LX15 Claimant

Team Code - LX15
LEX ORBIS INTERNATIONAL TRADE LAW MOOT COURT COMPETITION 2019
BEFORE THE PANEL ESTABLISHED BY WTO/DSB
SIESTA
-------
MEASURES CONCERNING
DOMESTIC SOURCING OF LETHARGIUM FOR THE MANUFACTURING OF AMS
PART
PROCRASTI NATION (COMPLAINANT)
V.
SIESTA (RESPONDENT)
WT/DSXXX
WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

TABLE OF CONTENTS
1. INDEX OF AUTHORITIES V
2. STATEMENT OF JURISDICTION IX
3. STATEMENT OF FACTS X
4. STATEMENT OF ISSUES XI
5. SUMMARY OF ARGUMENTS XII
6. ARGUMENTS ADVANCED 1-21
6. 1. SIESTA SME SCHEME IS INCONSISTENT WITH ART. III, GATT 1
[A.] ART. III: 4, GATT IS VIOLATED 1
[B]. ART. III: 5, GATT IS VIOLATED 4
[C]. ART. III: 8 (A), GATT IS VIOLATED 8
6. 2. THE MEASURE IS NOT EXEMPTED UNDER ART. XX, GATT 10
[A]. THE MEASURES TAKEN BY SIESTA WAS NOT FOR THE PROTECTION OF
HEALTH 10
[B]. THE MEASURES WERE NOT NECESSARY TO ACHIEVE THE POLICY
OBJECTIVES 11
[C]. THE MEASURES APPLIED VIOLATE THE “CHAPEAUX” OF ART. XX OF THE
GATT.. 11
6. 3. THE SME SCHEME VIOLATES THE SCM AGREEMENT 12
[A]. SCHEME IS INCONSISTENT WITH ART. 3.1(B) OF THE SCM AGREEMENT 13
[B]. SCHEME VIOLATES ART. 3.2 OF THE SCM AGREEMENT 15
6.4. SIESTA ACTED INCONSISTENTLY WITH ART. 2.1 OF THE TRIMS
AGREEMENT 16
[A]. DCR MEASURES ARE INCONSISTENT 17
6.5. THE MEASURES AMOUNTS TO VIOLATION OF ART. 2.2 OF TBT
AGREEMENT 18
[A]. IT IS A TECHNICAL REGULATION 19
[B]. IT IS PROHIBITED UNDER ART.2.2, TBT 21
7. PRAYER XIII

|I|
LIST OF ABBREVIATIONS
1. & And
2. AB Appellate Body
3. Annex. Annexure
4. Art. Article
5. Arts. Articles
6. APR Anti-Pollution Regulator
7. AMS Accessory Module System
8. BISD Basic Instruments and Selected Documents
9. CMS Core Module System
10. DCR Domestic Content Requirement
11. Doc. Document
12. DS Dispute Settlement
13. DSB Dispute Settlement Board
14. DSM Dispute Settlement Mechanism
15. DSU Dispute Settlement Understanding
16. EC European Communities
17. e.g. exempli gratia, for example
18. GATS General Agreement on Trade in Service
19. GATT General Agreement on Tariffs and Trade
20. GoS Government of Siesta
21. GoPN Government of Procrasti Nation
22. GPA Agreement on Government Procurement
23. Id. Ibid
24. NGO Non-Governmental Organization
25. p. Page
26. pp. Pages
27. ¶ Paragraph
28. ¶¶. Paragraphs
29. PC Paris Convention
30. PIL Public International Law

| II |
31. PSE Public Sector Enterprise

32. R Report
33. SCM Agreement on Subsidies and Countervailing
Measures
34. Sec. Section
35. Secretariat Secretariat of the World Trade Organization
36. SIS Siesta Institute of Science
37. SME Snore Murthy Electricity
38. SMES Snore Murthy Electricity Scheme
39. SPS Sanitary and Phytosanitary Measures
40. SSG Special Safeguard
41. TBT Agreement on Technical Barriers to Trade
42. TRIMs Trade Related Investment Measures

43. TPRB Trade Policy Review Body
44. TPRM Trade Policy Review Mechanism
45. U.S. United States
46. VCLT Vienna Convention on Law of Treaties
47. v. Versus
48. Vol. Volume
49. WHO World Health Organization
50. WT World Trade
51. WTO World Trade Organization
52. WTO Agreement Agreement Establishing the World Trade
Organization
INDEX OF AUTHORITIES
WTO APPELLATE BODY REPORTS

| III |
1. Appellate Body Report, Brazil-Export Financing Programme for Aircraft, ¶ 157, WTO
Doc. WT/DS46/AB/R (adopted Aug. 2, 1999). 17
2. Appellate Body Report, Brazil-Measures Affecting Imports of Retreaded Tyres, ¶ 246,

WTO Doc. WT/DS332/AB/R, (adopted Dec. 17, 2007) 10, 11
3. Appellate Body Report, Canada-Certain Measures Affecting The Automotive Industry, ¶

158, WTO Doc. WT/DS139/AB/R, WT/DS142/AB/R (adopted May 31, 2000) 3
4. Appellate Body Reports, Canada-Certain Measures Affecting the Renewable Energy

Generation Sector / Canada - Measures Relating to the Feed-in Tariff Program, ¶ 5.24,
WTO Doc. WT/DS412/AB/R / WT/DS426/AB/R, (adopted May 24, 2013) 17
5. Appellate Body Report, Canada-Measures Affecting the Export of Civilian Aircraft, ¶

139-166, WTO Doc. WT/DS70/AB/R (adopted Aug. 14, 2000) 15
6. Appellate Body Reports, China-Measures Related to the Exportation of Various Raw

Materials, ¶ 326, WTO Docs. WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R,
(adopted Feb. 22, 2012) 11
7. Appellate Body Report, European Communities-Measures Affecting Asbestos and

