World Trade Organization

introduction

1. 
   In a communication dated 12 October 1998 (WT/DS146/1), the European Communities requested consultations with India pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article 8 of the Agreement on Trade-Related Investment Measures (TRIMs Agreement), concerning certain measures affecting the automotive sector. On 21 and 22 October 1998, Japan and the United States, respectively, lodged requests to join in the consultations.¹ The European Communities and India held consultations in Geneva on 2 December 1998. The United States and Japan participated in the consultations under DSU Article 4:11.
   
2. 
   In a communication dated 2 June 1999 (WT/DS175/1), the United States requested consultations with India pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article 8 of the Agreement on Trade-Related Investment Measures (to the extent it incorporates by reference Article XXII of the GATT 1994) regarding certain measures affecting trade and investment in the motor vehicle sector. The United States and India held such consultations, in which Japan and the European Communities joined, on 20 July 1999. The consultations provided some helpful clarifications but failed to settle the dispute.
   
3. 
   On 15 May 2000, the United States (WT/DS175/4) requested the Dispute Settlement Body to establish a panel with standard terms of reference as set out in Article 7.1 of the DSU. The Panel was established on 27 July 2000. On 12 October 2000, the European Communities (WT/DS146/4) also requested the DSB to establish a panel pursuant to Article 4.7 and 6 of the DSU.
   
4. 
   At its meeting of 17 November 2000, the DSB agreed that, in accordance with Article 9.1 of the DSU, the Panel established on 27 July 2000 to examine the complaint by the United States should also examine the complaint by the European Communities contained in WT/DS146/4 and agreed that the Panel should have standard terms of reference. The terms of reference of the Panel were therefore as follows:
   

5. 
   On 24 November, in accordance with Article 8.7 of the DSU, the Director-General composed the Panel as follows:
   

Members: Ms. Gloria Peña

1. 
   Japan and Korea reserved their third party rights in the dispute.
   
2. 
   The Panel met with the Parties on 21 and 22 March 2001 and 17 and 18 May 2001. The Panel held a third-party session on 22 March. Korea presented its submission. Japan did not make a submission.
   

1. FACTUAL ASPECTS

   1. The licensing regime

1. 
   For many years, India applied import restrictions for balance of payment reasons. On 24 July 1997 the European Communities requested consultations with respect to all the import restrictions maintained by India on balance-of-payment grounds, including those on passenger cars, and chassis and bodies therefore.² As a result of those consultations, the European Communities and India reached a mutually agreed solution on 25 November 1997 (the "1997 Agreement").³ The 1997 Agreement stipulated that the import restrictions on passenger cars, and on chassis and bodies therefor, were to be eliminated no later than 31 March 2003. The 1997 Agreement, nevertheless, had to a large extent been superseded by the agreement concluded between India and the United States on 24 December 1999⁴ referred to below.
   
2. 
   On 22 July 1997 the United States requested consultations under the DSU with respect to quantitative restrictions maintained by India for balance-of-payments reasons on 2,714 agricultural and industrial product tariff lines.⁵ A panel was established on 18 November 1997.⁶ The panel concluded that the restrictions applied by India, violated GATT Article XI:1 of GATT and were not justified by GATT Article XVIII:B.⁷ The Appellate Body upheld those findings.⁸
   
3. 
   On 24 December 1999 India and the United States agreed, pursuant to Article 21.3(b) of the DSU, that the reasonable period of time for complying with the recommendations and rulings of the DSB would expire on 1 April 2001.⁹ Accordingly, India was required to eliminate the current system of non-automatic licenses for imports of passenger cars, and chassis and bodies therefor, no later than 1 April 2001. At the time when the United States (15 May 2000) and the European Communities (12 October 200) submitted their requests for the establishment of this panel, India applied discretionary import licensing to 715 tariff line items, including cars imported in the form of completely and semi-knocked down ("CKD/SKD") kits. The import licensing scheme for cars imported in the form of CKD/SKD kits was abolished on 1 April 2001 in accordance with the agreements reached with the European Communities and the United States under Articles 3.6 and 21.3(b) of the Dispute Settlement Understanding ("DSU").
   
1. 
   
   Directory: english -> tratop e -> dispu e
   dispu e -> Annex g list of exhibits submitted by the parties
   dispu e -> World Trade Organization
   dispu e -> World Trade Organization
   
   
   
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