TWN Info Service on WTO and Trade Issues (Jun14/02)
3 June 2014
Third World Network  

Panel set on Indian measures over solar cells and modules
Published in SUNS #7811 dated 26 May 2014

Geneva, 23 May (Kanaga Raja) -- The Dispute Settlement Body (DSB) of the World Trade Organisation (WTO) on Friday agreed to establish a panel, at the request of the United States, to examine certain measures imposed by India relating to solar cells and solar modules.
 
This was a second-time request and panel establishment was automatic.
 
Norway, the European Union, Brazil, Canada, Malaysia, China, Russia, Turkey, Korea and Japan reserved their third party rights to the dispute.
 
In other issues that came up, Pakistan blocked the first-time panel request of Indonesia on its dispute over the initiation and continuation by Pakistan of certain anti-dumping and countervailing duty investigations of imports of certain paper products from Indonesia and failure by Pakistan to terminate investigations in a timely manner.
 
The DSB also heard a statement by Dominica, on behalf of Antigua and Barbuda, that the US had made no settlement offer in the dispute over the cross-border supply of gambling and betting services while complaining that Antigua and Barbuda was blocking a settlement.
 
And while the US had in a bilateral accord granted concessions worth US$200 billion to the European Union for the removal of the US commitment on cross-border supply of these services, it had made no offer to Antigua and Barbuda (beyond the offer to hold a few thousand dollars' worth of training sessions), while in face-to-face discussions, it was clear that no concessions were available to Antigua and Barbuda, the Member who brought this case to the DSB at great expense "in an honest but seemingly misguided and naive recourse to the process under the DSU (Dispute Settlement Understanding)."
 
On the solar energy dispute against India, the US, in its communication to the DSB, had said that the dispute concerns domestic content requirements contained in, respectively, "Phase I" and "Phase II" of the Jawaharlal Nehru National Solar Mission (NSM).
 
According to the US communication, the measures at issue are India's requirements that solar power developers, or their successors in contract, purchase or use solar cells or solar modules of domestic origin in order to enter into and maintain certain power purchase agreements under Phase I or Phase II of the NSM with National Thermal Power Company Vidyut Vyapar Nigam Limited or the Solar Energy Corporation of India.
 
"The measures at issue also appear to provide solar power developers, or their successors in contract, additional benefits and advantages, such as long-term tariffs for electricity, contingent on their purchase and use of solar cells and solar modules of domestic origin," said the US.
 
The US said that the measures at issue appear to be inconsistent with Article III: 4 of the GATT 1994 because they accord less favourable treatment to imported products than to like products of national origin. They also appear to be inconsistent with Article 2.1 of the TRIMs Agreement because they are investment measures related to trade in goods that are inconsistent with Article III: 4 of GATT 1994. (See SUNS #7792 dated 28 April 2014.)
 
In its statement at the DSB, the US said that it held two rounds of consultations with India to try to resolve this dispute - early in 2013 and again earlier this year. Not only did these consultations fail to resolve the dispute, but India actually chose to expand the scope of the domestic requirements following the initial consultations in 2013, it added.
 
The US emphasised that it is not challenging India's NSM Program on the basis that it promotes solar power generation, adding that it shares the commitment of many Members to reduce their reliance on fossil fuels through greater use of solar power and other renewable energy sources.
 
"What the United States is challenging is the domestic content requirements in India's measures that discriminate against imported solar cells and modules in favour of like domestic products."
 
Such domestic content requirements, according to the US, are inconsistent with WTO obligations, and do not promote solar power. To the contrary, domestic content requirements undermine India's efforts to promote solar power by impeding access to the best available technology from the global marketplace, it said.
 
In its statement at the DSB, India said that it is disappointed that the US has made a second request for the establishment of a panel in this dispute.
 
It said that it participated in the consultations with an open mind and had shown willingness to explore all options for a mutually satisfactory solution, but the US has chosen to litigate rather than to negotiate.
 
Noting that a panel will be set up today according to the rules of the Dispute Settlement Understanding (DSU), India said that it stands ready to defend its measure before the panel.
 
In other actions, Pakistan blocked a request for the establishment of a panel by Indonesia concerning anti-dumping and countervailing duty investigations initiated by Pakistan on certain paper products from Indonesia.
 
This was a first-time request and panel establishment will be automatic when the request comes up again before the DSB.
 
