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India Auto Case: Alia, To Comply With Certain Local Content and Export Balancing
India Auto Case: Alia, To Comply With Certain Local Content and Export Balancing
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relationship between) Arts. III and XI, the Panel noted that it could not be
excluded that different aspects of a measure may affect the competitive
opportunities of imports in different ways, making them fall within the
scope of either Art. III or XI or there may be potential for overlap between
the two provisions.
Panel and Appellate Body proceedings
Further to a second request to establish a panel by the US, the DSB
established a panel at its meeting on 27 July 2000. The EC, Japan and
Korea reserved their third-party rights.
On 12 October 2000, the EC also requested the establishment of a panel.
At its meeting on 23 October 2000, the DSB deferred the establishment of
a Panel. Further to a second request by the EC, the DSB established a
panel at its meeting of 17 November 2000. Since a panel had already
been established with a similar mandate in the framework of the
case WT/DS175, the DSB decided to join the panel with the already
established panel in that case pursuant to Article 9.1 of the DSU. Japan
reserved its third-party rights. On 14 November 2000, the US requested
the Director-General to determine the composition of the Panel. On 24
November 2000, the Panel was composed.
On 21 December 2001, the Panel circulated its report to the Members. The
Panel concluded that:
India had acted inconsistently with its obligations under Article III:4
of the GATT 1994 by imposing on automotive manufacturers an
obligation to use a certain proportion of local parts and components
in the manufacture of cars and automotive vehicles
(indigenization condition);
India had acted inconsistently with its obligations under Article III:4
of the GATT 1994 by imposing, in the context of the trade balancing
condition, an obligation to offset the amount of any purchases of
previously imported restricted kits and components on the Indian
market, by exports of equivalent value.
The Panel recommended that the DSB requests India to bring its measures
into conformity with its obligations under the WTO Agreements.
On 31 January 2002, India appealed the above Panel Report. In particular,
India sought review of the following Panels conclusion on the grounds that
they are in error and based upon erroneous findings on issues of law and
related legal instruments:
Indias reservations with regard to Section VIII of the Panel Report. The EC
considered that the Panels findings were justified. Despite its decision to
withdraw its appeal as a result of the introduction of its new auto policy,
India indicated that the findings contained in Section VIII were outside of
the Panels terms of reference and were both factually and legally
incorrect. India requested that the DSB adopt only a part of the Panel
Report and consider the adoption of Section VIII only at its next meeting.
The EC responded that the Reports should be adopted unconditionally by
the parties, thus there was no justification for Indias request. The DSB
proceeded with the adoption in full of the Appellate Body and Panel
reports.