170 Interim Report, paras. 7.150-7.151 (7.151-7.152), and 7.351-7.354 (7.350-7.353).
171 Interim Report, paras. 7.364 (7.363), 7.380 (7.379), and 7.403 (7.402).
172 India's request for review, paras. 78-82 and 84-85; opening statement at the Panel's interim review
meeting, paras. 37-42.

is possible to achieve a positive NFE through certain listed "supplies" other than taking goods out of
India.173 In particular, India takes issue with our explanation that "when a subsidy is available on
condition of export performance, the fact that the same subsidy can also be obtained under a
different set of circumstances, not involving export contingency, does not prevent a finding that the
subsidy is export contingent".174
8.12. According to India, this "runs contrary to the explanation … in footnote 4 of the
SCM Agreement"175, according to which "[t]he mere fact that a subsidy is granted to ent erprises
which export shall not for that reason alone be considered to be an export subsidy within the meaning
of this provision". 176 Thus, according to India, our analysis "conflates conditionality with the
beneficiaries of a measure".177
8.13. The United States responds that "India ignores the fact that SEZ Units are exporters not by
happenstance, but by the requirements of the SEZ Scheme".178
8.14. We agree with the United States' observation. As set out in our Interim Report, the
SEZ Scheme, on its face, conditions the availability of the subsidies on the maintenance of positive
NFE179, which is defined by the formula A – B >> 0. This requires "A" to be greater than 0, and A
has several components, the first of which is the FOB value of exports by the Unit. " Therefore, one
condition triggering the subsidies to Units is export performance: exports greater than 0". 180 Thus,
we are not at all faced with a "mere fact that a subsidy is granted to enterprises which export". 181
Instead, as we have established in the Inte rim Report, India conditions the subsidy on export
performance.
8.15. As it did in the earlier stages of our proceedings, India invokes a passage from the
Appellate Body Report in Canada – Autos, where the Appellate Body notes that under the measure
it is reviewing, "the import duty exemption is simply not available to a manufacturer unless it exports
motor vehicles".182 The Appellate Body therefore finds that the duty exemption in question "is clearly
conditional, or dependent upon, exportation".183 From this, India derives that the legal standard for
export contingency is a "but for" standard. 184 India is, however, confusing the
Appellate Body's description of the measure before it with the applicable legal standard. That under
the measure at issue in Canada – Autos exports were the only possible trigger of the subsidy does
not mean that this is a necessary feature of export contingency.
8.16. India also argues that the reasoning in US – FSC is not applicable to the SEZ Scheme because
the measures at issue are "structurally different" but, again, India does not identify a difference that
would actually affect the application of the legal standard for export contingency.185
8.17. Finally, India "emphasize[s]"186 that in a passage of the panel report in Canada – Dairy that
was not appealed, that panel observed that "access to milk" at administered prices under certain
"milk classes" was "also available (often exclusively) to processors which produce for the domestic

173 The United States observes that India is repeating arguments already considered by the Panel.
(United States' comments on India's request for review, para. 54.)
174 Interim Report, para. 7.525 (7.524).
175 India's request for review, para. 78. See also ibid. paras. 84-85.
176 Fn 4 of the SCM Agreement.
177 India's request for review, paras. 79; opening statement at the Panel's interim review meeting,
para. 40.
178 United States' comments on India's request for review, para. 56.
179 And to other requirements involving exportation: see paras. 7.529 (7.528), 7.532 (7.531),
and 7.533 (7.532) of the Interim Report.
180 Interim Report, para. 7.523 (7.522).
181 Fn 4 of the SCM Agreement.
182 Appellate Body Report, Canada – Autos, para. 104. We had also addressed India's argument in the
second part of fn 773 (775) of the Interim Report.
183 Appellate Body Report, Canada – Autos, para. 104.
184 India's request for review, para. 80; opening statement at the Panel's interim review meeting,
para. 41.
185 India's request for review, para. 81; opening statement at the Panel's interim review meeting,
para. 38.
186 India's request for review, para. 82.

market" and was therefore "not 'contingent on exp ort performance'". 187 We note that the facts
underlying this statement were considerably different from those before us.188 In any event, if India
considers that the more recent appellate reports we have relied upon189 constitute a departure from
that earlier report, it has not explained to us why we should nonetheless rely on that earlier report.
8.18. We therefore reject India's request for review.
9 INDIA'S REQUESTS CONCERNING THE PANEL'S RECOMMENDATIONS
9.1 The "extent" of the recommendation
9.1. India asks us to specify that our recommendation to withdraw the prohibited subsidies is only
made "to the extent" we have found them to be inconsistent with Articles 3.1(a) and 3.2 of the
SCM Agreement.190 The United States objects, noting that Articl e 4.7 of the SCM Agreement
expressly refers to a finding that "the measure … is … a prohibited subsidy".191
9.2. What must be withdrawn pursuant to a recommendation under Article 4.7 is the "prohibited
subsidy" – not, for example, aspects of a scheme that d o not give rise to a prohibited subsidy. We
therefore consider that the requested change is unnecessary, and we decline to make it.
9.2 Time period for withdrawal
9.3. India asks us to review our recommendation on the time period for withdrawal of the prohibited
subsidies under four of the five schemes at issue.
9.4. We begin with the prohibited subsidies under the EOU/EHTP/BTP Schemes, EPCG Scheme,
and MEIS. For these, in our Interim Report we recommended withdrawal within 90 days, whereas
India requests "at least 180 days".192
9.5. India does not dispute the Panel's reasoning that withdrawal of the prohibited subsidies in
question would require amendment of measures that can be adopted by the Government, i.e. chiefly
the FTP and possibly subordinate administrative instruments.193 India also observes that modifying
the FTP requires "consultations with various stakeholders" including at central and state government
level, and "an express approval from India's cabinet"194; that "the next review of the FTP is scheduled
for April 2020" 195; and that modifications to the FTP "may have to be laid before the
Indian Parliament for a period of 30 days".196
9.6. The United States considers that the arguments advanced by India are not consistent with the
requirement to withdraw prohibited subsidies without delay, and that in the context of its graduation
from Annex VII in 2017, as well as following the United States' request for consultations in this
dispute in March 2018, India has been on notice of the need to withdraw its prohibited subsidies.197
9.7. We consider that stakeholder consultations and approval from India's Cabinet can take place
within the three -month framework envisaged in our Interim Report. As for the fact that the next
review of the FTP is scheduled to com e into effect in April 2020 198, we consider that helpful, as it
hopefully facilitates withdrawal of the prohibited subsidies in question. Thus, we do not consider that
this warrants an extension to the period for withdrawal. As for the possibility that the FTP may have

187 India's request for review, para. 82, citing Panel Report, Canada – Dairy, para. 7.41. See also
India's opening statement at the Panel's interim review meeting, para. 39. We understand the reference to
para. "7.14", in India's request for review, to be a typographical error, given that language cited by India is
found in para. 7.41 of the cited report.
188 Panel Report, Canada – Dairy, paras. 2.38-2.39.
189 Interim Report, paras. 7.476 (7.475) and 7.525 (7.524) and fn 773 (775).
190 India's request for review, para. 87.
191 United States' comments on India's request for review, para. 58.
192 India's request for review, para. 91.
193 India's request for review, paras. 89-91.
194 India's request for review, para. 90.
195 India's request for review, para. 91.
196 India's request for review, para. 91.
197 United States' comments on India's request for review, paras. 59-63.
198 Indeed, the current FTP is to "remain in force up to 31st March, 2020". Section 1.01 of the FTP.

to be laid before Parliament for 30 days, we consider that this justifies a 30 -day extension to the
time period we had envisaged for withdrawal before India made us aware of this requirement. We
therefore consider that for the three schemes governed by the FTP, withdrawal "without delay" would
be withdrawal within 120 days from adoption of this Report, and we modify our recommendations
accordingly.
9.8. We now turn to the prohibited subsidies under the SEZ Scheme. For these, in our Interim
Report we envisaged withdrawal within 180 days, in light of the legislative process involved; now
India requests us to "allow for the beginning of the next fiscal year after a period of 180 days from
the adoption of the report".199 In other words, India asks for a 180-day period from adoption of the
report, plus any period that runs from the end of the 180 days to the beginning of India's fiscal year
on 1 April. The resulting time-period could then be anything between 180 days (if the 180-day period
ends when the fiscal year starts) and 544 days (if the 180-day period ends the day after).
9.9. India confirms the Panel's understanding that, for the SEZ Scheme, withdrawal of the measures
we have found to constitute prohibited subsidies would require legislative action.200 As reasons for
its request for 180 days plus the period up to the start of the following fiscal year, India adds that
modifications to tax legislation "are mostly done through a general budget", and "can be
implemented at the start of the next financial year".201
9.10. The United States argues that we "carefully examined the steps" required for withdrawal of
the prohibited subsidies under the SEZ Scheme and that no additional time is required.202
9.11. We have considered a number of scenarios under India's proposed approach, and we observe
that in the circumstances, adding up a 180-day period and any other period of time preceding the
start of the following financial year introduces elements of uncertainty and potential delay that are
incompatible with the requirement to withdraw the prohibited subsidies "without delay". We also
note that India's comments concede that 180 days suffice, since under India's proposal, if the fiscal
year started immediately after the 180-day period, then India would only have 180 days. We further
note that India submits that modifications to tax legislation are "mostly" made through a general
budget, which means they are not exclusively made this way; and also that such modifications "can
be implemented at the start of the next financial year", which, again, leaves open the possibility of
implementing them at a different date.203 We therefore consider it practicable, also in light of India's
interim review arguments, to withdraw the prohibited subsidies in questi on within 180 days from
adoption, as envisaged in our Interim Report.
9.12. We thus reject India's request for a modification of the time period for withdrawal set in our
Interim Report for the prohibited subsidies under the SEZ Scheme.
10 THE UNITED ST ATES' REQUEST CONCER NING SCRIPS PROVIDED UNDER THE
EPCG SCHEME
10.1. The United States disagrees with our statement in the last sentence of footnote 219 (220)
that duty credit scrips under the EPCG Scheme (EPCG scrips) are not at issue in this dispute, an d
asks us to delete this sentence. 204 The United States argues that it challenged the provision of
EPCG scrips throughout the proceedings205, and that India failed to rebut the United States' prima
facie case.206 The United States therefore also asks us to modify our conclusion in paragraph 8.1(b)
of the Interim Report, and conclude that the provision of EPCG scrips is inconsistent with
Articles 3.1(a) and 3.2 of the SCM Agreement.

199 India's request for review, para. 93.
200 India's request for review, para. 92.
201 India's request for review, para. 92.
202 United States' request for review, para. 64.
203 India's request for review, para. 92.
204 United States' request for review, paras. 4 and 10.
205 United States' request for review, paras. 5 and 7, fns 2, 3, and 5 (referring to the United States'
first written submission, paras. 64 and 69; second written submission, para. 116; and executive summary,
para. 12). With regard to the United States' reference to its executive summary, we note that paragraph 22 of
our Working Procedures provides that the parties' "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".
206 United States' request for review, para. 9.

10.2. India opposes the United States' request on the grounds that the United Sta tes has not
advanced any arguments concerning the EPCG scrips207, and that these operate in a different manner
from the challenged exemption from customs duties under the EPCG Scheme.208
10.3. We observe that the United States structured its submissions in two parts with respect to the
EPCG Scheme. In a first part, the United States provided a factual description of the Scheme 209 or
made introductory remarks. 210 In a second part, the United States articulated its case of
inconsistency.211 The United States referred to EPCG scrips in the first – descriptive or
introductory – part212, but not in the second. Rather, the United States only advanced arguments on
the merits in respect of the EPCG's duty exemption. A respondent, however, must be able to
understand what case of inconsistency it has to answer. One could not discern from the
United States' presentation of its case that the United States was challenging EPCG scrips. We
therefore reject the United States' request and do not include EPCG scrips in o ur analysis and
findings.
11 THE UNITED STATES' REQUEST CONCERNING THE PANEL'S ASSESSMENT OF DFIS
11.1. The United States asks us to review our findings, in paragraphs 7.259 -7.262 (7.262-7.265)
of the Interim Report, that the United States has not estab lished that Conditions 10, 21213, 28, 32,
33, and 101 do not meet the conditions of footnote 1 of the SCM Agreement. 214 The United States
now emphasizes that for each line item the measure "establishes two … conditions" 215, and argues
that the backward -looking c ondition (i.e. the capping of the duty -free entitlement at a value
corresponding to a certain percentage of past exports) is not contemplated in footnote 1 of the
SCM Agreement and introduces an additional element of export contingency. 216 The United States
therefore ask us to conclude that it has demonstrated that the measure does not meet the conditions
of footnote 1.
11.2. India responds that the United States is basing its request on a "new theory" and that the
request "lacks merit". 217 India observes that the backward-looking element acts as a limit on the
value of imported inputs consumed in the production of exported products that can benefit from the
duty exemption218, and that while footnote 1 requires exemptions or remissions not to be "in excess"
of duties or taxes accrued, it does not prevent Members from exempting from, or remitting, less
than the full exemption or remission allowed by footnote 1.219
11.3. We recall that, as described at paragraphs 7.257-7.260 (7.260-7.263) of our Interim Report,
there are two requirements (or elements, or "conditions" 220) attaching to each of the duty
exemptions in question. The imported goods must be inputs consumed in the production of an
exported product, and the value of the duty -exempt goods must not exceed a defin ed percentage
of the FOB value of the importer's previous year's exports (we referred to the latter as the
"backward-looking element"221). Until interim review stage, the United States relied on the latter
requirement to argue that the duty exemption was "disconnected" from the duties actually levied on

207 India's comments on the United States' request for review, paras. 3-4 and 6.
208 India's comments on the United States' request for review, para. 5.
209 United States' first written submission, paras. 64-69.
210 United States' second written submission, para. 116.
211 United States' first written submission, paras. 70-79; second written submission, paras. 117-133.
212 United States' first written submission, paras. 64 and 69; second written submission, para. 116.
213 Except for one and six items respectively. Interim Report, paras. 7.252-7.253 (7.255-7.256)
and 7.264 (7.267).
214 United States' request for review, paras. 12-26. We note that the United States mischaracterizes our
conclusion as being that "these conditions 'meet the conditions of footnote 1'". Ibid. para. 14. In the passage
the United States cites, our conclusion is that "the United States has not shown to this Panel that the six duty
stipulations at issue do not meet the conditions of footnote 1". Interim Report, para. 7.262 (7.265). (emphasis
added)
215 United States' request for review, para. 15.
216 United States' request for review, paras. 12-13, and 15-19.
217 India's comments on the United States' request for review, para. 8.
218 India's comments on the United States' request for review, para. 9.
219 India's comments on the United States' request for review, paras. 10 and 14.
220 Given that the measures are referred to as "Conditions", we prefer to use alternative wording.
221 Interim Report, para. 7.259 (7.262).

imported inputs. As noted in our Interim Report, that argument all but ignored the first requirement,
despite questions in that regard from the Panel.222
11.4. As correctly pointed out by India, the United Stat es has now changed approach. Noting that
the second element acts as an export-contingent ceiling on an importer's duty-free entitlement under
DFIS (when the value of imported inputs exceeds a defined percentage of the FOB value of the
previous year's exports), the United States submits that this additional element is not foreseen in
footnote 1, and introduces an additional 223 layer of export contingency that does not benefit from
the safe harbour of the footnote.
11.5. The fact that an additional condition is not foreseen in footnote 1 is not enough to disqualify
a measure from footnote 1. There may well be conditions not foreseen in footnote 1 that make a
measure incompatible with the footnote, and there may equally be conditions that are compatible
with footnote 1. In the measure before us, the backward -looking element acts as a ceiling on the
permissible value of the duty exemption; it does not expand the value of the duty exemption beyond
("in excess of") what is permitted by footnote 1. According to the United States' review request, this
ceiling renders the measure incompatible with footnote 1 because it is contingent upon export
performance. However, we must first answer the question whether the measure must "not be
deemed to be a subsidy" pursuant to fo otnote 1. While a treaty must be interpreted as a whole, it
seems to us that the determination whether there is a subsidy logically precedes, and cannot depend
on, a determination of export contingency.
11.6. Therefore, the arguments advanced by the Unite d States in its request for review have not
persuaded us to depart from our conclusion that the United States has not established that the duty
stipulations at issue do not meet the conditions of footnote 1 of the SCM Agreement.224 We therefore
reject the United States' request for review.
12 THE UNITED STATE S' REQUEST CONCERNIN G THE CHARACTERIZATI ON OF
MUNICIPAL LAW
12.1. At paragraph 7.300 (7.303) of our Interim Report, we have noted that "the rules of taxation
of a Member are not part of the applicable law in WTO dispute settlement". The United States submits
that this paragraph "could be clarified" by adding "but are instead a question of fact".225 India does
not comment on the United States' request.
12.2. We consider that the statement as currently d rafted conveys our reasoning clearly, and we
reject the United States' request.

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of the United States 35
Annex B-2 Integrated executive summary of the arguments of India 46

ANNEX B-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
EXECUTIVE SUMMARY OF THE U.S. FIRST WRITTEN SUBMISSION
I. INTRODUCTION
1. India provides subsidies to its exporters that are inconsistent with its obligations under the
Agreement on Subsidies and Countervailing Measures ( "SCM Agreement "). The SCM Agreement
prohibits subsidies contingent upon export performance ( "export subsidies"). India grants export
subsidies through several schemes that are the focus of this dispute.

II. RELEVANT LEGAL STANDARD
2. In summary, under the SCM Agreement, for the complaining Member to establish that a
Member provides a prohibited export subsidy, it must show the following three elements: (1) that
the government or public body provided a financial contribution through the measure at issue
(SCM Agreement Article 1.1(a)); (2) that the fin ancial contribution conferred a benefit
(SCM Agreement Article 1.1(b)); and (3) that the resulting subsidy is contingent - in law or in fact -
on export performance (SCM Agreement Article 3.1(a)).

3. Although Article 27 of the SCM Agreement provides a limited exception to Article 3.1(a), India
no longer qualifies for that limited exception.

III. FACTUAL BACKGROUND AND LEGAL ANALYSIS OF THE PROGRAMS
A. Export Oriented Units and Sector Specific Schemes
4. India designed the Export Oriented Units (EOU) Scheme and Sector Specific Schemes,
including the Electronics Hardware Technology Parks (EHTP) Scheme and Bio -Technology Parks
(BTP) Scheme, to "promote exports, enhance foreign exchange earnings, and attract investment for
export production and employment generation." EOU, EHTP, and BTP units (collectively referred to
as "units") agree to export their entire production of goods and services in exchange for exemption
from import duties and taxes. Furthermore, throughout these documents, India stresses the
requirement that an enterprise maintain a positive net foreign exchange (NFE).

1. Financial Contribution
5. The exemption provided by these schemes from customs and excise duty constitutes
"government revenue that is otherwise due [that] is foregone or not collected " within the meaning
of Article 1.1(a)(1)(ii) of the SCM Agreement. This provision defines a finan cial contribution to
include a measure through which the government foregoes the collection of revenue that would
otherwise be due in the absence of the challenged measure.

6. Exporters participating in the EOU/EHTP/BTP schemes are exempt from the paymen t of
customs and excise duty that would otherwise be due in the absence of the measure. Comparably
situated enterprises in India, on the other hand, must pay customs duties according to India 's
national tariff schedule.

2. Benefit
7. The financial contribution confers a benefit on EOU/EHTP/BTP participants. A benefit analysis
under Article 1.1(b) of the SCM Agreement requires considering whether the recipient is in a better
position because of the financial contribution. Here, the EOU/EHTP/BTP units recei ve benefits
because they are financially "better off" by receiving an exemption from paying the duties they would
otherwise have paid.

3. Export Contingency

8. Article 3.1(a) provides that "subsidies contingent, in law or in fact, whether solely or as one
of several other conditions, upon export performance " are prohibited. As evidenced throughout
government documents, India conditions the availability of these benefits to the EOU/EHTP/BTP units
upon the promise of agreeing to export their entire pro duction and obtaining and maintaining of a
positive NFE.

B. Merchandise Exports from India Scheme
9. The Merchandise Exports from India Scheme (MEIS) "provide[s] rewards to exporters to offset
infrastructural inefficiencies and associated costs" and thus "promote[s] the manufacture and export
of notified goods/products. " India, through the MEIS, advances these objectives by providing to
exporters transferable import duty credit scrips (scrips) as a reward for export of listed products to
specified country markets. These scrips offset the cost of multiple expenses and liabilities, including
for: (1) basic customs duty related to import of inputs or goods, including capital goods; (2) central
excise duties; (3) basic customs duty related to payment of fees; and (4) a shortfall in export
obligation. After an exporter accrues scrips through the MEIS scheme, it may transfer the scrips,
and the recipient of the transfer may use the scrips without the same export conditions as the
original MEIS participant.

1. Financial Contribution
10. India awards scrips as a "direct transfer " of funds under Article 1.1(a)(1)(i) of the
SCM Agreement. India provides the MEIS participants with scrips that serve as a financial claim for
that participant. That participant can use the scrips to pay for customs and excise duties, fees, or to
cover the difference between an enterprise 's deficit in actual export performance for a year versus
the export obligation for that year. It is also freely transferable and has cash value.

2. Benefit
11. The MEIS participants receive benefits for participating in this scheme. A benefit analysis under
Article 1.1(b) of the SCM Agreement requires considering whether the recipient is in a better position
because of the financial contribution. Here, the MEIS participants receive benefits because they are
financially "better off" than they would be in the market by receiving scrips that can offset customs
duty, central excise duties, and customs fees, and can be used to offset a shortf all in export
obligation. These scrips are freely transferable, and can be sold on the open market for cash.

3. Export Contingency
12. Article 3.1(a) provides that "subsidies contingent, in law or in fact, whether solely or as one
of several other conditions, upon export performance" are prohibited. An MEIS program participant
receives scrips conditioned and tied to the value it exports, where the exports are sold, and of what
product. Through an intensive monitoring process, India ensures that the value, place, and product
of export, i.e., export performance, determine the MEIS reward.

C. Export Promotion Capital Goods Scheme
13. The Export Promotion Capital Goods Scheme (EPCG) "facilitate[s] import of capital goods for
producing quality goods and services and enhance[s] India's manufacturing competitiveness." EPCG
applicants promise to fulfil export obligations, i.e., meet export performance benchmarks. In return,
participants receive advantages including exemption from paying import duties on capital equipment
used to produce exports or duty credit scrips, similar to scrips in the MEIS scheme, which can be
used to offset import duty for capital goods imported to produce exports.

1. Financial Contribution
14. Article 1.1(a)(1)(ii) defines a financ ial contribution to include a measure through which the
government foregoes the collection of revenue that would otherwise be due in the absence of the
challenged measure. The EPCG scheme exempts a participant from the payment of customs duties
otherwise due on the import of capital goods used for export pre-production, production, and post-
production. Comparably situated enterprises, not participating in this scheme, in India importing the
same or similar capital goods must pay customs duties according to India's national tariff schedule.

2. Benefit
15. EPCG participants receive numerous benefits under the program. A benefit analysis under
Article 1.1(b) of the SCM Agreement requires considering whether the recipient is in a better position
because of the f inancial contribution. Here, the participants receive "benefits" because they are
financially "better off" by not having to pay the import duties for the capital goods they use for their
export operations.

3. Export Contingency
16. Article 3.1(a) provides that "subsidies contingent, in law or in fact, whether solely or as one
of several other conditions, upon export performance " are prohibited. Here, a unit receives EPCG
benefits conditioned and dependent on its fulfilment of its export obligations. An enterprise agrees
to a specific export obligation of six times the duties, taxes, and cess saved on capital goods to be
fulfilled in six years from date of issue authorization.

D. Special Economic Zones Scheme
17. Special Economic Zones are geographic areas that contain multiple exporting units
(SEZ Units). India established the SEZ scheme for the express purpose of promoting exports by SEZ
Units. An SEZ Unit is entitled to a number of tax reductions and customs duty exemptions:
(1) Corporate income tax deduction of export earnings (100% for five years, and then 50% each of
the subsequent five years); (2) Exemption from customs duty on goods imported into the SEZ;
(3) Exemption from export duties; and (4) Exemption from India 's Integrated Goods and Services
Tax.

18. In the Annual Performance Report, the SEZ Unit reports export value (FOB value of exports
for the most recent year) and import value of inputs and capital goods. Using this data, the SEZ Unit
calculates the NFE ea rning for the year: "FOB value of exports for the year " minus total value of
imports during the year. If the resulting number is positive, the unit has satisfied the NFE condition.

1. Financial Contribution
19. India makes a financial contribution to SEZ Units in the form of "government revenue that is
otherwise due is foregone or not collected" as provided in Article 1.1(a)(1)(ii) of the SCM Agreement.
The four tax reductions and duty exemptions identified above [] represent a decision by India to
"[give] up an entitlement to raise revenue that it could 'otherwise' have raised." In each instance,
as a result of the reduction or exemption provided to SEZ Units, India has foregone revenue that it
would otherwise be due.

2. Benefit
20. In the case of each of the reductions or exemptions described above, India confers benefits
to SEZ Units. A benefit analysis under Article 1.1(b) of the SCM Agreement requires considering
whether the recipient is in a better position because of the financial contribution. Here, the financial
contributions confer benefits to SEZ Units within the meaning of Article 1.1(b) to the extent of the
tax reduction and customs duty exemptions.

3. Export Contingent in Law
21. Article 3.1(a) provides that "subsidies contingent, in law or in fact, whether solely or as one
of several other conditions, upon export performance " are prohibited. The reductions and
exemptions India provides through the SEZ scheme are contingent in law. If approved as an SEZ
Unit, an enterprise commits to con ditions that again relate to export performance. The Letter of
Approval issued by India establishes the SEZ Unit 's projected annual exports and the NFE earning
for the first five years of operation. Finally, the enterprise must commit to achieve a positive NFE, a
calculation that relies on the FOB value of exports as the starting point for the determination.

4. Export Contingent in Fact
22. The United States has demonstrated that the challenged subsidies are contingent in law upon
export performance, and the Panel 's analysis of export contingency may end there. For

completeness, the United States also demonstrates that the facts establish that the subsidies
granted or maintained to SEZ Units are also contingent in fact upon export performance by the SEZ
Unit.

E. Duty Free Imports for Exporters Scheme
23. The duty-free imports for exporters scheme exempts eligible exporters from customs import
duties based on past export performance. The extent of the import duty exemption is contingent
upon the FOB value of exports of a given product during the previous year.

1. Financial Contribution
24. India makes a financial contribution to participating enterprises in the form of "government
revenue that is otherwise due is foregone or not collect ed," as defined in Article 1.1(a)(1)(ii). A
participating enterprise receives a duty free import entitlement based on export value from the
previous year, and is then entitled to import eligible goods duty free until it has exhausted the duty
free import entitlement. The enterprise is not required to pay the customs duty that would otherwise
be due in the absence of the measures. A comparably situated enterprise in India must pay customs
duties according to India's national tariff schedule.

2. Benefit
25. India confers benefits to participating exporters through the exemption of customs duties
normally due to the government to the extent of those exemptions. A benefit analysis under
Article 1.1(b) of the SCM Agreement requires considering whether the recipient is in a better position
because of the financial contribution. Here, the financial contribution confers benefits to a
participating enterprise within the meaning of Article 1.1(b) to the extent of the customs duty
exemptions.

3. Export Contingency
26. Article 3.1(a) provides that "subsidies contingent, in law or in fact, whether solely or as one
of several other conditions, upon export performance " are prohibited. The availability of the duty
exemption under the measure is contingent – or conditional – upon the value of the goods an
enterprise exported in the previous year, and the value of the exemption is directly related to the
value of exports.

EXECUTIVE SUMMARY OF THE U.S. SECOND WRITTEN SUBMISSION
I. ARTICLE 3 OF THE SCM AGREEMENT APPLIES TO INDIA
27. India claims that it is entitled to an eight -year phase out of its export subsidy programs
pursuant to Article 27 of the SCM Agreement. India undertakes a convoluted interpretive exercise
based largely on policy arguments and negotiating history to argue for a legal interpretation that
the SCM Agreement still permits India to grant export subsidies otherwise prohibited by Article 3 of
the SCM Agreement.

28. Article 31 of the Vienna Convention on the Law of Treaties, which reflects customary rules of
interpretation of public international law, provides that "[a] treaty shall be interpreted in good faith
in accordance with the ordinary meaning to be given to the terms of the treaty in their context and
in the light of its object and purpose." The starting point of the interpretive exercise is the text of
the applicable treaty.

29. Under Article 27.2(b), the prohibition of Article 3.1(a) shall not apply to certain developing
country Members "for a period of eight years from the date of entry into force [January 1, 1995 ] of
the WTO Agreement, subject to compliance with the provisions of paragraph 4 " of Article 27. A
"developing country " Member under Article 27.2(b) had its right to grant export subsidies end
on January 1, 2003, unless it requested and was granted an extension, as provided for in
Article 27.4.

30. Therefore, reading Annex VII and Article 27.2(b) of the SCM Agreement together, an
Annex VII(b) developing country that graduates shall end its prohibited subsidies by the later of
January 1, 2003, or the time it reaches $1,000 GNP per capita.

31. India has no textual support for its position that an additional eight -year phase out applies,
and instead requests that the Panel consider such supplemental sources as negoti ating history and
amorphous language about the general support for giving developing country Members the
opportunity to provide export subsidies. Such resort to reviewing supplemental sources is
unnecessary when the ordinary meaning of the text, in context and in light of the object and purpose
of the SCM Agreement, answers the question, and India's argument should be rejected.

II. ARTICLE 4 OF THE SCM AGREEMENT APPLIES TO THIS DISPUTE
32. India's argument that the special procedures of Article 4 of the S CM Agreement are
inapplicable to this dispute fails for a number of reasons.

33. First, India 's arguments ignore the plain text of Article 4. Article 4.1 provides that:
"[w]henever a Member has reason to believe that a prohibited subsidy is being granted or maintained
by another Member, such Member may request consultations with such other Member. " Article 4.4
then provides that: "[i]f no mutually agreed solution has been reached within 30 days of the request
for consultations, any Member party to such consultations may refer the matter to the Dispute
Settlement Body ( "DSB") for the immediate establishment of a panel, unless the DSB decides by
consensus not to establish a panel." The threshold for invoking the procedures of Article 4 therefore
is whether "a Member has reason to believe that a prohibited subsidy is being granted or maintained
by another Member." Contrary to India's arguments, Article 4 does not require that there first be a
determination that Article 27 does not apply. Here, the United States has properly invoked Article 4
because the United States "has reason to believe that a prohibited subsidy is being granted or
maintained by" India.

34. India's claim that the U.S. statement of available evidence does not conform to Article 4 .2 of
the SCM Agreement is without merit. Article 4.2 of the SCM Agreement contains no obligation to
provide a statement of evidence that "establishes that the measures are, in fact, subsidies " - that
is, meet the legal definition of a subsidy contained in Article 1 of the SCM Agreement. That would
be a legal argument, not a statement of available "evidence." As demonstrated in the U.S.
First Written Submission, the evidence cited in the statement of available evidence is indeed
evidence regarding the existence and nature of the subsidies in question. India does not identify a
legal basis for its claim that the United States was required to present arguments applying evidence
to the applicable legal standard. India again appears to confuse what is evidence with what is legal
argument.

35. India requests again that the Panel amend and extend the adopted timetable and working
procedures for this dispute to include a second substantive meeting because holding one substantive
hearing allegedly is not in accordance with Article 12.10 of the DSU and India's "due process rights."
However, the parties have had and will have adequate opportunity to present their arguments and
to be heard in this proceeding. Importantly, the setting of one substantive meeting rather than
two reflects the expedited nature of the proceedings under Articles 4.4 and 4.6 of the
SCM Agreement and contributes towards meeting the deadline specified in the SCM Agreement. The
Panel's adopted timetable and working procedures for this dispute are consistent with Article 12.10
of the DSU.

III. INDIA'S CHALLENGED EXPORT SUBSIDIES ARE INCONSISTENT WITH
ARTICLE 3.1(a) AND 3.2 OF THE SCM AGREEMENT BECAUSE THEY ARE SUBSIDIES
CONTINGENT UPON EXPORT PERFORMANCE
36. India argues that the measures at iss ue fall under the SCM Agreement 's exemption for duty
drawback systems. India's response fails to address the elements of the schemes that are at issue.
As reflected in Annex I of the SCM Agreement, a requisite feature of a duty drawback program is
that imported inputs are "consumed" in the production of the exported product (making normal
allowance for waste). Accordingly, the challenged schemes differ fr om drawback, exemption, and
remission programs contemplated by Footnote 1 and Annexes I-III of the SCM Agreement.

A. Export Oriented Units and Sector Specific Schemes
37. India argues that it does not provide a financial contribution to these Units beca use these
schemes provide an exemption from customs duties that falls under Footnote 1, and therefore, there
is no subsidy under the SCM Agreement Article 1.1.

38. This argument misses the mark because the EOU/EHTP/BTP schemes do not meet the
requirements under Footnote 1 since they are not duty drawback schemes. SCM Annex II defines a
duty drawback scheme as one where "import charges levied on inputs that are consumed in the
production of the exported product ... " are remitted or drawn back. SCM Annex I(i) provides that
the "remission or drawback of import charges in excess of those levied on imported inputs that are
consumed in the production of the exported product" is an export subsidy.

39. Before reaching the question of whether a remission was in excess of the import charges
levied, one must first determine whether, as part of the drawback scheme, imported inputs were
consumed in the production of an exported product. Footnote 1 does not apply to EOU/BTP/EHTP
units because they fail to meet this r equirement. Units face no restriction that imported duty -free
goods be consumed in the export production process. The imported duty-free goods need only be
imported "for approved activity."

40. India also argues that imported capital goods under the EOU /EHTP/BTP schemes are inputs
because they are "consumed" by contributing to the value of the final product. India's argument is
contrary to the text of the SCM Agreement. The definition of "inputs" at Footnote 61 of the
SCM Agreement does not directly or i mplicitly contemplate capital goods. The footnote concerns
"inputs" that are consumed in the production process. By their very nature, capital goods are not
physically incorporated or consumed in the goods being manufactured during the production process.

41. Annex I(i) provides no help to India either. Annex I(i) does not refer to goods contributing to
the final cost of exports, but to "imported inputs that are consumed in the production of the exported
product (making normal allowance for waste)."

42. India also cites to Annex I(h) to argue that the exemption on excise duties applies to the
EOU/BTP/EHTP schemes and falls squarely within the meaning of prior -stage cumulative indirect
taxes referred to in Annex I(h) to the SCM Agreement. Similarly here, this provision is inapplicable
because Annex I(h) requires that "the prior‑stage cumulative indirect taxes are levied on inputs that
are consumed in the production of the exported product."

B. Merchandise Exports from India Scheme
43. Next, India claims the MEIS scrips fall under the "ambit" of Footnote 1 of the SCM Agreement,
and therefore, the scrips are not a subsidy. To support this theory, India states that the scrips
recipient only receives as a refund (in the form of scrips) the money the Unit paid in indirect taxes.
As a result, India suggests, the MEIS scrips are a proper remission of duties or taxes not in excess
of that accrued.

44. Footnote 1 and Annex I of the SCM Agreement do not apply to the MEIS because the
exemption or remission of indirect taxes is irrelevant to the MEIS. There is no requirement for a
scrips holder to tie the scrips it receives to imports of certain products, or that the products be inputs
to the exported product for which the company received the scrips. The value of the scrips received
is tied only to the value, country and product of export, and has no relationship to an exporter's
imports.

45. In fact, an MEIS beneficiary may use the scrips to offset an export obligation for other
programs such as the EPCG scheme described below. Scrips can be freely bought and sold and are
financial instruments. Various online marketplaces facilitate the exchange of scrips, and companies
may sell their scrips. Thus, the MEIS program is not an "exemption, remission or deferral " as
contemplated by Footnote 1 and Annex I.

C. Export Promotion Capital Goods Scheme
46. India's central argument is that the EPCG scheme falls within the scope of Footnote 1 and
Annex I of the SCM Agreement as a duty drawback system that is deemed not to be a subsidy.

