II. introduction 1
III. FACTUAL ASPECTS 2
A. The licensing regime 2
B. Public Notice No. 60 and the MOUs 3
IV. parties' requests for findings and recommendations 4
A. US Claims and Requests for Findings 4
B. EC Claims and Requests for Findings 4
C. India's Requests for Findings 5
V. ARGUMENTS OF THE PARTIES 6
A. Factual Arguments 6
1. The licensing regime 6
2. Public Notice No. 60 and the MOUs 8
(a) The "indigenization" requirement (paragraph 3 (iii) of Public Notice No. 60) and paragraph III(IV) of the MOU) 9
(b) The "trade balancing" requirement (paragraph 3 (iv) of Public Notice No. 60 and paragraph III (vi) of the MOU) 10
B. Has The Matter Been Settled and Adjudicated? 14
1. Has the matter been settled? 16
2. Has the matter already been adjudicated? 23
(a) India – Quantitative Restrictions 23
(i) The notion of res judicata 28
(b) The provisions are an inherent part of the licensing scheme that must be eliminated 29
(i) The notion of abusive splitting 32
C. Are the Measures within the Terms of Reference of the Panel? 36
1. Do the measures applied after 1 April 2001 fall outside the terms of reference? 36
(a) The method of enforcement before and after 1 April 2001 38
D. Claims under GATT 1994 and TRIMs 52
1. Article III:4 52
(a) The indigenization requirement 53
(b) The trade balancing requirement 57
2. Article XI:1 60
(i) The indigenization requirement 60
(ii) The trade balancing requirement 61
(a) Are the measures justified by Article XVIII:B of the GATT and Articles 3 and 4 of the TRIMs Agreement? 70
(i) Procedural requirements of the balance of payments provisions 72
(ii) Substantive Requirements of the balance of payments provisions 74
(iii) The burden of proof 76
(iv) Relevance of the India – Quantitative Restrictions case 80
3. TRIMs Agreement 82
VI. ARGUMENTS OF THE THIRD PARTIES 87
1. The Agreements regarding the Indian measures must be respected and enforced 87
2. The measures that India may take by 1 April 2001 are not, and as a matter of logic cannot be, properly before the Panel. 88
3. Prospective measures 89
VII. INTERIM REVIEW 90
B. Comments on the descriptive part 90
1. Comments by the United States 90
2. Comments by India 90
3. Comments by the European Communities 91
C. Comments on the findings and conclusions 91
1. Comments by the United States 91
3. Comments by India 93
(b) General comment in respect of India's procedural rights in the proceedings 93
(c) India's argument that the matters addressed in the Recommendations section should be left to a compliance panel. 95
(d) India's argument that the Panel could not "properly" conclude that the violation is still in existence 97
(e) India's argument that the Panel inappropriately prescribes a "retrospective" remedy 98
VIII. findings 99
B. Clarification of the claims in the course of the proceedings and requests for preliminary rulings 100
C. Clarification of the measures within the terms of reference of this Panel 102
2. Measures identified in the complainants' requests for establishment of a panel 103
3. Evolution of the measures in the course of the proceedings 104
4. Measures not within our terms of reference 106
D. the panel's competence to consider the matter before it 108
1. Are any of the United States' claims barred by the principle of res judicata? 109
(b) Arguments of the parties and scope of India's invocation of the doctrine of res judicata 109
(c) Role of India's import licensing system in the United States' claims 110
(d) General approach to the res judicata arguments 111
(i) The matter before this Panel 114
(ii) The matter ruled on by the India – Quantitative Restrictions panel 116
(iii) Comparison between the matter ruled on by the India – QRs panel and the matter before this Panel 118
A comparison of the measures expressly considered 119
A comparison of the express claims 119
Are the matters the same? 120
Conclusion 123
1. Has any part of the matter before this Panel been settled through a mutually agreed solution? 124
(b) The mutually agreed solution in the India – Quantitative Restrictions dispute with the EC 124
(c) Relevance of mutually agreed solutions in subsequent proceedings 125
(d) The scope of the mutually agreed solution between the European Communities and India 126
(e) Conclusion 130
2. Measures to be eliminated in the course of implementing the results of the India ‑ Quantitative Restrictions dispute and abusive splitting of a dispute 130
(b) Abusive splitting 130
(c) Unnecessary litigation 131
3. Conclusion 132
E. Order of examination of the claims 133
F. Consistency of the Indigenization condition with the GATT 1994 136
1. Claims under Article III:4 of GATT 1994 136
(a) Like products 137
(b) "Laws, regulations or requirements" 138
(i) The notion of "requirement" within the meaning of Article III:4 138
(ii) The indigenization condition as a "requirement" 140
(c) … affecting the internal sale, offering for sale, purchase (…) of the products 142
(d) Whether imported products are accorded less favourable treatment 142
(e) Conclusion 143
2. Claim under Article XI 144
G. GATT claims concerning the trade balancing condition 144
1. Factual aspects of the measure 144
2. Order of analysis of the claims 145
3. Relationship between Articles III and XI 146
4. Claims under Article XI:1 147
(a) Scope of the European Communities' claim 147
(ii) The scope of the trade balancing obligation 148
(iii) The continued enforceability of the MOUs after 1 April 2001 149
(b) Arguments of the parties 150
(c) Scope of Article XI:1 151
(i) The notion of "measures" within the meaning of Article XI:1 151
(ii) "Restriction on importation" within the meaning of Article XI:1 and "border measures" 152
(d) The trade balancing condition as a "restriction … on importation" 154
(i) The notion of "restriction … on importation" 154
(ii) Analysis of the trade balancing condition 157
5. Balance-of-payments defense 158
6. Claims under Article III:4 160
(a) Purchases of restricted imported kits and components on the domestic market 160
(i) Like products 161
(ii) Laws, regulations or requirements 161
(iii) affecting internal sale, use, … 161
(iv) Whether the measure affords less favourable treatment to imported products 162
7. Ruling on the consistency of Public Notice No. 60 with the GATT 1994 163
(a) Consistency of Public Notice No. 60 with Article III:4 of GATT 1994 163
(b) Consistency of Public Notice No. 60 with Article XI:1 of the GATT 1994 in so far as it contains the trade balancing condition 164
H. Claims under the TRIMs Agreement 165
IX. Conclusions and Recommendations 165
A. Conclusions 165
B. Consequences of events having taken place in the course of the proceedings 166
1. Presentation of the issue: arguments of the parties 166
2. Approach of the Panel 168
3. Analysis 171
(a) Indigenization provisions 172
(i) The cessation of the application of Public Notice No. 60 and the MOUs as private contracts 172
(ii) Achievement of the required levels of indigenization by MOU signatories 174
(b) Trade balancing provisions 175
(i) Accrued obligations as independent from imports 175
(ii) Cessation of the application of Public Notice No. 60 and the MOUs as private contracts 176
C. Recommendations 176
TABLE 1 177
TABLE 2 179
