This is a guest post by Vineet Hegde, a PhD researcher in International Law at the Leuven Centre for Global Governance Studies at KU Leuven, Belgium.
On 27 June 2019, the WTO panel in US — Certain Measures Relating to the Renewable Energy Sector issued its report and found eleven US state policies were in violation of III:4 of the GATT 1994 because of less favorable treatment accorded to foreign producers. The measures at issues were from the states of Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware, and Minnesota, in the energy sector.
This post analyzes some aspects mentioned in the panel report regarding the “terms of reference” and consideration of amendments to the measures after the establishment of the panel.
1. Lack of engagement with the law from both parties [India and the US]:
For the establishment of the panel, questions relating to whether amendments could be included in the panel’s terms of references were discussed. The US stated that neither Article 6.2 nor Article 7.1 of the DSU support the view that measures enacted, including amendments, after the date of the establishment of a panel, are within a panel’s terms of reference. It also stated that “[n]or has India identified any other text in the DSU that would otherwise support such view”. The US argued that India relied on “certain reports” [highlighting India’s reliance on EC – IT Products (DS375)] and are “not persuasive”, because India did “not start with or even consider the relevant text of the DSU”.
The panel interestingly noted that neither India nor the US engaged in detail with past cases on the issue of panel’s jurisdiction over measures amended after the panel establishment. The panel went ahead and quoted Appellate Body reports in EC – Chicken Cuts and US – Zeroing (Japan), to state “Article 6.2 does not set out an express temporal condition or limitation of the measures that can be identified in a panel request”: “measures enacted subsequent to the establishment of the panel may, in certain limited circumstances, fall within a panel’s terms of reference”.
It is surprising that India did not mention any text of the DSU to substantiate its claims as there are some Appellate Body rulings in India’s favor for this issue, and that discuss DSU provisions. It is also an interesting take from the US side, to have narrowed its arguments only to the text of the DSU and not further its contentions through the support of the WTO rulings. The panel disagreed with the reasoning of the US, which stated that past cases are “not persuasive” because India did not start with or even consider the relevant text of the DSU. Reading between the lines, it might be due to the US’s concerns that the rulemaking of the WTO law and policy must not be vested with the WTO dispute settlement system. It could also be that the law was not in favor of the US on this issue, and that the panels could consider amendments after the establishment of the panel, in its terms of references.
[paragraphs 7.1 – 7.17].
2. Measure 8: Michigan Equipment Multiplier/Michigan labor Multiplier
Another interesting take by the panel was with respect to Measure 8 - the Michigan Equipment Multiplier and the Michigan Labor Multiplier, that were included in a 2008 legislation [Public Act no. 295]. The measure under the 2008 Act was one of the contested measure at the time of panel establishment. The Act [Public Act No. 342], that amended the 2008 Act was enacted in December 2016. India requested that the 2016 measure be taken into consideration for panel’s assessment. The US did not dispute to the 2016 measure being included in the panel’s terms of reference as it was enacted prior to the establishment of the panel. The panel was established in April 2018. Although, the 2016 Act was enacted prior to the panel establishment, it was entered into force after the date of panel establishment. The panel still went on to analyze this and stopped its line of reasoning midway. In para 7.45, the panel stated “It is therefore, not entirely clear to us whether Measure 8 should properly be understood as having been amended before or after the Panel’s establishment”. It furthered this line of reasoning to pose a different scenario – “[i]t might be thought that, because the amendment only entered into force after the Panel’s establishment, it did not exist on that date. In this view, the measure ‘in existence’ at the time of the Panel’s establishment would be the original version of the measure in Public Act No. 295”. Although, it considered the 2016 measures in its terms of reference, it was for different reasons. It was based on previous WTO rulings and “that a panel has jurisdiction to examine amendments made to measures in existence at the time of panel establishment if (i) the terms of reference are broad enough to include such amendments; (ii) the amendments do not change the essence of the measures identified in the panel request; and (iii) such examination is necessary to secure a positive to that dispute” [citing EC – IT Products, and China – Raw Materials].
The panel left the analysis of measures “in existence” in the hanging. Its reasoning indicates that the measures “in force” are equivalent to the ones “in existence” and may not include the ones that have been enacted and not in force. Hypothetically assuming that the 2016 amendments never existed, what if the measures in the 2008 Act were merely enacted and never “in force”? Would it still consider the measure to be “in existence”? The panel in EC – IT Products, while discussing the terms of reference stated, “While we do not consider that the mere incantation of the phrase ‘any amendments or extensions and any related or implementing measures’ in a panel request will permit Members to bring in measures that were clearly not contemplated in the Panel request, it may be used to refer to measures not yet in force or concluded on the date of the panel request…. the same essential effect as the measures that were specifically identified.” Based on this reasoning, the panel’s consideration that the 2008 Act would be the original version and not the 2016 one, may be an incorrect assessment of the terms of reference. The measure enacted, and not in force, may have the same essential effect. Therefore, the panel’s question of “..whether Measure 8 should properly be understood as having been amended before or after the Panel’s establishment” may seem misguided.
[paragraphs 7.42 – 7.50].
[Also, the WTO has a summary of Article 7 of the DSU published, that could be easily referred to].