47. India first points to Annex I(g) and claims the EPCG scheme is an exemption for various
indirect taxes on capital goods. India is mistaken because Annex I(g) is inapplicable to the EPCG
scheme. Annex I(g) deals wit h the "exemption or remission, in respect of the production and
distribution of exported products, of indirect taxes. " In the EPCG scheme, there is no requirement
to use the capital good, for which the exemption or remission of indirect tax was received, i n "the
production and distribution of exported products," as is required in Annex I(g).

48. India also argues that the EPCG scheme is not a subsidy under Annex I(i). This statement is
factually incorrect. Annex I(i) concerns import charges "levied on imported inputs that are consumed
in the production of the exported product (making normal allowance for waste)." Capital equipment
- which is the focus of the EPCG scheme - is distinct from inputs. Footnote 61 of the SCM Agreement
limits the applicable input s to those "inputs physically incorporated " and "consumed," a definition
that does not apply to capital goods.

49. The references in Annex I, items (h) and (i), to a "normal allowance for waste " supports an
interpretation that Annex I, items (h) and (i), do not contemplate or permit for capital goods to be
considered as inputs. Capital goods are not "consumed" in the production process, and do not
thereby result in wastage during production for which a normal allowance can be made.

50. In addition, while Indian companies must export to receive advantages under EPCG, there is
no requirement that capital goods imported duty-free only be utilized for export production. Rather,
the duty-free capital goods imported under EPCG may be used for any amount of production bound
for the domestic market so long as the EPCG participant also meets its export obligation.

D. Special Economic Zones Scheme
51. India also claims that a positive NFE can be reached without exporting to other countries.
However, despite there being a number of ways listed in the SEZ Rules for a company to increase
its NFE, the definition of "export" in the SEZ Act, 2005 is relatively straightforward:

• Item (m) "export" means (i) taking goods, or providing services, out of India, from a Special
Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise; or
(ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or
Developer; or (iii) supplying goods, or providing se rvices, from one Unit to another Unit or
Developer, in the same or different Special Economic Zone.

• Item (ii), regarding supplying goods from the DTA to a Unit or a Developer, would only apply
to suppliers of SEZ Units - located in the Domestic Tariff Area and not the SEZ - and not to
SEZ Units themselves. Thus, in the case of SEZ Units the SEZ Act defin es export to cover
two situations: SEZs "taking goods, or providing services, out of India," or providing goods
or services to other SEZ units. In the case of the latter, these recipient Units then ultimately
must either export those goods out of India (with or without further processing), or provide
them to another SEZ Unit.

52. India claims that the U.S. evidence of export contingency in fact is insufficient. India first
argues that the intent of the SEZ Act is not relevant to the Panel's analysis, but at no point disagrees
with the evidence presented that the SEZ Act was enacted to promote exports from India. This policy
rationale is useful evidence in considering whether the subsidy is tied to, or geared to induce, export
performance.

53. India also e rrs in arguing that the SEZ application and approval processes are not in
themselves tied to actual or anticipated exports. Consider the requirement to achieve a positive NFE.
This requirement incentivizes an SEZ Unit to make export-market sales rather than domestic-market
sales. Maintaining positive NFE is the critical requirement for being an SEZ Unit. The determination
of whether an SEZ Unit has achieved positive NFE relies principally on the "Free on Board value of
exports" by the SEZ Unit. Increased exports and the resulting higher export value will strengthen
the likelihood of an SEZ Unit attaining positive NFE, meaning that an enterprise would be inclined to
direct sales to the export market and support its effort to reach positive NFE. Thus, the granting of
subsidies is tied to actual or anticipated exports, and the premise of this primary requirement of SEZ
Units is to encourage exports.

54. India has also not addressed the fact that the SEZ Scheme structured the tax reduction benefit
to induce exports by SEZ Units. SEZ Units are permitted to deduct from income tax liability 100%
of profits from exports for the first five years, and then 50% of profits from exports during each of
the subsequent five years. Any profits from domestic sales do not resu lt in the same benefits to
SEZ Units, raising again the question of the economic value to an SEZ Unit in pursuing domestic
sales. Indeed, the structure of this tax reduction has a direct impact on the cost of a transaction to
an export market, providing SE Z Units with greater flexibility to complete export sales. India tied
the tax reduction entirely to export sales, creating a strong incentive for SEZ Units to export.

E. Duty Free Imports for Exporters Scheme
55. India argues that Articles 3.1(a) and 3.2 of the SCM Agreement do not apply to the DFIES
because it is a duty drawback system under Footnote 1 of the SCM Agreement and Annex I(i) as
"inputs consumed in the production of the export." India also argues that "duty exemptions are only
provided on goods that are inputs to be used by manufacturer exporters."

56. As explained above, under DFIES, past export performance entitles the enterprise to an import
duty exemption. In addition, while some of the products for which import duty exemptions may be
applied can be inputs, it is not true for all of them.

EXECUTIVE SUMMARY OF THE U.S. OPENING STATEMENT
57. After filing its Second Written Submission in November 2018, India enacted additional, or
expanded, benefits under the MEIS and EPCG schemes. India's actions betray its statement that it
is making efforts to "reduce the impact of the duty and tax exemptions on government revenue."

58. India cites to Annex II of the SCM Agreement to advocate that the United Stat es, as the
complaining party, bears the burden to undertake an "examination of the inputs consumed, " "a
quantitative analysis of the amounts and prices of the inputs consumed, " and "an examination of
whether excess remissions have occurred. " Elsewhere, India argues that the United States must
offer a "data-driven, technical argument" to show that duty-free imported inputs are not consumed
under the challenged schemes.

59. India fails to mention that the section of Annex II it relies upon is one that is only applicable
to a countervailing duty investigation. The plain language of the SCM Agreement shows that the
guidelines of Annex II apply to countervailing duty investigations.

60. In any event, India has structured the schemes without any regard for whether duty-free
products imported by scheme participants are consumed in the production of the exported good
(EOU, EPCG, DFIES) or to quantify the existence and amount of any indirect tax liability borne by
the exported product (MEIS). Thus, such a "quantitative analysis" of amounts and prices of inputs
consumed and whether excess remission occurred would be futile because there is no duty drawback
or remission scheme to begin with.

61. With regard to capital goods, India has repeatedly proposed that capital goods be included in
the definition of "inputs" for purposes of the SCM Agreement and acknowledged in a WTO filing that
"[t]hus capital goods and consumables have been left out even though they can be said to have
been used to the extent of their depreciation and actual consumption." India's proposal was opposed
and rejected. For instance, a 2001 Chairman's Report recalls that India 's proposal "advocates
including capital goods in the definition in Footnote 61 of inputs consumed in the production
process." In other words, capital goods were not already included. Contrary to India's assertion that
"capital goods fall squarely within the definition of 'inputs' in Footnote 61 of the SCM Agreement, "
the SCM Agreement's negotiating history for Footnote 61 and subsequent discussions show that the
question of whether to include capital goods as "inputs" was deliberated and the proposal was
rejected.

EXECUTIVE SUMMARY OF U.S. RESPONSES TO THE PANEL'S QUESTIONS

U.S. RESPONSE TO PANEL QUESTION 35
62. The Appellate Body has applied a three -step approach that (i) identifies the tax treatment
that applies to the income of the alleged subsidy recipients; (ii) identifies a benchmark for
comparison; and (iii) compares the chal lenged tax treatment and the reasons for it with the
benchmark tax treatment. In the second step, the Appellate Body has noted that determining a
benchmark may require examining the "structure" and "organizing principles " of a Member 's
domestic tax system. Both the United States and India agreed at the substantive meeting that there
is no need to examine the structure and organizing principles of India's domestic tax regime.
63. First, while a three -step approach can serve as a useful analytical tool in ce rtain cases, it is
unnecessary in this dispute under these facts. Second, while the applied import duty rate may vary
by product, exporters participating in the challenged schemes, who receive blanket import duty
exemptions, do not pay import duties, and similarly situated exporters in India, absent participation
in the challenged scheme, do. Third, the "reasons for the challenged tax treatment " in the case of
the challenged schemes are clear: a reward for export performance.

U.S. RESPONSE TO PANEL QUESTION 36
64. The Appellate Body reasoning in its report in EU - PET (Pakistan) is not particularly relevant
to this dispute. EU - PET (Pakistan) began with the unchallenged premise that the scheme at issue
was a duty drawback scheme. Here, India has asserted that the challenged schemes are proper duty
drawback or remission schemes. The United States has demonstrated that the challenged Indian
schemes are not proper duty drawback or remission schemes to begin with because the schemes
are not limited to inputs consumed in exported products and/or do not even attempt to connect the
alleged drawback or remission to the import charges or indirect taxes accrued.

U.S. RESPONSE TO PANEL QUESTION 41
65. Regardless of whether they operate on what India labels a "post-export" basis, duty drawback
schemes must limit their scope to "imported inputs that are consumed in the production of the
exported product" and connect the "remission or drawback of import charges " with "those [import
charges] levied." The challenged Indian schemes fail to meet these fundamental elements.

66. As explained previously, the SCM Agreement envisions the connection described above to be
based on a firm 's actual experience, including actual import duty liability incurred and input
consumption, and not on an aggregate, estimated or industry or product -wide rate. For instance,
paragraph 2 of Annex II specifies that the analysis involves the amount that is "actually levied" on
inputs that are consumed in the production of the exported product.

U.S. RESPONSE TO PANEL QUESTION 46
67. The elements that Members agreed are required for a proper remission or exemption scheme
differ depending on whether the scheme concerns indirect taxes, cumulative indirect taxes, or import
charges.

68. A remission or exemption scheme may fall within the scope of Annex I(g) if it contains the
following elements, as reflected in the text of item (g) : (1) permits remission or exemption for
indirect taxes applied to exported products; (2) permits remission or exemption for only production
and distribution-related indirect taxes; and (3) requires determining the indirect taxes actually levied
on the production and distribution of like products sold for domestic consumption so as not to provide
excessive remission or exemption.

69. A remission or exemption scheme may fall within the scope of Annex I(h) if the exemption,
remission or deferral of prior -stage cumulative indirect taxes: (1) is tied to actual prior stage
cumulative indirect tax liability; (2) is limited to goods and services used in the production of the
exported product; (3) is tied to inputs, as defined in Footnote 61, consumed in the produc tion of
exported products; and (4) is determined on actual taxes levied on inputs that are consumed in the
production of the exported product.

70. A remission or exemption scheme may fall within the scope of Annex I(i) if: (1) there is an
input as defined in Footnote 61; (2) the input is imported (with the exception of certain home market
inputs described in Annex I, item (i)) and Annex III; (3) the input is consumed in the production of
the exported product; and (4) the remission or drawback of import charges is not in excess of those
levied on the imported inputs.

U.S. RESPONSE TO PANEL QUESTION 69
71. Despite this common understanding and the SEZ scheme's primary focus on foreign "export,"
India focuses on narrow domestic means to improve an enterprise 's NFE that purportedly negates
the scheme's export contingency. Section 2(m) of the SEZ Act provides for a limited exception under
(iii) for domestic sales, and Rule 53 differentiates between exports on the one hand, and a narrowly
defined list of exceptions in the form of encouraged domestic sales, subject to special conditions, by
which an SEZ unit may improve its NFE.

72. The availability of these limited exceptions as a secondary means f or an SEZ unit to fulfill its
NFE does not diminish the primary means for an SEZ unit to fulfill its net foreign exchange
requirement - foreign export. India has not and cannot explain why the SEZ scheme only incentivizes
exports by SEZ units and not sales to other SEZ units. Also, the export contingency of a scheme is
not lost even if a small number of "exports" made domestically can count toward positive NFE or a
small number of exporters can meet their NFE requirement predominantly through domestic sales.

73. India's own examination of the SEZ scheme supports the U.S. view. The Comptroller and
Auditor General of India (CAG), in a report entitled "Performance of Special Economic Zones (SEZs),"
analyzed exports from SEZ units based on the common understan ding of "exports." While the
Department of Commerce noted the NFE impact of certain DTA sales, the CAG concluded that the
possibility of an SEZ unit fulfilling its NFE requirement without making physical exports was an
unintended loophole incompatible with the SEZ scheme. The CAG emphasized that reliance by SEZ
units on domestic sales defeated "the basic objective of the scheme of earning foreign exchange
from overseas" through "actual physical exports to foreign countries…"

U.S. RESPONSE TO PANEL QUESTION 79
74. There is a glaring disconnect between the import duty actually levied on the imported inputs,
and India's reward of exemption. The SCM Agreement, on its face, necessitates connecting "the
remission or drawback of import charges" with "those levied on imported inputs that are consumed
in the exported product." Under DFIES, the amount of duty exemption granted for exports is uniform
across broad categories of exports based on the FOB value of exports, regardless of what inputs
were used, whether the inputs were themselves imported duty -free, or whether the inputs were
even imported. As a result, one cannot connect the actual amount of import duty levied on the
imported inputs with the amount of the import duty exemption. This fact is unsurprising beca use
the amount of the duty exemption is a reward contingent upon the exporter's export performance.
EXECUTIVE SUMMARY OF U.S. COMMENTS TO IN DIA'S RESPONSES TO T HE PANEL'S
QUESTIONS
U.S. COMMENT ON INDIA'S RESPONSE TO PANEL QUESTION 35
75. India argues that a three -step approach and an inquiry into the "structure" and "organizing
principles" of its tax system are unnecessary in this dispute. India argues that, for measures falling
under Footnote 1, the Panel need only compare the "amount of remission of such duties or taxes
and those which have accrued…. " For these reasons, the three -step approach and inquiry into the
"structure" and "organizing principles" of India's tax system is unnecessary.

76. This "excess remissions principle, " on whi ch India relies, is that "in the context of duty
drawback schemes, the financial contribution element of the subsidy (i.e. government revenue
forgone that is otherwise due) is limited to the excess remission or drawback of import charges on
inputs... ." However, this comparison presumes that a scheme is a proper duty drawback scheme
that attempts to relate remission of duties to those duties actually accrued. The challenged schemes
do not even attempt to connect the amount of remission and the amount of duties or taxes actually
accrued. Thus, the schemes fail to meet a fundamental requirement of a drawback scheme. The

challenged schemes also do not require exempted items to be consumed in production of the
exported product, another fundamental requirement.

77. An inquiry into the "structure" and "organizing principles" of India's tax system is unnecessary.
India provides: (1) a 100% exemption on duties or taxes under these schemes; (2) similarly-situated
enterprises who do not participate in the schemes, al l other things being equal, pay the duties or
taxes from their income; and (3) the transparent reason for the challenged treatment is a reward
for export performance. Under these facts, the "benchmark" treatment for comparison, the
treatment of the income of a similarly situated non-scheme participant enterprise under Indian law,
is readily identifiable.

78. Finally, to the extent the Panel finds a three-step approach appropriate in this proceeding, in
the U.S. written submissions and responses to the Panel's questions, the United States has identified
(i) the duty or tax treatment of the income that applies to the scheme participants and (ii) a
benchmark for comparison. The United States then compares (iii) the challenged tax treatment and
the reasons for it with the benchmark duty or tax treatment. This comparison shows that the
challenged schemes result in India foregoing revenue and providing a financial contribution to
scheme participants.

U.S. COMMENT ON INDIA'S RESPONSE TO PANEL QUESTION 38
79. India mistakenly applies the mandatory/discretionary distinction, which is a useful analytical
tool for determining whether a measure irrespective of its application can be found WTO -
inconsistent, to argue that the United States must establish that "the legislation [is] worded in such
a manner as to preclude the possibility of imported inputs being consumed in the production of an
exported product[], or, alternatively, the legislation [] explicitly prevent[s] the possibility of inputs
being imported solely for the consumption of exported products." India misconstrues what will suffice
to show the challenged measures are inconsistent with the SCM Agreement.

80. India erroneously contends that the United States must demonstrate how the "legislation []
explicitly prevent[s] or obstruct[s], either in i[t]s language or its operation, the fundamental aspects
of a duty drawback program, in order for it to be held as inconsistent" with the SCM Agreement. But
there is no basis in the SCM Agreement to require a complaining party to show that a measure could
never operate in a WTO-inconsistent manner for it to be in breach.

81. To the contrary, if a complaining party can demonstrate that a measure will, in a defined
circumstance, necessarily produce a WTO -inconsistent result, the measure may be found WTO -
inconsistent "as such." That in other circumstances the measure may not necessarily produce a
WTO-inconsistent result does not cure the inconsistency (for example, a measure that sets out a
tariff in excess of a Member's binding, but only on Monday and not Tuesday -Friday). Similarly, the
fact that the measures do not mandate, for example, the explicit preclusion of imported inputs being
consumed in the production of the exported product does not mean that the challenged schemes do
not confer export subsidies when domestic inputs are being consumed in the production of exported
products. That is, there is no relevant "discretion" under the measure under the mandatory /
discretionary distinction (the discretion not to engage in WTO-inconsistent behavior).

CONCLUSION
82. For the foregoing reasons, the United States respectfully requests that the Panel find that the
measures at issue are export subsidies inconsistent with Articles 3.1(a) and 3.2 of the
SCM Agreement.

ANNEX B-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDIA
I. INTRODUCTION

1. In the present dispute, the United States alleges that five domestic schemes maintained by
India ("Challenged Schemes") are prohibited export subsidies under Art. 3.1(a) and 3.2 of the
Agreement on Subsidies and Countervailing Measures ( "SCM Agreement "). The Challenged
Schemes are (1) Export Oriented Units Scheme and sector specific schemes including Electronics
Hardware Technology Parks Scheme and Bio -Technology Parks Scheme ( "EOU Scheme ");
(2) Merchandise Exports from India Scheme ("MEIS"); (3) Export Promotion Capital Goods Scheme
("EPCG Scheme "); (4) Special Economic Zones Scheme ( "SEZ Scheme "); and (5) Duty Free
Imports For Exporters Scheme ("DFIE").

2. India respectfully submits that Art. 3 of SCM Agreement is not applicable to India. Countries
listed in Annex VII of the SCM Agreement are to receive the same treatment as accorded to
developing countries as stipulated in Art. 27.2(b). Conseq uently, India has an 8 -year phase out
period after graduation (from the year 2017) from Annex VII(b) for phasing out any alleged export
subsidy.

3. Further, India contends that the Challenged Schemes are not prohibited export subsidies as
per Art. 3.1(a) of the SCM Agreement. The United States has mischaracterised and misunderstood
the Challenged Schemes. Four of the challenged schemes are duty drawback or remission schemes,
and the SEZ Scheme is not export contingent. None of the schemes challenged by the United States
violate India's obligations under the SCM Agreement.

II. INDIA'S REQUEST FOR A PRELIMINARY RULING

4. Along with its first written submission, India made a request for a preliminary ruling wherein
India contended that (A) the United States has failed to meet the specificity requirements in Art. 6.2
of the DSU and that consequently/as a consequence, the 'problem has not been presented clearly';
(B) the United States has erred in invoking the dispute pursuant to Art. 4 of the SCM Agreement,
and the timelines therein are prejudicial to India; (C) the Statement of Available Evidence submitted
by the United Stat es does not meet the requirements of Art. 4.2 of the SCM Agreement (D) the
failure to provide for a second substantive meeting is a violation of India 's due process rights as
couched in the DSU, particularly in Art. 12.10 of the DSU.

A. UNITED STATES HAS FAILED TO MEET THE SPECIFICITY REQUIREMENTS IN ART. 6.2
OF DSU

5. India underscores that in the present case, the United States has; (1) obscured the very
meaning of the term 'measure' by failing to identify a measure at all, (2) failed to fulfil the specificity
requirement in Art. 6.2 of the DSU; and (3) failed to provide a brief summary of the legal basis of
the complaint sufficient to present the problem clearly.

6. Relying on the Panel report in Australia – Apples (New Zealand), India expresses its concerns
that the panel request by the United States merely lists out legal instruments, particularly the ones
that are "too extensive and exhaustive", but does not indicate/identify the specific measur e within
such instruments. For instance, the United States cites at Instrument 26 "Income Tax Act, 1961, as
amended." - In citing the entire legal instrument, without indicating the precise measure within the
Act that is at issue, nor identifying the relevant provisions within the said legislation, it appears that
the United States is challenging the legal instrument in its entirety.

7. In the present case, the Panel Request has not provided sufficient clarity with respect to the
legal basis of its complai nt vis -à-vis the measures within the identified schemes. Moreover,
United States in the Panel Request simply states that the identified schemes provide export subsidies
in violation of Art. 3 of the SCM Agreement as the legal basis of the complaint.

B. THE UNITED STATES HAS ERRED IN INVOKING THE DISPUTE PURSUANT TO ART. 4 OF
THE SCM AGREEMENT

8. Art. 27 of the SCM Agreement accords that a subset of developing country members are not
subject to the procedure laid down in Art. 4 of the SCM Agreement. Art. 4 procedures are only
applicable in the case of prohibited export subsidies, 1 and owing to the application of Art. 27.7,
alleged export subsidies maintained by developing country members may only be challenged under
Art. 7 and not Art. 4 of the SCM Agreem ent. The United States, without any demonstrable injury,
has incorrectly invoked Art. 4 instead of following the Art. 7 procedure. India relies on the Panel
Report in Brazil - Aircraft, wherein it was held that in order to invoke proceedings under Art. 4, the
Complaining member would have to show non -conformity with paragraphs 2 -5 of Art. 27. 2 India
submits that the United States has failed to satisfy that burden. Therefore, the United States has
erred in invoking the dispute pursuant to Art. 4 of the SCM Agreement.

C. IF ART. 4 APPLIES, UNITED STATES HAS FAILED TO MEET ITS OBLIGATIONS UNDER
ART. 4.2 OF THE SCM AGREEMENT

9. Alternatively, if Art. 4 of the SCM Agreement applies in the present case, India submits that
the requirements of Art. 4, specifically , the requirement to submit a 'Statement of Available
Evidence' at the time of consultations under Art. 4.2 of the SCM Agreement – has not been met by
the United States. The United States, in its request for consultations, does not provide any basis
that establishes the character of the measures in the Challenged Schemes as a subsidy.3

10. India asserts that, at the very least, the statement of available evidence must have included
specific provisions within the legislation that are relevant to the charact erization of the measure as
a prohibited subsidy.

11. Additionally, there is no substantive difference between the 'Request for Consultation' dated
14 March 2018, and the Request for Establishment of a Panel dated 18 May 2018. It is submitted
that this disregards the substantive difference between a Statement of Available Evidence within the
meaning of Art. 4.2 of the SCM Agreement, and the requirement to specify measures in the Request
to Establish a Panel, as mandated by Art. 6.2 of the DSU.

D. THE FAILURE TO PROVIDE FOR A SECOND SUBSTANTIVE MEETING IS A VIOLATION
OF INDIA'S DUE PROCESS RIGHTS UNDER ART. 12.10 OF THE DSU

12. The Appellate Body in its report in Argentina – Textiles & Apparel stated that 'It is also true,
however that the Working Procedures in Appendix 3 do contemplate two distinguishable stages in a
proceeding before a panel'4 while referring to the first and the second substantive meeting with the
Panel. The second substantive meeting, as per Paragraph 7 of Appendix 3 of the DSU, shall include
but may not be limited to, the Formal Rebuttals.

13. India submits that the failure to grant a second substantive meeting has affected India's right
to respond to the claims being made against it, since the proceedings do not present adequate
opportunity and sufficient time for India to "prepare and present its argumentation " as mandated
by Art. 12.10 of the DSU. A substantive meeting is an opportunity for parties to meet with the Panel,
present their arguments, as well as better understand the claims being made.

14. Appendix 3 of the DSU supports the claim that the failure to provide for a second substantive
meeting is indeed a denial of the right to be heard and adequate opportunity for a party to present
its claims and defences. Appendix 3 of the DSU provides for two substantive meetings in the conduct
of a dispute. While India understands that a panel is not compelled to adher e to the timetable and
working procedures stipulated in Appendix 3 of the DSU, the Panel can deviate only after consulting
the parties to the dispute.5

2 Panel Report, Brazil – Aircraft, paras. 7.54 and 7.57; Appellate Body, Brazil – Aircraft, para. 141.
3 Appellate Body Report, US – FSC, para. 161.
4 Appellate Body Report, Argentina-Textiles and Apparel, para. 79.
5 Article 12.1 of the DSU. See also: US – Shrimp (Ecuador), a dispute pursuant to Article 6 of the DSU
and Article 17 of the Anti -Dumping Agreement, where a second substantive meeting was foregone, but only
upon a mutual agreement by both parties.

15. India is of the view that the present case does not present any extraordinary circumstances
that would require a departure from the procedure provided in Appendix 3 of the DSU. Moreover, as
witnessed from all the previous cases, including wherein Art. 4 of the SCM Agreement was invoked,
the Panel provided the parties two separate substantive meetings, to adequately provide the Parties
to present their submissions before the Panel. Moreover, India respectfully submits that Art. 4 of
the SCM Agreement requires the timeline to be expedited, and does not mandate the deletion of
procedural steps during the dispute settlement process.

16. Accordingly, India submits that the failure to provide for a second substantive meeting
amounts to a denial of an opportunity to be heard and to respond, which is a violation of India's due
process rights under the DSU and Art. 12.10 of the DSU.

III. AS INDIA BENEFITS FROM THE SPECIAL AND DIFFERENTIAL TREATMENT UNDER
ART. 27 OF THE SCM AGREEMENT, THE PROHIBITION UNDER ART. 3 OF THE
SCM AGREEMENT DOES NOT APPLY TO INDIA

17. Art. 27 of the SCM Agreement recognises the S&DT afforded to developing country members.
India contends that Art. 27.2(b) of the SCM Agreement continues to apply to members who graduate
from Annex VII(b).

18. The text of Annex VII(b) of the SCM Agreement instructs that countries included therein
become subject to Art. 27.2(b) when their GNP per capita reaches $1000 per annum. Art. 27.2(b)
provides a phase -out period of 8 years to the developing country members for prohibited export
subsidies under Art. 3. India submits that the eight-year phase-out period in Art. 27.2(b) of the SCM
Agreement should be granted to all Annex VII developing country members when they graduate
from Annex VII. As explained below, such an interpretation is required by the general rules of treaty
interpretation provided in Art. 31 of the Vienna Convention of the Law of Treaties ( "VCLT"), and
supported by the supplementary means of interpretation provided in Art. 32 of the VCLT.

19. As per Art. 31(1) of VCLT, a treaty is to be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and in the light of its object
and purpose. The principle of effectiveness has been read into Art. 31(1) of the VCLT,6 and has been
recognised as a cardinal rule of treaty interpretation by all international adjudicatory bodies,
including the WTO Appellate Body.7 Specifically, in US – Gasoline, the Appellate Body explained that
'[a]n interpreter is not free to adopt a reading that would result in reducing whole clauses or
paragraphs of a treaty to redundancy or inutility'.8 An effective interpretation of the treaty language
guarantees that the text is not rendered useless, redundant, or even irrational. 9 A strictly literal
interpretation of Art. 27.2(b), in isolation of the scheme of organization of Art. 27.2, Annex VII(b),
and other provisions of Art. 27, deprives the Annex VII countries of the special treatment envisaged
under Part VII of the SCM Agreement. More importantly, such an interpretation negates the principle
of effectiveness.

20. The Panel in Indonesia-Autos stated that Art. 27.1 of the SCM Agreement is an integral part
of the object and purpose of the SCM Agreement10 and must be read in tandem with other provisions
of Art. 27 and the Annexes. In addition to these provisions, Annex VII is instrumental in
implementing the S&DT framework embedded in the SCM Agreement. Annex VII(b) reads as:

6 AB Report, Japan Alcoholic Beverages II, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, para 106.
7 Voting Procedure on Questions Relating to Reports and Petitions Concerning the Territory of South-
West Africa, Separate Opinion of Judge Lauterpacht [1955] ICJ Report 90, at 104–105; AB Report, US – Offset
Act (Byrd Amendment)), WT/DS217/AB/R, at para. 271; see also AB Report, US- Gasoline, WT/DS2/AB/R at
21; AB Report, Japan – Alcoholic Beverages II, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at 106, 111;
AB Report, Korea – Dairy, WT/DS98/AB/R,, at para 80; AB Report, Canada – Dairy, WT/DS103,113/AB/R, at
para 133; AB Report, Argentina– Footwear, WT/DS121/AB/R, at para 81; AB Report, US – Underwear,
WT/DS24/AB/R, at 24; AB Report, United States – Section 211 Appropriations Act, WT/DS176/AB/R, at paras
161, 338; AB Report, US – Upland Cotton, WT/DS267/AB/R, at para 549; AB Report, EC – Chicken Cuts,
WT/DS269/AB/R, WT/DS286/AB/R, at para. 214. See also Panel Report, US – Carbon Steel, WT/DS213/R, at
para. 8.29, see also paras 8.43 and 10.10 (‘would yield irrational results').
8 Panel Report, US – Gambling, WT/DS285/R, at para. 6.49, n. 605. The Panel justified its effective
interpretation under the good faith principle in Article 31(1).
9 Isabelle Van Damme, Treaty Interpretation by the WTO Appellate Body, 21 EJIL 3 (2010).

"Each of the following developing countries which are Members of the WTO shall be
subject to the provisions which are applicable to other developing country Members
according to paragraph 2(b) of Article 27 when GNP per capita has reached
$1,000 per ann um: Bolivia, Cameroon, Congo, Côte d'Ivoire, Dominican Republic,
Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua,
Nigeria, Pakistan, Philippines, Senegal, Sri Lanka and Zimbabwe."

21. Therefore, a developing country member that graduates from Annex VII "shall be subject" to
the provisions which are applicable to other developing country members in Art. 27.2(b). The
mandatory nature of the provision is evident from the use of the word "shall". In other words, the
treatment that is afforded to a developing country member under Art. 27.2(b) and a developing
country member graduating from Annex VII(b) must necessarily be the same.

22. Art. 27.2 of the SCM Agreement serves to exclude, in a qualified or unqualified manner, certain
developing countries from the scope of application of substantive obligations found in Art. 3 of the
SCM Agreement, for a period o f 8 years. 11 Accordingly, through Art. 27.2(b), the applicable
treatment is an exemption from the prohibition on export subsidies for a period of eight years, i.e. an
8-year phase out period.

23. Annex VII(b) requires that the treatment afforded to a graduating member must be the same
as that was afforded to a country originally falling within scope of Art. 27.2(b). The treatment is to
be understood as an eight-year phase out period. Therefore, the prohibition on export subsidies does
not apply to a country graduating from Annex VII, for a period of eight years, from the date when
its GNP pe annum crosses $1000 mark, and the data is published by WTO Secretariat, i.e. when the
country graduates from Annex VII.

24. India's interpretation of Art. 27.2 and Annex VII seeks to preserve the elements of Annex VII
and the objectives of providing special treatment for Annex VII countries. India submits that the
phrase "… from the date of entry into force of the WTO Agreement" is applicable only to developing
country members that were originally within the scope of Art. 27.2(b). Accordingly, those developing
country members graduating from Annex VII(b) must receive the same benefit which other
developing countries have received, i.e. an "eight year " phase o ut period. The United States
proposes such a narrow "literal interpretation" of Art. 27.2(b) of the SCM Agreement separated from
the context of Annex VII(b), and places undue reliance on the phrase "… from the date of entry into
force of the WTO Agreement ". The United States claims that developing country members that
graduate from Annex VII(b) are not entitled to the right in Art. 27.2(b) beyond 1 January 2003.
However, such an interpretation defeats the very purpose of including two separate provisions,
namely for (a) Annex VII countries, and (b) for other developing countries, and consequently renders
Art. 27.2(b) inutile for Annex VII(b) members graduating beyond the said date.

25. As explained above, Annex VII(b) and Art. 27.1 are an integral part of the overall object and
purpose of the SCM Agreement which recognises that subsidies play an integral role in the economic
development of developing country members. The interpretation put forth by India takes into
account this object and purpose, and does not render any part of the SCM Agreement inutile.
Therefore, as per the general rules of interpretation provided in Art. 31 of the VCLT, an eight -year
phase out period in Art. 27.2(b) of the SCM Agreement is available to all developing country
members that graduate from Annex VII.

26. Further, the interpretation proposed by the United States results in absurdity when applied in
the context of Art. 27.5 of the SCM Agreement. Art. 27.5 provides Annex VII countries with an eight-
year phase-out period for expo rt subsidies where a product has reached export competitiveness.
However, as per the interpretation proposed by the United States, it does not provide any flexibility
or a phase-out period for the wider export subsidies by the same Member. This results in a situation
where subsidy program itself is unable to avail of the 8 - year phase -out period stipulated in
Art. 27.2(b), but one of the products, part of the subsidy program receives an eight-year phase-out
period under Art. 27.5.

27. This interpretation is also supported by the text of Art. 27.4 of the SCM Agreement which
obligates the developing country members which are subject to Art. 27.2(b) to progressively phase
out the subsidies over a period of 8 years. The text of Art. 27.4 do es not qualify this period until

1st January 2003, but rather provides a gradual phase -out period of 8 years, accounting for late
graduates from Annex VII to benefit from the full term of 8 years. Therefore, to preserve the integrity
of Art. 27, the Panel must interpret the provisions in the context in which they operate, i.e. in tandem
with all the provisions of Art. 27.

28. Additionally, the supplementary means of interpretation provided in Art. 32 of the VCLT serve
as further evidence of this interpretation of Art. 27.2(b) submitted by India. They are not subsidiary
to the means of interpretation recognised in Art. 31, but supplementary.12

29. The list of supplementary means of interpretation identified in Art. 32 is not exhaustive, and
that preparatory work of the treaty and the circumstances of its conclusion can be used to ascertain
the common intention of the parties. 13 Accordingly, India underscores that the negotiation history
of Art. 27 of the SCM Agreement is critical to the interpretation of the provision. As evidenced from
the Draft Texts formulated by the Chairman of the Negotiating Group for the SCM Agreement based
on the proposal submitted by the members, 14 text which led to the SCM Agreement, developing
countries were provided with variable ph ase-out periods under Art. 27.2(b), in accordance to their
development levels. Among the developing countries, a separate group of countries whose GNP per
capita was less than $1,000 per annum were given the option to negotiate a phase -out period
according to their development needs, upon crossing $1,000 GNP per annum.15 That is, the drafters
of the SCM Agreement intended not a reduction of a timeframe for phase-out period, but rather, to
provide wider flexibilities to developing countries, even upon their graduation from Annex VII(b).

30. Therefore, India submits that the eight -year phase out period in Art. 27.2(b) of the
SCM Agreement should be available to countries that graduate from Annex VII, and hence, the
prohibition under Art. 3 of the SCM Agreement is not applicable to India.

IV. THE CHALLENGED SCHEMES ARE NOT PROHIBITED EXPORT SUBSIDIES AS PER ART. 3
OF THE SCM AGREEMENT

A. Export Oriented Units

31. The United States has argued that the exemption from customs and excise duties provided to
companies in the EOU/EHTP/STP/BTP schemes ( 'EOU Scheme') constitutes "government revenue
that is otherwise due [that] is foregone or not collected" within the meaning of Art. 1.1(a)(1)(ii) and
is therefore a subsidy for the purposes of the SCM Agreement. The United States has contended that
the EOU scheme is an export subsidy based on two defining features – one, that the program
requires all partici pating enterprises ( 'Units') to export their entire production, and two, that it
imposes a Net Foreign Exchange Requirement.16 However, the United States has failed to view the
scheme as a whole, rather, it has selectively culled out provisions of the India n legislation in order
to characterize the scheme as an export subsidy. In doing so, the United States has incorrectly relied
on the Appellate Body report in the Canada – Autos, to assert that since the import duty exemptions
are only available to units that export their entire production, the scheme is export contingent, and
therefore a prohibited subsidy in violation of Art. 3.1(a) of the SCM Agreement.

32. India submits that the United States has misunderstood the object and functioning of the EOU
Scheme. The EOU scheme presents a system through which India streamlines its domestic
administrative and development-oriented policy objectives. The scheme is to be read in the context
of the object of the scheme, which is to boost domestic manufacturing. The exclusive designation of
units and the requirement to export their entire production under the EOU scheme creates, in a
sense, a tax-free zone, which makes certain that the duty exemptions fall within the legal mandate
of Footnote 1, Annex I and Annex II o f the SCM Agreement, and are not excess in nature.
Consequently, the EOU scheme is akin to a pre -authorized duty drawback or remission scheme,
rather than an export subsidy.