Products Containing Asbestos, ¶ 101-103, WTO Doc. WT/DS135/AB/R (adopted Mar.
12, 2001) …….1, 18, 19
8. Appellate Body Report, European Communities-Regime for the Importation, Sale and
Distribution of Bananas, WTO Doc. WT/DS27/AB/R (adopted Sept. 9, 1997) 3
9. Appellate Body Report, European Communities-Trade Description of Sardines, ¶ 189,

WTO Doc. WT/DS231/AB/R (adopted Oct. 23, 2002) 19
10. Appellate Body Report, Japan-Taxes on Alcoholic Beverages - II, ¶ 16, WTO Doc.
WT/DS8/AB/R (adopted Oct. 9, 1996) 7
11. Appellate Body Report, Korea-Measures Affecting Import of Fresh, Chilled and Frozen
Beef, ¶ 133, WTO Doc. WT/DS161/AB/R, WT/DS169/AB/R (adopted Dec. 11, 2000)...
1, 4
12. Appellate Body Report, Thailand-Customs and Fiscal Measures on Cigarettes from the
Philippines, ¶ 134, WT/DS371/AB/R (adopted July 15, 2011) 6
13. Appellate Body Report, United States-Import Prohibition of Certain Shrimp and Shrimp
Products, ¶ 119- 120, WTO Doc. WT/DS58/AB/R, (adopted Nov. 6, 1998) 10, 11

| IV |
14. Appellate Body Report, United States-Measures Affecting the Cross-Border Supply of
Gambling and Betting Services, ¶ 339, WTO Doc. WT/DS285/AB/R, (adopted Apr. 20,
2005) 4
15. Appellate Body Report, United States-Measures Concerning the Importation, Marketing
& Sale of Tuna and Tuna Products, ¶ 202, WTO Doc. WT/DS381/AB/R (adopted May
16, 2012) 8,11
16. Appellate Body Report, United States-Standards for Reformulated and Conventional
Gasoline, WTO Doc. WT/DS2/AB/R, (adopted May 20, 1996) 20,21
17. Appellate Body Report, United States-Standards for Reformulated and Conventional
Gasoline, ¶ 544, WTO Doc. WT/DS26/AB/R (adopted Mar. 3, 2005) 10
18. Appellate Body Report, United States-Tax Treatment For Foreign Sales Corporations, ¶
111, WTO Doc. WT/DS108/AB/RW (adopted Jan. 14, 2002) 15
PANEL REPORTS
1. Panel Reports, Argentina-Measures Affecting the Importation of Goods, WTO Doc.
WT/DS438/R, WT/DS444/R, WT/DS445/R (adopted Aug. 22, 2014) 1
2. Panel Report, Canada-Measures Affecting the Export of Civilian Aircraft, ¶ 9.112, WTO
Doc. WT/DS70/R, (adopted Apr. 14, 1999) 14
3. Panel Report, Canada-Certain Measures Affecting The Renewable Energy Generation

Sector and Canada-Measures Relating To The Feed-In Tariff Program, ¶ 9.23, WTO
Doc. WT/DS412/R, WT/DS426/R (adopted Dec. 19, 2012) 8,9,14,16,17
4. Panel Report, China-Countervailing and Anti-Dumping Duties on Grain Oriented Flat-

rolled Electrical Steel from the United States, WTO Doc. WT/DS414/R (adopted June
13, 2012).. 13
5. Panel Report, EEC Measures on Animal Feed Proteins, ¶ 4.8, WTO Doc. BISD 25S/49
(adopted Mar. 14, 1978) 6
6. Panel Report, India-Measures Affecting the Automotive Sector, ¶ 7.174, WTO Doc.
WT/DS146/R, WT/DS175/R (adopted Dec. 21, 2001) 2,4,6
7. Panel Report, Indonesia-Certain Measures Affecting the Automobile Industry, WTO Doc.
WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (adopted July 2, 1998) 17

|V|
8. Panel Report, Italian Discrimination against Imported Agricultural Machinery, ¶ 11,

WTO Doc. BISD 7S/60 (adopted Oct. 23, 1958) 7
9. Panel Report, Turkey-Measures Affecting the Importation of Rice, ¶ 7.214-7.216, WTO

Doc. WT/DS334/R (adopted Sept. 21, 2007) 2,3
10. Panel Report, United States-Measures Affecting the Importation, Internal Sale and Use of
Tobacco, WTO Doc. WT/DS44/R (adopted Oct. 4, 1994) 3,5,7
11. Panel Report, United States-Procurement of a Sonar Mapping System, WTO Doc. 26S/34
(adopted Apr. 23, 1992) 8,9
12. Panel Report, US-Subsidies on Upland Cotton, ¶ 7.1494, WTO Doc. WT/DS26/R
(adopted Sept. 4, 2004) 13
BOOKS REFFERED
1. Adam Liberman Et Al., International Licensing and Technology Transfer: Practice and
The Law (2011) 18
2. Autar Krishen Koul, Guide to WTO and GATT, (6th ed., 2018)………………….……4,5
3. Benn Mcgrady, Trade and Public Health (2011)4
4. Chantal Thomas Et Al., Developing Countries in The WTO Legal System (4 th ed., 2009)
.2
5. David Palmeter & Petros C. Mavroidis, Dispute Settlement In The World Trade
Organisation (2nd Ed. 2004) 7
6. G. Marceau & Jp Trachtman, WTO Dispute Settlement System (2003) 11
7. Isabelle Van Damme, Treaty Interpretation by The WTO Appellate Body (2009) 20
8. J.G. Merrills, International Dispute Settlement (5th ed., 2011) 8
9. James Cameron Et Al, Dispute Resolution in the WTO (1st ed., 1999) 8
10. John H. Jackson, Sovereignty, The WTO, And Challenging Fundamentals of