In its communication to the DSB, Indonesia said the dispute concerns the initiation and continuation by Pakistan of, and its failure to terminate in a timely manner, certain anti-dumping and countervailing duty investigations of imports of certain paper products from Indonesia.
 
It said that consultations were held on 27 February 2014 with a view to reaching a mutually satisfactory solution, but while these consultations clarified certain issues pertaining to this matter, it failed to resolve the dispute.
 
According to the Indonesian communication, the first measure at issue consists of the initiation, continuation and failure to terminate in a timely manner an anti-dumping investigation of imports of certain paper products from Indonesia that was initiated on 10 November 2011 by Pakistan's National Tariff Commission.
 
Indonesia understands that the relevant Pakistani national laws applicable to anti-dumping investigations are the National Tariff Commission Act of 1990, the Anti-Dumping Duties Ordinance of 2000, the Anti-Dumping Duties
(Amendment) Act of 2011, and the Anti-Dumping Duties Rules of 2001.
 
In particular, it said, Article 29 of the Anti-Dumping Duties Ordinance of 2000 provides that "[t]he Commission shall, except in special circumstances, conclude an investigation within twelve months, and in no case more than eighteen months after its initiation."
 
In this case, however, the investigation was not concluded within 18 months, said Indonesia, adding that instead, on 12 December 2011, the investigation was suspended by the Islamabad High Court. On 24 May 2012, the Islamabad High Court issued a decision declaring that the investigation was inconsistent with Pakistani domestic law. This decision was subsequently appealed.
 
To Indonesia's knowledge, a further judgment has been rendered in this matter, but Indonesia has not been officially informed of the content of this judgment.
 
As far as Indonesia is aware, therefore, more than two years after the initiation of the investigation, the Commission has issued neither a final determination nor a notice terminating the investigation.
 
According to the Indonesian communication, the second measure at issue consists of the initiation, continuation and failure to terminate in a timely manner, a countervailing duty investigation of alleged subsidised imports of certain paper products from Indonesia that was initiated by the Commission on 23 November 2011.
 
Indonesia understands that the relevant Pakistani national laws applicable to countervailing duty investigations are the National Tariff Commission Act of 1990, the Countervailing Duties Ordinance of 2001, and the Countervailing Duties Rules of 2002.
 
Article 12.8 of the Countervailing Duties Ordinance of 2001 provides, in relevant part, that "[a]n investigation shall, whenever possible, be concluded within one year and in no event later than eighteen months from its initiation [...]."
 
In this case, however, the investigation was not concluded within 18 months, Indonesia again said, adding that it was interrupted by court proceedings instead.
 
According to the Indonesian communication, the Peshawar High Court dismissed a petition from certain importers seeking that the investigation be declared illegal. On 18 December 2012, however, the Peshawar High Court granted interim relief suspending the investigation while the Court's determination on the consistency of the investigation with Pakistani domestic law was pending.
 
On 28 January 2014, said Indonesia, the Peshawar High Court issued a definitive ruling declaring that the investigation was legal under the law of Pakistan.
 
As far as Indonesia is aware, therefore, more than two years after the initiation of the investigation, Pakistan has issued neither a final determination nor a notice terminating the countervailing duty investigation at issue.
 
In its statement at the DSB, Indonesia said that in November 2011, Pakistan initiated an anti-dumping investigation on certain paper products from Indonesia, and that in the same month, Pakistan also initiated a countervailing duty investigation of alleged subsidised imports of certain paper products from Indonesia.
 
Up to now, almost 30 months later, the investigations have still not been finalised and no notices of termination have been issued.
 
To the contrary, said Indonesia, the investigating authority is actively undertaking certain investigative steps. It expressed concern that Pakistan has not completed these investigations within the time-frames provided for under the Anti-Dumping Agreement and the SCM (Subsidies and Countervailing Measures) Agreement.
 
Additionally, Indonesia is concerned that Pakistan does not appear to apply its anti-dumping laws in "a uniform, impartial and reasonable manner" as it is required to do under Article X: 3 (a) of the GATT 1994.
 
"We are particularly concerned because Pakistan has, in the past, completed certain anti-dumping and countervailing duty investigations within the prescribed 18-month deadline, but in other investigations, did not respect this time limit," said Indonesia.
 
In Indonesia's view, trade remedy investigations do not have a commercial impact only when they are finalised and measures are imposed. Rather, the initiation and conduct of an investigation itself has a significant commercial impact, because it discourages importers to source products from exporters in the investigated countries.
 