12 MARK E. VILLAGER, COMMENTARY ON THE 1969 VIENNA CONVENTION ON THE LAW OF THE TREATIES, 446, Internal
Footnote "See the statements by Waddock in the ILC, YBILC 1966 ½ 206, para. 41, and at 270, para. 35."
13 Appellate Body Report, EC – Chicken Cuts, para. 283.
14 Negotiating Group on Subsidies and Countervailing Measures, "Draft Text by the Chairman,"
MTN.GNG/NG10/23, 7 November 1990, p. 25 (Ex. IN-04)
15 Negotiating Group on Subsidies and Countervailing Measures, "Draft Text by the Chairman,"
MTN.GNG/NG10/23, 7 November 1990, p. 25 (Ex. IN-04).
16 United States Second Written Submission, para. 78.

33. The incentive offered under the EOU scheme is an exemption on the payment of c ustoms
duties and additional duty, if any, on the import and/or procurement of all goods, required for
manufacturing within the EOU unit. These exemptions are limited to customs and excise duties on
those goods imported or procured for use as inputs in the manufacturing activity of the EOU Unit,
i.e. "approved activity ".17 The only activity permitted by the Unit is manufacturing activity of
products to be exported, and consequently, that the inputs imported or procured by the Unit are
necessarily only used in the production of exported products. Therefore, the EOU Scheme can only
be characterized as a pre-authorized duty drawback or remission scheme.

34. The scope and meaning of Footnote 1 has been clarified by the Appellate Body in EU – PET
(Pakistan), where it held that Footnote 1 deals with two situations: a) the exemption of an exported
product from duties or taxes borne by the like product when destined for domestic consumption,
and b) the remission of such duties or taxes in amounts not in excess of those which have accrued.
Accordingly, neither of these two situations fall within the meaning of a 'subsidy' as defined by
"government revenue foregone" in Art. 1.1(a)(1)(ii).18 It follows that only those remissions of duties
and taxes that are in excess of those which have accrued are deemed to be a subsidy.

35. India reiterates that these duty exemptions fall within the scope of Footnote 1 of the SCM
Agreement, and are therefore not deemed to be a subsidy within the meaning of Art. 1 of the SCM
Agreement. Compliance with Footnote 1 is further established through the provision in the scheme
that regulates sales of goods by the Unit to the DTA. While the Unit must export its entire production
– and this obligation must be met so as to ensure that the inputs b eing imported are used only in
the production of exports – certain circumstances of sales to the DTA are permitted. 19 However,
such DTA sales are limited in nature, 20 require pre -authorization,21 and further, are subject to
payment of duties on DTA sales as w ell as reversal of customs duties saved on imported raw
materials.22 The reversal of import duties demonstrates that where Units sell to the DTA, the custom
duty exemption becomes inapplicable to them. Further, these duties are aggregated on the basis of
Standard Input Output Norm (SION) norms or other norms established by the Norms Committee,
to ensure that the amounts to be reversed are the amounts that were actually due.23 Both of these
provisions ensure that the exemption of duties is commensurate to the duties, and their quantities,
applicable to the inputs consumed in the production of the exported product.

36. Further, the United States argues that the EOU scheme conditions benefits on export
performance.24 However, in doing so, the United States hinges its argument on export performance
as opposed to consumption of inputs. The latter is the fulcrum of the issue, given that the EOU
scheme is a duty remission.

37. The United States also argues that the duty exemptions are only available insofar as Units
obtain and maintain a positive NFE, which is determined by subtracting the total value of imports
from the total value of exports. 25 The United States wrongly alleges that the structure of the NFE
requirement is sufficient evidence to establish export contingency. 26 The NFE equation is not
indicative of export contingency but rather a function of basic business prudence. It merely requires
that enterprises act prudently so as not to operate at a loss, and is a tool to ensure compliance with
the Remission Principle.

17 Foreign Trade Policy, 6.01(d)(i)(ii), (Ex. US-03).
18 Appellate Body Report, EU – PET (Pakistan), para. 5.97.
19 Foreign Trade Policy, 6.00(a) (Ex. US-03).
20 Foreign Trade Policy, 6.08 (Ex. US-03).
21 Foreign Trade Policy, 6.08 and 6.09 (Ex. US-03); Aayat and Niryat Forms, ANF-6C (Ex. US-06).
22 Foreign Trade Policy, 6.08(a)(v) (Ex. US-03).
"The DTA sale by EOU/EHTP/STP/BTP units shall be subject to payment of excise duty, i f applicable
and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First
Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose
of manufacturing of such fini shed goods (including by -products, rejects, waste and scraps arising in the
course of production, manufacture, processing or packaging of such goods). This reversal of Customs Duty
would be as per prevailing SION norms or norms fixed by Norms Committee (wh ere no SION norms are
fixed)."
23 Foreign Trade Policy, 6.08(a)(v) (Ex. US-03).
24 United States Second Written Submission, para. 78.
25 United States Second Written Submission, para. 100.
26 United States Second Written Submission, para. 78.

38. India also notes the Panel's ruling in Canada – Aircraft Credits and Guarantees where it was
held that the existence of an export subsidy first requires existence of a subsidy within the meaning
of Art. 1 of the SCM Agreement. Since the EOU scheme falls within Footnote 1 of the SCM Agreement,
it is deemed not to be a subsidy, and accordingly, the analysis of export contingency is not relevant.27

39. The United States has failed to establish t hat India grants or maintains prohibited export
subsidies through the EOU and Sector Specific Schemes. India has demonstrated that the measures
under the EOU and Sector Specific Schemes are not subsidies as per Art. 1 of the SCM Agreement,
and are not contingent on export performance as per Art. 3.1(a) of the SCM Agreement. Therefore,
it is submitted that the EOU and Sector Specific Schemes are not prohibited export subsidies as per
Art. 3.1(a) and 3.2 of the SCM Agreement.

B. Merchandise Exports from India Scheme

40. The United States argues that through the MEIS, India grants a subsidy within the meaning
of Art. 1.1(a) of the SCM Agreement which is contingent upon export performance, and is in violation
of Art. 3.1(a) of the SCM Agreement. The United Sta tes mischaracterizes MEIS as a direct transfer
of funds under Art. 1.1(a)(1)(i). The United States argues that MEIS scrips are financial claims
available to participants, who can use them to pay for customs and excise duties, fees and that
these scrips can be traded for cash.

41. India submits that MEIS is consistent with Art. 3.1(a) and 3.2 of the SCM Agreement since it
is not a subsidy. India asserts that the correct characterization is that MEIS is a remission of indirect
taxes under Footnote 1 of the SCM Agreement. MEIS refunds indirect taxes already paid by exporters
on production, distribution of exported products and on inputs consumed in the production of the
exported product. Instead of directly granting a monetary refund of such taxes, the Government of
India indirectly refunds such taxes paid as MEIS Scrips. When the scrips are used to pay for basic
customs duty and additional customs duty on import of inputs, central excise duty on domestically
procured inputs and/or custom duties in case of a s hortfall in export obligation ( "Specified Uses"),
the refund of the indirect taxes paid earlier, is actually received by the original recipient/exporter.
MEIS is not a direct transfer of funds:

42. India has advanced the following three -pronged argument, in support of its submission that
MEIS is not a direct transfer of funds as per Art. 1.1(a)(1)(i). Firstly, MEIS is not a direct transfer of
funds because it is not similar to a loan, grant or equity infusion. Secondly, the scope of direct
transfer of funds is limited by Art. 1.1(a)(1)(ii). Thirdly, MEIS scrips are not financial claims available
to the recipient. Instead, India submits that MEIS is a remission of indirect taxes already paid.
MEIS is a remission of indirect taxes, falling within Footnote 1:

43. Footnote 1 of the SCM Agreement attaches itself to Art. 1.1(a)(1)(ii) which is financial
contribution in the form of government revenue foregone. By way of the deeming fiction created by
Footnote 1, the remission of duties or taxes in amounts not in excess of those which have accrued,
is deemed to not be a subsidy. Annex I(g), (h) and (i) complement this part of Footnote 1. The
remissions under these illustrations are "subsidies" only if they are excess. Annex I(g) identifies
the exemption or remission of indirect taxes in respect of the production and distribution of exported
products when it is in excess, as an export subsidy. Annex I(h) also identifies indirect tax rebate
schemes, which result in exemption, remission or deferral of prior -stage cumulative indirect taxes
on inputs that are consumed in the production of the exported product in excess of such tax actually
levied, as a form of export subsidy.

44. India submits that MEIS is akin to the transactions referred to in Annex I (g) and (h) and the
remission is not in excess of the taxes accrued on the final exported product. MEIS offers a refund
of indirect taxes paid by the exporter in respect of the prod uction and distribution of the exported
products such as indirect taxes paid on fuel and electricity. Further, MEIS is an indirect tax rebate
scheme since it also offers a refund of prior-stage cumulative indirect taxes paid on inputs consumed
in the production of exported products, such as indirect tax paid on fuel and other taxes and duties
which are outside the ambit of Goods and Services Tax. Notably, remission of taxes includes the
refund of taxes as per Footnote 58 appended to Annex I.

27 India First Written Submission, para. 318 citing Panel Report, Canada – Aircraft Credits and
Guarantees, para. 7.16.

45. The value of MEIS Scrips is calculated by multiplying the rate with the FOB value of export of
the product, which consists of embedded indirect taxes. Since it is extremely cumbersome to
calculate the precise amount of embedded taxes in the exported product, given India's complex tax
regime, a refund which is approximate but less than the actual levy of duties and taxes, is provided
to the exporter.28

46. India expressed its view that neither the 'uses' nor the 'value' of MEIS scrips, as contended
by the United States, show that MEIS is a direct transfer of funds. The value and nature of the scrip
is agnostic to the Specified Uses. For example, if the exporter uses a scrip to pay basic customs
duty, he is using his indirect tax refund to pay for the basic customs duty to the extent of the value
of the scrip. The 'value' remains the quantum of indirect tax refund offered by the government and
the 'nature' remains a form of government revenue foregone as permitted by the Footnote 1 of the
SCM Agreement.

47. The United S tates argues that because MEIS scrips are freely transferable and can be
exchanged for cash, they constitute a direct transfer of funds. India clarifies that the policy doesn 't
provide for sale of scrip for cash and although scrips can be freely transferred to third parties without
further permission from the Government, the MEIS scrips can still only be used for the limited
Specified Uses enlisted in Paragraph 3.02 of the Foreign Trade Policy. The value of the scrip still
corresponds to the remission of em bedded indirect taxes already paid, qualifying as a transaction
falling under Footnote 1 of the SCM Agreement.29

48. India has therefore demonstrated that the transactions of payment of indirect taxes which are
embedded in the cost of exported product, sub sequent issuance of MEIS Scrips against such
exported products and utilization of the MEIS scrips for payment of Specified Uses, as a whole,
amount to remission of indirect taxes as covered within Footnote 1 of the SCM Agreement.

49. Alternatively, India argues that scrips act as credit notes, which can be used for payment of
duties (basic customs duty, additional customs duty) on imports, which also results only in remission
of indirect taxes already paid. Notably, while maintaining t hat MEIS could be best characterized as
a direct transfer of funds, in responding to the Panel's question, the United States has also acceded
that MEIS could be characterized as government revenue foregone under Art. 1.1(a)(1)(ii) when the
scrip is redeemed.30

50. India submits that MEIS is a remission of indirect taxes falling under Footnote 1 of the SCM
Agreement and is therefore deemed to not be a subsidy. Since MEIS is not a subsidy, it cannot be a
prohibited subsidy as per Art. 3 of the SCM Agreement. This negates the need for a benefit analysis.
Hence, MEIS is not a prohibitive subsidy and is consistent India 's obligation under Art. 3.1(a) and
3.2 of the SCM Agreement.

C. Export Promotion and Capital Goods Scheme

51. The EPCG scheme grants duty and tax exemptions on the import of capital goods used in the
pre-production, production, and post -production of exported goods. 31 These exemptions are on
indirect taxes, specifically customs duties, Integrated Goods and Services Tax, and Compensation
Cess on capital goods used for pre-production, production, and post-production. India submits that
such exemptions qualify under Footnote 1 of the SCM Agreement making the EPCG scheme a duty
drawback, read with Annex I(g) and (i).

52. Analogous to other pre -authorized duty drawback schemes, the EPCG Scheme involves a
detailed authorization process in order to ensure that the duty and tax exemptions are offered only
to exporting entities and within the quantum of consumption of those imported inputs. An enterprise
must apply for grant of authorization to the concerned Regional Authority, along with the submission
of a nexus certificate from a Chartered Engineer and a Chartered Accountant, both of whom
guarantee that the import of capital goods shall be used in the pr e-production/production/post-
production stage for manufacture of the export products.32 India asserts that the requirement to use

28 India's Responses to Written Questions Posed by the Panel, Question 60.
29 India's Responses to Written Questions Posed by the Panel, Question 56.
30 United States Responses to Written Questions Posed by the Panel, Questions 54 and 55.
31 India First Written Submission, para. 296 citing Foreign Trade Policy 5.01(a) (Ex. US-03).
32 Handbook of Procedures, 5.02 (Ex. US-05); Appendices and Aayat Niryat Forms, "Guidelines for
Applicants," ANF 5B (Ex. US-06).

the imported capital goods only in the production of exported products is verified during the
application process.

53. The United States argues that the EPCG scheme does not qualify as a duty drawback because
capital goods are not inputs within the meaning of Footnote 61 and therefore, do not fall within the
meaning of Annex I(g) and (i).33 However, India disagrees. Capital goods necessarily falls within the
ambit of Annex I(g) and (i). These goods are critical to the production of exported products,
particularly in the case of developing countries.34 This view has also been advocated by developing
country Members at various occasions.35

54. India submits that the list provided in Footnote 61 is indicative, and not exhaustive. It includes
inputs that are physically incorporated as well as catalysts, which undergo no permanent change,
but remai n inputs within the meaning of Footnote 61. Notably, even fuel is not "physically
incorporated" but rather used in the process of manufacturing. Further, a duty drawback is meant
to offset the cost impact of import duties on inputs incorporated in exported products. Given that
capital goods necessarily contribute to the final cost of the exported product, India is of the view
that capital goods fall within the meaning of inputs consumed in Footnote 61.

55. Considering that the EPCG scheme falls within the scope of Footnote 1 of the SCM Agreement,
India submits since no subsidy is deemed to be found in the case of duty drawbacks, it follows that
no benefit can be conferred. In the present case, the United States has failed to establish that the
measures unde r the EPCG Scheme are "subsidies" within the meaning of Art. 1 of the
SCM Agreement, or a prohibited export subsidy as per Art. 3.1(a) and 3.2 of the SCM Agreement.

D. The Special Economic Zones Scheme

56. The United States alleges that the SEZ Scheme is a prohibited export subsidy as per Art. 3 of
the SCM Agreement. The United States argues that the alleged subsidies under the SEZ Scheme are
export contingent "in law", and in the alternative argues that that they are export contingent "in
fact". However, United States ' arguments are coloured by their misunderstanding of the SEZ
Scheme, and the United States fails to establish how the alleged subsidies under the SEZ Scheme
meet the threshold laid down for export contingent "in law" or "in fact".

57. India first addresses the mischaracterisation of its domestic policy by the United States. The
economic measures in the SEZ Scheme are designed to equip the SEZ Units with increased
production capacity, resulting in additional economic activity, promotion of inv estments, and
creation of employment opportunities. By merely reproducing provisions that refer to "export
promotion",36 the United States fails to understand the context in which the phrase is used, and in
effect distorts the interpretation of the policy objective of the SEZ Scheme. The promotion of exports
is merely one of the many indicators employed by the SEZ Scheme to assess the achievement of its
overall objective of increased economic activity. This is materially different from the claim made by
the United States that the purpose of the SEZ Scheme is to result in the promotion of exports. This
distinction ensures that a condition of export performance is not imposed or mandated on SEZ Units,
and the emphasis, instead, is on achieving the overall objective of the Scheme.

58. There are three substantive elements that are required to satisfy the threshold for export
contingency under Art. 3.1(a) of the SCM Agreement.37 The United States also implicitly recognises
this standard.38 First is "granting of a subsidy ", i.e. whether the authority that is responsible for
granting the subsidy takes into account the factor of export performance. Second, the conditionality
of the subsidy, which requires that the subsidy be dependent on export performance of the recipient.
Third, the subsidy is tied to export performance as understood in the SCM Agreement, i.e. the sale

33 United States Second Written Submission, para. 119.
34 See Committee on Subsidies and Countervailing Measures, "Chairman's Report on the
Implementation-Related Issues referred to the Committee on Subsidies and Countervailing Measures in the 15
December 2000 Decision of the General Council," G/SCM/34, 3 August 2001.
35 General Council, "Implementation-Related Issues and Concerns- Decision of 15 December 2000",
WT/L/384, 19 December 2000, para. 6.3 (Ex.-IN-09).
36 United States First Written Submission para 80 and 83; United States Second Written Submission
para. 134.
37 Appellate Body Report, Canada – Aircraft, paras. 169-172; Panel Report, EC and certain member
States – Large Civil Aircraft (Article 21.5 – US), para. 6.678.
38 United States Second Written Submissions, para. 138.

of goods beyond the territorial jurisdiction of the Member state. However, the United States fails to
recognise these distinct substantive elements, and consequently fails to establish how the SEZ
Scheme falls within the scope of prohibited export subsidies.
The Alleged Subsidies under the SEZ Scheme are not export contingent "in law"

59. In order to establish de jure export contingency, the United States erroneously relies on the
application process for SEZ Units, the process of review and approval of the applications, and the
monitoring process of the SEZ Units. 39 However, in elaborating each of these procedures, the
United States has failed to reproduce the entirety of the concerned provisions and, consequently
merely creates an illusion of export contingency.

60. In determining whether a particular measure satisfies the threshold for de jure export
contingency, the Appellate Body in Canada Autos has invoked the "but for" test.40 The burden on
the complainant is to establish the de jure export contingency, through the words of the measures
themselves, that the alleged subsidies under the SEZ Scheme are not available to an SEZ Unit but
for the exports undertaken by it.

61. The United States primarily relies on the positive NFE requirement provided in the review of
applications and approval process, and the monitoring data collected from the SEZ Units.41 In effect,
United States argues that an SEZ Unit would not satisfy the positive NFE requirement unless it
engages in export of goods. India respectfully disagrees, and s ubmits that the United States'
application of the "but for" test is over-simplistic. A unit in SEZ may achieve positive NFE without
exporting to other countries.

62. The positive NFE requirement is one of the tools employed by the SEZ Scheme to ensure that
the SEZ Units are effectively utilizing the resources at their disposal and efficiently contributing to
production activity. The formula for calculation of the NFE earnings of an SEZ Unit is provided in
Rule 53 of the SEZ Rules, and reads "A – B > 0". "A" has been defined as the sum of the FOB value
of exports, and the value of the products in the situations listed therein, while "B" has been defined
as the sum of the CIF value of all inputs listed therein. The emphasis in the present case is on two
factors: the use of the term "exports" in "A"; and the additional factors taken into account in
calculating the value of "A".

63. India submits that the definition of "exports" under the SEZ Scheme is different from the
meaning of exports as envisaged under the SCM Agreement. Exports under the SCM Agreement is
physical export of goods outside the territory of the member state. Whereas, in the SEZ Scheme,
exports includes the supply of goods/services to another member state as well as the Indian
territory, including the supply of goods/services from one SEZ Unit to another SEZ Unit or Developer
within the same or different SEZ.42 Consequently, the condition of "export" under the SEZ Scheme
is wider than "export performance" under Art. 3.1(a) of the SCM Agreement.43 Accordingly, in order
to establish that the SEZ Scheme is "export contingent", a higher threshold (than mere reference to
the term "exports") would have to be shown to satisfy the "but for" test. This threshold would have
to specifically account only for exports outside the territory of India by a Unit situated in the SEZ,
which is a free trade zone.

64. The second factor concerns the equation for calculating the NFE requirement by the SEZ Units.
The United States asserts that "an enterprise must export to meet these requirements".44 However,
the United States has abandoned this position altogether and recognized that a positive NFE
requirement can be achieved by an SEZ Unit even without engaging in exports as understood by the
SCM Agreement.45 This recognizes that a positive NFE balance can be achieved by enterprises even
without engaging in any physical exports outside the territory of India. Therefore, this does not lend
support to the claims raised by the United States that the NFE requirement satisfies the "but for"
test for export contingency.

39 United States First Written Submission para. 89 – 102.
40 Appellate Body Report, Canada – Autos, para. 104.
41 United States Second Written Submission para.147 - 150.
42 Section 2(m) of the Special Economic Zones Act, 2005.
44 United States First Written Submission para. 124.
45 United States Second Written Submission, para. 159.

65. Furthermore, India humbly submits that the United States has failed to put forth suff icient
evidence to show how the words/legal text of the SEZ Scheme, either explicitly or by necessary
implication, results in export contingency. In responding to the questions posed by the Panel, the
United States has relied on the Report of the Comptroller and Auditor General of India (CAG) on the
Performance of Special Economic Zones, for the year 2012 - 2013.46 It is pertinent to note that
instead of lending support to the United States' claim, the Report affirms that that the SEZ Scheme
does not require the SEZ Units to undertake physical exports in order to satisfy the positive NFE
requirement.
The Alleged Subsidies under the SEZ Scheme are not export contingent "in fact"

66. The United States alternatively seeks to establish that the alleged subsidies under the SEZ
Scheme are export contingent in fact. However, in doing so, the United States has expanded the
scope of Art. 3.1(a) and Footnote 4 of the SCM Agreement. The United Sta tes argues that "(a)
subsidy granted by a Member with the expectation of exportation meets the standard of contingent
"in fact"".47 India submits that such a standard renders Footnote 4 of the SCM Agreement ineffective.
The appropriate standard is whether t here exists a relationship of conditionality or dependence
between the granting of the subsidy and the actual or anticipated export. This is distinct from the
United States' argument which is satisfied by ascertaining "expectations" of exports on the part of
the granting authority. The Appellate Body in EC- Large Civil Aircrafts was mindful of this distinction,
and limited the understanding of export contingency in fact to the former.48

67. It is necessary to reiterate that although the legal standard for de facto and de jure is the
same,49 the evidence required to establish de facto export contingency is necessarily different.

68. The evidence produced by the United States fails to meet its burden to establish contingency
of export performance. The United States has erred in relying unofficial statements available on
various websites regarding the SEZ Scheme. The United States themselves have relied on the Report
of the Appellate Body in EC- Large Civil Aircrafts50 which categorically warns against placing undue
reliance on such statements,51 and lends little support as to the evidentiary value of such statements.

69. Further, the United States attempts to revive their arguments relating to the positive NFE
requirement, and claims that the requirement incentivises an SEZ Unit to make export-market sales
over domestic market sales.52 However, there is no distinction made between SEZ Units who achieve
the positive NFE requirement by DTA sales and those that achieve them by exports as understood
under the SCM Agreement, so as to incentivise one over the other.

70. Therefore, India submits that the United States has not provided adequate evidence to
supplement its claim that the alleged subsidies under the SEZ Scheme are export contingent in law
or in fact. Therefore, it is submitted that the SEZ Scheme is not a prohibited export subsidy, either
in law or in fact, as per Art. 3.1(a) and 3.2 of the SCM Agreement.
Given that the SEZ Scheme is not export contingent, it is not necessary to make any
additional findings

71. The United States has also argued in length on how the economic measures under the SEZ
Scheme meet the threshold of "subsidies" under Art. 1 of the SCM Agreement. 53 However,
United States has failed to establish that such alleged subsidies are export contingent "in law" or "in
fact", India submits that the Panel may not address these arguments at this stage. If the present
dispute can be resolved by determining the arguments raised by the United States regarding export

46 Report of the Comptroller and Auditor General of India "Performance of Special Economic Zones for
the Year 2012-13" (Ex. US- 67).
47 United States First Written Submission, para 130.
48 Appellate Body Report, EC - Large Civil Aircraft, paras. 1049 and 1050; See also Appellate Body
Report, Canada – Aircraft, para. 173. To recall, the second sentence provides that "{t}he mere fact that a
subsidy is granted to enterprises which export shall not for that reason alone be considered to be an export
subsidy within the meaning of {Article 3.1 of the SCM Agreement}".
49 Panel Report, Canada – Aircraft Credits and Guarantees, para. 7.365; Panel Report, US – FSC
(Article 21.5 – EC), paras. 8.54-8.56.
50 United States Second Written Submission, para. 155, fn. 198.
51 Appellate Body Report, EC- Large Civil Aircraft, para. 1051.
52 United States First Written Submission para. 136.
53 United States First Written Submission para. 106 - 120.

contingency, it is submitted that the determination on whether the measures are subsidies as per
Art. 1 of the SCM Agreement need not be undertaken.

E. Duty Free Imports for Exporters Scheme

72. The DFIE is a grouping of individual duty stipulations provided in Customs Notification
50/2017, which is a government regulation that identifies the range of goods that India imports and
specifies the commensurate applied duty rate. DFIE authorizes import duty exemptions on specific
inputs being imported for use in the manufacture of an exported product. The DFIE operates in the
manner of the pre -authorized duty drawback model discussed earlier, in that it only provides this
duty exemption to eligible enterprises, subject to strict scrutiny by concerned authorities.

73. In order to import inputs, the eligible exporters must, at the time of import, apply for an
Import Certificate, that stipulates the quantum and value of the inputs sought to be imported. 54 In
this manner, the DFIE is two -tiered –as a first step it mandates the pre -authorization of eligible
enterprises, and subsequently also requires issuance of a certificate each time an eligible exporter
seeks to import inputs. The scheme incorporates scrutiny at two different points, ensuring that only
enterprises that export their products are seeking exemption under the scheme,55 and that the duty
exemption is offered only on a declared quantum of imported inputs, as required in the manufacture
of exports. The Export Promotion Councils ( "EPC") are responsible for the administration of the
application process to identify and designate the beneficiaries to the scheme. The streamlined
method through which the EPC authorizes the exporter as eligible is necessary to ensure that only
the duty-free exemption is consistent with Footnote 1 of the SCM Agreement. For example, in the
case of leather garment exporters, enterprises are required to submit applications to the Leather
EPC.56 Leather garment exporters that qual ify are issued an Export Performance Certificate which
they must produce in order to apply for an Import Certificate needed to import inputs on a duty-free
basis.57 Therefore, in its essence, this form of a pre -authorized duty drawback/ substitution
drawback falls within Footnote 1 of the SCM Agreement.

74. The United States argues that the DFIE is not a duty drawback within the meaning of
Footnote 1 and Annex I(i) of the SCM Agreement because the scheme allegedly grants import duty
exemption for past export performance.58 However, such an approach adopts an export contingency
argument and tries to establish it as financial contribution. In any case, the allegation is a
misinterpretation of the legislation, as the exemptions provided under the scheme do not hinge on
export performance. The scheme merely aggregates the value of the duty exemption on the basis
of past export values and volume.

75. Having established that the DFIE falls within the scope of Footnote 1 of the SCM Agreement,
India submits that DF IE is not a subsidy, it follows that no benefit can be conferred. The
United States has failed to establish that the measures under the DFIE are "subsidies" within the
meaning of Art. 1 of the SCM Agreement, and has failed to prove that the DFIE is an export subsidy
as per Art. 3.1(a) and 3.2 of the SCM Agreement.

V. CONCLUSION

76. For the reasons stated above, India requests the Panel to conclude India continues to benefit
from the 8-year phase out period under Art. 27 of the SCM Agreement, and none of the challenged
schemes are in violation of Art. 3.1(a) and Art. 3.2 of the SCM Agreement.

ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil 59
Annex C-2 Integrated executive summary of the arguments of Canada 63
Annex C-3 Integrated executive summary of the arguments of Egypt 67
Annex C-4 Integrated executive summary of the arguments of the European Union 69
Annex C-5 Integrated executive summary of the arguments of Japan 75
Annex C-6 Integrated executive summary of the arguments of Sri Lanka 78
Annex C-7 Integrated executive summary of the arguments of Thailand 80

ANNEX C-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF BRAZIL
I. Introduction
1. Brazil provides the following executive summary of its participation during the panel
proceedings in this dispute.

II. The proper interpretation of Article 27 of the Agreement on Subsidies and
Countervailing Measures (SCM Agreement)
2. Article 27 of the SCM Agreement contain s rules on special and differential treatment of
developing country Members. In particular, Article 27.2, in conjunction with Annex VII of the
SCM Agreement, regulates the applicability of the prohibition of subsidies contingent on export
performance contained in Article 3.1(a) of the SCM Agreement to developing countries.

3. In Brazil's view, t he ordinary meaning of the terms contained in Article 27.2(b) leaves no
margin for doubt when it comes to establishing the time period given to developing country
Members: "eight years from the date of entry into force of the WTO Agreement, subject to
compliance with the provisions in paragraph 4 ". Brazil thus finds that the proper interpretation of
Annex VII in conjunction with Article 27.2(b) of the SCM Agreement is that once the GDP per capita
of a developing country Member listed in Annex VII reaches US $1,000.00 it immediately becomes
subject to Article 27.2(b).

4. Brazil notes that consideration of the objective and purpose Article 27.2(b) of the
SCM Agreement also confirms the interpretation yielded by the ordinary meaning of the terms used
therein. Brazil acknowledges that the object and purpose of Article 27.2 of the SCM Agreement is to
provide developing country Members with some flexibility in ter ms of time to adjust their subsidy
policies to the prohibition of export contingent subsidies. Brazil also acknowledges that the objective
and purpose of Annex VII is to provide additional flexibility for certain categories of Members.

5. In this context, a harmonious interpretation that gives meaning to all provisions of Article 27
and of Annex VII of the SCM Agreement leads to the following three conclusions. First, developing
country Members in general enjoyed a flexibility adjustment period of eight y ears from the date of
entry into force of the WTO Agreement, in accordance with Article 27.2(b). Second, least-developed
countries were granted a flexibility that is open -ended, since, in accordance with literal (a) of
Annex VII, the provisions of paragraph 1(a) of Article 3 of the SCM Agreement do not apply to WTO
Members designated as LDCs by the United Nations. Third, Annex VII also contains another category
of Members that lies between the previous two categories in terms of added flexibility – those listed
under literal (b).

6. Consideration of the remainder of Article 27 as immediate context confirms the interpretation
described above. Article 27.4 serves to limit, not expand the flexibility granted by Article 27.2. It
provides that developing count ry Members shall phase out their export subsidies, preferably in a
progressive manner, during the eight -year period established in Article 27.2. It is noteworthy that
the lack of a starting point to the eight -year period mentioned in the first sentence of Article 27.4
is, in Brazil's view, simply a consequence of the fact that said provision is referring to the specific
time-period stipulated in Article 27.2. This Article, in turn, clearly states the starting point as being
the date of entry into force of the WTO Agreement. Article 27.5 also sets limits rather than expands
the flexibilities granted by Article 27.2. It operates to reduce the flexibility of Members regarding
products in which they have achieved export competitiveness status (as defined in Arti cle 27.6 of
the SCM Agreement). It is only applicable while Member countries are still excluded from the
application of Article 3.1(a) by virtue of Article 27.2, not after.

III. The applicability of Article 4 of the SCM Agreement in disputes involving developing
country members
7. In Brazil 's view, the moment and the manner of assessing whether Article 4 of the
SCM Agreement is applicable in a dispute involving developing country Members that invoke
Article 27.7 of the same Agreement is an issue to be dealt with on a case-by-case basis.

8. Brazil notes that Article 4 of the SCM Agreement establishes both substantive and procedural
obligations. The latter are applicable from the consultations request up to the implementation of the
recommendations and rulings of the Dispute Settlement Body (DSB). In this sense, some provisions,
such as the establishment of a panel at the first DSB meeting (Article 4.4) will apply at the very
beginning of proceedings; other provisions, such as the removal of the inconsistent subsidies
"without delay " under Article 4.7, will only give rise to obligations if, after the end of panel
proceedings (and a possible appeal), a finding of inconsistency is issued.

9. Because obligations have specific requirements and will a pply at different moments of the
dispute, the relationship between Article 27.7 and Article 4 will likely come into play multiple times
at different stages during the proceedings. Brazil also notes, in this regard, that procedural rules
contained in Articl e 4 of the SCM Agreement are likely to come into play earlier than more
substantive obligations.

10. At the same time, the specific characteristics of each dispute and the context in which
Article 27.7 claims are made can be relevant to determining the ap propriate moment at which to
assess the relationship between Article 27 and Article 4 of the SCM Agreement. In this context,
Brazil's position is that a final determination regarding the applicability of Article 27.7 of the
SCM Agreement, which, in some ca ses, will only be made at a later stage of the dispute (possibly
even on appeal) cannot always be a necessary condition for an assessment of whether provisions of
Article 4 of the SCM Agreement of a more procedural nature should apply.
IV. The decision by the Panel not to have a Second Substantive Meeting with the
Parties
11. As a third party, Brazil did not take part in the organizational meetings, but it would appear
from India's First Written Submission that India did not agree with the decision to conduct only one
substantive meeting between the Parties and the Panel1. In this regard, Brazil's position is that while
foregoing a second substantive meeting with the Parties may be admissible in certain circumstances,
agreement between the Parties is an important element to consider when pondering deviation from
the procedures established in Appendix 3, especially in the case of disputes involving developing
country Members.
V. Statement of Available Evidence
12. In response to questions posed by the Panel, Brazil argued that, in its view, Article 4.2 of the
SCM Agreement and Article 4.4 of the DSU impose distinct and cumulative obligations on
complainants pursuing claims of prohibited subsidies under Article 3 of the SCM Agreement. While
Article 4.4 of the DSU requires Members to identify, in their consultation requests, "the measures at
issue" and give an "indication of the legal basis for the complaint", Article 4.2 of the SCM Agreement
requires Members pursuing claims of prohibited subsidies to include, in their consultations request,
a "statement of available evidence". Because there is no conflict between the provisions of Article 4.4
of the DSU and Article 4.2 of the SCM Agreement, it is clear to Brazil that both must be applied
simultaneously.

13. However, Brazil believes that the fact that Article 4.2 of the SCM Agreement establishes a
distinct and additional requirement for consultations requests involving claims of prohibited subsidies
does not mean that the first proposition presented by the Panel must necessarily be incorrect. It is
not inconceivable, in Brazil 's view, that a legal instrument, and therefore, its mention in a
consultations request, may at once achieve the objectives of both Article 4.4 of the DSU and
Article 4.2 of the SCM Agreement . It may serve to identify a measure of the responding Member
and as evidence that a subsidy is being granted or maintained by the respondent that is contingent
either on export performance or on the use of domestic over imported goods. Brazil notes, in th is

context, that in disputes involving de jure claims of prohibited subsidies, it is particularly likely, that
mention of legal instruments, norms and regulations may suffice to, simultaneously, identify the
measure at issue for the purposes of Article 4.4 of the DSU and serve as evidence of the exist ence
and nature of the subsidy in question within the meaning of Article 4.2 of the SCM Agreement.

14. Another issue is whether the use of the adjective "available" in Article 4.2 of the
SCM Agreement means that the complainant must present all evidence a vailable to it. In Brazil 's
view, what the obligation in Article 4.2 entails is a duty to provide, in good faith, a statement of
evidence which a Party has available to it with regard to the existence and nature of the subsidy in
question. The purpose of t his statement is, to "provide a responding Member with a better
understanding of the matter in dispute and serve as the basis for consultations".
VI. Financial contribution
15. In Brazil's view, a measure that contains some components that are inconsistent with the
Covered Agreements is inconsistent only to the extent of those components. Therefore, if a measure
is found inconsistent because one of its aspects cannot benefit from the shelter of footnote 1 of the
SCM Agreement, the respondent may achieve com pliance by amending or substituting the
challenged measure in a manner that eliminates that inconsistency with the Covered Agreements.