International Law (2006) 12
11. Luca Rubani, The Definition Of Subsidy And State Aid: WTO and EC Law in
Comparative Perspective, 108 (2009) 4
12. Mitsuo Matsushita Et Al., The World Trade Organisation (3rd ed., 2015) 1
13. Peter Gallagher, Guide To The WTO And Developing Countries (2000) 5
| VI |
14. Petros C. Mavroidis Et Al., The WTO and International Trade Law / Dispute Settlement
(2005) 9
15. Peter Van Den Bossche, Tha Law and Policy of World Trade Organisation, (2005)...9,11
16. Prof. J. C. T. Chuah, Law of International Trade: Cross-Border Commercial
Transactions, (5th ed., 2017)..……………………………………………………..
…………………….15
17. Ravindra Pratap, India At The WTO (2004) 4
18. Rudiger Wolfrum Et Al, Max Planck Institute of Comparative Public Law and
International Law, WTO - Institutions and Dispute Settlement (2009) 18
19. Simon Lester, Bryan Mercurio & Arwel Davies, World Trade Law, (2012)…………….8
20. Tracy Murray, Trade Preferences For Developing Countries (1977) 4
21. Won-Mog Choi, ‘Like Products’ In International Trade Law (2003) 19
ARTICLES REFFERED
1. Andrew D. Mitchell, Proportionality and Remedies in WTO disputes, The European
Journal of International Law (2006), Vol. 17 No. 5, Pg.985-1008 18
2. Maria Anna Corvaglia, Public Procurement and Private Standards: Ensuring

Sustainability Under the WTO Agreement on Government Procurement, Journal of
International Economic Law (2016), 19, Pg.607–627 4
3. John H. Jackson, National Treatment Obligations and Non-Tariff Barriers, Michigan

Journal of International Law, Vol. 10, Issue 1 2
4. Sherzod Shadikhodjaev, National Treatment under GATT Article III:2 and its
Applicability in the context of Korea’s FTA’s, Journal of International Economics
Studies, Vol. 12, No. 1, ISSN 1598-2769, (2008) 7
5. Sondre Torp Helmersen, Interpretation in International Law, 6 UCLJLJ 130 (2017)

11
6. D. Hammond et al., Impact of the Graphic Canadian Warning Labels on Adult

Smoking Behavior, 12 Tobacco Control 390, 391-395 (2003) (discussing the
effectiveness of health warning labels in Canada) 11

| VII |
7. Ernst-Ulrich Petersmann, The WTO and Regional Trade Agreements as Competing

Fora for Constitutional Reforms: Trade and Human Rights, in REGIONAL TRADE
AGREEMENTS AND THE WTO LEGAL SYSTEM 281, 282 (2006). 11
8. Government’s Role in the Electricity Sector, Organization of American States,

http://www.oas.org/dsd/publications/unit/oea79e/ch08.htm. 11
AGREEMENTS AND CONVENTIONS

1. Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, 1869 U.N.T.S. 14.
2. Agreement on Technical Barriers to Trade, Jan. 1, 1985, 1868 U.N.T.S.120, 18 I.L.M.
1079.
3. DSU, Dispute Settlement Rules: Understanding on Rules and Procedures Governing the
Settlement of Disputes, Art. 10, 1869 U.N.T.S. 401, 33 I.L.M. 1226.
4. General Agreement on Tariffs and Trade, 15 April 1994, 1867 U.N.T.S 187, 33 I.L.M.
1153.
5. Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867
U.N.T.S. 154.
MISCELLANEOUS
1. Dictionary of Trade Policy Terms, 303 (4th ed., 2003).
2. Merriam Webster Online Dictionary, (10th ed., 1999).
3. Report by the Working Party on Border Tax Adjustments L/3464 (Nov., 20 1970).
4. Request for the Establishment of a Panel by Germany, United States-Countervailing
Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, ¶ 123,
WT/DS213/AB/R (adopted Nov. 28, 2002).
5. First Written Submission of The United States, India-Certain Measures Relating to Solar
Cells and Solar Modules, ¶ 68, DS456 (adopted Oct. 24, 2014).
STATEMENT OF JURISDICTION

| VIII |
PURSUANT TO ARTICLE 6 OF DISPUTE SETTLEMENT UNDERSTANDING, THIS PANEL HAS

JURISDICTION TO HEAR CASES OF A LEGAL NATURE SUBMITTED TO IT BY NATIONS. THE
MEMBERS SUBMIT THE MEASURES CONCERNING DOMESTIC SOURCING OF LETHARGIUM FOR
THE MANUFACTURING OF AMS PART. THE CLAIMANT SUBMITS TO THE JURISDICTION OF
THIS PANEL.
STATEMENT OF FACTS

| IX |
BACKGROUND
Siesta and Procrasti Nation are the member of the WTO. Procrasti Nation is a developed
capitalist economy and largest exporter of Procrastium. A scientist by name Snore Murthy
invented a device generating electricity whenever there are sound vibrations around the
device. Scientist demonstrated his invention to the President of Siesta and told them that he
was ready to secretly disclose the “detailed description” of his invention to the Government
on certain conditions.
INVENTION
The device contained two main parts CMS and AMS. Scientist’s invention is found in CMS
part. The CMS part was manufactured secretly by “Sonuelectric Limited”. The
manufacturing of AMS part was proposed to be outsourced to private firms. The Government
however laid down a condition that the subsidy is given to only those firms who strictly
adhere to the conditions. Several private firms started manufacturing the AMS parts and
supplying them to “Sonuelectric Limited” and made huge profits.
THE POLLUTION REPORT
On the basis of the report of SIS, GoS revised the condition for providing the subsidy & made
it mandatory to use Lethargium for manufacturing of AMS part for getting subsidies,
however subsidy was not given to such manufacturers who using procrastium mineral for the
manufacturing of AMS part, the exports of Procrastium from Procrasti Nation came down.
THE DISPUTE
When Siesta made it voluntary to use Lethargium for the manufacturing of AMS part, the
exports of Procrastium from Procrasti Nation came down. Procrasti Nation lost considerable
amount of international trade. The policy of Siesta was alleged to be violate the principles of
WTO and GATT. Procrasti Nation communicated to Siesta that the steps taken by Siesta are
not in the spirit of international trade.
THE PANEL
Procrasti Nation and Siesta decided to hold consultations as per Article 4 of the Dispute
Settlement under Article 6 under the Dispute Settlement Understanding. After the failed
consultations, Procrasti Nation requesting to form the DSB.
STATEMENT OF ISSUES

|X|
[ISSUE I]
WHETHER THE SIESTA SME SCHEME IS INCONSISTENT WITH ARTICLE III OFGATT 1994.
[ISSUE II]
WHETHER THE MEASURE IS EXEMPTED UNDER ARTICLE. XX OF GATT 1994.
[ISSUE III]
WHETHER THE SME SCHEME VIOLATED THE SCM AGREEMENT 1994.
[ISSUE IV]
WHETHER SIESTA ACTED INCONSISTENTLY WITH ARTICLE 2.1 OF THE TRIMs AGREEMENT
1994.
[ISSUE V]
WHETHER THE MEASURES AMOUNT TO VIOLATION OF ARTICLE 2.2 OF TBT AGREEMENT