According to Indonesia, Pakistan's investigations have resulted in estimated losses to Indonesia of approximately US$1 million a month since the initiation of these investigations, and that in addition, these investigations - and their continuation far beyond the 18-month deadline - have had a significant adverse "chilling effect" on imports from Indonesia.
 
Indonesia believes that Pakistan has failed to take steps, both of a general and particular character, to ensure that all its laws, regulations and administrative procedures are consistent with its obligations. As this particular occasion, as well as several previous occasions, demonstrate, Pakistani law makes it possible for the investigating authorities to extend anti-dumping and CVD investigations far beyond the 18-month deadline.
 
This, according to Indonesia, is inconsistent with, inter alia, Pakistan's obligations under Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the SCM Agreement to ensure that its laws, regulations and administrative procedures are consistent with its obligations under those agreements.
 
In its statement at the DSB, Pakistan expressed its surprise and regret over Indonesia's request for panel establishment.
 
Pakistan said that Indonesia approached it for consultations in November last year, and that on the same day, Pakistan conveyed its willingness to engage in a good faith dialogue.
 
Consultations were held on 27 February this year, and that these consultations took place in a friendly manner and both members better understood each other's positions.
 
According to Pakistan, Indonesia is a major exporter of certain paper products to Pakistan and has consistently held over 50% of Pakistan's import market share. No provisional or definitive anti-dumping or countervailing duties have been imposed by Pakistan on the products in question in this case.
 
Since the initiation of anti-dumping and countervailing investigations by Pakistan, Indonesia's share of the import market has in fact grown from 53% in 2011 to nearly 58% in 2013.
 
Pakistan maintained that during the consultations, both members noted that the investigations did not have any economic impact on Indonesia.
 
Meanwhile, Dominica, on behalf of Antigua and Barbuda, delivered a statement under the agenda item of US measures affecting the cross-border supply of gambling and betting services.
 
In its statement, Antigua and Barbuda highlighted four points, the first being that since the last meeting of the DSB, the United States has not made any offer to Antigua and Barbuda in settlement of this dispute nor in fact made any communication at all.
 
[Antigua and Barbuda had received authorisation from the DSB in January last year to suspend concessions or other obligations under the TRIPS Agreement with respect to the United States in an amount not exceeding $21 million annually.
 
[The authorisation request had highlighted several sections of Part II under the TRIPS Agreement with respect to the suspension of concessions or other obligations, namely, Section 1 (copyright and related rights), Section 2
(trademarks), Section 4 (industrial designs), Section 5 (patents) and Section 7 (protection of undisclosed information). See SUNS #7514 dated 30 January 2013.]
 
In its statement at the DSB, Antigua and Barbuda said that secondly, other than an offer of a few thousand dollars' worth of training and seminar sessions, the United States has made no settlement offer to Antigua and Barbuda at all.
 
Third, Antigua and Barbuda contended, the United States has never offered an explanation as to why it continues to fail to submit reports on this matter for the regular meetings of the DSB as required by Article 21.6 of the DSU, although Antigua and Barbuda has on many occasions asked for one.
 
"It would be interesting to hear from the United States delegation in this regard," it said.
 
Fourth, the United States continues to assert that Antigua and Barbuda are standing in the way of the Americans' effort to dispose of this case by changing their obligations under the treaty and removing the commitment for gambling and betting services.
 
"Of course, Antigua and Barbuda has blocked this effort, as the United States has offered nothing to the country in return."
 
As is known from certain ‘wikileaked' communications, said Antigua and Barbuda, the United States granted concessions for the removal of the commitment worth some US$200 billion to the European Union.
 
Further, the Government of Antigua and Barbuda knows from face-to-face discussions with the United States that there are no concessions available to it, who brought this case at great expense and as a result of crippling devastation to a new and bright promise to the struggling Antiguan economy.
 
"Is it really so simple? Can the United States please other countries with basically bilateral agreements on whoever knows what scope of topics and provide nothing in return to the country that has suffered so much and expended so much of its very dear treasure in an honest but seemingly misguided and naive recourse to the process under the DSU?", it asked.
 
To this query, as well, Antigua and Barbuda said it would appreciate an answer.
 
According to trade officials, the US said that it had made proposals to Antigua and Barbuda to solve this problem in the context of the GATS and was expecting "realistic and constructive counter-proposals" from Antigua and Barbuda.