16. When a financial contribution takes the form of government revenue otherwise due that is
foregone or not collected, it is Brazil's view that there is a requirement to conduct a "three-step test"
which includes an examination of the structure of the domestic tax system and its organizing
principles, in order to ascertain whether a financial contribution was granted. Moreover, Brazil does
not consider that the existence of a ceiling for the tax exemptions or remissions granted by a
hypothetical measure is sufficient to establish that such an scheme no longer falls under footnote 1
of the SCM Agreement by virtue of it not providing exemptions or remissions for the specified inputs
"as a whole". Whether a scheme actually results in remissions or exemptions which are in "excess
of" and therefore inconsistent with the SCM Agreement is a factual matter to be addressed on a
case-by-case basis.
VII. Exceptions, derogations and burden of proof
17. In Brazil's view, when dealing with exceptions, Members, panels and the Appellate Body are
facing a potential justification for what would otherwise be a measure that is inconsistent wit h the
Covered Agreements. Exceptions, therefore, result from the acknowledgement by Members that
certain circumstances require legitimate deviation from the established norms. Derogations,
however, are not justifications. They instead act to limit the scope of application of other provisions
and, in so doing, help to clarify the boundaries of Members' rights and obligations under the Covered
Agreements. The distinction is significant, among other things, for the determination of the proper
order of analysis in specific disputes.

18. Brazil notes that while characterizing a provision as an exception has a clear consequence for
the determination of the burden of proof, the implications of the characterization of a provision as a
derogation are less clear. In any case, in Brazil 's view, the rules normally applicable to the
determination of the burden of proof under the WTO dispute settlement system are equally
applicable in relation to provisions containing derogation. Moreover, a proper determination of the
burden of proof regarding derogations may require an examination on a case-by-case basis.

19. That notwithstanding and regardless of the characterization of a provision as a derogation or
as an exception, Brazil notes that, in previous disputes, panels have placed on the respondent the
burden of proof regarding provisions which contained language t hat was very similar to the one
adopted in footnote 1 of the SCM Agreement. For instance, in China – Raw Materials, the Panel
concluded that: "the burden is on the respondent (China in this case) to demonstrate that the
conditions of Article XI:2(a) are me t in order to demonstrate that no inconsistency arises under
Article XI:1".2

20. Language contained in the second paragraph of item (k) of Annex I to the SCM Agreement
resembles that which is found in footnote 1 of the SCM Agreement. The second paragraph of item (k)
contains the following sentence: "an export credit practice which is in conformity with those

2 Panel Report – China – Raw Materials – para 7.213.

provisions shall not be considered an export subsidy prohibited by this Agreement.3" This is similar
to the formula "shall not be deemed to be" used in footnote 1. Brazil notes that the panel in Brazil
– Aircraft (21.5 – Canada II)4 also placed on the respondent the burden of proof regarding the
second paragraph of item (k) of the SCM Agreement.

21. Finally, Brazil also notes that none of the parties in this dispute made specific claims regarding
the question of burden of proof in footnote 1. Therefore, in Brazil's view, this is not an issue before
the Panel.

3 Emphasis added.
4 Panel Report – Brazil – Aircraft (21.5 Canada II), paras. 5.61-5.63.

ANNEX C-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CANADA
I. ARTICLE 27.2 SPECIAL AND DIFFERENTIAL TREATMENT
A. Article 27.2 of the SCM Agreement
1. Article 27.2 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement)
provides for special and differential treatment (S&DT) applicable to certain developing country
Members, which excludes them from the application of the Article 3.1(a) prohibition for export
subsidies for a certain period of time. This S&DT applies to three categories of developing countries,
under different conditions: (1) the least developed countries referred to in Annex VII(a); (2) the
developing countries listed in Annex VII(b); and (3) the other developing countries not referred to
in Annex VII.
2. Article 27.2(a) exempts the developing countries listed in Annex VII(b), including India, from
the application of Article 3.1(a) until their GNP per capita reaches $1,000. When this condition is
met, these developing countries become subject to the provisions applicable to other developing
countries according to 27.2(b).
3. Pursuant to Article 27.2(b), the Article 3.1(a) prohibition does not apply to "other developing
countries for a period of eight years from the date of entry into force of the WTO Agreement, subject
to compliance with the provisions in paragraph 4"1.
4. In Canada's view, the ordinary meaning of Article 27.2(b) is clear that the period of eight
years applies from "the date of entry into force of the WTO Agreement". Furthermore, the "date of
entry into force of the WTO Agreement" is a fixed date, according to Article XIV of the Marrakesh
Agreement Establishing the World Trade Organization (i.e. the WTO Agreement). The WTO
Agreement clearly entered into force on 1 January 1995.
5. Canada's position is supported by the Appellate Body's interpretation of Article 27.2(b). In
Brazil – Aircraft, the Appellate Body found as follows:
The ordinary meaning of the text of Article 27.2(b) is clear. For a period of eight years after
the date of entry into force of the WTO Agreement, the prohibition on export subsidies in
paragraph 1(a) of Article 3 of the SCM Agreement does not apply to developing country
Members described in Article 27.2(b) – as long as they comply with the provisions of
Article 27.4. […] During the transitional period from 1 January 1995 to 1 January 2003 ,
certain developing country Members are entitled to the non -application of Article 3.1(a),
provided that they comply with the specific obligations set forth in Article 27.4. Put another
way, when a developing country Member complies with the conditions in Article 27.4, a claim
of violation of Article 3.1(a) cannot be entertained during the transitional period , because
the export subsidy prohibition in Article 3 simply does not apply to that developing country
Member2.
6. This jurisprudence confirms that the starting point of the eight year transitional period was
the date of entry into force of the WTO Agreement, i.e. 1 January 1995, and not the date a given
developing country Member graduates from paragraph (b) of Annex VII. Thus, the transitional period
in Article 27.2(b) expired on 1 January 2003, in any event.

1 Canada notes that in 2001, pursuant to Article 27.4 of the SCM Agreement, the Committee on
Subsidies and Countervailing Measures established procedures for granting extensions to the transition period
under Article 27.4 for certain developing country members beyond the original 8-year period (G/SCM/39).
These procedures provided that Members enumerated in Annex VII(b) who had not yet reached the GNP per
capita threshold could reserve their rights to make use of this extension process. It does not appear that India
reserved its rights to benefit from the Article 27.4 extension process.
2 Appellate Body Report, Brazil – Aircraft, para. 139 [emphasis added].

7. When the GNP per capita of a developing country Member listed in Annex VII(b) reaches
$1,000, it becomes subject to the limited S&DT of Article 27.2(b). Because the period of application
of this S&DT clause expired on 1 January 2003, subject to an extension having been granted, any
developing country Member who graduates from Annex VII(b) after this date immediately becomes
subject to the export subsidies prohibition of Article 3.1(a). In the present case, and in accordance
with this mechanism, India is now subject to Article 3.1(a) as there is no debate that it has graduated
from Annex VII(b).
8. This view is further strengthened by the language of Annex VII(b), which states, in relevant
part that: [India] shall be subject to the provisions which are applicable to other developing country
Members according to paragraph 2(b) of Article 27 when GNP per capita had re ached $1,000 per
annum […]. Because the transitional period of paragraph 2(b) of Article 27 expired on
1 January 2003, the "provisions which are applicable to other developing country Members" are the
export subsidies disciplines of Article 3.1(a). As such, these disciplines are now applicable to India.
B. Article 27.4 of the SCM Agreement
9. The purpose of Article 27.4 is to set out the conditions according to which developing country
Members may be exempted from the application of Article 3.1(a), pursuant to Article 27.2.
Therefore, the two occurrences of "the eight -year period" in Article 27.4, in the first and third
sentences, refer to the same eight-year period defined in Article 27.2(b).
10. The third sentence of Article 27.4 gives developing country M embers the opportunity to
request an extension to maintain export subsidies beyond the expiry date of the eight -year period,
provided that they enter into consultations with the SCM Committee not later than one year before
the expiry of this eight-year period. Thus, developing country Members were required to enter into
consultations not later than one year before 1 January 2003; meaning before 1 January 2002.
11. The "Procedures for extensions under Article 27.4 for certain developing country members" 3
("Procedures") confirm this ordinary meaning, because they provide in Article 1(a) that Members
seeking an extension must enter into consultations with the Committee on the basis of documents
submitted no later than 31 December 2001. Moreover, Articles 1(c) and 2 of the Procedures provide
that the extensions may be granted starting in calendar year 2003, which corresponds to the first
year after the end of the eight-year period.
12. Canada considers that the third sentence of Article 27.4 and WTO Members' prac tice in
applying these treaty terms confirm the ordinary meaning of the terms "for a period of eight years
from the date of entry into force of the WTO Agreement" as referring to a period delimited by fixed
start and end dates, respectively 1 January 1995 and 1 January 2003.
II. STATEMENT OF AVAILABLE EVIDENCE
13. The scope of "the statement of available evidence" required under Article 4.2 is defined by
"the existence and nature of the subsidy in question", as indicated by the terms "with regard to".
Therefore, the ordinary meaning of Article 4.2 is that a complainant can limit its statement of
available evidence to the evidence necessary to demonstrate the existence and nature of the
subsidy.
14. To require a complainant to state all evidence availabl e to it at the time of its request for
consultations would render inutile the terms "with regard to the existence and nature of the subsidy
in question". Thus, this interpretation should be rejected.
III. FINANCIAL CONTRIBUTION
15. The text of footnote 1 o f the SCM Agreement read in conjunction with Annex I(i) and (h)
makes it clear that this provision is concerned with duties or taxes in the form of "import charges"
on inputs that are consumed in the production of goods destined for export 4. The text refers to an
exemption applied to "an exported product" and to a remission or drawback applied to "imported

3 G/SCM/39, November 20, 2001.
4 Appellate Body Report, EU – PET (Pakistan), para. 5.98.

inputs" consumed in the production of "the exported product". This rule is clearly linked to the
exported product itself and the duties and taxes applied to such a product as well as the duties and
taxes applied to the inputs consumed in the exported product's production, meaning the transactions
themselves. It does not allow for a general reduction of the tax burden of an exporter, as this would
not meet the specific requirements of footnote 1 and the applicable Annexes.
16. With respect to duty exemptions on the importation of inputs, footnote 1 applies when these
inputs are consumed in the production of a product which is subsequently exported5. The "exported
product" in question is the one which was produced using the imported inputs subject to the duty
exemption. If a Member decides to impose a limit or ceiling on the amount of duty exemptions that
may be provided, this should not prevent exemptions from being applied in accordance with
footnote 1 to imported inputs which are consumed in the production of exported goods up to the
level of that ceiling, provided that the legal conditions in Annexes I through III are satisfied to the
extent that they are applicable.
17. With respect to a scheme that exempts specified goods from customs duties and other indirect
taxes while the same goods are subject to duties or taxes outside the challenged scheme, a panel
cannot look at a tax measure or scheme in isolation. In the context of a scheme that exempts goods
from duties and taxes, it must be determined whether an amount that would otherwise be due has
been foregone or not collected by reference to some type of benchmark for comparison. This
necessary process of comparing the tax treatment to an appropriate benchmark is essentially what
is being referred to as the "three-step test". Considering the breadth and complexity of domestic tax
systems, which generally include a multitude of tax rates and exceptions, a careful examination and
analysis of the tax program in the context of the broader tax system should be done. If the evidence
of a particular case shows that additional programs, taxes, duties, or exceptions may be relevant to
or interact with a challenged scheme, it would be necessary for a panel to examine this evidence,
taking into account the structure and organizing principles of the domestic tax system.
IV. BENEFIT FROM GOVERNMENT REVENUE FORGONE
18. As a general rule, revenue foregone will confer a b enefit to the recipient. The fact that a
government does not collect tax from an entity when it would normally have done so confers a
benefit to that entity. This does not mean that the concepts of "financial contribution" and "benefit"
are conflated. A financial contribution, in the form of revenue foregone, will first have to be identified.
Once it has been identified, the question arises as to whether that financial contribution confers a
benefit. The fact that the response to this question will, as a general rule, be in the affirmative when
revenue foregone is at issue, does not amount to the conflation of "financial contribution" and
"benefit".
19. A simple example which illustrates this point is that of a financial contribution in the form of a
grant. A grant is considered to be a direct transfer of funds under Article 1.1(a)(1)(i) of the SCM
Agreement. By its nature, a grant by a government confers a benefit to the recipient, in the full
amount of the grant, as it consists of money being freely given to the recipient that it could not have
obtained on the market. Arriving at that conclusion does not mean that the legal elements of financial
contribution and benefit are wrongly conflated. It is simply a consequence of the nature of the
financial contribution which confers a benefit per se.
V. EXCEPTIONS, DEROGATIONS AND BURDEN
20. As recognized by the Appellate Body in US – Wool Shirts and Blouses , the burden of proof
rests upon the party, whether the complainant or the respondent, who asserts the affirmative of a
particular claim or defense. When a party provides sufficient evidence to support its claim or defense,
the burden of proof then shifts to the other party6.
21. The purpose of footnote 1 of the SCM Agreement is to refine the scope of the d efinition of a
particular financial contribution, by preventing certain types of measures to be characterized as
revenue foregone.

5 Ibid., para. 7.37.
6 Appellate Body Report, US – Wool Shirts and Blouses, at para. 335.

22. Therefore, in making an affirmative claim that a measure is a subsidy within the meaning of
Article 1.1, a complainant does not necessarily need to address footnote 1. Indeed, if a complainant
demonstrates that the measure at issue meets all the definitional criteria of a subsidy set out in
Article 1.1, it has met its prima facie burden of proof, which then shifts to the respondent to rebut.
23. Canada recalls that the burden of proof relies on the party making an affirmative claim or
defense. This results from the impossibility for a party to prove a claim in the negative.

ANNEX C-3
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF EGYPT
Mr. Chairman, Members of the Panel,

1. Egypt thanks you for the opportunity to present its views in this dispute.
2. Egypt has provided a written submission that focuses on some key issues of systemic interest
regarding the interpretation and application of Articles 3.1(a), 3.2, 27 and Annex VII of the
SCM Agreement.
3. Today, Egypt will focus on the issue raised by the parties relating to the application of
Article 27 and Annex VII to the SCM Agreement. As the Panel is aware, these provisions concern the
Special and Differential Treatment of Developing Country Members.
4. The United States contends that India no longer qualifies for the exception provided in
Article 27.2(a) on the grounds that India's Gross Nationa l Product (GNP) has exceeded US$1,000
based on the recent years for which data are available.1
5. As an initial matter, Egypt observes that developing countries falling within the scope of
Article 27.2(b) of the SCM Agreement were granted a transitional period of eight years from the
date of the entry into force of the WTO Agreement – i.e. from 1 January 1995 to 1 January 2003.
6. An equivalent transitional period should be available to those deve loping country Members
that have recently graduated from the Annex VII list. It is important to recall that these developing
country Members were listed in Annex VII on account of its lower level of economic development.
On graduation, these developing countries have reached the threshold of US$1,000 annual GNP per
capita; yet, the fact that some developing countries have (barely) exceeded that threshold does not
imply that they have reached a comparable level of economic development vis-à-vis more advanced
developing countries, let alone developed countries.
7. Accordingly, a proper interpretation of Annex VII to the SCM Agreement may not leave
recently graduated developing countries in a situation where they are immediately required to
eliminate their export subsidies. This would be both unfair and unreasonable. Just as more advanced
developing countries had an eight -year phase -out period, so too recently graduated developing
countries should avail themselves of an equivalent transitional period to allow for a smooth
application of the prohibition set out in Article 3.1(a) of the SCM Agreement.
8. Moreover, recently graduated developing country Members may enjoy the opportunity
provided for in Article 27.4 to enter into consultations with the SCM Committee which will determine
whether an extension of the eight years period is justified, after examining all the relevant economic,
financial and development needs of the developing country Member in question.
9. Egypt thus invites the Panel to interpret Article 27.2(a) and Annex VII to the SCM Agreement
in the light of the second recital of the preamble of the WTO Agreement that recognizes the "need
for positive efforts designed to ensure that developing countries … secure a share in the growth in
international trade commensurate with the needs of their economic development". Pursuant to this
mandate, Article 27.2(a) and Annex VII to the SCM Agreement may not leave developing countries
unprotected upon graduation from Annex VII. Rather, these developing countries must be afforded
a transitional period progressively to eliminate their export subsidies.
10. In closing, Egypt's written submission and this oral statement have focused on a few specific
issues raised in this dispute. This should not be regarded as an indication that Egypt considers that
the issues it has not addressed are not important. Nor does it indicate agreement, or otherwise, with
any particular argument of the parties or third parties in this dispute.

1 United States' first written submission, para. 26.

11. Egypt again thanks the Chairman and Members of the Panel for this opportunity to present its
views in this dispute.

ANNEX C-4
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION
1. INTRODUCTION
1. The European Union exercises its right to participate as a third party in this case because of
its systemic interest in the correct and consistent interpretation and application of the covered
agreements and other relevant documents, and the multilateral nature of the rights and obligations
contained therein, in particular the Agreement on Subsidies and Countervailing Measures (the
SCM Agreement).
2. OBSERVATIONS OF THE EUROPEAN UNION
2.1. WHETHER THERE IS A "GRADUATION" PERIOD ENVISAGED IN ARTICLE 27.2(B)
2. The wording of Articles 27.2 (b) and 27.4 of the SCM Agreement clearly does not support the
interpretation provided by India.
3. To begin with, Articles 27.2(b) and 27.4 refer to exempting certain developing countries from
the prohibition in Article 3.1(a), in the form of phasing out the respective subsidies, preferably in a
progressive manner, "for a period of eight years from the date of entry into force of the WTO
Agreement". Annex VII of the SCM Agreement provides that India "shall be subject to […]
paragraph 2(b) of Article 27 when GNP per capita has reached $1000 per annum".
4. It clearly follows from the above that should India have reached the $1000 per annum GNP
per capita in the first 8 years from the date of entry into force of the WTO Agreement
(1 January 1995), then it could have benefited from the exemption in Articles 27.2(b) and 27.4 for
the remainder of the 8 year period.
5. This means that once a developing country has graduated out of Annex VII, Article 27.2 (b)
and 27.4 apply to them. Hence, such countries have to comply with the prohibitio n of export
subsidies after a period of 8 years from the entry into force of the WTO Agreement.
6. India's alleged understanding of Articles 27.2 (b) and 27.4 of the SCM Agreement i.e. that the
phasing out period for countries graduating out of Annex VII would start from the year when they
graduate cannot be reconciled with the wording of the Agreement. Annex VII (b) states that from
the graduation the provision applicable to other developing countries according to Article 27.2 (b)
becomes applicable, without adapting the content of those provisions or indicating that they should
be applied mutatis mutandis.
7. Not granting a full eight year transition period to countries graduating from Annex VII at a
much later date after 1 January 1995 is intentional, as those countries should have been aware of
their positive economic development so that their graduation and the subsequent application of
Article 3.1 (b) should not come as a surprise to them. This is even more so as graduation only occurs
once the US $1000 GNP threshold has been exceeded for three consecutive years.
8. The extensions referred to in the third sentence of Article 27.4 refer to periods of time beyond
the 8 year period, but such extensions do not have an impact on the interpreta tion of the starting
date of the 8 year period, which is the date of entry into force of the WTO Agreement. In this respect,
both the first and third sentences of Article 27.4 use the definite article ("the") when referring to
"the eight -year period" and m ust therefore be referring to something that has already been
identified. That something can only be "the" eight -year period referred to in Article 27.2(b), as is
expressly stated in the first sentence of Article 27.4. Article 27.2 states unequivocally that the eight-
year period starts on the date of entry into force of the WTO Agreement. Therefore, whilst India
would benefit from the exemption in Article 27.2(a) and Annex VII as long as it remained below the
GNP threshold, when that threshold was reached India's obligations and rights, like other developing
country Members, were rather controlled by Article 27.2(b). Thus, India could have benefitted from

the exemption in Article 27.2(b) during the eight -year period, but once that period expired, India,
like other developing countries, became subject to the obligation in Article 3.1(a). Interpreting this
8 year phasing out period as starting in the case of developing countries included in Annex VII from
the year in which they graduate and not from the date of the entry into force of the WTO Agreement
(as India would have it) would go contra legem and no means of interpretation would be able to
lead to such a result.
9. The European Union considers that recourse to Article 32 of the Vienna Convention is not
necessary or appropriate in the present case, as the Panel does not need confirmation of the meaning
of the relevant terms in Article 27.4 and the meaning of those terms is not ambiguous or obscure.
10. For the reasons above, the interpretation suggested by I ndia according to which developing
countries that graduate out of Annex VII profit from an eight year extendable transition period from
the time of graduation is not supported by a faithful reading of the Agreement.
11. Furthermore, the WTO Membership decided in the 2001 Decision on "Implementation-Related
Issues and Concerns," that Annex VII includes the Members that are listed therein until their GNP
per capita reaches US $1,000 in constant 1990 dollars for three consecutive years. These three
consecutive years were also provided in order to address concerns of the kind expres sed by India,
namely that such developing countries would need a transition period to adjust (India reached the
threshold in 2013, 2014, 2015 and 2016).
12. While such language was included in a Ministerial Declaration, language suggested by India
and a small group of like-minded countries going against the very text of the SCM Agreement was
rejected by the Membership (Negotiating Group on Rules, Amendment to Article 27.2 and 27.4 of
ASCM in relation to Developing Countries Covered Under Annex VII - Communication from the
Plurinational State of Bolivia, Egypt, Honduras, India and Sri Lanka). A contrario, the fact that such
language was never adopted by the WTO Membership confirms that what India is asking for in its
submissions actually amounts to expect the Panel to add to or diminish the rights and obligations of
the Parties, contrary to Article 3.2 of the DSU.
13. Thus, India was obliged at least as of July 2017 to terminate any export subsidy schemes,
according to Articles 3.1 (a) and 3.2 of the SCM Agreement.
2.2. WITH RESPECT TO THE BURDEN OF PROOF
14. The European Union at this stage of the proceedings, after the parties have already exchanged
two sets of written submissions, there is already a good deal of evidence before the Panel. This
places both the Panel and the third parties in a good evidentiary position.
15. The European Union would be cautious against a mechanistic delimitation between the effects
on the burden of proof of provisions which are in the nature of a derogation and the effects of those
that are in the nature of an exception.
16. There is a well-known legal principle in pretty much every legal system under the sun which
says that the one who makes a positive affirmation before a court of justice bears the burden of
proving it (onus probandi incumbit actori). The Appellate Body did not re -invent the wheel in US -
Wool Shirts and Blouses . This principle is valid in the interpretation of the covered agreements,
including the SCM Agreement.
17. The European Union also agrees with the longs tanding practice that the party invoking an
affirmative defence bears the burden of making its case and that it is not up to the complainant to
second-guess the kind of arguments the respondent may put forward.
18. However, there are cases, and in particular certain SCM cases, when by its very nature not all
the information which may be relevant is in the hands of the complainant. Rather, such information
is in the custody of the Member whose measures are challenged. This distribution of available
evidence needs to be taken into account when determining the respective duties of the parties to a
dispute with regard to the gathering of evidence and its presentation to a panel.

19. Keeping the above considerations in mind, the European Union turns now to footnote 1 of the
SCM Agreement. We already know that "footnote 1 indicates when certain measures will not
constitute a subsidy". The language which is used ( "not deemed"), juxtaposed to the language of
Article 1.1 ("deemed") suggests that this footnote is a mer e continuation of the definition of what
constitutes and what does not constitute a subsidy for the purpose of the SCM Agreement. It can be
compared to Article III:8(a) of GATT 1994, which is a derogation limiting the scope of the national
treatment obligation.
20. Thus, footnote 1 of the SCM Agreement is rather in the nature of a derogation and not in the
nature of an affirmative defence, as it is the case, for instance, with the general and security
exceptions in Articles XX and XXI of GATT 1994.
21. This being said, in the circumstances of the SCM Agreement and of this particular case, the
European Union considers that the existing exchange between the parties enables the Panel to make
an objective assessment of the matter before it, including with regard to footnote 1 and the relevant
portions of Annexes I to III of the SCM Agreement.
22. Furthermore, we point out that footnote 1 is part of the definition of a subsidy. Definitional
provisions do not have to be expressly cited in consultations requests or panel requests. Rather,
when a claim is made under, for example, Article 3.1(a), it is implicit that the complainant is
asserting that the measure is a subsidy. The situation would be different if the "derogation" in
question would limit and frame the obl igation. In such a case, the "derogation" would have to be
cited in the consultations request and panel request in order to be within the panel's terms of
reference. If not cited, the panel would be unable to determine the claim, since the scope of the
obligation would simply not have been corrected stated by the complainant.
2.3. WITH RESPECT TO THE STATEMENT OF AVAILABLE EVIDENCE
23. First, the adequacy of the statement of available evidence must be determined on a case by
case basis.
24. Second, in the c ase of prohibited subsidies it may, indeed, often occur that the legal
instruments that serve to identify the measures at issue also provide evidence of the existence of
the subsidies and of their nature as subsidies.
25. Third, the European Union would emphasize the word "available". The evidence should be in
the public domain and thus available to the complainant at that very early stage of the proceedings,
when drafting a consultations request. It should not be made impossible to write consultations
requests compliant with Article 4.2 of the SCM Agreement because some information is in the
custody of the Member adopting the contested measures. Furthermore, during consultations
Members usually ask for and receive clarifications with regard to the measures at issue, in order to
improve their understanding and to attempt to obtain satisfactory adjustment of the matter.
26. In conclusion, it cannot be excluded that in certain cases the listing of the legal instruments
containing the measures at issue will sati sfy at the same time both the conditions in Article 4.2 of
the SCM Agreement and in Article 4.4 of the DSU.
27. The text of Article 4.2 does not use the words "statement of all available evidence", but instead
refers to "statement of available evidence".
28. Thus, the complainant is under an obligation to state only the evidence "available", and only
to the extent that such evidence is able to serve the purpose of clarifying "the existence and nature"
of the subsidy in question.
29. A complainant is require d to provide evidence of facts that it asserts. In a de jure case the
facts are the terms actually used in the measure at issue and the evidence is the text of that
measure. Thus, no controversy should normally arise. However, in a de facto case complainant and
defendant may have different views about the relevance and weight to be given to certain facts. In
the opinion of the European Union, a complainant is not required to include in its "statement of
available evidence" facts that it considers irrelevant . Even if they are subsequently found to be
relevant, that would not invalidate the statement of available evidence or the claim.

30. Furthermore, the European Union considers that it is for the defendant to bring forward
evidence of facts that it seeks to rely on for the purposes of rebutting a de facto claim. There is no
obligation on the complainant to include such evidence in its "statement of available evidence". Thus,
for example, if there would be a press release in which the granting authority would assert that the
measure is not contingent upon export, that would be something for the defendant to rely on and
adduce if it would so wish. The absence of such evidence from the statement of available evidence
would not invalidate the statement or the claim. A complainant cannot be expected to anticipate
what a defendant might wish to seek to rely on. Article 4.2 only requires "a" statement of available
evidence. Use of the indefinite article supports the view that the statement may be tailored to the
purposes of the complainant, that is, that it need only contain the evidence of the facts that the
complainant seeks to rely on.
31. Finally, the European Union considers that it is also possible that, during the course of the
exchange of arguments, th e complainant wishes to refer to additional facts in order to rebut
representations being made by the defendant, and to adduce supporting evidence for those
additional facts. That such additional evidence would not be referred to in the statement of available
evidence would not invalidate the statement or the claim. This would also be consistent with
Article 7.2 of the SCM Agreement, which contains similar wording.
32. Only if there would be a complete absence of a statement of available evidence, or a statement
that would be manifestly devoid of substance and incapable of supporting the claim, would the
European Union see a procedural defect capable of vitiating the claim.
2.4. WHETHER ELEMENTS OF THE FIVE PROGRAMMES CONSTITUTE PROHIBITED SUBSIDIES
33. The European Union starts by recalling that for a subsidy to qualify as a prohibited export
subsidy under the SCM Agreement three conditions should be met: (i) there must be a financial
contribution by a government, (ii) conferring a benefit and (iii) being co ntingent upon export
performance.
34. The European Union disagrees with India. The same facts and evidence may be relevant both
for the determination of financial contribution and the determination of benefit. However, the two
concepts remain legally distinct and are not conflated.
35. The European Union notes that in the present case companies under the Export Oriented Units
and Sector Specific Schemes (EOU & SSS) and the special economic zones (SEZ) programme are
required to achieve a positive Net Foreign Exchange (NFE). Furthermore, all goods produced
pursuant to the EOU requirements may be destined for export. Monitoring is in place so as to ensure
the fulfilment of the export condition. Failure to comply with the terms of the agreement between
companies and the state may result in penal action in the case of EOU & SSS and SEZ.
36. In exchange, participating Indian companies are exempted from customs and excise duties
under the EOU & SSS, while SEZ Units are entitled to a corporate income tax deduction of export
earnings, exemptions from customs duty on goods imported into the SEZ, exemptions from export
duties and exemptions from India's Integrated Goods and Services Tax.
37. The scenario when a Member has a scheme exempting from import duties both (1) inputs that
are consumed in the production of exported products, and (2) goods that cannot qualify as "inputs
that are consumed in the production of the exported product" under Annex I(i) may be of particular
interest in the context of Part V of the SCM Agreement, where it is necessary to calculate the amount
of the subsidy in order to calculate the rate of the countervailing duty, and hence where it is
necessary to understand whether the amount of the subsidy is to be calculated by reference to the
entire scheme, or only the component that falls outside footnote 1. Is it of less immediate interest
in the context of Part II of the SCM Agreement because, in any event, an unsuccessful defendant
will have to bring the measure into conformity with its obligations under the SCM Agreement, and
this is so irrespective of whether or not the "measure" is considered to be the scheme as a whole,
or only the component that falls outside the scope of footnote 1. This Panel may therefore not have
to engage with this issue or do so in any detail.
38. The Appellate Body in PET found that in the context of duty drawback schemes, the financial
contribution element of the subsidy (i.e. the government revenue foregone that is otherwise due) is

limited to the excess remission or drawback of import charges and does not encompass the entire
amount of the remission or drawback of import charges.
39. The above interpretation would be pertinent only to the extent that the resp ective Indian
schemes can be qualified as duty drawback schemes at all.
40. Thus, in an abstract scenario like the one invoked above, the part of the scheme which does
not conform to footnote 1/Annexes II and III of the SCM Agreement would not fall under t he carve
out of footnote 1 (e.g. capital goods that are not 'consumed' within the meaning of the SCM
Agreement). In other words, the components outside footnote 1 could amount to prohibited export
subsidies. In the European Union 's view, a Member cannot re ly on footnote 1 to include elements
exogenous to the true nature of the measures envisaged under footnote 1. Such elements or
components which do not belong to footnote 1 could be assessed with regard to their conformity
with the SCM Agreement.
41. In this respect, a panel could examine whether the design, structure and expected operation
of such a scheme could lead to a legal characterisation as a duty drawback scheme under the
SCM Agreement.
42. In that respect, the European Union recalls that the Appell ate Body has previously held that
the characterisation of a measure under a Member's municipal law is not dispositive (US - Large Civil
Aircraft (2nd complaint), Canada - Renewable Energy / Canada - Feed-in Tariff Program, Indonesia
- Iron or Steel Products).
43. A duty drawback system aims at refunding import duties paid (or to be paid in case of import
substitution drawbacks) on imports of raw materials when those raw materials are incorporated into
exported finished products. It also presupposes a verif ication system assessing whether expenses
on raw materials that are consumed are indeed linked to exported products (e.g. excluding import
duties paid on raw materials incorporated in domestically sold processed products) etc. Furthermore,
there may be such circumstances that the scheme does not only suffer from an improper verification
system, but it is rather a question of the very design of that scheme.
44. In a case where the design, structure and expected operation of a scheme leads to the
conclusion that it cannot be characterized as a duty drawback scheme under the SCM Agreement,
the entire scheme falls outside the scope of footnote 1. If the assessment indicates that the scheme
is designed and operates in a manner that its footnote 1 compliant compon ents could be severed
from the non -compliant components, then only the non -compliant components would fall outside
the scope of footnote 1.
45. Neither footnote 1, which refers to Annexes I to III, nor Annex I, nor Annex II, paragraphs 1
and 2, nor the introductory paragraph of Annex III are limited to countervailing duty investigations.
The fact that provisions are "technical in nature" or "data driven" does not release a panel from its
obligation to make an objective assessment of the matter before it, in cluding an objective
assessment of the facts, pursuant to Article 11 of the DSU.
46. The Panel should apply the normal burden of proof rules. To the extent that India is making
affirmative factual assertions, India should have already brought forward evide nce in support of
those assertions. This is particularly so when the relevant facts and evidence are under the sole
control of India. To the extent that India has failed to provide the necessary factual clarifications or
evidence, the Panel should consider making use of Article 13 of the DSU in order to require India to
provide the necessary information. In the absence of a response or complete response from India
the Panel should draw reasonable inferences based on the information available to it.
47. In the case of footnote 1 a proper duty drawback scheme will not constitute a prohibited
subsidy. According to the destination principle, formulated in the context of border tax adjustments,
a product destined for export could be exempted from domestic taxes o r given a rebate (or
remission) by the country of export, and then taxed by the country of import.
48. Footnote 1 can be considered an expression of the destination principle in the context of the
SCM Agreement. However, specific rules to the SCM Agreement clarify that there has to be a certain
correlation between the exemptions/remissions and the consumption of e.g. imported inputs as per

Annexes I to III. Any system which by design or in its implementation fails to respect this correlation
will amount to an export subsidy.
3. CONCLUSIONS
49. The European Union hopes that its contribution in the present case will be helpful to the Panel
in objectively assessing the matter before it and in developing the respective legal interpretations
of the relevant provisions of the SCM Agreement.

ANNEX C-5
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN
I. De facto export contingency under Article 3.1(a) of the SCM Agreement
1. While Japan does not wish to take a specific position on the facts of the present case, Japan
would like to emphasize that, first, subsidies contingent in fact upon export performance should be
determined by examining how a subsidy's design and structure contribute to the existence of an
incentive for a recipient to favor exports over domestic sales. In this regard, it is Japan's position,
supported by WTO jurisprudence, that the export orientation of a recipient cannot be the sole
supporting fact of a finding of export contingency. For example, in the present case, the fact that an
enterprise's application to be an SEZ unit must include the anticipated FOB value of exports for the
first five years of operation is not in and of itself an indication of the export contingency of the
subsidies. Second, Japan considers th at subjective statements made by government officials with
regard to the reason why the subsidies were granted, alone cannot prove the export contingency of
the subsidies. Accordingly, the Panel should focus on the subsidy itself and on the objective evidence
surrounding the granting of the subsidy, as is required by the Appellate Body.
II. Special and differential treatment under Article 27 of the SCM Agreement
a) Articles 27.2(b), 27.4 and Annex VII(b) of the SCM Agreement
2. Japan disagrees with India's argument that Article 27.2 of the SCM Agreement is "meant to
provide for an 8 year phase out period for any late Annex VII graduating country ".1 Article 27.2(b)
of the SCM Agreement expressly stipulates that developing country Members that are not part of
Annex VII are under an obligation to phase out their subsidies within an eight-year period "from the
date of entry into force of the WTO Agreement ". Articles 27.2(b) and 27.4 apply to Members that
are not part of Annex VII for a maximum period of eight years after the entry into force of the WTO
Agreement, i.e. until 2003. This means that Annex VII Members who graduate after 2003 can no
longer benefit from Article 27.2(b) and by implication from Article 27.4.
3. Japan is mindful of the fact that a country graduating from Annex VII does not have the
necessary means to remove its subsidies overnight. Nonetheless, Japan submits that these concerns
have been accommodated through the extension mechanism provided for in Article 27.4 which
allowed Annex VII countr ies that were not able to phase out their subsidies in due time, that is
before 2003, to request extension periods prior to the expiration of the eight-year phase-out period,
and through the 2001 Decision on "Implementation -Related Issues and Concerns", ac cording to
which a Member will not graduate from Annex VII unless their GNP per capita reaches US $1000 for
three consecutive years.2
b) Article 27.5 of the SCM Agreement
4. The second sentence of Article 27.5 obliges Members that are allowed to maintain t heir
subsidies by virtue of being part of Annex VII to phase out these subsidies for products in which
they reach export competitiveness. If a Member graduates from Annex VII , it shall be "subject to
the provisions of paragraph 1(a) of Article 3", "according to paragraph 2(b) of Article 27", as set out
in Annex VII itself. Thus, by logical implication, there is no room to apply the second sentence of
Article 27.5 to a country who has already graduated from Annex VII. The wording of the second
sentence of Article 27.5 supports this view, as it applies only to developing country Members that
are "referred to in Annex VII and which has reached export competitiveness".