1995.
SUMMARY OF ARGUMENTS

| XI |
I. SIESTA SME SCHEME IS INCONSISTENT WITH ART. III of GATT 1994.

The SME scheme violates Art. III: 4, as the imported and domestic products are like products
and the imported products are accorded less favorable treatment and also violates Art. III: 5
as it discourages imports vis a vis domestic products. Further, the procurement must not be
for a commercial purpose. Here, the device is purchased by the government not for its own
consumption, but for providing people electricity on a commercial basis.
II. THE MEASURE IS NOT EXEMPTED UNDER ART. XX OF GATT 1994.

The measure taken Siesta is not exempted under Art. XX, no legitimate objective has been
achieved. The measures undertaken were not necessary to achieve the slated objectives. It
discriminated against imports and therefore violates the chapeaux of Art. XX.
III. THE SME SCHEME VIOLATES THE SCM AGREEMENT 1994.

The SME scheme is said to violate the SCM agreement as the government makes a financial
contribution to a private companies which confers a benefit on him. It is a subsidy by way of
purchase and thereby confers a benefit to such a producer. In doing so it is a prohibited
subsidy within the meaning of Art. 3.2.
IV. SIESTA ACTED INCONSISTENTLY WITH ART. 2.1 OF THE TRIMS AGREEMENT 1994.
Siesta violates Art. 2.1 by virtue of trade related investment measure and the tariff imposes a
“minimum required domestic content level” on AMS part compelling them to purchase and
use renewable energy generation equipment produced in Siesta. Hence, the scheme is
inconsistent with Article 2.1 of the TRIMs Agreement.
V. THE MEASURES AMOUNTS TO VIOLATION OF ART. 2.2 OF TBT AGREEMENT 1995.

The measure taken by Siesta is a violation of the TBT agreement as it is a technical
regulation as per Annexure 1. Further, it is a prohibited regulation under Art. 2.2 as it is trade
discriminatory and does not pursue a legitimate objective.

| XII |
ARGUMENTS ADVANCED
I. THAT THE SME SCHEME IS INCONSISTENT WITH ART. III OF THE GATT.
1. It is humbly submitted that the Government of Siesta provided the special subsidy under
the Snore Murthy Electric1 Scheme to encourage the use of “Lethargium mineral”. 2 The SME
Scheme, prescribes the modalities for the manufacturing of the Accessory Module System part 3
by using Lethargium were entitled to the Government subsidies4.
2. The basic principles of Art. III prevent discrimination and domestic protectionism. In
establishing a violation of Arts. III and XI of General Agreement on Tariffs and Trade 1994 5, one
must simultaneously test its compliance with Art. 2.1 Of TRIMS.6 Therefore, the impugned
measures of Siesta which require mandatory local content violate Art. III: 4[A] and III: 5[B] of
the GATT. Further it is not Government procurement within GATT, Art.III:8(a) [C].
[A.] Measure is inconsistent with National Treatment obligation under Art. III:4.
3. A violation of Art. III:4 of the GATT 1994 is found when a measure concerns imported
and domestic products that are “like products” [1]; with requirements affecting their purchase or
use [2] and accords “less favourable” treatment [3] to imported product than that accorded to like
domestic products.7
[1.] THE PRODUCTS ARE “LIKE PRODUCTS”.