1 India's First Written Submission, para. 188.
2 Decision adopted at the Doha WTO Ministerial Conference, Fourth Session, "Implementation-Related
Issues and Concerns, paras 10.1 and 10.4 - Decision of 14 November 2001" WT/MIN(01)/17
(20 November 2001) and various addenda thereto.

III. Burden of proof
5. Japan submits that while the burden of proof for a prima facie case is on the complaining
party, the respondent party with exclusive access to the details of the challenged measures should
have an obligation to cooperate in the context of litigation. Japan considers that a complaining party
should not be disadvantaged by t he non-cooperation of the respondent. This position is supported
by the Appellate Body in US – Large Civil Aircraft (2 nd complaint) which has recognized that when
one party has relevant evidence in its sole possession, the burden of adducing evidence must fall on
that party.3 Furthermore, the panel in Argentina – Textiles and Apparel stressed "the requirement
for collaboration of the parties in the presentation of the facts and evidence to the panel and
especially the role of the respondent in that process ", adding that "the adversary is obligated to
provide the tribunal with relevant documents which are in its sole possession".4
6. With regard to the question of whether the burden of proof depends on the characterization
of a provision as a derogation or a n exception, the Appellate Body noted that "the characterization
of the provision as a derogation does not pre -determine the question as to which party bears the
burden of proof with regard to the requirements stipulated in the provision ".5 In Japan's view, who
has a burden of proof for a prima facie case on a particular provision or part of a provision should
not be determined categorically depending on whether it is a derogation or an exception.
IV. Government revenue foregone under Article 1.1(a)(1)(ii) of the SCM Agreement
a) Examination of whether government revenue that is otherwise due has been
foregone
7. When examining a claim under Article 1.1(a)(1)(ii) of the SCM Agreement, a "three-step test"
articulated by the Appellate Body6 should be applied in order to fully comprehend the structure and
principles of a Member's tax system. A complainant should not be placed at a disadvantage vis -à-
vis a respondent in cases where the latter chooses not to disclose, or avoid the provision of,
necessary information for the complainant's case.
8. The Appellate Body further explained that in light of the variety and complexity of domestic
tax systems, an examination under Article 1.1(a)(1)(ii) "must be sufficiently flexible to adjust to the
complexities of a Member's domestic rules of taxation".7 Japan is therefore of the view that such an
examination should involve a comprehensive assessment of a Member's tax system when applying
the "three-step test" established by and consistently reaffirmed in WTO jurisprudence.
b) Benefit analysis in cases of foregone government revenue otherwise due
9. Japan is of the view that a benefit is conferred whenever government revenue otherwise due
is foregone for the purposes of Article 1.1(a)(1)(ii) of the SCM Agreement. In accordance with
standing case-law, Japan considers that in cases of foregone government revenue otherwise due,
unless it falls within the scope of Footnote 1 of the SCM Agreement, the conferral of a benefit for
the purposes of the SCM Agreeme nt requires little, if any, further examination. The very word
"foregone" suggests that the government has given up an entitlement to raise the revenue that it
could otherwise have raised, which the market could not have possibly had. In other words, a
comparison with the terms that would have been "available to the recipient on the market "8 would
thus make no sense.

3 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1139 (emphasis added).
4 Panel Report, Argentina – Textiles and Apparel, para. 6.40 (emphasis added).
5 Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.56.
6 See, e.g. Appellate Body Reports, Brazil - Taxation, paras. 5.162 and 5.196; US – Large Civil Aircraft
(2nd complaint), paras. 812-814.
7 Appellate Body Report, Brazil – Taxation para. 5.162, quoting Appellate Body Report, US – FSC
8 Panel Report, Canada – Aircraft, para. 9.112; see also Appellate Body Report, Canada – Aircraft,
paras. 154 and 157; Panel Report, Brazil – Aircraft, para. 7.24; Panel Report, Korea – Commercial Vessels,
para. 7.427 ("[T]here will be a 'benefit' if a financial contribution is made available on terms more favourable
than those that the recipient could obtain on the market").

V. Statement of available evidence under Article 4.2 of the SCM Agreement
10. While the Appellate Body has explained that the additional requirement of Article 4.2 of the
SCM Agreement is distinct from and not satisfied by the compliance with Article 4.4 of the DSU,9 it
would be illogical to expect that this was meant to refer to more than the available evidence that
goes towards identifying the existence and the character or nature of the measure as a subsidy.10
A Member should only have to identify a measure in light of the limited available evidence that will
allow it to characterize the existence and nature of the measure as a subsidy.
11. Furthermore, given that "[t]he purpose of consultation shall be to clarify the facts" according
to the second sentence of Article 4.3 of the SCM Agreement, and "the requirement to submit a
statement of available evidence applies in the earliest stages of WTO dispute settlement, and that
the requirement is to provide a 'statement' of the evidence and not the evidence itself",11 Japan is
of the view that the complainant should only supply the evidence that is necessary and sufficient
with regard to the existence and nature of the alleged subsidy. Indeed, in order to comply with the
requirements of Article 4.2 of the SCM Agreement in particular, the statement of evidence need
not comprise "all evidence" but rather only that which is needed to assess the existence and nature
of a measure as a subsidy.

9 Appellate Body Report, US – FSC, para. 161.
10 Panel Report, US – Upland Cotton, para. 7.88.
11 Appellate Body Report, US – Upland Cotton, para. 308.

ANNEX C-6
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF SRI LANKA
Mr. Chairman,

Thank you for the opportunity to present Sri Lanka 's position as a third party to this dispute. We
believe that this dispute, and the panel's decision, will have a direct impact on the interests and on
key elements of the economic and development policies of Annex VII graduating countries. The
stakes are equally high for all other Annex VII countries as well as the least-developed countries
(LDCs) that, one hopefully not so distant day, will graduate from their LDC status to Annex VII
status. In other words, what this panel will rule in this dispute has significant implications for
approximately one entire third of the WTO Membership – and it is the poorest third of the WTO
Membership.

The question is simple, but fundamental. Is it equitable that low-income developing countries should
be deprived of the very same transition period that higher-income developing countries enjoyed for
their export promotion policies for twenty years of the WTO's history? Should they be deprived of a
transition period to adjust their economies and government policies to a new categorical and
consequential prohibition on export promotion, which is an extremely important tool of industrial
policy? Should low-income developing countries be, in this regard, placed in a worse position than
higher-income developing countries?

It is evident that the answer to these questions should be "no"; it is obviously not equitable to treat
poorer countries less favourably than wealthier countries. This is also a fundamental principle which
has long been embodied in the WTO system – the principle of special and differential (S&D)
treatment for developing countries.

Mr. Chairman, members of the panel,

It hardly needs recalling that trade plays a fundamental role in the development needs of developing
countries. The United Nations Sustainable Development Goals of 2015 recognize the key role of
trade as a mean of sustainable development in developing countries, in order to eradicate poverty
and to address social imbalances. But the contribution of trade to GDP is still relatively low in many
developing countries. For instance, the average export to GDP ratio of Annex VII countries is still
below the world average of 37% and, according to World Bank statistics, has declined by 17.2%
since 1995. Developing countries desperately need to diversify their products and geographical
markets for their trad e-led development. Attracting foreign or domestic investments to export -
oriented industries is therefore a crucial development strategy for these countries, and government
incentives to that effect are vital, and consistency and predictability are essential.

Mr. Chairman, members of the panel,

Your interpretation of the SCM Agreement should reflect these realities. And indeed, it is perfectly
possible – indeed, compelling – to interpret the language of the relevant provisions of the
SCM Agreement before you in exactly that way, using the standard interpretative tools of the Vienna
Convention.

In legal terms, you have been requested to determine whether countries that have graduated from
Annex VII should be granted the same period of 8 years to eliminate the existing export subsidies
that was granted in 1995 to all non-Annex VII developing countries, pursuant to Article 27.2(b).

The 8 -year period referred to in Article 27.2(b) was and remains applicable to all developing
countries when the prohibition o f export subsidies becomes applicable to them . Article 27.2(b)
includes the phrase "from the date of entry into force of the WTO Agreement". However, that phrase
must be understood in a broader sense, in exactly the sense it must have been understood by th e
drafters – as referring to the point in time when the Article 3.1(a) prohibition would "kick in" for any
given developing country.

For countries other than those listed in Annex VII, that "kicking in" point in time was in 1995 when
the WTO Agreement entered into force. That is why Article 27.2(b) explicitly refers to the entry into
force of the WTO Agreement.

But for the Annex VII countries that now "emerge" from Annex VII, that point in time is precisely
when they lose the Annex VII protective shield. In other words, that point in time is the moment of
their graduation. The reason why Article 27.2(b) does not state that explicitly is simple: Annex VII
countries were not subject to the Article 3.1(a) prohibition at the time of entry into force of the WTO
Agreement, and so there was no need to provide for a carve-out for them. The countries that needed
a carve-out were those in principle subject to the Article 3.1(a) prohibition, and they needed that
carve-out to apply immediately, in 1995.

Had the drafters wished to deny graduating Annex VII economies the Article 27.2(b) phase -out
period, they would have presumably stated so explicitly. But they did not do so. Hence, the
applicability of the transition period referred to in Article 27.2(b) to now -graduating Annex VII
countries from the time of their graduation, is implicit in the wording of the provision. There are
other instances in the SCM Agreement of such implicit regulations compelled by simple logic. For
instance, there is no explicit provision which states that an LDC graduates from its LDC status would
fall under the group of countries in Annex VII with a per capita income of below 1,000 USD. But
would anybody doubt that this would be the case?

The legal view put forward by Sri Lanka is also fully consistent with the logic of other S&D provisions
of the SCM Agreement such as Article 27.5, which stipulates an 8 -year phase -out period for
individual products of Annex VII countries for which export competitiveness has been achieved.
Clearly, this 8-year period did not begin in 1995; rather, it begins anytime – after 1995, today or in
the future – when export competitiveness for that product has been achieved. The drafters went to
great length to "cushion" the blow of the export subsidy prohibition when it comes to one individual
product, by granting an 8 -year phase out period. Does it then make sense that the same drafters
would have denied the same "cushion" to the entire economy, and the full panoply of all products ,
of an Annex VII country when its economy as a whole graduates from Annex VII?

Sri Lanka accepts that the string of extensions granted by the SCM Committee under Article 27.4
beyond the original 8-year period – until 2013, with an effective ending date of 2015 – should not
apply to n ewly-graduated countries. Thus, Sri Lanka is not asking that graduating Annex VII
countries be granted a phase -out period of 20 years. These extensions were granted for the
countries, and specific subsidy programmes, to which Article 27.2(b) and 27.4 were applicable at
the point in time when these extensions were granted. However, that cannot mean that the basic,
original 8-year transition period does not apply to newly-graduated countries today.

Mr. Chairman, members of the Panel,

Thank you for your attention to my statement. We have confidence that your interpretation of the
SCM Agreement in this dispute will reflect both the clear wording as well as the sound and compelling
policy arguments we have put before you today.

ANNEX C-7
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THAILAND
I. INTRODUCTION
1. Thailand appreciates the opportunity to present its views as a third party in this dispute.
2. In this oral statement, Thailand will focus its comments on the interpretation of Article 27 of
the Agreement on Subsidies and Countervailing Measure ( "SCM Agreement") and its application to
developing countries Members graduating from Annex VII(b) of the SCM Agreement.
II. THE INTERPRETATION AND APPLICATION OF EXPORT SUBSIDIES DISCIPLINES TO
GRADUATED ANNEX VII(B) MEMBERS
3. The United States asserts that India no longer qualifies for the exception to the prohibition of
export subsidies since India's GNP per capita has reached $1,000 for three consecutive years.1 India,
on the other hand, argues that the harmonious reading of Article 27.2(b) and Annex VII(b) of the
SCM Agreement demonstrates that India is entitled to eight additional years to phase out the alleged
export subsidies from the point of its graduation.2
4. At the outset, Thailand reiterates the importance of special and differential treatment in
assisting less developed country Members to integrate fully into the international trading system. To
this end, special and differential treatment provisions are an integral part of WTO Agreements,
providing, inter alia, exemptions or delays from implementing multilateral trade rules so as to allow
greater policy space for less developed country Members in a manner commensurate with their
development needs.
5. Having said that, Thailand notes that the interpretation of special and differential treatment
provisions is subject to the same "general rule of interpretation " applicable to all legal provisions
under the WTO covered agreements.3 In particular, the WTO provisions must be read in good faith
in accordance with their ordinary meaning in the context and in t he light of the treaty's object and
purpose.4
6. Thailand considers that the general rule of interpretation does not support India 's reading of
Article 27.2(b) and Annex VII(b) of the SCM Agreement. In Thailand's view, these provisions do not
grant Members graduating from Annex VII(b) an extra eight -year phase-out period from the point
of their graduation, for the following reasons.
7. Annex VII(b) of the SCM Agreement states that developing countries listed therein "shall be
subject to the provisions whic h are applicable to other developing country Members according to
paragraph 2(b) of Article 27 when GNP per capita has reached $1,000 per annum".5 Article 27.2(b)
stipulates "a period of eight years from the date of entry into force of the WTO Agreement " during
which other developing country Members are exempted from the prohibition of export subsidies.6
8. Thailand is of the view that the ordinary meaning of the terms contained in these provisions
is clear and leaves no ambiguity. As soon as the GNP per capita of a Member listed in Annex VII(b)
reaches $1,000, that Member becomes subject to the disciplines in Article 27.2(b). Since the eight-
year period from the date of entry into force of the WTO Agreement in that Article lapsed on
1 January 2003, gradu ated Annex VII(b) countries are currently prohibited from using export
subsidies like other developing countries. Article 27.2(b) makes no reference to other particular

1 The United States' first written submission, para 26.
2 India's first written submission, paras 155-188.
3 Article 31 of the Vienna Convention of the Law of Treaties. See Appellate Body Report, US – Gasoline, p.17.
4 Article 31 of the Vienna Convention of the Law of Treaties.
5 Annex VII(b) of the SCM Agreement (emphasis added).
6 Article 27.2(b) of the SCM Agreement (emphasis added).

points of time for the exemption period, nor does it distinguish between graduated Anne x VII(b)
countries and other developing countries.
9. From Thailand's perspective, the fact that Article 27.4 "does not restrict the application of the
8 year period from the date of entry into force of the WTO Agreement " does not imply a special
phase-out period for graduated Annex VII(b) Members.7 The reference to "the eight-year period" in
Article 27.4 indicates the drafters' intention that it refers to the same eight-year period starting from
the date of entry into force of the WTO Agreement as appears in Article 27.2(b). Indeed, a
formulation akin to "a period of eight years" contained in Article 27.5 could have been used if another
specific point of time had been intended. Accordingly, Thailand considers that neither Article 27.2(b)
nor Article 27.4 leaves a room to read into these provisions an eight-year phase-out period from the
point of graduation.
10. It is worth highlighting that, compared to other developing countries, Members listed in
Annex VII(b) are granted more preferential treatment in r espect of subsidies disciplines.
Annex VII(b) Members are exempted from the elimination of export subsidies for an indefinite period
and without a phase -out obligation, as long as their GNP per capita are below $1000. Thus, this
group of developing country Members enjoys greater flexibility as to whether they wish to voluntarily
remove export subsidies gradually in a manner corresponding to their development, or to eliminate
prohibited subsidies right upon the graduation. Even in the latter scenario, it see ms unlikely that
graduated Annex VII(b) Members are expected to withdraw export subsidies "overnight"8, since the
graduation would only occur when their GNP per capita reach $1,000 "for three consecutive years".9
The preferential treatment described here reflects the "concession offered in Annex VII(b) "10. This
is not invalidated in any way by the clear and unambiguous ordinary meaning of the terms of
Article 27.2(b) described earlier.
11. Lastly, Thailand notes that the assertion that graduated Annex VII(b) Members are entitled to
an eight-year period to maintain export subsidies starting from the point of graduation is difficult to
reconcile with subsequent agreements or practices of WTO Membership.
12. The WTO Ministerial Conference agreed on 20 November 2001 to extend the transition period
under Article 27.2(b) of the SCM Agreement to the year 2007 for c ertain subsidy programmes
pursuant to the agreed Procedures for Extensions under Article 27.4 for Certain Developing Country
Members.11 The Procedures provides that, for an Annex VII(b) Member that has reserved rights and
subsequently reaches the developmen t threshold during the period of 2003 -2007, that Member is
entitled to an extension "for the remainder of the period [2003 -2007]"12. On 27 July 2007, the
General Council adopted similar procedures which allows Annex VII(b) Members graduating during
the period 2008-2015 to have an extension "for the remainder of that period" after the graduation.13
13. These further underscore the fact that graduated Annex VII(b) Members do not have eight
additional years from the point of their graduation to phase out export subsidies. Otherwise, it would
have been pointless for WTO Membership to specifically grant graduated Annex VII(b) Members the
transition periods referred to in these procedures, if Annex VII(b) Members had already have a right
to maintain export subsidies for another eight years after their graduation. Based on the procedures
mentioned-above, WTO Membership appears to share the views that the eight -year period in
Article 27.4 ends on 1 January 2003, and that export subsidies maintained thereafter by developing
country Members, including graduated Annex VII(b) Members, are subject to conditions which
permit only certain eligible subsidies and within the prescribed timeframe.

7 India's first written submission, para 162.
8 India's first written submission, paras 177, 186, 187.
9 Doha Ministerial Conference, Decision of 14 November 2001 on Implementation-Related Issues and
10 India's first written submission, para 159.
11 Doha Ministerial Conference, Decision of 14 November 2001 on Implementation-Related Issues and
Concerns, WT/MIN(01)/17, 20 November 2001, para. 10.6; Committee on Subsidies and Countervailing
Measures, Procedures for Extensions under Article 27.4 for Certain Developing Country Members, G/SCM/39,
20 November 2001.
12 Committee on Subsidies and Countervailing Measures, Procedures for Extensions under Article 27.4
for Certain Developing Country Members, G/SCM/39, 20 November 2001, paras 6(b)-(c).
13 General Council, Decision of 27 July 2007 on Article 27.4 of the Agreement on Subsidies and
Countervailing Measures, WT/L/691, para 5(b).

III. CONCLUSION
14. For the reasons set out above, while Thailand recogniz es the role of special and differential
treatment in response to development needs, we do not consider that the general rule of
interpretation is able to accommodate the reading that graduated Annex VII(b) Members have an
additional eight years after the point of graduation to phase out prohibited export subsidies.
15. This concludes Thailand's oral statement. Thailand thanks the Panel for the consideration of
its views.

ANNEX D
PRELIMINARY RULINGS AND OTHER COMMUNICATIONS FROM
THE PANEL TO THE PARTIES
Contents Page
Annex D-1 Communication dated 22 January 2019 from the Panel to the parties concerning
the issues of a single substantive meeting and a partially open meeting
84
Annex D-2 Communication dated 22 January 2019 from the Panel to the parties concerning
the Panel's terms of reference, the applicability of Article 4 of the SCM Agreement
and the statement of available evidence
92
Annex D-3 Communication dated 16 April 2019 from the Panel to the parties concerning the
Panel's Working Procedures and Timetable
116

ANNEX D-1
COMMUNICATION DATED 22 JANUARY 2019 FROM THE PANEL TO THE PARTIES CONCERNING
THE ISSUES OF A SINGLE SUBSTANTIVE MEETING AND A PARTIALLY OPEN MEETING
22 January 2019
COMMUNICATION FROM THE PANEL ON THE WORKING PROCEDURES AND TIMETABLE
1 INTRODUCTION
1.1. This communication addresses two requests by the parties relating to the Panel's Working
Procedures and timetable.
1.2. First, the Panel's Working Procedures and timetable provide for a single substantive meeting
with the parties, while reserving the possibility to hold additional meetings as required. In a number
of submissions, India asked the Panel to hold two substantive meetings with the parties as
contemplated by Appendix 3 to the Understanding on Rules and Procedures Governing the
Settlement of Dis putes (DSU). In response, the Panel confirmed its earlier decision and indicated
that it would communicate its reasons in due course. In this communication, the Panel sets out the
reasons for its earlier decision (section 2).
1.3. Second, the United States requested that the Panel hold a partially open meeting, making its
oral statement and answers in the course of the panel meeting available for public viewing, although
the oral statement and answers of the other party would not be available for public viewing. The
Panel has decided to decline the United States' request for a partially open meeting (section 3).
2 SINGLE MEETING
2.1 Introduction
2.1. As set out in the Working Procedures and timetable adopted in this case, the Panel decided to
hold one substantive meeting with the parties, after both parties filed their respective first and
second written submissions. 1 The Panel reserved the right to reassess the situation and hold
additional meetings with the parties as required. 2 In response to submissions by India, the Panel
confirmed that it would proceed with the Working Procedures and timetable as adopted 3, and
indicated that it would communicate the reasons for its decision in due course.4
2.2. Below, the Panel sets out the reasons for its earlier decision (section 2.4), after recalling the
procedural background and arguments of the parties and third parties (section 2.2), and the
applicable legal standard (section 2.3).
2.2 Procedural background and main arguments of the parties and third parties
2.3. On 3 August 2018, the Chairperson of the Panel, on behalf of the Panel, held a meeting with
the parties to obtain their views in preparation of the Panel's draft Working Procedures and
timetable, particularly considering the need to reconcile competing considerations, namely, the
provision for accelerated procedures in Article 4 of the Agreement on Subsidies and Countervailing
Measures (SCM Agreement), the obligation to provide special and differential treatment to
developing country Members, and resource constraints in the Secretariat. At that meeting, the

1 Working Procedures (22 August 2018), paras. 3, 5, and 15-16; and timetable (22 August 2018).
2 Timetable (22 August 2018), fn 1; Communication dated 9 October 2018 from the Panel to the parties
and third parties; and Communication dated 19 October 2018 from the Panel to the parties and third parties.
3 Communication dated 9 October 2018 from the Panel to the parties and third parties; and
Communication dated 19 October 2018 from the Panel to the parties and third parties.
4 Communication dated 19 October 2018 from the Panel to the parties and third parties.

United States proposed that the Panel hold a single meeting with the parties in this case, a proposal
which India opposed.
2.4. As a means to balance the competing obligations and constraints in the particular
circumstances of this case, in its draft Working Procedures and timetable sent t o the parties on
8 August 2018, the Panel proposed holding a single meeting with the parties, after the filing of both
parties' first and second written submissions5, and reserved the right to schedule further meetings
with the parties as required.6 On 22 August 2018, the Panel adopted these draft Working Procedures
and timetable. In response to submissions by India, on 9 and 19 October 2018 the Panel confirmed
that it would proceed with the adopted Working Procedures and timetable, while reserving the right
to schedule additional meetings as necessary.7 On 19 October 2018, the Panel indicated that it would
communicate the reasons supporting its decisions in due course.8
2.5. India objected to the Panel's approach in its comments on the draft Working Proc edures and
timetable9, comments on the United States' comments10, first written submission 11, and in
communications dated 5 October and 16 October 2018 12, and sought a preliminary ruling from the
Panel that an additional substantive meeting with the parties should be held before the filing of the
second written submissions.13
2.6. In its own communications, the United States took the view that the Panel could hold a single
substantive meeting with the parties, or even decide the case entirely on the basis of the
parties' written submissions, without holding any substantive meeting with the parties. 14 The
United States set out its arguments on the matter in its comments on the draft Working Procedures
and timetable15, comments on India's comments16, and second written submission.17
2.7. Brazil commented on this matter in its third-party submission.
2.8. India argued that the Panel was required to hold two substantive meetings with the parties, in
order to comply with its obligation to ensure due process, and in order to comply with Article 12.10
of the DSU. It argued that holding a single meeting with the parties would deprive India of a fair
opportunity to present its arguments adequately and defend itself18; that the case was complex and
required adequate time for oral argumentation19; that the DSU envisages two distinguishable stages
in panel proceedings, each with a substantive panel meeting with the parties20; that the right to be
heard in the context of proceedings conducted in a balanced and orderly man ner, according to

5 Draft Working Procedures (8 August 2018), paras. 3, 5, and 15-16; Draft timetable (8 August 2018).
6 Draft timetable (8 August 2018), fn 1.
7 Communication dated 9 October 2018 from the Panel to the parties and third parties; Communication
dated 19 October 2018 from the Panel to the parties and third parties.
8 Communication dated 19 October 2018 from the Panel to the parties and third parties.
9 Communication dated 14 August 2018 from India to the Chairperson of the Panel, paras. 1-2 and 5-7.
10 Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 1-15.
11 India's first written submission, paras. 16-18 and 105-116.
12 Communication dated 5 October 2018 from India to the Chairperson of the Panel; Communication
dated 16 October 2018 from India to the Chairperson of the Panel.
13 India's first written submission, paras. 18 and 105-115; Communication dated 5 October 2018 from
India to the Chairperson of the Panel, pp. 1-4. See also Communication dated 16 October 2018 from India to
the Chairperson of the Panel, p. 2.
14 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
paras. 4-7; Communication dated 17 August 2018 from the United States to the Chairperson of the Panel,
para. 1.
15 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
paras. 1-7.
16 Communication dated 17 August 2018 from the United States to the Chairperson of the Panel,
paras. 1-8.
17 United States' second written submission, paras. 45-52.
18 Communication dated 14 August 2018 from India to the Chairperson of the Panel, para. 2;
India's first written submission, paras. 106, 111, and 114; and Communication dated 5 October 2018 from
India to the Chairperson of the Panel, pp. 2-3.
19 Communication dated 14 August 2018 from India to the Chairperson of the Panel, paras. 2 and 5;
Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 5-6.
20 Communication dated 14 August 2018 from India to the Chairperson of the Panel, paras. 6-7;
Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 11. See also,
Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 12-13; and
India's first written submission, para. 109.

established rules, is part of due process 21; that Article 12.10 of the DSU requires panels to afford
developing country respondents sufficient time to prepare and present their argumentation22; that,
in the past, panels in proceedings gover ned by Article 4 of the SCM Agreement had held two
substantive meetings with the parties23; that Article 21.5 proceedings, in which panels hold a single
substantive meeting with the parties, are of a different nature from original panel proceedings 24;
that in the other cases where panels had held a single meeting with the parties, they had done so
with the Agreement of the parties25; and that resource constraints in the Secretariat could not trump
parties' due process rights.26
2.9. The United States argued that Article 4 of the SCM Agreement requires expedited proceedings,
unless parties agree otherwise 27; that its claims were "focused" and required neither two panel
meetings with the parties nor one 28; that Article 12.1 of the DSU allows panels to depart from
Appendix 3 of the DSU, and that in proceedings under Article 21.5 of the DSU, where the overall
timeframe is the same as that provided for in Article 4.6 of the SCM Agreement, panels routinely
hold a single meeting with the parties 29; that Article 12.10 of the DSU did not justify a departure
from Article 4.6 of the DSU30; and that in any event the timetable provided enough opportunity for
India to be heard.31
2.10. In its third -party submission, Brazil observed that Appendix 3 of the DSU provides for two
substantive panel meetings with the parties, with the second meeting devoted to rebuttals 32; that
the Agreement of the parties is an important element to consider when deciding to deviate from
Appendix 3, as there is otherwise a risk that due process will be af fected33; that the opportunity to
participate in a second substantive panel meeting is an important aspect of giving a developing
country respondent sufficient time to prepare and present its argumentation as required by
Article 12.10 of the DSU 34; and that Article 4.12 of the SCM Agreement envisages halving time
periods, not skipping procedural steps.35
2.3 The applicable legal standard
2.11. The Working Procedures in Appendix 3 of the DSU envisage a process consisting of a first
exchange of written submissions, followed by a first substantive panel meeting with the parties, and
a second exchange of written submissions, followed by a second substantive panel meeting with the
parties.36
2.12. Thus, the Working Procedures in Appendix 3 contemplate two "main stages in a proceeding
before a panel".37 The first stage is devoted to each party setting out its case in chief, and the second

21 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 11;
India's first written submission, para. 105.
22 Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 2-4;
India's first written submission, paras. 18-19; and Communication dated 5 October 2018 from India to the
Chairperson of the Panel, p. 2.
23 Communication dated 14 August 2018 from India to the Chairperson of the Panel, para. 7;
India's first written submission, para. 110; and Communication dated 5 October 2018 from India to the
Chairperson of the Panel, p. 3.
24 Communication dated 16 October 2018 from India to the Chairperson of the Panel, p. 1.
25 Communication dated 14 August 2018 from India to the Chairperson of the Panel, para. 7;
Communication dated 16 October 2018 from India to the Chairperson of the Panel, p. 1.
26 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 12.
27 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
paras. 2 and 4-6; Communication dated 17 August 2018 from the United States to the Chairperson of the
Panel, paras. 1-3 and 7; and United States' second written submission, paras. 45-46 and 50.
28 Communication dated 17 August 2018 from the United States to the Chairperson of the Panel,
paras. 1-2.
29 Communication dated 17 August 2018 from the United States to the Chairperson of the Panel,
30 United States' second written submission, para. 49.
31 United States' second written submission, paras. 50-51.
32 Brazil's third-party submission, para. 29.
33 Brazil's third-party submission, paras. 28 and 30.
34 Brazil's third-party submission, para. 31.
35 Brazil's third-party submission, para. 32.
36 Dispute Settlement Understanding, Appendix 3, paras. 5-10 and 12.
37 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 149. See also Appellate Body Report,
Argentina – Footwear (EC), para. 79.

stage is "designed to permit the rebuttal by each party of the arguments and evidence submitted by
the other parties".38 Appendix 3 envisages that each of these two stages include written submissions
and a substantive meeting.
2.13. Article 12.1 of the DSU provides that "[p]anels shall follow the Working Procedures in
Appendix 3 unless the panel decides otherwise after consul ting the parties to the dispute". Thus,
panels enjoy relatively broad discretion to depart from the procedures in Appendix 3, after consulting
the parties, as part of their "ample and extensive authority to undertake and to control the [panel]
process … [w hich] is indispensably necessary to enable a panel to discharge its duty imposed by
Article 11 of the DSU".39 This discretion, while broad, is not unlimited. Its exercise cannot entail the
violation of other provisions of the DSU 40, including the due process requirement embedded in
Article 11 of the DSU, and other provisions such as Article 12.10 of the DSU.
2.14. Departing from the procedures in Appendix 3 would violate due process, for example, if it
deprived parties of "an adequate opportunity to pursue t heir claims, make out their defences, and
establish the facts in the context of proceedings conducted in a balanced and orderly manner,
according to established rules".41
2.15. Further, departing from the procedures in Appendix 3 would violate Article 12.10 of the DSU
if by doing so a panel failed to "accord sufficient time to the [responding] developing country Member
to prepare and present its argumentation".42
2.16. Articles 4.2 to 4.12 of the SCM Agreement are special or additional rules listed in Appendix 2
of the DSU. Pursuant to Article 1.2 of the DSU, such special or additional rules apply together with
the DSU, except to the extent there is a conflict.43
2.17. Article 4.6 of the SCM Agreement provides that the panel report shall be issued within 90
days of the date of the establishment of the panel's terms of reference. 44 This is half the time
envisaged in Article 12.8 of the DSU for ordinary panel proceedings.
2.18. To reconcile this reduced timeframe with the procedural steps envisaged by the DSU ,
Article 4.12 of the SCM Agreement provides that for disputes under Article 4 of the SCM Agreement,
"time-periods applicable under the DSU … shall be half the time prescribed therein". That is,
Article 4.12 provides for halving the time-periods applicable to each step in the proceedings.
2.4 The reasons for the Panel's decision in this case
2.19. The Panel chose to depart from Appendix 3 of the DSU, by scheduling only one substantive
meeting with the parties, to be held after both parties filed their respective first and second written
submissions.45 The Panel reserved its right to schedule additional meetings with the parties if
required.46
2.20. The Panel's choice was motivated by the need to reconcile competing considerations. First,
the Panel is bound by the provision for abbreviated proceedings in Article 4 of the SCM Agreement.
Second, the Panel is bound by the requirement in Article 12.10 of the DSU that it accord sufficient
time for a developing country respondent to prepare and present its argume ntation. The Panel
abided by this requirement, in particular, by allowing four weeks for India to prepare its first written
submission following the United States' first written submission, and four weeks for India to prepare
its second written submission following the United States' second written submission. The
Panel's timetable also provided for more than two months between the filing of submissions and the

38 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 149.
39 Appellate Body Report, US – Shrimp, para. 106. As regards fixing the timetable, Article 12.3 of the
DSU provides that it is for panellists to do so, after consulting the parties to the dispute.
40 See, e.g. Appellate Body Report, India – Patents (US), para. 92.
41 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 147.
42 Dispute Settlement Understanding, Article 12.10.
43 Appellate Body Report, Guatemala – Cement, para. 65.
44 Footnote 6 to the SCM Agreement provides that the time periods set out in Article 4 "may be
extended by mutual Agreement".
45 See fn 1 above.
46 See fn 2 above.

substantive meeting with the parties. Third, in seeking to comply with Article 4 of the
SCM Agreement and Article 12.10 of the DSU, the Panel had to take into account resource
constraints in the Secretariat.
2.21. After consulting the parties during the organizational meeting, as a means of balancing the
considerations described above in the particu lar circumstances of this case, the Panel proposed
Working Procedures and a timetable that envisaged a single panel meeting with the parties. The
parties, as set out above, had opposite views on the matter. The United States proposed a single
panel meeting and suggested that the Panel could even decide the dispute without any substantive
meeting with the parties; India opposed the proposal and asked the Panel to hold two substantive
meetings as contemplated in Appendix 3 to the DSU. In the circumstances of this case, the Panel
decided to proceed with only one substantive meeting, while reserving the right to hold further
substantive meetings with the parties if required.
3 PARTIALLY OPEN MEETING
3.1 Introduction
3.1. The United States requests that the Panel make its meeting with the parties either entirely
open to public viewing or, in the event that India objects to this request, partially open, by making
the oral statement and answers of the United States in the course of the meeting available for public
viewing. India objects both to an open meeting and to a partially open meeting, and asks that the
Panel meet with the parties in closed session.
3.2. Given that India did object to the United States' request, the remaining question before the
Panel is whether to meet with the parties in closed session, or in a partially open session. Holding a
partially open Panel meeting would involve making the oral statement and answers of only one of
the parties (the United States) in the course of the Panel meeting available for public viewing, despite
the fact that the other party to the dispute (India) opposes the request for an open meeting and
does not consent to making its own oral statement and answers available for public viewing.
3.3. Below, the panel recalls the procedural background and arguments of the parties and third
parties (section 3.2), and sets out the applicable legal standard (section 3.3) and its decision in this
case (section 3.4).
3.2 Procedural background and main arguments of the parties and third parties
3.4. On 8 August 2018, the Panel transmitted the draft Working Procedures to the parties, pursuant
to which the Panel would "meet in closed session".47 On 14 August 2018, the United States requested
the Panel to provide for the meeting(s) with the parties to be "open … to the public, either in whole
or in part".48 On 17 August 2018, India "completely oppose[d]" the United States' request.49
3.5. In the Working Procedures adopted on 22 August 2018, the Panel indicated that it would "revert
to this issue in due course before the date of [its] meeting" with the parties.50
3.6. On 3 January 2019, the Panel invited third parties to ex press their views on the matter of
holding a partially open meeting. Third parties submitted their views on 11 January 2019.
3.7. The United States argued that opening panel meetings to the public serves to heighten public
confidence in the system 51; that it is done in other international adjudicatory systems 52; that the

48 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
para. 18. See also, ibid. paras. 11-17, and Annex, Additional Working Procedures for the Panel: Open
Meetings.
49 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 21. See also,
ibid. paras. 22-26.
50 Working Procedures (22 August 2018), para. 10.
51 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
paras. 12-13.
52 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
para. 14.

United States has a right, under Article 18.2 of the DSU, to disclose its statements to the public, and
that the United States was in essence seeking the Panel's assistance to be able to di sclose its
statements "contemporaneously with their utterance" 53; and that the reasoning that led the
Appellate Body in US – Continued Suspension to open its hearing to the public should lead this Panel
to hold a partially open meeting in this case.54
3.8. India responded that, under Article 18.2, the United States has a right to disclose its own
position only to the extent that it does not affect India's right to confidentiality55; that a party's right
to disclose its own statements under Article 18.2 does not extend to opening panel proceedings to
the public56; that Appendix 3 to the DSU envisages that panels meet with the parties in closed
session57; that partially open hearings could affect the efficiency of panel proceedings 58; and that
the only applicable procedures are those established in the WTO Agreements and jurisprudence.59
3.9. Among the third parties, five answered the Panel's question whether the DSU "does not allow,
gives discretion to, or requires a panel to accept" a request for a partially ope n meeting.60 Canada,
China, the European Union and Japan indicated that, under the DSU, it is within panels' discretion
to decide on such a request61, and Thailand noted that panels have "some discretion" to depart from
the procedures in Appendix 3 to the DSU.62 As to how to exercise that discretion, China and Thailand
expressed deep concerns about granting a request for a partially open meeting in the absence of
the consent of both parties to the dispute63, whereas Canada and the European Union took the view
that a party that does not want to make its own statements available for public viewing cannot
prevent another party from doing so, provided its own right to confidentiality is respected.64
3.3 The applicable legal standard
3.10. Appendix 3 of the DSU provides, at paragraph 2, that "[t]he panel shall meet in closed
session", and that parties and interested parties "shall be present at the meetings only when invited
by the panel to appear before it". Article 12.1 of the DSU p rovides that "[p]anels shall follow the
Working Procedures in Appendix 3 unless the panel decides otherwise after consulting the parties to
the dispute."
3.11. Thus, the default rule set out in the DSU is for panels to meet in closed sessions. 65 At the
same time, under Article 12.1, panels may depart from Appendix 3 after consulting the parties,

53 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
para. 15.
54 Communication dated 14 August 2018 from the United States to the Chairperson of the Panel,
paras. 16-17.
55 Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 21 and 23.
56 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 24.
57 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 22.
58 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 24.
59 Communication dated 17 August 2018 from India to the Chairperson of the Panel, para. 25.
60 Communication dated 3 January 2019 from the Panel to the third parties, question 2. In addition to
seeking third parties' view on this matter, the Panel asked the third parties whether they would wish to make
their own statements and answers available to the public in the event a partially open meeting were held.
(Ibid. question 1). Four third parties indicated that they would, four indicated that they would not, one
answered that the question was premature, and one did not submit an answer.
61 Communication dated 11 January 2019 from Canada to the Chairperson of the Panel; Communication
dated 11 January 2019 from China to the Chairperson of the Panel; Communication dated 11 January 2019
from the European Union to the Chairperson of the Panel; and Communication dated 11 January 2019 from
Japan to the Chairperson of the Panel.
62 Communication dated 11 January 2019 from Thailand to the Chairperson of the Panel.
63 Communication dated 11 January 2019 from China to the Chairperson of the Panel; Communication
dated 11 January 2019 from Thailand to the Chairperson of the Panel.
64 Communication dated 11 January 2019 from Canada to the Chairperson of the Panel, pp. 1-2;
Communication dated 11 January 2019 from the European Union to the Chairperson of the Panel, p. 2. Japan
noted that Article 18.2 of the DSU recognizes that the DSU does not prevent a party from disclosing
statements of its own position to the public. (Communication dated 11 January 2019 from Japan to the
Chairperson of the Panel).
65 See, e.g. Panel Report, US – Continued Suspension, para. 7.50:
The Panel understands [paragraph 2 of Appendix 3] to mean that it shall always meet in camera,
whether or not the parties and/or interested parties have been invited to appear before it. No reference is
made in that provision to other Members or to the general public.
(emphasis original)

which is part of panels' "ample and extensive authority to undertake and to control the [panel]
process … [which] is indispensably necessary to enable a panel to d ischarge its duty imposed by
Article 11 of the DSU".66
3.12. A panel's discretion to depart from the Working Procedures in Appendix 3 has limits. In
particular, it "does not extend to modifying the substantive provisions of the DSU" 67, including the
provisions regarding confidentiality set out in Article 18.2 of the DSU, and the due process
requirement embedded in Article 11 of the DSU.68
3.13. The second sentence of Article 18.2 of the DSU recognizes that the DSU does not preclude a
Member "from disclosing statements of its own position to the public". At the same time, the third
sentence of Article 18.2 requires Members to "treat as confidential information submitted by another
Member to the panel or the Appellate Body which that Member has designate d as confidential".
Therefore, Members' right to make their "statements of their own position" public, under the second
sentence, finds its limit in their duty to maintain the confidentiality of information designated by
other Members as confidential, under the third sentence. Panels and the Appellate Body have read
these two provisions as referring not only to written submissions, but also to the statements of
Members during hearings.69
3.14. Turning to due process, this is "a fundamental principle of WTO dispute settlement" which
"finds reflection in the provisions of the DSU", and is "intrinsically connected to notions of fairness,
impartiality, and the rights of parties to be heard … in the context of proceedings conducted in a
balanced and orderly manner".70
3.15. Thus, panels have discretion, pursuant to Article 12.1 of the DSU, to depart from Appendix 3
and open their substantive meetings with the parties to the public, provided they consult the parties
to the dispute, and provided they do not infrin ge other provisions of the DSU, including the
requirement to afford due process, and the provisions of Article 18.2 of the DSU.
3.4 Whether to grant a partially open hearing in this case
3.16. As set out above, Article 12.1 gives discretion to panels to depart from Appendix 3, which
otherwise provides for meetings "in closed session". To date, with the exception of three
proceedings, all in the same dispute 71, WTO adjudicators have only opened substantive meetings
for public viewing when all parties to the dispute in question agreed.72 In the present case, one of

66 Appellate Body Report, US – Shrimp, para. 106.
67 Appellate Body Report, India – Patents (US), para. 92.
68 A WTO adjudicator must also ensure the prompt settlement of disputes pursuant to Article 3.3 of the
DSU, and "the careful and efficient discharge, or the integrity, of the adjudicative function". (Panel Reports,
US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico) (Article 21.5 – Mexico II), para. 7.31). See
also, ibid. paras. 7.28-7.30.
69 See, e.g. Panel Report, US – Continued Suspension, para. 7.50; and Appellate Body Report, US –
Continued Suspension, Annex IV, para. 4 (discussing the opening of appellate hearings to the public).
70 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 147.
71 Panel Reports, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico) (Article 21.5 –
Mexico II), paras. 7.16-7.31; and Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – US),
paras. 2.17-2.31. On appeal, the Appellate Body found it unnecessary to rule on the issue, while indicating that
this did not constitute an endorsement of the panel's decision to hold a partially open meeting. (Appellate Body
Reports, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico) (Article 21.5 – Mexico II),
para. 6.320 and fn 901). These three proceedings, like the present case, involved a request for a partially open
meeting. In US – Upland Cotton (Article 21.5 – Brazil) and US – OCTG (Korea), the same type of request was
rejected. (Panel Reports, US – Upland Cotton (Article 21.5 – Brazil), para. 8.20; and US – OCTG (Korea),
Annex E-1, paras. 1.2 and 3.1-3.4).
72 See, e.g. Panel Report, US – Continued Suspension, para. 7.50. With reference to the partly different
legal framework applying to appellate proceedings, see also, e.g. Appellate Body Reports, US – Continued
Suspension, Annex IV; and US – COOL (Article 21.5 – Canada and Mexico), paras. 1.22-1.23. The question of
the consent of all parties to the dispute has been treated differently from that of the consent of third
parties: panels and the Appellate Body have consistently held that objections from third parties did not
preclude the opening to public viewing of those parts of a hearing that did not involve the objecting third
parties. (See e.g. Panel Report, US – Continued Suspension, para. 7.40; and Appellate Body Reports, Canada –
Continued Suspension, Annex IV, paras. 6, 7, and 9; US – Continued Suspension, Annex IV, paras. 6, 7, and
9; and US – Continued Zeroing, Annex III, para. 6). In Canada – Continued Suspension and US – Continued
Suspension, the Appellate Body distinguished the "relationship between the participants and the
Appellate Body" from the "relationship between the third participants and the Appellate Body", and reasoned

the two parties has vigorously objected to opening the hearing to public viewing, in whole or in part.
In view of these considerations, the Panel has decided to decline the United States' request that it
depart from the rule in Appendix 3, paragraph 2, of the DSU.

that third participants cannot invoke confidentiality "as it applies to their relationship with the Appellate Body"
to "bar the lifting of confidentiality … in the relationship between the participants and the Appellate Body".
(Appellate Body Reports, Canada – Continued Suspension, Annex IV, paras. 6-7; US – Continued Suspension,
Annex IV, paras. 6-7).

ANNEX D-2
COMMUNICATION DATED 22 JANUARY 2019 FROM THE PANEL TO THE PARTIES CONCERNING
THE PANEL'S TERMS OF REFERENCE, THE APPLICABILITY OF ARTICLE 4 OF THE
SCM AGREEMENT AND THE STATEMENT OF AVAILABLE EVIDENCE
22 January 2019
PRELIMINARY RULING BY THE PANEL
1 INTRODUCTION
1.1. In this communication, the Panel addresses three preliminary ruling requests by India. India
requested the Panel to rule (a) that the United States' request for the establishment of the Panel
does not meet the requirements of Article 6.2 of the Understanding on Rules and Procedures
Governing the Settlement of Disput es (DSU); (b) that the provisions of Article 4 of the Agreement
on Subsidies and Countervailing Measures (SCM Agreement) cannot, at this stage, apply to the
dispute before the Panel; and (c) that the statement of available evidence in the
United States' request for consultations does not meet the requirements of Article 4.2 of the
SCM Agreement.
1.2. For the reasons set out below, the Panel rules that the United States' request for the
establishment of the Panel meets the requirements of Article 6.2 of the DSU (section 2).
1.3. The Panel declines to rule at this stage that Article 4 of the SCM Agreement does not apply to
this dispute and instead defers its decision on this matter (section 3). The Panel also declines to rule
at this stage on whether the statement of available evidence meets the requirements of Article 4.2
of the SCM Agreement and instead defers its decision on this matter (section 4).
2 TERMS OF REFERENCE
2.1 Introduction
2.1. In its first written submission, India has sought a preliminary ruling from the Panel that the
United States' panel request does not meet the require ments of Article 6.2 of the DSU. India has
challenged the sufficiency of the panel request in its entirety. According to India, for all measures
and claims, the panel request (a) fails to identify the specific measures at issue; and (b) fails to
provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.1
2.2. We will begin our consideration of India's request by recalling the applicable legal standard
under Article 6.2 of the DSU (section 2.2). We will then apply that legal standard to the panel request
in this case (section 2.3), beginning from whether the panel request properly identifies the specific
measures at issue (section 2.3.1), and turning then to whether it sets out a sufficient summary of
the legal basis of the complaint (section 2.3.2).
2.2 The applicable legal standard under Article 6.2 of the DSU
2.3. Article 6.2 of the DSU sets out the requirements applying to requests for the establishment of
a panel. The sufficiency of a panel request, judged according to the standard set out in Article 6.2,
is one of those issues of such a "fundamental nature" that panels must deal with them and satisfy
themselves that they have the authority to proceed, even, "if necessary, on their own motion".2

1 India's first written submission, para. 19; see also ibid. paras. 16 and 20-70.
2 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 36. See also, e.g.
Appellate Body Reports, US – Carbon Steel, para. 123; and EC – Large Civil Aircraft, para. 791.

2.4. Article 6.2 of the DSU provides, in relevant part, that panel requests:
[S]hall … identify the specific measures at issue and provide a brief summary of the
legal basis of the complaint sufficient to present the problem clearly.
2.5. Accordingly, Article 6.2 "sets out two principal requirements: (i) the identification of the specific
measures at issue; and (ii) the provision of a brief summary of the legal basis of the complaint
sufficient to present the problem clearly".3 Together, the measures and the claims identified in the
panel request form "the matter referred to the DSB" under Article 7.1 of the DSU.4
2.6. Article 6.2 serves the fundamental functions of "establishing and delimiting the
panel's jurisdiction and serving the due process objective of notifying the respondent and third
parties of the nature of the case".5 The need for these two functions to be fulfilled is the very reason
why it is "important that a panel request be sufficiently precise".6
2.7. The specific measure at issue is "the object of the challenge, namely, the measure that is
alleged to be causing the viola tion of an obligation contained in a covered Agreement".7 The
requirement to identify the specific measures at issue "means that the measures at issue must be
identified with sufficient precision so that what is referred to adjudication by a panel may be
discerned from the panel request"8; further, "although a measure cannot be identified without some
indication of its contents, the identification of a measure within the meaning of Article 6.2 need be
framed only with sufficient particularity as to indicate the nature of the measure and the gist of what
is at issue."9
2.8. Assessing whether a request identifies the specific measures at issue "may depend on the
particular context in which those measures exist and operate", and "involves, by necessity, a
case-by-case analysis since it may require examining the extent to which those measures are
capable of being precisely identified".10 For example, whether a measure is identified with sufficient
specificity may "depend on the extent to which that measure is specified in the public domain".11
2.9. Whether a panel request identifies a measure with sufficient specificity is not necessarily
dependent on how multi -faceted the measure at issue is, or on how lengthy the relevant legal
instruments are.
2.10. In EC – Bananas III , the Appellate Body agreed with the panel that the
European Communities' regime for the importation of bananas, a complex measure, had been
identified with sufficient specificity by the language in the panel request that referr ed to "a regime
for the importation, sale and distribution of bananas established by Regulation 404/93 (O.J. L 47 of
25 February 1993, p. 1), and subsequent EC legislation, regulations and administrative measures,

3 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.12. See also, e.g.
Appellate Body Reports, Argentina – Import Measures, para. 5.39; EC and certain member States – Large Civil
Carbon Steel, para. 125.
4 Appellate Body Report, Argentina – Import Measures, para. 5.39. See also, e.g. Appellate Body
Report, EC and certain member States – Large Civil Aircraft, para. 639.
5 Appellate Body Report, Argentina – Import Measures, para. 5.39 (referring to Appellate Body Report,
US – Countervailing and Anti-Dumping Measures (China), paras. 4.6-4.7). See also, e.g. Appellate Body
Reports, EC and certain member States – Large Civil Aircraft, paras. 639-640; US – Zeroing (Japan)
(Article 21.5 – Japan), para. 108; EC – Selected Customs Matters, para. 130; EC – Computer Equipment,
para. 68 (observing that whether the terms it was examining were sufficiently specific under Article 6.2
depended "upon whether they satisfy the purposes of the requirements of that provision"); and US – Continued
Zeroing, para. 161; and Panel Report, US – Large Civil Aircraft (2nd complaint) (Article 21.5 – EC), para. 7.374.
6 Appellate Body Report, EC – Bananas III, para. 142.
7 Appellate Body Report, EC – Selected Customs Matters, para. 130. See also, e.g. Appellate Body
8 Appellate Body Report, US – Continued Zeroing, para. 168.
9 Appellate Body Report, US – Continued Zeroing, para. 169.
10 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 641. See also
Appellate Body Report, Argentina – Import Measures, para. 5.41.
11 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 648. See also,
ibid. paras. 646-647.

including those reflecting the provisions of the Framework Agreement on bananas, which implement,
supplement and amend that regime".12
2.11. In EC – Selected Customs Matters , the United States had challenged four
European Communities' regulations that "cumulatively contain[ed], literally, thousand s of different
provisions … relate[d] to a vast array of different customs areas, and [could] entail administration
in a multitude of diverse ways" 13, as well as their implementing measures and other related
measures. The panel request "ma[de] it clear that the United States [did] not challenge … the
substantive content of [those] legal instruments … but their administration collectively". 14 The
Appellate Body found that, with regard to the four identified regulations, "the specificity requirement
in Article 6.2 of the DSU … [was] met", because "[f]or each of these instruments, a specific citation
is provided", and "the panel request indicate[d] clearly that the United States was challenging the
manner in which these legal instruments are administered collectively".15
2.12. As to what may constitute a "measure" identified in the panel request, "[a]s long as the
specificity requirements of Article 6.2 are met, [there is] no reason why a Member should be
precluded from setting out in a panel request 'any act or o mission' attributable to another Member
as the measure at issue." 16 Article 6.2 "does not impose any additional requirement … that a
complainant must, in its request for establishment of a panel, demonstrate that the identified
measure at issue … can violate … the relevant obligation".17
2.13. Turning now to the legal basis of the complaint, i.e. the claims18, this "pertains to the specific
provision of the covered Agreement that contains the obligation alleged to be violated". 19 The brief
summary of the legal basis must "aim[] to explain succinctly how or why the measure at issue is
considered by the complaining Member to be violating the WTO obligation in question". 20 This
summary must be "sufficient to present the problem clearly", in particular so that the r espondent
knows "what case it has to answer, and what violations have been alleged so that it can begin
preparing its defense", and so that third parties are "informed of the legal basis of the complaint".21
For the summary of the legal basis to present the problem clearly the panel request must, in
particular, "'plainly connect' the challenged measure(s) with the provision(s) claimed to have been
infringed such that a respondent can 'know what case it has to answer, and … begin preparing its
defence'".22
2.14. As a "minimum prerequisite", to provide a brief summary of the legal basis the complainant
must identify "the treaty provisions claimed to have been violated by the respondent".23 There may
be situations where such identification of the treaty provisions is enough24, but this will "not always
be enough".25 For example, it may not be enough "where the Articles listed establish not one single,
distinct obligation, but rather multiple obligations".26 The question "whether the mere listing of the
Articles claimed to have been violated meets the standard of Article 6.2 must be examined on a
case-by-case basis … tak[ing] into account whether the ability of the respondent to defend itself was
prejudiced, given the actual course of the panel proceedings, by the fac t that the panel request

12 Appellate Body Report, EC – Bananas III, para. 140.
13 Panel Report, EC – Selected Customs Matters, para. 7.30.
14 Appellate Body Report, EC – Selected Customs Matters, para. 151.
15 Appellate Body Report, EC – Selected Customs Matters, para. 152. The Appellate Body conversely
found that "the phrase 'implementing measures and other related measures' [did] not 'identify the specific
measures at issue' as required in Article 6.2 of the DSU". (Ibid. fn 369).
16 Appellate Body Report, EC – Selected Customs Matters, para. 133.
17 Appellate Body Report, Australia – Apples, para. 423. (emphasis original)
18 Appellate Body Report, EC – Selected Customs Matters, para. 130.
19 Appellate Body Report, EC – Selected Customs Matters, para. 130.
20 Appellate Body Report, EC – Selected Customs Matters, para. 130. (emphasis original)
21 Appellate Body Report, Thailand – H-Beams, para. 88.
22 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.8 (quoting
Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 162); see also, e.g.
Appellate Body Reports, Argentina – Import Measures, para. 5.39; and China – Raw Materials, para. 226.
23 Appellate Body Reports, Korea – Dairy, para. 124; EC – Bananas III, para. 142. See also, e.g.
Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.14.
24 See, e.g. Appellate Body Report, EC – Bananas III, para. 141.
25 Appellate Body Report, Korea – Dairy, para. 124.
26 Appellate Body Report, Korea – Dairy, para. 124. See also, e.g. Appellate Body Reports, China –
HP-SSST (Japan) / China – HP-SSST (EU), paras. 5.14-5.15.

simply listed the provisions claimed to have been violated." 27 A respondent alleging that a "mere
listing of articles" in the panel request "prejudiced its ability to defend itself" may have to corroborate
that allegation with "supporting particulars" as to how that was the case.28
2.15. The legal basis of the complaint, i.e. the claims, must be distinguished from the
complainant's arguments, which need not be set out in the panel request. 29 The legal basis of the
complaint refers to "a claim that the respondent party has violated, or nullified or impaired the
benefits arising from, an identified provision of a particular Agreement".30 In contrast, the arguments
are "adduced by a complaining party to demonstrate that the responding par ty's measure does
indeed infringe upon the identified treaty provision … [and] are set out and progressively clarified in
the first written submissions, the rebuttal submissions and the first and second panel meetings with
the parties".31
2.16. In a prior dispute involving claims under Articles 3.1(b) and 3.2 of the SCM Agreement, the
panel expressed the view that "an explanation about … the type of subsidy at issue … the granting
or maintaining of that subsidy, the use of domestic over imported goods, and the notion of
contingency" would be "the … subject matter of the arguments".32
2.17. In assessing the sufficiency of the panel request, a panel must "ensure its compliance with
both the letter and the spirit of Article 6.2 of the DSU". 33 Ensuring compliance with the spirit of
Article 6.2 of the DSU requires ensuring the panel request fulfils its two purposes, which, to recall,
are to define the jurisdiction of the panel and to "serve the due process objective of notifying
respondents and potential third parties of the nature of the dispute and of the parameters of the
case to which they must begin preparing a response".34
2.18. The assessment of the sufficiency of the panel request must be based on the panel request
on its face, read as a whole, on the basis of the language used 35, and "as it existed at the time of
its filing". 36 Therefore, defects in the panel request cannot be cured by the parties' subsequent
submissions37, although "subsequent events in [the] panel proceedings, including submissions by a
party, may be of some assistance in confirming the meaning of the words used in the panel
request".38
2.19. The requirement to assess the sufficiency of the panel request on the face of the measure
does not mean that the panel is precluded from including in its assessment documents that are
referenced in the panel request, but whose text is not reproduced in the panel request itself. As the
Appellate Body has explained:

27 Appellate Body Report, Korea – Dairy, para. 127.
28 Appellate Body Report, Korea – Dairy, para. 131.
29 Appellate Body Reports, EC – Selected Customs Matters, para. 153; Korea – Dairy, paras. 123 and
30 Appellate Body Report, Korea – Dairy, para. 139. See also, e.g. Appellate Body Reports, China –
HP-SSST (Japan) / China – HP-SSST (EU), para. 5.14; and Communication from the Panel dated 25 May 2012,
Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 20.
31 Appellate Body Report, Korea – Dairy, para. 139. See also, e.g. Panel Report, US – Large Civil Aircraft
(2nd complaint) (Article 21.5 – EC), para. 7.381.
32 Communication from the Panel dated 25 May 2012, Canada – Renewable Energy / Canada – Feed-in
33 Appellate Body Report, US – Zeroing (Japan) (Article 21.5 – Japan), para. 108 (referring to
Appellate Body Reports, EC – Bananas III, para. 142; US – Continued Zeroing, para. 161; US – Carbon Steel,
para. 127; US – Oil Country Tubular Goods Sunset Reviews, paras. 164 and 169; and China – China –
HP-SSST (Japan) / China – HP-SSST (EU), para. 5.13).
34 Appellate Body Report, US – Continued Zeroing, para. 161. See also para. 2.6 above.
35 Appellate Body Reports, US – Zeroing (Japan) (Article 21.5 – Japan), para. 108 (referring to
Appellate Body Reports, EC – Bananas III, para. 142; US – Continued Zeroing, para. 161; US – Carbon Steel,
para. 127; US – Oil Country Tubular Goods Sunset Reviews, paras. 164 and 169); and China – HP-SSST
(Japan) / China – HP-SSST (EU), para. 5.13.
36 Appellate Body Report, Argentina – Import Measures, para. 5.42.
37 Appellate Body Reports, Argentina – Import Measures, para. 5.42; EC and certain member States –
Large Civil Aircraft, para. 642; and Panel Report, US – Large Civil Aircraft (2nd complaint) (Article 21.5 – EC),
para. 7.375.
38 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 642. See also, e.g.
Appellate Body Report, Argentina – Import Measures, para. 5.42; and Panel Report, US – Large Civil Aircraft
(2nd complaint) (Article 21.5 – EC), para. 7.375.

The term "on its face" … must not be so strictly construed as to preclude automatically
reference to sources that are identified in its text, but the contents of which are
accessible outside the panel request document itself.
It is common practice, for example, for panel requests identifying legislation,
regulations, or other similar instruments as measures at issue to provide information
that enables the respondent and potential third parties to access the text of the
measures themselves, rather than to copy the entire text of these instruments into the
body of the panel requests, or to attach them as annexes. Such information may consist
of the title, date of enactment or entry into force, the official number of the law or
regulation, and the citation to the government regulatory bulletin in which it was
published.
…
So long a s a panel request seeks to identify the specific measure at issue through
reference to a source where that measure's contents may readily be found and
accessed, such contents may be the subject of scrutiny in assessing whether that
request identifies the s pecific measures at issue within the meaning of, and in
conformity with, Article 6.2 of the DSU.39
2.20. Having recalled the standard set out in Article 6.2 of the DSU, we now turn to applying it to
the panel request before us.
2.3 Whether the United States' panel request meets the applicable legal standard
2.21. To recall, India argues that the panel request fails to identify the specific measures at issue
and fails to provide a brief summary of the legal basis of the complaint sufficient to present the
problem clearly40, thus failing to fulfil the requirements of Article 6.2 of the DSU. We discuss, first,
whether the panel request identifies the specific measures at issue as required by Article 6.2
(section 2.3.1); and, second, whether the panel request provides a summary of the legal basis
meeting the requirements of Article 6.2 (section 2.3.2).
2.22. Before doing so, we recall that the assessment of the sufficiency of the panel request must
be based on the panel request on its face, read as a whole41, but that this includes the text of legal
instruments that are referenced in the panel request through "information that enables the
respondent and potential third parties to access the text of the measures themselves".42
2.23. The United States' panel request identifies twenty -five legal instruments 43 by reference to
their title and date, as well as, in most cases, the issuing authority and, in some cases, the citation
to a legal gazette or other repository where the legal instrument can be found. As the Panel has
verified, these references are sufficient to locate and access the text of the measures themselves.44
The Panel has therefore included the text of these legal instruments in its assessment of the
sufficiency of the panel request.

39 Appellate Body Report, Argentina – Import Measures, paras. 5.48-5.49 and 5.51. See also, ibid.
para. 5.57.
40 India's first written submission, para. 19. See also, ibid. paras. 20-70.
41 Appellate Body Reports, US – Zeroing (Japan) (Article 21.5 – Japan), para. 108 (referring to
Appellate Body Reports, EC – Bananas III, para. 142; US – Continued Zeroing, para. 161; US – Carbon Steel,
para. 127; US – Oil Country Tubular Goods Sunset Reviews, paras. 164 and 169); and China – HP-SSST
(Japan) / China – HP-SSST (EU), para. 5.13.
42 Appellate Body Report, Argentina – Import Measures, paras. 5.48-5.51. See also, ibid. para. 5.57.
43 Instruments Nos. 1-5, 7-15, and 17-27 (items 6 and 16 are cross-references to Instruments
Nos. 1-5).
44 The Panel located these legal instruments by conducting a simple web search for the identifiers
provided in the panel request. Annex A to this preliminary ruling lists the web pages at which the Panel was
able to access the referenced legal instruments; for ease of reference, in a separate column, Annex A also
indicates which exhibits, if any, correspond to these legal instruments. Equally, for ease of reference, the
corresponding exhibit, if any, is indicated in the relevant footnotes.

2.3.1 Whether the United States' panel request identifies the specific measures at issue
2.24. The description of the measures that the United States provided in its panel request comprises
two parts. First, the panel request states that it "appears that India provides export subsidies
through" five named programmes, which the United States lists in its request.45 Second, the panel
request explains that "[t]he export subsidies provided through these programs are reflected in legal
instruments that include [those listed in the panel request], operating separately or collectively, as
well as any amendments, or successor, replacement, or implementing measures" 46, and it goes on
to list such legal instruments for each of the five programmes. The panel request,
therefore (a) indicates that the measures appear to be export subsidies; (b) states the name of the
programmes under which the alleged export subsidies are provided; and (c) cites a number of legal
instruments that, operating separately or collectively, reflect those alleged subsidies.
2.25. We now examine, for each program, whether the panel request sufficiently identified the
measure at issue.
2.3.1.1 The First Programme: Export Oriented Units Scheme and sector specific schemes,
including Electronics Hardware Technology Park Scheme and Bio -Technology Parks
Scheme
2.26. The first progr amme through which, according to the panel request, India "appears … [to]
provide[] export subsidies" is described, in that request, as "Export Oriented Units Scheme and
sector specific schemes, including Electronics Hardware Technology Park Scheme and
Bio-Technology Parks Scheme"47 (the First Programme). The panel request lists five instruments in
connection with this programme, as "legal instruments" in which the measure is "reflected …
operating separately or collectively".48 These five instruments are listed as Nos. 1-5.49
2.27. Instrument No. 1 is described as " Foreign Trade Policy [1st April 2015 – 31st March 2020]
(Ministry of Commerce and Industry, Notification 01/2015 -2020, April 1, 2015), as modified by
Foreign Trade Policy [1 st April, 2015 -31st March, 2020] Mid -Term Review, Updated As On
5th December, 2017 (Ministry of Commerce and Industry, Notification 41/2015 -2020,
December 5, 2017)" (FTP). It is a lengthy and multifaceted document, setting out provisions relating
to trade that range, just by way of example, from trade facilitation to complaints from foreign buyers
regarding the quality of products exported from India.50
2.28. Chapter 6 of the FTP, however, provides specifically for the measures comprising the First
Programme. Chapter 6 is entitled "Export Oriented Units (EOUs), Electronics Hardware Technology
Park (EHTPs), Software Technology Parks (STPs) and Bio -Technology Parks (BTPs)". This
corresponds largely with the name of the schemes listed by the United States as the First
Programme, except that (a) the United States' panel request refers to "sector -specific schemes,
including" those named in the request; and (b) chapter 6 of the FTP covers a fourth scheme, namely,
"Software Technology Parks", which is not named in the panel request.
2.29. Chapter 6 of the FTP comprises 29 sections, four of which are no longer in force.51 Section 6.00
explains that "[u]nits undertaking to export their entire production of goods and services (except
permissible sales in DTA [(domestic tariff area)]) may be set up under" the schemes provided for in
that chapter, and sets forth the schemes' objectives. Section 6.08 sets forth exceptions to the
requirement that "the entire production" of units under the schemes in chapter 6 be exported.
2.30. Section 6.01 addresses "Export and Import of Goods". It sets forth rules on (a) what the units
established under these schemes may export, import or procure, and under what conditions;

45 United States' panel request, p. 1.
46 United States' panel request, p. 1.
47 United States' panel request, p. 1.
48 United States' panel request, p. 1.
49 United States' panel request, p. 1.
50 Foreign Trade Policy, (Exhibit USA-3), chapter 1b, section 2.06 and chapter 8, respectively.
51 Sections 6.06 and 6.26-6.28 are marked "deleted".

(b) exemptions from duties and taxes for import or procurement of goods52; and (c) the applicability
of the "State Trading regime" to EOU manufacturing units.53
2.31. Sections 6.02 and 6.03 bring the importation of second hand capital goods and the leasing of
capital goods within the remit of the schemes in chapter 6. Section 6.16 provides that units may be
set up under these schemes also for reconditioning, repair, and re -engineering, but that certain
provisions of chapter 6 shall not apply to these activities.
2.32. Section 6.04 sets out a net foreign exchange earnings requirement for u nits under the
schemes in chapter 6; section 6.09 lists "supplies effected from" such units that count for fulfilment
of the positive net foreign exchange requirement; and section 6.10 explains that such units may
export through others subject to certain conditions.
2.33. Section 6.11 sets forth "benefits", "exemption[s]" and other entitlements of units under the
schemes in chapter 6 for supplies from the domestic tariff area. And section 6.12 provides for "Other
Entitlements" of units under the schemes in chapter 6. There are six such other entitlements, of
rather varying nature.
2.34. Section 6.05 provides for the process of application and approval of units under the schemes
in chapter 6; section 6.18 provides for leaving the schemes; section 6.19 provides for conversion of
units from a scheme to another and from domestic tariff area units into units under one of the
schemes; section 6.20 contains provisions on monitoring of the net foreign exchange requirement;
section 6.24 envisages implementing powers; and section 6.25 provides for "Revival of Sick Units".
2.35. Chapter 6 also sets forth rules on (a) transfer of manufactured goods between units
(section 6.13); (b) subcontracting of production processes (section 6.14); (c) material that units
were un able to use and capital goods that have become "obsolete/surplus" (section 6.15);
(d) replacement/repair goods (section 6.17); (e) export through exhibitions and the like
(section 6.21); (f) personal carriage of goods (section 6.22); and (g) imports and ex ports by post
(section 6.23).
2.36. Thus, as a whole, chapter 6 sets out (a) the conditions for setting up units under the four
schemes named in this chapter, three of which are the schemes named in the panel request;
(b) rules on what these units may and may not do and the extent to which the entitlements vary
depending on certain circumstances; (c) the "entitlements" of these units; and (d) rules for the
programme's administration. Therefore, chapter 6 describes a relatively cohesive regime regarding
the programme named in the panel request.
2.37. Instrument No. 2, "Appendices and Aayat Niryat Forms"54, sets forth numerous forms for the
administration of schemes provided for in the FTP, including those in chapter 6 of the FTP, as well
as more detail on t he schemes set out in chapter 6 of the FTP such as approval criteria, and
miscellaneous provisions, e.g. on sale of surplus power.55
2.38. Instrument No. 3 bears the Handbook of Procedures, as revised pursuant to section 1.03 of
the FTP, which sets out procedures to be followed in the implementation of, among others, the FTP.56
Chapter 6 of the Handbook of Procedures bears almost exactly the same title as chapter 6 of the
FTP, namely, "Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHT Ps),
Software Technology Parks (STPs), Scheme [sic] and Bio-Technology Parks (BTPs)". To recall, these
schemes, except for the Software Technology Parks Scheme, are those named in the panel request
as comprising the First Programme.
2.39. Chapter 6 of the Handbook of Procedures sets out more detailed rules than those in the FTP
on the requirements that units must comply with in order to benefit from the schemes, as well as
rules on the administration of the programme, including on the approval process, com petent
authorities, and timeframes to decide upon applications. This chapter does not appear to provide

52 Foreign Trade Policy, (Exhibit USA-3), subsections 6.01(d)(ii), (d)(iii), (f), and (k).
53 Foreign Trade Policy, (Exhibit USA-3), subsection 6.01(e).
54 Appendices and Aayat Niryat forms, (Exhibit USA-6).
55 "No duty shall be required to be paid on sale of surplus power from an EOU unit to another EOU/SEZ
unit". (Appendices and Aayat Niryat forms, (Exhibit USA-6), appendix 6B, para. 4(ii)).
56 Handbook of Procedures, (Exhibit USA-5), p. 1; Foreign Trade Policy, (Exhibit USA-3), section 1.03.

more detail about the entitlements of units under the schemes, although it does provide that
"[a]pplication for grant of all entitlements may be made to the DC [(Development Commissioner)]
concerned".57
2.40. Instrument No. 4 amends some of the "sector-specific requirements for EOUs" in appendix 6B
(to the FTP), which is part of Instrument No. 2. The amendment relates to the eligibility under EOU
schemes of activities pertaining to the reprocessing of textiles. Instrument No. 5 removes the bond
requirement from certain provisions relating to the schemes comprising the First Programme.58
2.41. Thus, the panel request identifies the alleged export subsidie s comprising the first measure
through a combination of (a) the names of the programmes under which the alleged subsidies are
provided; and (b) the legal instruments reflecting the alleged subsidies. While some of these legal
instruments are broad, the com bination of the programmes' names and the legal instruments
identifies the relevant portions of those legal instruments. Further, the legal instruments set out the
manner of operation of the programmes, including conditions of eligibility, manner of administration,
and entitlements under each programme.
2.42. Chapter 6 of Instrument No. 1, the FTP, describes not one, but a number of entitlements
available to units under the schemes named in this chapter. 59 This raises the question of whether
the complainant should have singled out each entitlement in its panel request in order to identify
the measure at issue. India argues that "the precise incentive offered within the 'scheme' … must
be considered as the measure at issue". 60 India also argues that the panel request is akin to the
portion of the panel request in Australia – Apples that was held by that panel to be outside its terms
of reference.61
2.43. In Australia – Apples, New Zealand's panel request challenged "measures specified in and
required by Australia pursuant to the Final import risk analysis report for apples from New Zealand
[(FIRA)]", and, "[i]n particular," a list of 17 specific requirements. 62 The list of measures was
followed by a listing of several provisions of the SPS Agreement alleged to be violated.63 The panel
in that case found that, while the 17 requirements had been identified with sufficient specificity to
fall within its terms of reference, "given the length and complexity of Australia's FIRA … the broad
reference in New Zealand's panel request to the 'measures specified in and required by Australia
pursuant to the [FIRA]' fail[ed] to satisfy the requirement of sufficient clarity in the identification of
the … measure[]".64
2.44. However, the situation in the present case is not the same as that of the "broad reference" in
Australia – Apples. In the present case, the complainant has explained that it is challenging export
subsidies under three named programmes, and has listed legal instruments in which those subsidies
are reflected. This is not the same as referring to "measures specified in and required by [a Member]
pursuant to a [risk analysis]" 65, because the latter formulation leaves entirely open the type of
measures that could be "specified and required", mentioning only that the measures will have some
connection ("specified in", or "required … pursuant to") to the risk analysis in question.
2.45. In the case before the Panel, the complainant has challenged, in its panel request, alleged
subsidies provided under a set of three nam ed programmes, whose names in the panel request
correspond to those in the legislation referenced in that request. The referenced legislation appears
to set out a relatively cohesive and comprehensive regime for these programmes. Given the text of
the panel request and of the referenced legislation, the fact that these programmes envisage not
one entitlement, but several entitlements for participating units does not entail that the measure
has not been sufficiently identified. To borrow the words of the Appellate Body in EC – Bananas III,
subject to our consideration of India's further arguments, below, the panel request appears to

57 Handbook of Procedures, (Exhibit USA-5), section 6.18.
58 These provisions are set out in the Handbook of Procedures comprising Instrument No. 3
(Exhibit USA-5), and in the Appendices comprising Instrument No. 2 (Exhibit USA-6).
59 These entitlements are set out in FTP, sections 6.01, 6.11, and 6.12, as just described. (Foreign
Trade Policy, (Exhibit USA-3)).
60 India's first written submission, para. 34.
61 India's first written submission, para. 40.
62 Request for the establishment of a panel by New Zealand, Australia – Apples, WT/DS367/5, p. 1.
63 Request for the establishment of a panel by New Zealand, Australia – Apples, WT/DS367/5, p. 3.
64 Preliminary ruling by the Panel, Australia – Apples, WT/DS367/7, paras. 8-9.
65 Preliminary ruling by the Panel, Australia – Apples, WT/DS367/7, para. 9.