4. The products at issue are Procrastium minerals. Likeness is determined by a holistic
consideration of certain criteria.8 In Argentina – Import Measures9, the Panel noted that where the
DCR focused on the origin of the product; and only distinguishing feature between products in
1
Hereinafter “SME”.
2
Hereinafter “Lethargium”.
3
¶ 3, Moot Proposition, Lex Orbis International Trade Law Moot Court Competition, 2019.
4
5
General Agreement on Tariffs and Trade (1994), art. III: 5, 15 April 1994, 1867 U.N.T.S 187, 33 I.L.M. 1153.
[Hereinafter “GATT 1994”].
6
TRIMs Agreement, art. 2.1.
7
Appellate Body Report, Korea-Measures Affecting Import of Fresh, Chilled and Frozen Beef, ¶ 133, WTO
Doc. WT/DS161/AB/R, WT/DS169/AB/R (adopted Dec. 11, 2000).
8
Report by the Working Party on Border Tax Adjustments L/3464 (Nov. 20, 1970).
9
Panel Reports, Argentina-Measures Affecting the Importation of Goods, WTO Doc. WT/DS438/R,
WT/DS444/R, and WT/DS445/R (adopted Aug. 22, 2014).
[1]
terms of the application of requirement was origin, the products would be “like” for the purposes
of Art. III: 4 of the GATT.31 That is, where origin is the sole distinguishing criterion, there is no
need to establish the likeness between imported and domestic products in terms of traditional
criteria10.
5. Similarly, the only distinguishing criterion for giving subsidy between those minerals is
that “Mineral available in Siesta” 11 v. “Mineral imported from other Country”12. Additionally, the
SMES sets forth the requirements for availing the benefit of subsidy in manufacturing the AMS
part of the “SnoreGenerate” device. Procrastium and Lethargium are suitable, in terms of function
and quality, for the use of manufacturing of AMS part under the SME Scheme.
6. The “likeness” is further confirmed by the fact that several firm were using the
procrastium mineral in manufacturing the AMS part till Siesta government revised the condition
for the subsidy13. Therefore, it is submitted that the AMS part manufactured by domestic mineral
in Siesta and the imported from the Procrasti Nation are “like products”.
[2.] THE IMPUGNED MEASURES IS A ‘REQUIREMENT’ WITHIN THE MEANING OF ART. III: 4 OF GATT,
1994
7. For a measure to satisfy the term requirement under Art. III: 4 it must be a requirement
[i] affecting the internal sale or offering for sale of products [ii].14
(i) The measure is a ‘requirement’ within the meaning of Art. III: 4.
8. ‘Requirement’ is said to exist if the obligations are such that an enterprise is legally
bound to carry them out. It includes voluntarily acceptance to obtain an advantage from the
government.15
9. Firstly, domestic content provisions for the subsidy are ‘requirements’ because AMS
manufacturer have full knowledge that participation in the SMES is conditioned on compliance
10
Panel Report, India-Measures Affecting the Automotive Sector, ¶ 7.174, WTO Doc. WT/DS146/R,
WT/DS175/R (adopted Dec. 21, 2001); Panel Report, Turkey-Measures Affecting the Importation of Rice, ¶
7.214-7.216, WTO Doc. WT/DS334/R (adopted Sept. 21, 2007).
11
12
13
14
WT/DS175/R (adopted Dec. 21, 2001).
15
[2]
with the subsidy requirements. This signals voluntary acceptance of the obligation to use
domestic content in order to obtain an advantage from the government in the form of a subsidy.16
The AMS is legally obligated, to carry out the requirements of the Scheme.
10. Secondly, it is contended that subsidy coupled with SME Scheme is considered as a
regulation as it determines that only domestic mineral to be used in manufacturing the AMS part
to fulfill the condition and to avail the benefit of the subsidy.17
11. In this context, the Panel in US-DMA18, held that the measure to be a regulation should
set a minimum specified proportion of 75%, and made any producer that failed to source the
required amount of local content subject to penalties. The subsidy under SMES involves the
condition that manufacturer must use the Lethargium for the producing AMS part to get the
benefit of the subsidy and are thereby at a competitive advantage against manufacturer that fulfill
the condition.
12. Therefore, SMES’s condition are “requirements” in respect of the obligations of the
AMS manufacturer and the SME Scheme.
(ii) It ‘affects’ the internal sale of products.
13. The term “affecting” means having “an effect on”, encompasses measures that modify
the conditions of competition between domestic and imported goods in the market. 19 In the
present matter, a concrete link exists between using domestic mineral and getting the benefit of
the SME Scheme for AMS part in Siesta. Specifically, as per the terms of the subsidy under
scheme, a manufacturer must oblige to the condition by using Lethargium for AMS part in Siesta.
14. With regard to the SME Scheme, the Panel in EC – Bananas III20 clarified that the word
“affecting” covers measures which create incentives or disincentives with respect to the sale,
offering for sale, purchase, and use of an imported product.21 Therefore, the SME Scheme creates
16
17
¶ 5, Clarifications, Lex Orbis International Trade Law Moot Court Competition, 2019.
18
Panel Report, United States-Measures Affecting the Importation, Internal Sale and Use of Tobacco, WTO Doc.
WT/DS44/R (adopted Oct. 4, 1994).
19
Panel Report, Turkey-Measures Affecting the Importation of Rice, ¶ 7.214-7.216, WTO Doc. WT/DS334/R
(adopted Sept. 21, 2007); Appellate Body Report, Canada-Certain Measures Affecting the Automotive Industry,
¶ 158, WTO Doc. WT/DS139/AB/R, WT/DS142/AB/R (adopted May 31, 2000).
20
Appellate Body Report, European Communities-Regime for the Importation, Sale and Distribution of
Bananas, WTO Doc. WT/DS27/AB/R (adopted Sept. 9, 1997).
21
Appellate Body Report, European Communities-Regime for the Importation, Sale and Distribution of
Bananas, WTO Doc. WT/DS27/AB/R (adopted Sept. 9, 1997).
[3]
incentive for the use of domestic mineral over imported mineral.
15. Additionally the sale, purchase, or use of the mineral should be considered ‘internal’
because the requirements of subsidy apply with respect to the purchase, or use for a project