"contain[] sufficient identification of the specific measures at issue to fulfil the requirements of
Article 6.2 of the DSU".66
2.46. India also argues that for all measures, including the alleged subsidies under the First
Programme, the panel request merely "list[s] the identified Schemes", "stipulate[s] the title of each
programme … and thereafter, provides only a list of legal instruments that have implemented the
Identified Program".67 According to India, this means that the request "does not clarify whether the
challenged measure is the alleged 'scheme' … or the 'legal instruments'". 68 The United States
responds that it has iden tified the measures "by the very name India itself calls each measure" 69,
and has taken "the additional step of referencing legal instruments to facilitate … understanding of
the measures subject to the dispute".70
2.47. India's description does not correspond to the text of the panel request. The panel request
explains that India "provides export subsidies through" 71 the programmes that are named in the
panel request, and it then continues to explain that "[t]he exp ort subsidies provided through these
programs are reflected in legal instruments that include" those listed in the panel request. 72 Thus,
the panel request does clarify the relationship between the programmes, or schemes, and the cited
legal instruments.
2.48. Based on its view that the panel request can only be challenging either the scheme or the
legal instrument, India further argues that the panel request is insufficient in either case, i.e. whether
the United States "seeks to challenge the 'schemes'" 73, or whether the United States "claims that
the cited 'legal instrument' are the measures at issue".74
2.49. According to India, if the object of the United States' challenge are the schemes, the
United States failed to identify "the precise measure within the 'scheme' that is deemed to violate
Articles 3.1(a) and 3.2 of the SCM Agreement", particularly as the "'schemes' are policy programmes
that" have multiple objectives. 75 Instead, the United States "merely cited the name of the
programmes".76 Alternatively, India continues, if the object of the United States challenge is the
legal instruments, then the request does not provide sufficient clarity because the legal instruments
"are protracted/extensive in nature" and the United States failed to identify "the specific paragraph
or provision within such legal instruments".77
2.50. India seeks to separate the various elements of the panel request and read them in isolation.
However, a panel request must be assessed "as a whole". 78 When reading the panel request a s a
whole, the very combination of those elements permits the identification of the measures at issue,
as set out above. 79 The fact that the panel request lists the programme names allows the
identification of the relevant portions of the cited legal instru ments; and the identification of the
legal instruments provides greater specificity and precision in the identification of the programmes.
2.51. In a similar vein, India indicates that the panel request "merely" lists legal instruments. 80
However, the panel request does not merely list legal instruments. As described above, the panel
request sets forth programme names, explains that the programmes are reflected in certain legal

66 Appellate Body Report, EC – Bananas III, para. 140.
67 India's first written submission, para. 32.
68 India's first written submission, para. 33.
70 United States' second written submission, para. 13. See also, ibid. para. 18. The United States further
notes that there is "no specific requirement in Article 6.2 concerning the manner … for identifying a specific
measure at issue[,] [provided] its content is adequately described in the Panel request". (ibid. para. 17
(quoting Panel Report, US – FSC (Article 21.5 – EC II), para. 7.82)).
71 United States' panel request, p. 1.
72 United States' panel request, p. 1.
73 India's first written submission, para. 34.
74 India's first written submission, para. 35.
75 India's first written submission, para. 34.
76 India's first written submission, para. 34.
77 India's first written submission, para. 35.
78 See para. 2.18 above.
79 See paras. 2.26- 2.41 above.
80 India's first written submission, paras. 38 and 41.

instruments, and then lists legal instruments in which provisions relating to those programmes can
be found.
2.52. India further notes that Instruments Nos. 1, 2, and 3 are referred to in connection with three
programmes, namely the First Programme, Second Programme and Third Programme listed in the
panel request. A ccording to India, first, this "suggest[s] that the same measures are being
challenged with regards to three different schemes". 81 Second, these instruments "implement a
variety of India's policy objectives" 82, the United States fails to indicate "the specif ic measure
within"83 these instruments that it is challenging, and yet it "is absurd" to conceive that the
United States would challenge them "in their entirety".84
2.53. These arguments appear to have their foundation in the fact of parsing, and viewing in
isolation, the various elements of the panel request. While it is true that Instruments Nos. 1, 2,
and 3 are multifaceted, the panel request indicates the names of the programmes under which the
alleged export subsidies are provided, and these names allow the identification of the portions of
the cited legal instruments that are relevant to each of the challenged measures. Similarly, when
the programme names and the legal instruments are considered together, the reason why
Instruments Nos. 1, 2, and 3 are cited as instruments "reflect[ing]" 85 three programmes also
becomes apparent: these instruments contain distinct portions (in Instruments Nos. 1 and 3, distinct
chapters) devoted to each of the programmes.
2.54. Thus, based on the text of the panel request and the instruments reflected therein, the Panel
concludes that the panel request sufficiently identifies the alleged export subsidies comprising the
first measure, and allegedly provided under named programmes, through a combination of (a) the
names of the programmes under which the alleged subsidies are provided; and (b) the legal
instruments reflecting those alleged subsidies. In this way, the panel request meets the requirement
in Article 6.2 of the DSU to "identify the specific measures at issue".
2.3.1.2 The Second Programme: Merchandise Exports from India Scheme
2.55. The second programme through which, according to the panel request, India "appears … [to]
provide[] export subsidies" is described, in that request, as "Merchandise Exports from Ind ia
Scheme"86 (the Second Programme). The panel request lists 14 instruments in connection with this
programme, as "legal instruments" in which the measure is "reflected … operating separately or
collectively".87 These five instruments are listed as Nos. 1-5 and 7-15.88
2.56. Instrument No. 1 is the FTP. As noted above, the FTP is broad and multifaceted. However,
the FTP bears a chapter on "Exports from India Schemes" 89, which explains that there shall be two
such schemes, one for merchandise exports and one for services exports.90 The scheme "for exports
of Merchandise" is the "Merchandise Exports from India Scheme (MEIS)" 91, i.e. the programme
named in the panel request. The FTP provides for this programme in sections 3.00 to 3.06, and 3.14
to 3.24, of chapter 3.92
2.57. These provisions set out (a) the objective of the scheme (sections 3.00 and 3.03); (b) the
"Nature of Rewards" (section 3.02); (c) the conditions for eligibility; (d) the manners in which the
rewards can be utilized; (e) the "Privileges of Status Holders" under the Scheme (section 3.24) and
conditions for grant of such status; and (f) rules relating to the administration of the scheme.

81 India's first written submission, para. 43.
82 India's first written submission, para. 45.
83 India's first written submission, para. 46.
84 India's first written submission, para. 48.
85 United States' panel request, p. 1.
86 United States' panel request, pp. 1-2.
87 United States' panel request, p. 1.
88 United States' panel request, p. 2.
89 Foreign Trade Policy, (Exhibit USA-3), chapter 3.
90 Foreign Trade Policy, (Exhibit USA-3), section 3.01.
91 Foreign Trade Policy, (Exhibit USA-3), section 3.01.
92 Sections 3.03-3.06 pertain solely to the Merchandise Exports from India Scheme. Sections 3.00-3.02
and 3.14-3.24 relate to both this scheme and the "Service Exports from India Scheme".

2.58. In particular, section 3.02, on "Nature of Rewards", explains that "Duty Credit Scrips shall be
granted as rewards under MEIS" and "shall be freely transferable", and goes on to describe the three
types of uses to which these duty credit scrips can be put 93, i.e. payment of customs duties on
certain goods, payment of excise duties on certain goods, and payment of certain other dues such
as application fees and value shortfalls in export obligation.94
2.59. Section 3.04 of the FTP, on "Entitlement under MEIS", explains that "exports of [certain goods
to certain markets] shall be rewarded under MEIS". As we will see shortly, the relevant goods and
markets are set out in Instrument No. 7 and its amendments.
2.60. Instrument No. 2 contains a number of appendices and forms expressly related to MEIS,
including application forms.95
2.61. Instrument No. 3, the Handbook of Procedures, bears a chapter encompassing MEIS96, which
sets forth more detailed rules for the application of chapter 3 of the FTP.
2.62. Instrument No. 4 amends some of the "sector-specific requirements for EOUs" in Appendix 6B
to the FTP. Appendix 6B relates to the First Programme 97, and it is not clear to the Panel how the
reference to Instrument No. 4 is relevant to identify the measure at issue. Similarly, Instrument
No. 5 removes the bond requirement from certain provisions under the First Progra mme, and it is
not clear to the Panel how the reference to Instrument No. 5 is relevant to identify the measure at
issue.98
2.63. Instrument No. 7 bears Appendix 3B, which identifies the relevant goods and markets for
purposes of section 3.04 of the FTP, namely, the goods that must be exported, and the markets to
which they must be exported, to obtain rewards under MEIS.99 Instrument No. 8 bears amendments
to Appendix 3B.100 Instrument No. 9 bears the "Harmonised and Consolidated Table 2 of Appendix
3B as per Public Notice No. 61/2015-20".101 Instrument No. 10 bears corrections to descriptions of
products in table 2 of Appendix 3B. 102 Equally, Instruments N os. 11 to 15 amend, correct or
harmonize Appendix 3B.103
2.64. Thus, similar to the first measure, the panel request identifies the alleged export subsidies
comprising the second measure through a combination of (a) the name of the programme under
which the alleged subsidies are provided; and (b) the legal instruments reflecting the alleged
subsidies. Again, while some of these legal instruments are broad, the combination of the
programme's name and the legal instruments identifies the relevant portions of most of those legal
instruments (except for Instruments Nos. 4 and 5, addressed in the next paragraph). Further, the
legal instruments set out the manner of operation of the programmes, including the conditions of
eligibility, the manner of administration, and the entitlements under the programme.
2.65. Unlike the situation for the First Programme, on the face of the panel request, the relationship
between Instruments Nos. 4 and 5 and the Second Programme is not clear. Instruments Nos. 4 and
5 appear to re late to the First Programme. We are therefore puzzled by the reference to these
instruments. At the same time, while the reference to these two legal instruments does not add to
the understanding of the Second Programme, it does not detract from it either, particularly in light
of these two instruments' narrow focus. We also note that India, while raising specific arguments on

93 Foreign Trade Policy, (Exhibit USA-3), section 3.02.
94 Foreign Trade Policy, (Exhibit USA-3), section 3.02, together with section 3.18.
95 Appendices and Aayat Niryat forms, (Exhibit USA-6).
96 Handbook of Procedures, (Exhibit USA-5), pp. 86-100. The programme related to services is also
covered, but separately identified.
97 Instrument No. 4 http://dgft.gov.in/sites/default/files/pn3116_2.pdf (accessed 13 November 2018).
Appendix 6B without this amendment is contained in Appendices and Aayat Niryat forms, (Exhibit USA-6),
pp. 167-168.
98 Instrument No. 5 http://dgft.gov.in/sites/default/files/PN2516_0.pdf (accessed 13 November 2018).
99 Public Notice 2/2015-2020, (Exhibit USA-11).
100 Public Notice 27/2015-2020, (Exhibit USA-12).
101 Public Notice 61/2015-20, (Exhibit USA-13).
102 Public Notice 1/2015-2020, (Exhibit USA-14).
103 Public Notice 17/2015-2020, (Exhibit USA-15); Public Notice 22/2015-2020, (Exhibit USA-16); Public
Notice 42/2015-2020, (Exhibit USA-17); Public Notice 44/2015-2020, (Exhibit USA-18); and Public Notice
60/2015-2020, (Exhibit USA-19).

Instruments Nos. 1, 2, and 3, has not raised any specific argument relating to the reference to
Instruments Nos. 4 and 5 under the S econd Programme. Overall, therefore, we consider that the
listing of these two legal instruments under the Second Programme is not such as to change our
analysis of the sufficiency of the panel request.
2.66. India puts forward the same arguments regardin g the Second Programme, and the
United States provides the same response, as those we have already considered under the
First Programme, in paragraphs 2.46 to 2.53 above. The reasoning set out there applies in the same
way to the Second Programme as it did to the First Programme, because the relevant fact pattern
regarding the identification of the Second Programme is the same. The panel request does not, and
need not, sever the programme names from the legal instruments. Instead, it is the very
combination of the different elements in the panel request that permits the identi fication of the
"specific measures at issue" as required by Article 6.2. Similarly, it is this combination that permits
the identification of the relevant portions of Instruments No, 1, 2, and 3, which are otherwise indeed
broad in scope.
2.67. Therefore, by identifying the second measure through a combination of the name of the
programme under which the alleged export subsidies are provided, and the legal instruments
reflecting them, the panel request meets the requirement in Article 6.2 of the DSU to "id entify the
specific measures at issue".
2.3.1.3 The Third Programme: Export Promotion Capital Goods Scheme
2.68. The third programme through which, according to the panel request, India "appears … [to]
provide[] export subsidies", is described, in that request, as "Export Promotion Capital Goods
Scheme"104 (the Third Programme). Nine instruments are listed in connection with this scheme, as
"legal instruments" in which the measure is "reflected … operating separately or collectively". 105
These nine instruments are listed as Nos. 1-5 and 17-20.106
2.69. To recall, Instrument No. 1 sets out the FTP. 107 Chapter 5 of the FTP is entitled "Export
Promotion Capital Goods (EPCG) Scheme"108, a title that matches exactly the programme's name as
used in the United States' panel request. This chapter runs for six pages. 109 At section 5.01, it
explains that the "EPCG scheme" (a) "allows import of capital goods … at Zero customs duty";
(b) allows for the exemption from certain other taxes; and (c) in some cases allows for advantages
also in connection with the procurement of capital goods "from indigenous sources".110 Section 5.01
continues by providing that "[i]mport under EPCG Scheme shall be subject to an export obligation",
whose content is further detailed in chapter 5 of the FTP.111
2.70. The FTP then continues by setting out conditions that apply to the EPCG Scheme, the
scheme's coverage, and other provisions 112, such as the possibility for exporters who "intend to
import capital goods on full payment of applicable duties, taxes and cess in cash" to obtain "Post
Export EPCG Duty Credit Scrip(s)".113
2.71. Instrument No. 2114 contains a number of appendices and forms expressly related to the EPCG
Scheme, e.g. application forms.
2.72. Instrument No. 3, the Handbook of Procedures, bears a chapter entitled "Export Promotion
Capital Goods (EPCG) Scheme".115 This chapter sets out more detailed provisions for the application
of chapter 5 of the FTP, including on (a) authorisation procedures; (b) additional conditions for
fulfilment of the export obligation under the scheme; (c) monitoring of the export obligation;

104 United States' panel request, pp. 1-2.
105 United States' panel request, p. 1.
106 United States' panel request, pp. 2-3.
107 Foreign Trade Policy, (Exhibit USA-3), second page.
108 Foreign Trade Policy, (Exhibit USA-3), p. 85.
109 Foreign Trade Policy, (Exhibit USA-3), pp. 85-90.
110 Foreign Trade Policy, (Exhibit USA-3), p. 85.
111 Foreign Trade Policy, (Exhibit USA-3), p. 85.
112 Foreign Trade Policy, (Exhibit USA-3), pp. 86-90.
113 Foreign Trade Policy, (Exhibit USA-3), p. 89.
114 Appendices and Aayat Niryat forms, (Exhibit USA-6).
115 Handbook of Procedures, (Exhibit USA-5), p. 144

(d) reductions in the export obligation in certain circumstances; and (e) criminal liability "[i]n case
of failure to fulfil export obligation or any other condition of authorisation".116
2.73. Instrument No. 4 amends some of the "sector-specific requirements for EOUs" in Appendix 6B
to the FTP. Appendix 6B relates to the First Programme 117, and it is not clear to the Panel how the
reference to Instrument No. 4 is relevant to identify the measure at issue. Similarly, Instrument
No. 5 removes the bond requirement from certain pr ovisions under the First Programme, and it is
not clear to the Panel how the reference to this instrument is relevant to identify the measure at
issue.118
2.74. Instrument No. 17 lists services that can be counted "towards discharge of Export Obligation
under the Export Promotion Capital Goods (EPCG) Scheme" 119, thus setting out details for the
implementation of the EPCG Scheme.
2.75. Instrument No. 18 amends some of the forms to be used in the application of the EPCG
Scheme, as set out in Instrument No. 2.120
2.76. Instrument No. 19 sets out details for the application, in a particular year, of a provision in
the Handbook of Procedures, namely, the provision under which the average annual export
obligation under the EPCG Scheme can be reduced for sectors or products whose overall exp orts
declined by more than 5%.121
2.77. Instrument No. 20 amends the provisions for assessing compliance with the annual average
export obligation under the EPCG Scheme, and the list of capital goods that cannot be imported
under the EPCG, or that can only be imported subject to conditions.122
2.78. Thus, similar to the first and second measures, the panel request identifies the alleged export
subsidies comprising the third measure through a combination of (a) the name of the programme
under which the alleged subsidies are provided; and (b) the legal instruments reflecting them. Again,
while some of these legal instruments are broad, the combination of the programme's name and the
legal instruments identifies the relevant portions of most of those legal instru ments (except for
Instruments Nos. 4 and 5, addressed in the next paragraph). Further, the legal instruments set out
the manner of operation of the programmes, including conditions of eligibility, manner of
administration, and entitlements under the programme.
2.79. Also similar to the Second Programme, we were puzzled, on the face of the panel request,
about the relevance of Instruments Nos. 4 and 5 to the Third Programme. Instruments Nos. 4 and
5 seem to relate to the First Programme. At the same time, considering the panel request as a
whole, the reference to these two legal instruments does not ultimately detract from the
identification of the measure, particularly in light of these two instruments' narrow focus. We also
recall that India, while raisin g specific arguments on Instruments Nos. 1, 2 and 3, has not raised

116 Handbook of Procedures, (Exhibit USA-5), pp. 144-158.
117 Instrument No. 4 http://dgft.gov.in/sites/default/files/pn3116_2.pdf (accessed 13 November 2018).
Appendix 6B without this amendment is contained in Appendices and Aayat Niryat forms, (Exhibit USA-6),
pp. 167-168.
118 Instrument No. 5 http://dgft.gov.in/sites/default/files/PN2516_0.pdf (accessed 13 November 2018).
119 Instrument No. 17 http://dgft.gov.in/sites/default/files/PN0417_0.pdf (accessed
13 November 2018), p. 1.
120 Instrument No. 18
http://dgft.gov.in/sites/default/files/P.N.%2008%20dated%2006.05.16%20English.pdf (accessed
13 November 2018). Instrument No. 2 is set out in Appendices and Aayat Niryat forms, (Exhibit USA-6).
121 Instrument No. 19 http://dgft.gov.in/sites/default/files/PolicyCircular03%20dated21.11.2017_0.pdf
(accessed 13 November 2018).
122 Instrument No. 20 http://www.eximguru.com/notifications/new-appendices-5-e-and-82417.aspx
(accessed 13 November 2018). There is a slight discrepancy between the title of this Instrument as accessed
at this link and the title provided in the panel request: the panel request refers to "Public
Notice 47/2015-2010", whereas the title accessed at this link refers to "Public Notice 47/2015-2020". The
other identifiers, however, match; moreover, "2015-2020" appears to be a reference to the FTP 2015-2020,
further confirming that the ending in "-10" is a typographical error.

any specific argument relating to the reference to Instruments Nos. 4 and 5 under the Second
Programme.123
2.80. India's arguments and the United States' response regarding the Third Progr amme are the
same as those we have discussed under the First Programme, in paragraphs 2.46 to 2.53 above.
The reasoning, set out there, applies in the same way to the Third Programme as it did to the First
and Second Programmes, because the relevant fact pattern regarding the identification of the
measure in the panel request is the same. The panel request does not, and need not, sever the
programme names from the legal instruments. Instead, it is the very combination of the different
elements in the panel request that permits the identification of the "specific measures at iss ue" as
required by Article 6.2. Similarly, it is this combination that permits the identification of the relevant
portions of Instruments Nos. 1, 2, and 3, which are otherwise indeed broad in scope.
2.81. Therefore, by identifying the alleged export subsi dies comprising the third measure through
a combination of (a) the name of the programme under which the alleged subsidies are provided;
and (b) legal instruments reflecting the alleged subsidies, the panel request meets the requirement
in Article 6.2 of the DSU to "identify the specific measures at issue".
2.3.1.4 The Fourth Programme: Special Economic Zones
2.82. The fourth programme through which, according to the panel request, India "appears … [to]
provide[] export subsidies", is described, in that request, as "Special Economic Zones"124 (the Fourth
Programme). Six instruments are listed in connection with this scheme, as "legal instruments" in
which the measure is "reflected … operating separately or collectively".125 These six instruments are
listed as Nos. 21-26.126
2.83. Instrument No. 21 is the Special Economic Zones Act, 2005, No. 28 of 2005 ("Special
Economic Zones Act").127 It makes provision "for the establishment, development and management
of the Special Economic Zones for the promotion of exports" .128 In particular, it (a) sets out
procedures for establishing special economic zones129; (b) establishes bodies charged with approving
and administering special economic zones 130; (c) sets out "special fiscal provisions for special
economic zones" 131, as well as separately providing for "Modifications to the Income -tax Act,
1961"132; and (d) sets forth other "Miscellaneous" provisions relating to special economic zones.133
2.84. Instrument No. 22 consists of the Special Economic Zones Rules, 2006, incorporating
amendments up to July 2010 ("Special Economic Zones Rules").134 These rules were adopted in the
"exercise of the powers conferred by section 55" of the Special Economic Zones Act 135, which we
have just discussed. The Special Economic Zones Rules set out more detailed provisions for the
implementation of the Special Economic Zones Act. These rules relate to (a) the procedure for
establishing special economic zones (Chapter II), and for establishi ng a unit within a special
economic zone (Chapter III); (b) the "terms and conditions subject to which entrepreneur and
developer shall be entitled to exemptions, drawbacks and concessions" (Chapter IV); (c) the
conditions subject to which goods may be rem oved from a special economic zone to the domestic
tariff area (Chapter V); (d) rules relating to the requirement that units achieve net foreign exchange
earnings (Chapter VI); (e) rules on appeals (Chapter VII); (f) miscellaneous provisions (Chapter VIII

123 See para. 2.65 above.
124 United States' panel request, pp. 1 and 3.
125 United States' panel request, p. 1.
126 United States' panel request, p. 3.
127 Special Economic Zones Act, (Exhibit USA-22).
128 Special Economic Zones Act, (Exhibit USA-22), p. 1.
129 Special Economic Zones Act, (Exhibit USA-22), Chapter II.
130 Special Economic Zones Act, (Exhibit USA-22), Chapters III, IV, V, and VII.
131 Special Economic Zones Act, (Exhibit USA-22), Chapter VI.
132 Special Economic Zones Act, (Exhibit USA-22), Second Schedule.
133 Special Economic Zones Act, (Exhibit USA-22), Chapter VIII. In addition, Chapter I sets out the short
title, territorial and temporal scope of application of the act, and definitions for purposes of the act; and the
Third Schedule sets out amendments to three further acts.
134 Special Economic Zones Rules, (Exhibit USA-28), pp. 1-2.
135 Special Economic Zones Rules, (Exhibit USA-28), p. 3.

and Annexures I and following); and (g) forms needed in the application of the Special Economic
Zones Rules.136
2.85. Instrument No. 23 bears amendments, dated June 2010, to the Special Economic Rules that
we just discussed as Instrument No. 22.137 These amendments, however, are already reflected in
Instrument No. 22, which as its title indicates incorporates amendments up to July 2010.
2.86. Instruments No. 24 bears amendments, dated June 2017, to the Special Economic Rules that
we discussed as Instrument No. 22.138 These June 2017 amendments relate to the conditions under
which a unit may subcontract production and still benefit from exemptions, drawbacks, and
concessions under the Special Economic Zones Rules.139
2.87. Instrument No. 25 "exempts all goods or services or both imported by a unit or a developer
in the Special Economic Zone, from the whole of the integrated tax leviable thereon under
sub-section (7) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) for authorised
operations".140
2.88. Instrument No. 26 is the "Income Tax Act, 1961, as amended".141 The Income Tax Act, 1961,
is "[a]n Act to consolidate and amend the law relating to income -tax and super-tax"142; it is a very
extensive piece of legislation, broad in scope, and spanning more than a th ousand pages. In this
case, listing the Income Tax Act, 1961, alone, could hardly meet the requirement to identify the
"specific measure at issue" under Article 6.2 of the DSU. However, the panel request does not list
this act alone. Instead, it lists this act as one of the instruments under the Special Economic Zones
programme in which the alleged export subsidies are "reflected", together with a number of other
legal instruments, which we have discussed above.143 We will therefore consider Instrument No. 26
in this context.
2.89. A search in the text of the act for the programme name provided in the panel request,
i.e. "Special Economic Zones", identifies provisions relating to special economic zones, typically
accompanied by a note explaining that they we re inserted by the Special Economic Zones Act.
Moreover, Instrument No. 21, the first instrument listed in the panel request in connection with the
Special Economic Zones programme (a) provides, in the chapter setting out "Special Fiscal Provisions
for Spe cial Economic Zones", that the Income Tax, 1961, shall apply to developers and
entrepreneurs for operations in special economic zones or units "subject to the modifications
specified in the Second Schedule"144; and (b) in the Second Schedule, sets out ten "Modifications to
the Income Tax Act, 1961".145 These modifications relate to ten sections or subsections of the Income
Tax Act, 1961, and provide in particular for certain exemptions and deductions relating to business
in special economic zones.146

136 Special Economic Zones Rules, (Exhibit USA-28).
137 Instrument No. 23 http://sezindia.nic.in/upload/uploadfiles/files/20SEZ_Rule_amendment_10.pdf
(accessed 13 November 2018).
138 Instrument No. 24 http://sezindia.nic.in/upload/uploadfiles/files/amendmentrule2006.pdf (accessed
13 November 2018).
139 The amendments relate to Rule 41, "Sub-contracting", of Chapter IV ("terms and conditions subject
to which entrepreneur and developer shall be entitled to exemptions, drawbacks and concessions").
(Instrument No. 24 http://sezindia.nic.in/upload/uploadfiles/files/amendmentrule2006.pdf (accessed 13
November 2018)).
140 Notification 15/2017, (Exhibit USA-27).
141 United States' panel request, p. 3.
142 Instrument No. 26, "as amended by Finance Act 2008"
http://www.icnl.org/research/library/files/India/IndiaIncomeTax1961.pdf (accessed 22 November 2018), p. 1.
With its first written submission, the United States has submitted excerpts of the Income Tax Act, 1961, as
Exhibits USA-29 and USA-30; however, the Panel does not rely on these excerpts (which are more specific
than the reference to the Income Tax Act, 1961, as a whole) in its assessment under Article 6.2 of the DSU,
since the question before the Panel is whether the panel request, as it existed at the time of filing, was
sufficiently specific.
143 United States' panel request, pp. 1 and 3.
144 Special Economic Zones Act, (Exhibit USA-22), p. 15, Chapter VI, Section 27.
145 Special Economic Zones Act, (Exhibit USA-22), pp. 26-32.
146 Special Economic Zones Act, (Exhibit USA-22), pp. 26-32. The ten sections and subsections
are: Sections 10, 10A, 10AA, 54GA, 80-IA, 80-IAB, 80LA, 115JB, 115-0, and 197A.

2.90. Therefore, reading the text of the panel request as a whole, including the name of the Fourth
Programme and the Special Economic Zones Act, it is possible to identify the specific portions of the
Income Tax Act, 1961, which relate to the Fourth Programme listed in the panel request, namely,
the Special Economic Zones programme.
2.91. Therefore, the panel request identifies the alleged export subsidies comprising the fourth
measure through a combination of (a) the name of the programme under which the alleged subsidies
are provided; and (b) the legal instruments reflecting the alleged export subsidies. Again, while
some of these legal instruments are broad, the combination of the programme's name and the legal
instruments, as well as the interlinkages between leg al instruments, identify the relevant portions
of the legal instruments cited in the panel request. Further, these legal instruments set out the
manner of operation of the programme, including conditions of eligibility, rules for the administration
of the programme, and "special fiscal provisions" 147 under the programme, such as "exemptions,
drawbacks and concessions". 148 At the same time, the entitlements available under this fourth
programme are many.149
2.92. India makes two sets of arguments regarding the fourth measure. First, for all five measures,
India argues that the panel request fails to clarify whether the challenge is addressed to the
programme or the legal instruments, and that, either way, the request is insufficient. The Panel has
considered this set of arguments in paragraphs 2.46 to 2.51 above, with reference to the
First Programme. The reasoning set out there applies in the same way to the Fourth Programme,
because the relevant fact pattern regarding the identification of the Fourth Programme is the same.
The panel request does not, and need not, sever the programme names from the legal instruments.
Instead, it is the very combination of the different elements in the panel request that permits the
identification of the "specific measures at issue" as required by Article 6.2.
2.93. Second, India argues that the panel request fails to identify the fourth measure with the
required precision, because of the scope and breadth of the six legal instruments listed in the panel
request in connection with this measure. India explains that "the leg al instruments stipulated in
these paragraphs regulate a wide variety of India's policy objectives".150 In particular, India explains
that the Special Economic Zones Act "is 53 pages long and addresses a variety of policy
objectives"151, leaving "India [to] wo nder and guess as to which measures within the cited legal
instruments are allegedly in violation of Articles 3.1(a) and 3.2 of the SCM Agreement".152 India
further explains that the Income Tax Act, 1961, "is 1067 pages long and provides the entirety of
India's direct taxation regime and administration" 153, so that challenging it in its entirety would be
"absurd".154
2.94. It is definitely correct that certain of the legal instruments cited in the panel request are very
extensive. However, these legal instrumen ts are not cited in isolation. Instead, they are cited in
combination with the programme's name, and in combination with each other. In the request before
the Panel, it is the combination of these elements that allows the proper identification of the
measures at issue. In particular, as regards the Income Tax Act, 1961, it is the combination of these
elements that puts the reader on notice that the complainant is not challenging the Income Tax Act
in its entirety, but rather the special rules in this Act pe rtaining to the Special Economic Zones
programme.
2.95. As for the Special Economic Zones Act, we agree that the Act is quite comprehensive in scope
in that it sets out the legal framework for the establishment of such zones and of units therein, rules
for the administration of the Special Economic Zones programme, special fiscal rules for participating
entities, conditions of eligibility, and other rules. However, the United States is challenging the
alleged export subsidies provided under the Special Economic Zones programme, which means that

147 See para. 2.83 above.
148 See para. 2.84 above.
149 For example, Instrument No. 21 provides for numerous duty, tax, excise tax, or cess
exemptions: see, e.g. section 7 and First Schedule (referring to taxes, duties and cess under 21 separate acts),
section 26(i)(a)-(g), section 27 and Second Schedule, section 50(a), and section 55 (2)(h). (Special Economic
Zones Act, (Exhibit USA-22)).
150 India's first written submission, para. 51.
151 India's first written submission, para. 52.
152 India's first written submission, para. 54. (emphasis original)
153 India's first written submission, para. 56.
154 India's first written submission, para. 56.

it is proper for the panel request to refer, among other elements, to the legal instrument that
comprehensively sets out the legal framework for this programme.
2.96. We also agree that the Fourth Programme envisa ges not one, but a number of entitlements
available to participating entities. Similar to the First Programme, this raises the question whether
the complainant should have singled out each entitlement in its panel request in order to identify
the measure a t issue. India argues that "the precise incentive within the 'scheme' … must be
considered as the measure at issue". 155 India also argues that the panel request before the
United States is akin to the portion of the panel request in Australia – Apples that was held by that
panel to be outside the terms of reference.156
2.97. We refer to our discussion of the relevant portion of Australia – Apples in paragraphs 2.43 to
2.44 above. The situation in the present case is not the same as that of the umbrella reference to
measures in Australia – Apples. In the present case, the complain ant has explained that it is
challenging export subsidies provided under the Special Economic Zones programme, as reflected
in the legal instruments listed in the panel request. This is not the same as referring to "measures
specified in and required by [a Member] pursuant to the [risk analysis]" 157, because the latter
formulation leaves entirely open the type of measures that could be "specified and required",
mentioning only that the measures will have some connection ("specified in", or "required … pursuant
to") to the risk analysis in question.
2.98. The situation in the present case is reminiscent of EC – Bananas III, where the complainants
identified the measure by describing it as "a regime for the importation, sale and distribution of
bananas", and by referring to the specific regulation establishing the regime, as well as "subsequent
EC legislation, regulations and administrative measures … which implement, supplement and amend
that regime".158 In that case, the defendant argued, among other things, that the panel request had
failed to identify the specific measure at issue because it was challenging a "regime", without further
precision.159 The panel, upheld by the Appellate Body, found that the measure had been properly
identified160, and it did so in spit e of the absence of references to specific aspects of the regime or
of the regulation establishing the regime.
2.99. In this case, based on the text of the panel request and of the referenced legislation, we
conclude that the panel request properly identifies the challenged measures, through a combination
of the name of the programme under which the alleged subsidies are provided, and of the legal
instruments reflecting the alleged export subsidies. The text of the panel request and of the
referenced legi slation identifies a relatively cohesive and comprehensive regime comprising the
Fourth Programme, and the fact that the panel request does not single out the relevant provisions
of the cited legal instruments, or that the Fourth Programme envisages not on e, but many
entitlements, does not entail that the measure has not been sufficiently identified.
2.3.1.5 The Fifth Programme: Duty-free imports for exporters program
2.100. The fifth programme through which, according to the panel request, India "appears … [to]
provide[] export subsidies", is described, in that request, as "Duty -free imports for exporters
program"161 (the Fifth Programme). The panel request also lists one "legal instrument[]" in which
the measure is "reflected", namely, Instrument No. 27.
2.101. The panel request refers to Instrument No. 27 as "Notification No. 50/2017-Customs"
("Notification No. 50/2017"), "including Conditions 10, 21, 28, 32, 33, 36, 60, 61, 101".162

155 India's first written submission, para. 34.
156 India's first written submission, para. 40.
157 Preliminary ruling by the Panel, Australia – Apples, WT/DS367/7, para. 9.
158 Request for the establishment of a panel by Ecuador, Guatemala, Honduras, Mexico, and the
United States, EC – Bananas III, WT/DS27/6, p. 1.
159 Panel Report, EC – Bananas III, para. 7.24.
160 Panel Report, EC – Bananas III, para. 7.27; Appellate Body Report, EC – Bananas III, para. 140.
161 United States' panel request, pp. 1 and 3.
162 United States' panel request, p. 3.