approved only inside the customs territory22 of Siesta and not at the border. Hence, these measures
‘affect’ the ‘internal sale of goods’ of domestic mineral within the meaning of Art. III:4 of the
GATT 1994.
[3.] THE SUBSIDY ACCORDS “LESS FAVORABLE TREATMENT” TO IMPORTED PRODUCTS.
16. The Subsidy under the SMES accords less favorable treatment as it modifies conditions
of the competition in the relevant market to the detriment of imported products or denies effective
equality of opportunities for imported products.23 In India – Autos24, the Panel found that
indigenization requirements create a disincentive to use like imported products, and that it was
‘more than likely to have effect on manufacturers’ choice’.25
17. Similarly, SME scheme requires that a manufacturer must use Lethargium for availing
the benefit of the subsidy under the scheme in order to manufacture the AMS Part. 26 This creates
incentive for the purchase of domestic mineral. By creating such incentive, Scheme accords less
favorable ‘conditions of competition’, and therefore ‘less favorable treatment’, to imported
mineral Procrastium.
18. Therefore, the SME Scheme incentivize for using the domestic mineral and placing the
imported mineral at a competitive disadvantage. In the present matter, the imported mineral
procrastium accorded less favourable “conditions of competition” and therefore gives “less
favorable treatment” than Siesta’s domestic mineral.
19. Further, it has been established that there exists a genuine relationship between the
measure at issue and the unfavorable impact on competitive opportunities for imported products.27
22
First Written Submission of The United States, India-Certain Measures Relating to Solar Cells and Solar
Modules, ¶ 68, DS456 (adopted Oct. 24, 2014).
23
Appellate Body Report, Korea-Measures Affecting Import of Fresh, Chilled and Frozen Beef, ¶ 133, WTO
Doc. WT/DS161/AB/R, WT/DS169/AB/R (adopted Dec. 11, 2000).
24
25
26
27
Appellate Body Report, Thailand-Customs and Fiscal Measures on Cigarettes from the Philippines, ¶ 134,
WT/DS371/AB/R (adopted July 15, 2011); Appellate Body Report, United States-Measures Concerning the
Importation, Marketing & Sale of Tuna and Tuna Products, ¶ 202, WTO Doc. WT/DS381/AB/R (adopted May
[4]
In the present matter, the unfavorable impact is evident by the reduction in importation of
procrastium mineral after soon GoS revised the condition of the subsidy under Scheme. 28 Hence,
the condition imposed by the SMES on subsidy are inconsistent with Art. III: 4 of the GATT
1994.
[B.] Measures inconsistent with obligation under Art. III: 5 of the GATT 1994.
20. Art. III: 5 contains two substantive statements. The second sentence is invoked only
when the first is inapplicable. A conclusive finding under one provision is independent of an
affirmative finding under the other.29
[1]. THE MEASURE REQUIRES THE USE OF A SPECIFIC PROPORTION OF DOMESTIC MATERIALS
21. A regulation will be said to be in violation of the first sentence of Art. III: 5, the measure
must be an internal quantitative regulation [i], relating to the processing or use of products in
specified amounts and requiring, directly or indirectly, the use of those products from domestic
sources [ii].30
(i) The regulation is a quantitative regulation.
22. It is submitted that in US-DMA31, the internal quantitative regulation was: (i) A measure
established by an Act of the government, (ii) The opening sentence of the provision made specific
reference to “domestic manufacturers”, and (iii) The regulation set a minimum specified
proportion of 75 per cent for the use of U.S. tobacco. 32 In the present case, the enabling Scheme
was passed by the Ministry of Industry and makes specific reference to use of domestic mineral
by manufacturers for getting the benefit of the scheme33. Therefore, it is an internal quantitative
regulation within the meaning of Art. III: 5.
16, 2012); Appellate Body Report, Korea-Measures Affecting Import of Fresh, Chilled and Frozen Beef , ¶ 133,
WTO Doc. WT/DS161/AB/R, WT/DS169/AB/R (adopted Dec. 11, 2000).
28
29
30
31
32
33
[5]
(ii) Mandating domestic sourcing.
23. The internal quantitative regulation in question ‘relates’ to the processing or use of
products in specified amounts or proportions because they are concerned with the amounts and
proportions of domestic or imported products in AMS Part.34
24. When measures provide advantages conditioned on the purchase of a specified quantity
of domestic goods, then those measures ‘require’ such a purchase. In India-Autos35 it was found
that if vehicle manufacturers did not use sufficient domestic parts they were “charged according
to the duty rate for complete vehicles as penalty”.36
25. In the present case, AMS developers is not eligible for getting subsidy under scheme if
they did not comply with the conditions of the SME Scheme. Hence, the measures violate Art.
III:5, first sentence, because they are internal quantitative regulations relating to the use of
domestic products in specified quantities and impose disadvantage on parties if the specified
quantities of domestic parts are not met.
[2.] IT IS AN INTERNAL QUANTITATIVE REGULATION CONTRARY TO THE PRINCIPLES OF ART. III: 1.
26. The measure are inconsistent with Art. III: 5 second sentence because they are applied
“so as to afford protection to domestic production”. The second sentence doesn’t permit
quantitative regulations to be contrary to the general principles of Article III: 1. Therefore, in
order to find a violation of Article III: 5, consistency of the impugned regulation with the
provisions of Article III: 1, particularly as to whether it affords protection to domestic production
must be examined.37
(i) Quantitative regulation.
27. Quantitative restriction means specific limitations on the quantity of goods that can be
34
First Written Submission of The United States, India-Certain Measures Relating to Solar Cells and Solar
Modules, ¶ 89, WTO Doc. DS456 (adopted Oct. 24, 2014).
35
36
37
[6]
imported or exported,38 while regulation means actions or procedures implemented by