2.102. The Fifth Programme is the only one whose name as stated in the panel request does not
appear word for word in the referenced legal instrument.
2.103. Notification No. 50/2017 sets forth certain caps, for certain products, to the import duties
and integrated tax that would otherwise be levied on those goods under the legislation in force,
subject, in certain instances, to conditions specified in Notification No. 50/2017.163 The
United States' panel request singles out nine such conditions, which we will now review.
2.104. Under Condition No. 10, the goods must be "imported by an exporter of sea -food products
for use in processing sea -food products for export"; "the total value of the goods imported [must]
not exceed 1% of the FOB value of exports o f sea-food products exported during the preceding
financial year"; and certain administrative requirements must be complied with.164 Condition No. 10
is attached to the duty-free treatment165 of the items in List 1 of Notification No. 50/2017166 when
used "in the processing of sea-food".167
2.105. Under Condition No. 21, the goods must be imported "for use in the manufacture of
handicrafts for export" and "the value of the goods imported [must] not exceed 5% of the FOB value
of handicrafts exported during the prec eding financial year". 168 Condition No. 21 attaches to the
duty-free treatment of the goods listed at item 229 of the table in Notification No. 50/2017.169
2.106. Similarly, Conditions Nos. 28, 32, 33, and 101 require that the goods be imported for use in
the manufacture of certain goods for export 170, and that the imported goods not exceed a certain
percentage of the value of exports; and each of these four conditions attaches to the duty -free
treatment of the imported goods.171
2.107. Condition No. 36 requires that imports of carpet samples not exceed 1% of the value of
carpets exported the previous years, and attaches to the duty -free import of carpet samples. 172
Conditions No. 60 and 61 attach to the duty -free import, or the import at a reduced duty rate, of
goods used for research and development purposes; and they provide that the value of imports
benefiting from such duty-free treatment must not exceed 25%, and 1%, respectively, of the FOB
value of exports during the preceding financial year.173
2.108. India argues that for all programmes, including the Fifth Programme, the panel request fails
to clarify whether the challenge is addressed to the programme or the legal instruments, and that,
either way, the request is insufficient.174 The panel request, however, does clarify that the challenge
is to export subsidies provided under certain programmes that, in turn, are reflected in the cited
legal instruments. In the case of the Fifth Programme, the panel request explicitly lists nine
"Conditions" that readily permit the identification, in the cited legal instrument, of the duty
exemptions in question.
2.109. A panel request must be assessed as a whole and, when this is done, the combination of the
elements in the request before this Panel permits the identification of the specific measures at issue
as required by Article 6.2. Therefore, on the face of the panel request, read as a whole, the request
properly identifies as a fifth measure at issue alleged export subsidies provided under Conditions
Nos. 10, 21, 28, 32, 33, 36, 60, 61, and 101 of Notification No. 50/2017.

163 Notification No. 50/2017, (Exhibit USA-36), p. 1.
164 Notification No. 50/2017, (Exhibit USA-36), p. 53.
165 Notification No. 50/2017, (Exhibit USA-36), p. 7, item 104, column 4 ("Nil").
166 Notification No. 50/2017, (Exhibit USA-36), p. 78, List 1.
167 Notification No. 50/2017, (Exhibit USA-36), p. 7, item 104, column 3.
168 Notification No. 50/2017, (Exhibit USA-36), p. 56.
169 Notification No. 50/2017, (Exhibit USA-36), pp. 15-16.
170 Export of textile garments or leather garments (Condition 28); of leather footwear, synthetic
footwear, or other leather products (Condition 32); of handloom made ups or cotton made-ups or man-made
made ups (Condition 33); and of sports goods (Condition 101).
171 Notification No. 50/2017, (Exhibit USA-36), items 288 and 311 (Condition 28), 312 (Condition 32),
313 (Condition 33), and 612 (Condition 101).
172 Notification No. 50/2017, (Exhibit USA-36), item 327, Condition 36.
173 Notification No. 50/2017, (Exhibit USA-36), items 430 and 431, and Conditions 60 and 61.
174 See paras. 2.46-2.51 above, with reference to the First Programme.

2.3.2 Whether the United States' panel request provides a brief summary of the legal
basis of the complaint sufficient to present the problem clearly
2.110. We now turn to examine whether the panel re quest provides a "brief summary of the legal
basis sufficient to present the problem clearly" as required by Article 6.2.
2.111. The panel request, after setting out the measures in the manner examined above, reads:
Consistent with Annex VII of the SCM Agreement, India is subject to the obligations of
Article 3.1(a) of the SCM Agreement because India's gross national product per capita
has reached $1,000 per annum. Through each program, as reflected in the instruments
listed above, India provides subsidie s contingent upon export performance. The
measures appear to be inconsistent with Article 3.1(a) of the SCM Agreement, and India
appears to have acted inconsistently with Article 3.2 of the SCM Agreement.
2.112. In this passage, the United States first ad dresses the applicability of Article 3.1(a) of the
SCM Agreement. The United States asserts that "[c]onsistent with Annex VII of the
SCM Agreement", India is now subject to the obligation in Article 3.1(a) "because India's gross
national product per capita has reached $1,000 per annum". While India challenges this view on
separate grounds, India has not challenged this statement under Article 6.2 of the DSU.
2.113. Next, the United States asserts that "[t]hrough each program, as reflected in the
instruments listed above, India provides subsidies contingent upon export performance", which
"appear to be inconsistent with Article 3.1(a) … and … Article 3.2 of the SCM Agreement".
India's challenge to the sufficiency of the "brief summary of the legal basis" is directed at the
connection between the measures identified in the panel request and the claims under Articles 3.1(a)
and 3.2.175
2.114. India argues that the panel request fails to "plainly connect the challenged measures with
the provisions of the covered Agreements claimed to have been infringed". 176 According to India,
this is because the request "provides a list of legislations, without indicating the specific measure
within that legislation that is being challenged", and "this failure is compounded by a failure to
provide a narrative or brief description of how the legal instrument(s) is allegedly in violation of …
Article 3.1(a) and 3.2 of the SCM Agreement."177 The United States responds by noting, in particular,
that the panel request must identify claim s, not arguments 178, and that Article 6.2 of the DSU
"imposes no obligation to set out 'detailed arguments as to which specific aspects of the measure at
issue relate to which specific provisions of those Agreements'".179
2.115. We note that the request state s that "[t]hrough each program, as reflected in the
instruments listed above, India provides subsidies contingent upon export performance"180, and that
these measures appear to be inconsistent with Articles 3.1(a) and 3.2. Thus, the panel request
connects the measures and the claims by explaining that the claims apply to the subsidies provided
through "each" program. There is therefore no doubt as to "which allegations of error pertain to
which particular measure or set of measures identified in the panel request".181
2.116. There appear to be three interrelated facets to India's argument, namely (a) that the
United States provided a mere listing of broad legal instruments, and as a result failed to provide
any guidance as to the portions of those legal instruments to which its claims relate; (b) that, even
within the portions of those legal instruments that relate to the challenged programmes, the

175 India's first written submission, paras. 62 and 66-67. See also, ibid. para. 57.
176 India's first written submission, para. 57.
177 India's first written submission, para. 62 (with reference to "[a]ll Identified Schemes and Legal
Instruments 1, 2, 3, 6, and 16"). See also, ibid. paras. 66-67 and 69 (with reference to "[l]egal Instruments in
Scheme 4, and Scheme 4").
178 United States' second written submission, para. 20 (referring to Appellate Body Reports, US – Oil
179 United States' second written submission, para. 20 (quoting Appellate Body Report, EC –
Bananas III, para. 141).
180 United States' panel request, p. 3. (emphasis added)
181 Appellate Body Report, China – Raw Materials, para. 226.

United States failed to indicate the specific elements that it is challenging; and (c) that the narrative
of the brief summary of the legal basis is insufficient.
2.117. The first facet of India's argument appears to be premised on an atomization of the panel
request into disjointed programme names and legal instruments – the same approach taken by India
in its arguments on the identification of measures in the panel request. On that basis, India argues,
for example, that "[l]egal Instruments 1, 2 and 3 … address a wide variety of administrative
procedures that enact India's numerous policy objectives" 182, and that the p anel request fails to
connect the claims to specific measures within these legal instruments.
2.118. However, as discussed in section 2.3.1, above, the panel request identifies the challenged
export subsidies through a combination of (a) the names of the programmes under which the alleged
subsidies are provided, and (b) the legal instruments reflecting those subsidies . Thus, the panel
request does not merely challenge individual instruments in their isolation ("a list of legislations"183)
under Articles 3.1(a) and 3.2, with no further guidance as to their connection with these claims.
Instead, as already discussed, the programme names allow the identification, within the cited legal
instruments, of the portions that are relevant to the United States' challenge. Thus, for example,
the United States is not merely challenging the FTP (India's Foreign Trade Policy, Instrument No. 1)
under Articles 3.1(a) and 3.2. Instead, it is challenging, under those provisions, alleged export
subsidies provided under specific, named programmes that are each provided for in distinct chapters
of the FTP.
2.119. The second facet of India's argument suggests that, from among the provisions relating to
each programme, the United States should have explicitly identified the specific provisions that give
rise to the violation of Articles 3.1(a) and 3.2.
2.120. However, having identified the measures, and having made cle ar that the claims brought
relate to all measures, the complainant was not required, in its panel request, to "set[] out detailed
arguments as to which specific aspects of the measures at issue relate to which specific provisions
of those Agreements".184
2.121. The third facet of India's argument is that "where mere legal instruments are cited, the
accompanying narrative provided in the Panel request is critical to determine the specific measures
at issue and the manner in which they are connected to the st ipulated WTO obligations."185 While,
as discussed, the text of the panel request contradicts the statement that "mere legal instruments
are cited", we consider further India's allegation that the "accompanying narrative provided in the
Panel request" was insufficient in elucidating the connection between the measures and the claims.
2.122. To recall186, the summary of the legal basis provided in the panel request must be "sufficient
to present the problem clearly", so as to serve the function of delimiting the panel's jurisdiction and
the due process objective of notifying the respondent and third parties of the nature of the case.187
It must allow the respondent to know "what case it has to answer, and what violations have been
alleged so that it can begin prepa ring its defence".188 This requires, among other things, that the
panel request "plainly connect the challenged measure(s) with the provision(s) … claimed to have
been infringed"189, explaining "succinctly how or why the measure at issue is considered … to be
violating the WTO obligation in question".190
2.123. In this case, the measures at issue, as discussed in section 2.3.1, are identified as the export
subsidies provided under certain named programmes, and reflected in the legal instruments listed
in the panel request. The brief summary of the legal basis indicates that:

182 India's first written submission, para. 62.
183 India's first written submission, para. 62.
184 Appellate Body Report, EC – Bananas III, para. 141.
185 India's first written submission, para. 69.
186 See paras. 2.5-2.6, 2.13, and 2.16.
187 Appellate Body Report, Argentina – Import Measures, para. 5.39.
188 Appellate Body Report, Thailand – H-Beams, para. 88.
189 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 162.
190 Appellate Body Report, EC – Selected Customs Matters, para. 130.

Through each program, as reflected in the instruments listed above, India provides
subsidies contingent upon export performance. The measures appear to be inconsistent
with Article 3.1(a) of the SCM Agreement, and India appears to have acted
inconsistently with Article 3.2 of the SCM Agreement.191
2.124. In this way, the panel request makes it clear that the allegations of violation of Articles 3.1(a)
and 3.2 pertain to each of the listed measures. The panel request further states that the reason for
the allegation of violation is that, in the complainant's view, these measures are subsidies contingent
upon export performance.
2.125. The narrative provided to articulate the violation is not extensive. However, the brief
summary of the legal basis in the Panel request before us is sufficient to meet the standard in
Article 6.2, first, because the same claims are made for all measures, leaving no doubt as to "which
allegations of error pertain to which particular measure or set of measures"192; and, second, because
of the "specific content of the provisions invoked" 193 and the fact that they es tablish "one single,
distinct obligation," not "multiple obligations".194
2.4 Ruling by the Panel
2.126. We therefore rule that the panel request before us identifies the specific measures at issue,
and provides a brief summary of the legal basis of the complaint sufficient to present the problem
clearly, as required by Article 6.2 of the DSU.
3 THE APPLICABILITY OF ARTICLE 4 OF THE SCM AGREEMENT
3.1. The United States is challenging certain Indian measures under Articles 3.1(a) and 3.2 of the
SCM Agreement.195 In the United States' view, the obligation in Article 3.1(a) applies to India. 196
The United States therefore requested consultations under Articles 4 and 30 of the SCM Agreement
and Articles 1 and 4 of the DSU, and the establishment of a panel under Article 4.4 of the
SCM Agreement and Article 6 of the DSU. Upon the United States' request, the DSB established the
Panel in this dispute pursuant to Article 4.4 of the SCM Agreement and Article 6 of the DSU.197
3.2. India has sought a preliminary ruling that the provisions of Article 4 of the SCM Agreement
cannot automatically apply to this dispute and that, therefore, they do not apply to this dispute at
this stage.198
3.3. According to India, the United States has not demonstrated that Article 27 of the
SCM Agreement no longer excludes India from the scope of application of Article 3.1(a), and until
and unless the United States provides such demonstration, Article 4 does not apply to this dispute.199
In the alternative, India argues that, even assuming that the United States does not bear the burden
of demonstrating that Article 27 no longer excludes India from the scope of application of
Article 3.1(a), the Panel must first "evaluat[e] India's substantive claim of the applicability of
Article 27 of the SCM Agreement"200 before Article 4 may apply.201
3.4. At the same time, however, India argues that whether its measures are in conformity with
Article 27 of the SCM Agreement cannot be adjudicated upon at the preliminary stage and, instead,

191 United States' panel request, p. 3.
192 Appellate Body Report, China – Raw Materials, para. 226.
193 Preliminary ruling by the Panel, Australia – Apples, para. 11.
194 Appellate Body Report, Korea – Dairy, para. 124. See also, e.g. Appellate Body Reports, China –
HP-SSST (Japan) / China – HP-SSST (EU), paras. 5.14-5.15.
195 United States' consultations request, p. 3; panel request, p. 3.
196 United States' consultations request, p. 3; panel request, p. 3.
197 United States' panel request, pp. 1 and 3; Constitution note of the Panel, WT/DS541/5, para. 1.
198 India's first written submission, paras. 10, 12-18, and 71-90; Communication dated 5 October 2018
from India to the Chairperson of the Panel, p. 1. See also Communication dated 16 October 2018 from India to
the Chairperson of the Panel; and DSB, Minutes of the meeting held on 28 May 2018, WT/DSB/M/413,
para. 7.3.
199 India's first written submission, paras. 74-76 and 78-85.
200 India's first written submission, para. 87.
201 India's first written submission, paras. 85-90.

"is a legal issue that goes to the essence of the dispute, and therefore a matter to be adjudicated in
subsequent panel meetings".202
3.5. The United States responds that under Articles 4.1 and 4.4 of the SCM Agreement, the
"threshold for invoking the procedures of Article 4"203 is whether the complainant "has reason to
believe that a prohibited subsidy is being granted or maintained by another Member" 204, and,
therefore, "Article 4 does not require that there first be a determination that Article 27 does not
apply".205 According to the United States, India's approach "would require a panel to pre-judge the
very issue that is at the core of the dispute". 206 The United States then goes on to reiterate and
expand upon its arguments that Article 27 does not exclude India from the scope of application of
Article 3.1(a).207
3.6. Pursuant to Article 4.1 of the SCM Agreement, a Member may seek consultations with another
under that provision when it "has reason to believe" that the other Member is granting or maintaining
a prohibited subsidy, thus triggering the application of the provisi ons of Article 4. If consultations
fail to settle the dispute within 30 days, the complaining Member may refer the matter to the DSB
"for the immediate establishment of a panel" pursuant to Article 4.4 of the SCM Agreement.
3.7. At the same time, Article 27 of the SCM Agreement affords special and differential treatment
to developing countries. One element of that special and differential treatment is that a subset of
developing country Members' measures is not subject to the procedures of Article 4 of th e
SCM Agreement. Pursuant to Article 27.7 of the SCM Agreement:
The provisions of Article 4 shall not apply to a developing country Member in the case
of export subsidies which are in conformity with the provisions of paragraphs 2
through 5.
3.8. One can envisage a range of situations facing a panel. One extreme would be a hypothetical
case where it is undisputable that Article 27 excludes the applicability of Article 4. In such an event,
it would be particularly appropriate for a panel to issue a preliminary ruling at the earliest stages of
the dispute that the case may not proceed under Article 4. The other extreme would be a
hypothetical case where a defendant invokes Article 27 frivolously, i.e. with no basis for doing so;
there would then be no question that recourse to Article 4 was proper.
3.9. In between these two extremes lie cases where it is disputed whether Article 27 excludes the
applicability of Article 4. In such cases, a preliminary ruling on the matter may require adjudicating
upon the merits of the parties' arguments under Article 27.
3.10. The case before the Panel lies before the two extremes outlined above. The United States has
provided the reasons in law and fact based on which it considers that Article 27 does not exclude
the applic ability of Article 3.1(a) and therefore of Article 4.208 India disagrees, arguing that "the
ordinary meaning of the text of Article 27.2(b) results in ambiguity and internal contradictions
between provisions of Article 27 of the SCM Agreement"209, and that therefore the Panel must depart
from an interpretation based on ordinary meaning. The United States disputes India's interpretive
argument, and takes the view that the ordinary meaning of "eight years from the entry into force of
the WTO Agreement", in Article 27.2(b), is eight years from 1st January 1995.210
3.11. In these circumstances, the Panel considers that ruling on India's preliminary request would
require adjudicating upon the parties' interpretive disagreement. However India, the party seeking

202 India's first written submission, para. 79. See also Communication dated 17 August 2018 from India
to the Chairperson of the Panel, paras. 5 ("the interpretation of these provisions goes to the essence of the
dispute") and 6.
203 United States' second written submission, para. 26.
204 Agreement on Subsidies and Countervailing Measures, Article 4.1 (quoted in United States' second
written submission, paras. 25-26).
205 United States' second written submission, para. 26.
206 United States' second written submission, para. 27.
207 United States' second written submission, paras. 28-39.
208 United States' consultations request, p. 3; panel request, p. 3; first written submission,
paras. 24-26; and second written submission, paras. 28-39.
209 India's second written submission, para. 10.
210 United States' second written submission, para. 32.

a preliminary ruling, has also asked the Panel not to rule on the interpretive disagreement between
the parties as part of such a preliminary ruling. According to India, whether its measures are in
conformity with Article 27 is "a legal issue that goes to the es sence of the dispute, and therefore a
matter to be adjudicated in subsequent panel meetings".211
3.12. The Panel is receptive to India's request that the interpretive disagreement over Article 27 of
the SCM Agreement be adjudicated upon as part of the full panel proceedings, and not at a
preliminary stage. However, the Panel also considers that without ruling on that disagreement, in
the situation before it, the Panel cannot rule that Article 4 of the SCM Agreement does not apply.
3.13. Therefore, the Panel declines to rule at this stage that Article 4 of the SCM Agreement does
not apply to this dispute.
4 STATEMENT OF AVAILABLE EVIDENCE
4.1. India has sought a preliminary ruling that the statement of available evidence included in the
United States' request for consultations does not meet the requirements of Article 4.2 of the
SCM Agreement.212
4.2. India argues that this statement falls short of the requirements of Article 4.2 of
SCM Agreement.213 Specifically, India argues that the statement (a) includ es no evidence of the
character of the measure as a subsidy 214; (b) "reproduces a verbatim list" of the legal instruments
cited in the request for consultations 215; and (c) provides no "basis for the[] identified
programmes/schemes providing a subsidy" because it does "not indicate any specific chapter or
paragraph" of the cited legal instruments.216 In addition, India considers that the lack of "substantive
difference" between the request for consultations and the panel request is further evidence of the
United States' failure to appreciate the substantive standard in Article 4.2 of the SCM Agreement.217
4.3. The United States responds that India confuses evidence with arguments. 218 Article 4.2
requires a statement of the former, not the latter. 219 The United States considers that it has
demonstrated in its first written submission that the cited evidence "is indeed evidence regarding
the existence and nature of the subsidies in questi on".220 Specifically, the statement "identified
twenty-five separate legal instruments that gave the United States reason to believe that there are
five Indian export subsidy programs that are inconsistent with Articles 3.1(a) and 3.2 of the
SCM Agreement", and "are the primary evidentiary basis for the U.S. claims".221
4.4. Article 4.2 of the SCM Agreement provides:
A request for consultations under paragraph 1 shall include a statement of available
evidence with regard to the existence and nature of the subsidy in question.
4.5. Thus, a complainant in a prohibited subsidies case must "indicate, in its request for
consultations, the evidence that it has available to it, at that time, 'with regard to the existence and

211 India's first written submission, para. 79. See also Communication dated 17 August 2018 from India
to the Chairperson of the Panel, para. 5 ("the interpretation of these provisions [(i.e. Article 27 and Annex VII
of the SCM Agreement)] goes to the essence of the dispute").
212 India's first written submission, paras. 16-18. To recall, India argues that Article 4 of the
SCM Agreement does not apply; India therefore presents its arguments under Article 4.2 of the
SCM Agreement as alternative, in the event that the Panel does not accept India's position on the applicability
of Article 4 of the SCM Agreement in the first place.
213 India's first written submission, paras. 16-18.
214 India's first written submission, paras. 96 and 100.
215 India's first written submission, paras. 95 and 97.
216 India's first written submission, para. 101.
217 India's first written submission, paras. 102-103.
218 United States' second written submission, paras. 41-43.
219 United States' second written submission, para. 42 (referring to Panel Report, Australia – Automotive
Leather II, para. 9.18).
221 United States' second written submission, para. 44.

nature of the subsidy in question'". 222 This must be "available evidence of the character of the
measure as a 'subsidy' … and not merely evidence of the existence of the measure".223
4.6. Assessing whether a complainant has provided evidence of the "existence and nature" of a
subsidy, under Article 4.2, is of course different from assessing whether the complainant has
conclusively demonstrated the existence of a subsidy. Under Article 4.2, a panel must assess
whether the statement describes or refers to evidence that is sufficient to give the complai nant
"reason to believe that a prohibited subsidy is being granted or maintained". 224 Moreover, this
assessment must be grounded in the text of the statement of available evidence and of the
documents it references. Therefore, the consistency of a statement of available evidence with
Article 4.2 is capable of lending itself to a ruling at preliminary stage.
4.7. However, having considered the statement of available evidence in light of the legal standard
and of the arguments of the parties, the Panel in this case considers it premature to rule on whether
the statement of available evidence provides "evidence of the character of the measure as a
'subsidy'".225 Instead, the Panel wishes to further explore certain questions of fact and law in the
context of the substantive meeting with the parties.
4.8. Therefore, the Panel will not rule at this stage on whether the statement of available evidence
meets the requirements of Article 4.2.

222 Appellate Body Report, US – FSC, para. 161.
223 Appellate Body Report, US – FSC, para. 161.
224 Panel Report, Australia – Automotive Leather II, para. 9.19 (quoting SCM Agreement, Article 4.1).
225 Appellate Body Report, US – FSC, para. 161.

ANNEX D-3
COMMUNICATION DATED 16 APRIL 2019 FROM THE PANEL TO THE PARTIES
CONCERNING THE PANEL'S WORKING PROCEDURES AND TIMETABLE
16 April 2019
1.1. The Panel recalls its earlier communications on the matter of its decision to hold a single
substantive meeting with the parties in the current proceedings 1, and recalls that it had reserved
the right to schedule additional meetings if necessary. On 13 February 2019, during the substantive
meeting with the parties, and on 15 February 2019, as part of the questions posed to the parties
after the substantive meeting, the Panel asked each party whether and, if so, why, it considered
that adding a second substantive meeting was necessary at that stage. 2 In view of the concerns
expressed by India3, the Panel further asked India whether it considered that the fact of hold ing a
single substantive meeting had concretely, thus far, impaired or otherwise affected its ability to
defend itself in this case; and if so, concretely, how this had been the case, and what steps it
considered that the Panel should take to remedy that.4
1.2. On 4 March 2019, the parties responded to the Panel's questions and on 18 March each party
commented on the other party's responses.
1.3. According to the United States, the "hundreds of pages of written submissions … lengthy
opening and closing statements … two full days of questions and answers in the substantive
meeting", together with the fact that parties were "answering up to 92 questions posed by the Panel
with the opportunity to comment on each other's responses"5, have "provided sufficient opportunity
to develop the evidence and arguments to present to the Panel"6, including "an opportunity to rebut
all of the U.S. arguments at every stage of the proceeding". 7 The United States further noted that
"the Panel granted India's request for a two -week extens ion to complete the answers to the
Panel's questions to the parties" 8, and also that the 90 -day deadline under Article 4 of the
SCM Agreement had long passed.9 Moreover, the United States also noted that "neither the parties
nor the Panel raised any new is sues, and … this is a de jure export subsidies dispute where the
evidence … are the measures themselves". 10 Therefore, according to the United States, a second
substantive meeting would be unnecessary and inappropriate.11
1.4. In response to the Panel's question on the need for a second substantive meeting, India
reiterated its previous positions. In India's view, a second substantive meeting is necessary to ensure

1 Working Procedures (22 August 2018), paras. 3, 5, and 15-16; timetable (22 August 2018);
Communication dated 9 October 2018 from the Panel to the parties and third parties; Communication dated
19 October 2018 from the Panel to the parties and third parties; and Communication dated 22 January 2019
from the Panel to the parties concerning the issues of a single substantive meeting and a partially open
meeting, paras. 2.1-2.21.
2 Panel question No. 91. The Panel reminded the parties that, "[i]n the meantime, … the schedule
remain[ed] as originally planned, i.e. it [did] not at th[at] moment include a second substantive meeting", and
that therefore they should "respond to the … questions as fully as they would in the event that the Panel were
not to hold a second substantive meeting". (Communication dated 15 February 2019 from the Panel to the
parties)
3 Communication dated 14 August 2018 from India to the Chairperson of the Panel, paras. 2 and 5-7;
Communication dated 17 August 2018 from India to the Chairperson of the Panel, paras. 8-13; India's first
written submission, paras. 16, 18, 105-115 and 406; Communication dated 5 October 2018 from India to the
Chairperson of the Panel; Communication dated 16 October 2018 from India to the Chairperson of the Panel;
India's second written submission, para. 2; opening statement at the meeting of the Panel, para. 2; and
closing statement at the meeting of the Panel, paras. 1 and 8-9.
4 Panel question No. 92.
5 United States' response to Panel question No. 91, para. 4. See also ibid. para. 3.
6 United States' response to Panel question No. 91, para. 3.
7 United States' comments on India's response to Panel question No. 91, para. 12.
8 United States' response to Panel question No. 91, para. 5.
9 United States' response to Panel question No. 91, para. 6.
10 United States' comments on India's response to Panel question No. 91, para. 16.
11 United States' response to Panel question No. 91, paras. 1-7.

conformity with the procedure established under the DSU 12, to provide effective deliberation and
rebuttal opportunity to the parties 13, and to avoid setting a precedent contrary to the procedures
followed in previous disputes.14
1.5. In response to the Panel's question of whether India considered that the fact of holding a single
substantive meeting had concretely impaired or otherwise affected its ability to defend itself and, if
so, how this had been the case, India asserted the following:
a. holding a single meeting had not provided the opportunity for a detailed discussion of
"novel issues, such as issues perta ining to Footnote 1 and related Annexes of the
SCM Agreement"15, which "require detailed rebuttal to arguments advanced by the
United States"16;
b. holding a single meeting had not allowed "the discussion of the challenged schemes in a
more detailed manner"17; and
c. "the responses to the questions posed by the Panel … would also require additional
discussion between parties and the Panel" 18 and called for a second substantive meeting
"in form of a rebuttal" of those responses.19
1.6. The Panel begins with India's broader concerns about the Panel's decision to schedule a single
substantive meeting, departing from the working procedures in Appendix 3 of the DSU.20 The Panel
recalls that it set out the applicable legal standard and the balancing of case-specific considerations
underpinning its decision in its communication of 22 January 2019. 21 The Panel refers to that
discussion and will not repeat it here.22 Instead, the Panel intends to ascertain whether, at this
stage, pertinent considerations, prominently including due process, would warrant holding a further
substantive meeting with the parties or taking other steps.

12 India's response to Panel question No. 91, first para. and section (a).
13 India's response to Panel question No. 91, first para. and section (b). See also India's comments on
the United States' response to Panel question No. 91, para. 6.
14 India's response to Panel question No. 91, first para. and section (c).
15 India's responses to Panel question Nos. 92(a) and 92(b). See also responses to Panel question
16 India's response to Panel question No. 92(b), second para.
17 India's response to Panel question No. 92(a), first para. See also responses to Panel question
No. 92(a), third para., No. 92(c), and No. 91, section (b), first para.
18 India's response to Panel question No. 92(b), second para. See also responses to Panel question
No. 92(a), third para., and No. 92(c).
19 India's response to Panel question No. 91, section (c), third para. See also comments on the
United States' response to Panel question No. 91, para. 2.
20 India's responses to Panel question No. 91.
21 Communication dated 22 January 2019 from the Panel to the parties concerning the issues of a single
substantive meeting and a partially open meeting, paras. 2.11-2.21. See also Appellate Body Report, Thailand
– Cigarettes, para. 150 ("ensuring due process requires a balancing of various interests, including systemic
interests as well as those of the parties, and both general and case-specific considerations. In our view, panels
are best situated to determine how this balance should be struck in any given proceeding, provided that they
are vigilant in the protection of due process and remain within the bounds of their duties under Article 11 of
the DSU").
22 Both parties repeated in their responses to the Panel's questions arguments on the past practice
under Article 21.5 of the DSU and Article 4 of the SCM Agreement. Regarding past Article 21.5 proceedings,
the United States noted that panels in such cases, faced with a similar 90-day deadline, chose to hold a single
substantive meeting, whereas India argued that Article 21.5 proceedings are different from original panel
proceedings; regarding panels in past Article 4 proceedings, India reiterated that they held two substantive
meetings with the parties. The United States noted that in none of the Article 4 panel proceedings that India
relied upon was there any indication that either party requested the panel to hold only one substantive
meeting. See India's response to Panel question No. 91, section (c); United States' response to Panel question
No. 91, para. 7; India's comments on the United States' response to Panel question No. 91, paras. 4-5; United
States' comments on India's response to Panel question No. 91, paras. 4 and 13-14. The Panel noted these
arguments in its Communication dated 22 January 2019 but did not ground its decision in them. The Panel's
decision was grounded in its interpretation of Articles 11, 12.1, and 12.10, and Appendix 3, of the DSU, and
Article 4 of the SCM Agreement, and in the case-specific considerations it set out. See Communication dated
22 January 2019 from the Panel to the parties concerning the issues of a single substantive meeting and a
partially open meeting, paras. 2.8-2.9 and 2.11-2.21.

1.7. The Panel takes note of, and agr ees with, the United States' description of the extensive
opportunity that parties have had to make their case and rebut the other party's case, as well as on
the need to bring proceedings to a close. The parties' opportunity to make their case and rebut the
adverse case has included extensive filings, two full days of hearings, responses to almost a hundred
questions from the Panel and comments on each other's responses, and has further included a
doubling of the time for filing responses to the Panel's questions, at India's request.
1.8. Nonetheless, because of the fundamental importance of due process in the Panel's conduct of
proceedings, before reaching a final decision on whether to modify its Working Procedures and
timetable, the Panel wishes to ascertain whether its decision to hold a single substantive meeting
has concretely impaired the due process rights of India, who had opposed the Panel's decision to
hold a single meeting, so that, if it has, the Panel can decide on the appropriate remedial steps.
1.9. For this purpose, the Panel turns to India's answer to Panel question No. 92. India refers to
three ways in which it considers that holding a single substantive meeting has affected its ability to
defend itself. First, India considers that there has been insufficient opportunity to discuss footnote 1
and the related Annexes of the SCM Agreement. Second, India considers that there has been
insufficient opportunity to discuss the challenged schemes. Third, India considers that there is a
need for further discu ssion of the parties' responses to the Panel's questions. Therefore, "India
considers that the Panel should hold a second substantive meeting".23
1.10. With regard to footnote 1 and the related Annexes of the SCM Agreement, as well as the
challenged schemes, the Panel observes that the parties have filed their first and second written
submissions, made statements at the hearing, had the opportunity to ask questions of each other
and third parties during and after the hearing, answered questions orally during the h earing,
answered questions in writing, and commented on each other's written answers. Further, at
India's request, parties obtained four full weeks to answer questions after the hearing. In this
context, the Panel does not consider that there has been a la ck of an "opportunity to explore in
required depth"24, or respond to, arguments on footnote 1 or on the challenged schemes, and it
does not consider that this unspecified call for further discussion warrants a second substantive
meeting.
1.11. With regard to the third concern identified by India, namely, the need for discussion and
rebuttal of the parties' answers to the Panel's questions, the Panel notes, first, that the possibility
for comment by each party on the other party's answers serves precisely that nee d. At the same
time, since India anticipated that the answers to the Panel's questions would require a further
substantive meeting, the Panel has reviewed and considered those responses25, and the comments
on those responses26, before making its decision. Ha ving done so, the Panel has found no point of
fact or law in the answers, or in the comments on the answers, that would warrant holding a further
substantive meeting with the parties at this stage, and no such point was identified specifically by
India.
1.12. In sum, balancing the competing considerations in this case,27 the Panel chose to depart from
Appendix 3 of the DSU by scheduling a single substantive meeting with the parties, while reserving
its right to schedule additional substantive meetings if required. After the filing of both sets of written
submissions and the holding of the single hearing, the Panel sought the views of the parties on this
matter, and in particular it asked India if it considered that the fact of holding a single substantive
meeting had concretely affected its ability to defend itself in this case and, if so, concretely, how this
had been the case and what steps the Panel could take to remedy that. In response, India identified
no instance of its due process rights having been concret ely affected. Instead, India generically
referred to a need for further discussion of footnote 1 and the related Annexes of the
SCM Agreement, of the measures at issue, and of parties' responses to the Panel's questions. In
light of this, and in light of t he exchanges already had so far on the subjects referred to by India,
for which, moreover, the Panel has granted considerable time, the Panel does not consider that there
is a need to depart from the structure of proceedings as originally envisaged in this dispute. Nor has

23 India's response to Panel question No. 92(c).
24 India's response to Panel question No. 92(a), first para.
25 Submitted on 18 March 2019.
26 Submitted on 1 April 2019.
27 See Communication dated 22 January 2019 from the Panel to the parties concerning the issues of a
single substantive meeting and a partially open meeting, paras. 2.20-2.21.

the Panel's review of the two most recent sets of submissions, generically referred to by India as
requiring a further substantive meeting, disclosed the need for such a further meeting. Thus, the
Panel is satisfied that India's due process rights have been carefully preserved.
1.13. Therefore, the Panel has decided not to modify the Working Procedures and timetable by
adding a second substantive meeting. In light of this decision, the Panel has also determined the
timing of the further procedur al steps in these proceedings, as set out in the attached proposed
updated timetable.
1.14. The Panel notes that, if necessary, it has the authority to pose further questions in writing to
the parties.
1.15. The Panel invites parties to submit any comments to the attached proposed updated timetable
by 25 April 2019.