governments with a view to influencing the industry or customers of an industry in a particular
manner.39 In the absence of a specific interpretation of ‘qualitative regulation’, a quantitative
regulation is a rule or procedure implemented by a government which requires a certain
proportion of materials to be present or absent in a product on the basis of its place of origin. The
measures taken by Siesta fall within the definition of a quantitative regulation under Art. III: 5.
(ii) The quantitative regulation is against the principle of Art. III: 1.
28. A quantitative regulation is against the principles of Art. III: 1, if it discourages imported
products or protects domestic products.40 The measures requiring local content in all AMS based
projects encourages use of domestic minerals over imported ones, leading to effective protection 41
of domestic Lethargium industries from international competition.
29. The Panel has held that “measures with a view to ensuring the sale of a given quantity of
(domestic product) protected this product in a manner contrary to Article III: 1 and to the
provisions of Article III: 5, second sentence”.42 Similarly, in USA-DMA minimum DCRs violated
this principle because they reserved a portion of the domestic market for domestically grown
tobacco.43
30. In the present matter, the requirement under the SMES Programme violates Article III:1
by (i) ensuring the sale of a given quantity of domestic product, (ii) providing domestic
manufacturers a protected outlet for their production, and (iii) incentivizing the use of domestic
products by way of an SME Scheme.
[C.] It is not government procurement within the meaning of Art. III: 8 (a).
31. The provisions of Art. III do not apply to government procurement for governmental
purposes and for commercial resale.
[1]. NOT GOVERNMENT PROCUREMENT.
38
Dictionary of Trade Policy Terms, 303 (4th ed., 2003).
39
40
Appellate Body Report, Japan-Taxes on Alcoholic Beverages - II, ¶ 16, WTO Doc. WT/DS8/AB/R (adopted
Oct. 9, 1996); Panel Report, Italian Discrimination against Imported Agricultural Machinery, ¶ 11, WTO Doc.
BISD 7S/60 (adopted Oct. 23, 1958).
41
42
Id.
43
[7]
32. The GoS purchases the AMS part produced by private authorities through a Public sector
enterprise.44 To constitute government procurement, the products purchased must be for
immediate government consumption in governmental use or for government purposes.45 A
product is for government purposes if the payment is made by the government (i) for government
use of the product (ii) or where there is government control over the procurement of the product
(iii).46
(i) Payment is not made by the government.
33. Under the SME Scheme, the AMS part is purchased by the public sector enterprise 47,
with the GoS paying for the device produced. But the mineral here is the lethargium itself, which
aren’t purchased by the government money. The purchases of AMS part from private companies
have been held to be government procurement, a difference is that in the Sonar Mapping case48,
the contractor was reimbursed by the Government for its expenses. In the absence of such a clause
in the instant case, the purchase of minerals by private bodies cannot be said to be with
government money.
(ii) No government benefit from the product
34. The product purchased by the Government is different from the product targeted by the
measures, with both being distinct and incomparable. 49 The GoS purchases electricity, while the
product subject to measure is the power generation equipment. Since Art. III: 8(a) must be
construed keeping in mind Art. III: 1, the application of Art. III: 8(a) requires discrimination
between two like products one of which is procured by the government. Electricity and electricity
generation equipment being different, Art. III: 8(a) cannot be applied.
35. In this particular case, the government acquires electricity whereas the products subject
to requirements is minerals. Therefore, the DCR cannot be characterized as “procurement by
governmental agencies”. Hence, Article III: 8(a) does not exempt requirements that discriminate
44
45
Panel Report, United States-Procurement of a Sonar Mapping System, WTO Doc. 26S/34 (adopted Apr. 23,
1992).
46
1992).
47
Hereinafter “PSE”.
48
1992).
49
Appellate Body Reports, Canada-Certain Measures Affecting the Renewable Energy Generation Sector /
Canada-Measures Relating to the Feed-in Tariff Program, ¶ 5.24, WTO Doc. WT/DS412/AB/R,
WT/DS426/AB/R, (adopted May 24, 2013).
[8]
against imported minerals.
(iii) No government control over the procurement of the ‘product’.
36. The Government of Siesta, exercises no control on the ‘product’ (i.e., AMS Part),
because it is purchased by PSE. The producer can choose between domestic or imported minerals.
In US-Sonar Mapping50, owing to the profound control over the procurement reflected by right to
cancel a contract entered into between contractor and a third party, as a government procurement.
In the absence of any such control with the Government of Siesta, the measure cannot be said to
deal with government procurement.
[2]. IT IS FOR COMMERCIAL RESALE.
37. Art. III: 8(a) is inapplicable to procurement as it is for commercial purpose. The
purchase of electricity is for commercial resale and is beyond the scope of Art. III: 8(a).
Commercial resale means ‘sale at an arm’s length’, where seller seeks to maximize his profits
and the buyer seeks to maximize his interests. 51 However, short term loss may be in the long term
strategy of the seller.52 As per the conditions, the device is to be used for the benefit of the
common public and no profits should be made by selling the device. 53 But, the absence of profit
motive will not take away from the commercial nature of the transaction. The transaction is
therefore a ‘sale at arm’s length’ as discussed by the Appellate Body in Canada-FIT,54 and
consequently is one undertaken with a commercial purpose, and hence not exempted.
II. THE IMPUGNED MEASURE DO NOT FALL WITHIN ANY OF THE EXCEPTIONS
UNDER ART. XX OF THE GATT.
38. Art. XX of the GATT 1994 lists states public policy grounds available to members
wishing to deviate from GATT obligations. The Appellate Body in US – Shrimp55 prescribed that
in order to extend the protection of Article XX to a challenged measure. Art. XX (b) exempts
measures which are necessary to protect human, animal or plant life or health.
50
1992).
51
Panel Report, Canada-Measures Relating to the Feed-In Tariff Program, ¶ 9.23, WTO Doc. WT/DS412/R,
52
53
¶ 2 (d), Moot Proposition, Lex Orbis International Trade Law Moot Court Competition, 2019.
54
55
Appellate Body Report, United States-Import Prohibition of Certain Shrimp and Shrimp Products, ¶ 119- 120,
WTO Doc. WT/DS58/AB/R, (adopted Nov. 6, 1998).
[9]
39. For a measure to claim an exemption under Art. XX(b), the policy in question must fall
within the range designed to protect human, animal or plant life or health [A], The inconsistent
measures invoking the exception must be necessary to fulfill the policy objective [B] and the
measures must be applied in conformity with the introductory clause of Art. XX [C].
[A.]The policy sought to be achieved by the impugned measure was not the protection of
human health.
40. It is submitted that sub-paragraph of Art. XX(b) applies when a member can demonstrate
that i) the measure protects or aims to protect “human, animal or plant life or health” and, if so,
the ii) measure is “necessary” to achieve that objective.56 This includes determining, that there are
no other ‘reasonably available’ ‘less trade restrictive measures’ to achieve the desired object.57 In
the present case, GoS may avail less restrictive trade measures by not making the conditions
mandatory for getting the subsidy.
[B.]The measures implemented were not necessary to achieve the policy objectives.
41. For a measure to be ‘necessary’, it must contribute to the achievement of the objective.
There must be a relationship between the means adopted and the end sought to be achieved for
there to be any contribution. 58 The conditions of the SME scheme do not help the proclaimed
objective of reducing adverse pollution impact. The measures may reduce the market share of
Procrastium minerals, but does not protect consumers from adverse pollution effects caused by
the exposure of Procrastium minerals. Therefore, the measures are not apt to contribute to the
policy objectives in the given instance.59
42. It is further submitted that for the application of Art. XX (g), the measure must be
‘related to the conservation of exhaustible natural resources’. These measures must be ‘made
effective in conjunction with restrictions on domestic production or consumption’.60 Further, the
restrictions must be imposed upon both domestic and foreign production. 61 There have been no
56
Freya Baetens, Jos Guilherme Moreno Caiado, Frontiers of International Economic Law: Legal tools to
confront Interdisciplinary Challenges (2014).
57
58
Appellate Body Report, Brazil-Measures Affecting Imports of Retreaded Tyres, ¶ 246, WTO Doc.
WT/DS332/AB/R, (adopted Dec. 17, 2007).
59
60
61
Appellate Body Report, United States-Standards for Reformulated and Conventional Gasoline, ¶ 190, WTO
Doc. WT/DS2/AB/R, (adopted Jan. 27, 1996).
[10]
recorded restrictions on the use of fossil fuels in the instant case.
[C.]The measures applied violate the “CHAPEAU” of Art. XX of the GATT.
43. Art. XX of the GATT allows measures inconsistent with the obligations under the GATT
if they fall within the exceptions listed in clauses (a)-(g), provided they are not arbitrary,
unjustifiable, or disguised restrictions on international trade. 62 An arbitrary or unjustifiable
discrimination exists when a member seeks to justify a measure by a rationale that bears no
relationship to the accomplishment of the objective.63 The purpose of the measure implemented
by the Siesta government is to decrease the use of Procrastium in Siesta, resulting in the indirect
closure of domestic manufacturers.
III. THE SME SCHEME VIOLATES THE SCM AGREEMENT.
44. The Government of Siesta launched the SME Scheme to encourage the use of domestic
mineral by providing the special subsidy on the domestic mineral instead of procrastium in the
manufacturing of AMS Part.
45. It is contended that the SME Scheme as implemented by the GoS is inconsistent with [A]
Art. 3.1(b), and [B] Art. 3.2 Of the Agreement on Subsidies and Countervailing Measures64.
[A.] INCONSISTENT WITH ARTICLE 3.1(B) OF THE SCM AGREEMENT.
46. Article 3.1(b) of the SCM 1994, prohibits subsidies within the meaning of Article 1 that
are contingent, that is, “conditional”, on the use of domestic over imported goods. 65 In the present
matter, the SME Scheme constitutes [1] a “subsidy” within the meaning of Article 1.1 of the SCM
1994, and is [2] “contingent” on the use of domestic equipment over imported equipment.
[1.] Snore Murthy Electricity Scheme is a “subsidy”.
47. The FIT Scheme satisfies the definition of a “subsidy” laid down under Article 1 of the
SCM Agreement. The term “subsidy” captures situations in which something of economic value
62
Appellate Body Report, United States-Measures Affecting the Cross-Border Supply of Gambling and Betting
Services, ¶ 339, WTO Doc. WT/DS285/AB/R, (adopted Apr. 20, 2005); Appellate Body Report, United States-
Standards for Reformulated and Conventional Gasoline, ¶ 190, WTO Doc. WT/DS2/AB/R, (adopted Jan. 27,
1996).
63
64
Agreement on Subsidies and Countervailing Measures, 15 April 1994, 1867 U.N.T.S 14 (entered into force 1
January 1995) [hereinafter SCM Agreement].
65
Panel Report, US-Subsidies on Upland Cotton, ¶ 7.1494, WTO Doc. WT/DS26/R (adopted Sept. 4, 2004).
[11]
is transferred by a government to the advantage of a recipient. 66 As under this article, the two
prerequisites required to establish the existence of a subsidy are (i) a financial contribution made
by a government and (ii) a benefit is conferred by such contribution.67
(i) Financial Contribution made by the government.
48. A financial contribution by a government can be in the form of purchase of goods by the
government.68 SME Scheme is an “income or price support” measure in terms of Article 1.1(a)
(2) of the SCM Agreement.
49. It is submitted that the term “or” between Articles 1.1(a) and 1.1(a) (2) of the SCM 1994
is used implying that the first element of the definition of subsidy can be met by either
alternative.69 In the present matter, the SME Scheme is challenged under Article 1.1(a) (2) of the
SCM 1994.
50. In terms of Art. XVI of the GATT70 “income or price support”, means that the income or
price support measure introduced by the government must operate to increase production of the
subsidized product or to decrease imports of similar products. They may also be defined as
measures introduced by governments in order to sustain the income of a certain category of
industries or maintain the price of a commodity.
51. In the present case, under the SME Scheme, GoS providing special subsidies to only
those firms manufacturing the AMS part by using lethargium availing the scheme thereby
operating to reduce import of Procrastium mineral into Siesta71.
52. Moreover, the SME Scheme amounts to “income or price support” as it requires to use
the Lethargium for manufacturing of AMS part for getting the benefit of the special subsidy in the
form of reduced electricity tariff and tax benefits, hence, incentivizing the use of domestic
produced mineral.
53. Therefore, it is a form of “income or price support” under Article XVI of the GATT
1994. Additionally, the panel in China – GOES72 established that government measures designed
66
SCM Agreement 1994, art. 1.
67
Luca Rubini, The Definition of Subsidy and State Aid: WTO and EC law in Comparative Perspective, 108
(Oxford University Press, 2009).
68
SCM Agreement 1994, art. 1.1(a) (1) (iii).
69
Panel Report, US-Subsidies on Upland Cotton, ¶ 7.1494, WTO Doc. WT/DS26/R (adopted Sept. 4, 2004).
70
GATT 1994, art. XVI.
71
72
Panel Report, China - Countervailing and Anti-Dumping Duties on Grain Oriented Flat-rolled Electrical Steel
[12]
to sustain a certain price level, would be considered “price support”. The SME Scheme does this
by guaranteeing the reduced electricity tariff and tax benefit to that manufacturers who uses
Lethargium mineral. Thus, the program can be considered a form of “price support”.
(ii) A benefit is conferred.
54. To establish a benefit, the guidelines provided under Art. 14, SCM is used to evaluate the
consideration. The determining standard is the market price.73 However, this is not suitable in the
present case.
55. In Canada-Aircraft, the Panel found that the ordinary meaning of “benefit”, clearly
encompasses some form of advantage. 74 The existence of the advantage was determined by
examining whether the recipient was in a more advantageous position than they would have been
but for the financial contribution.75
56. The SME Scheme is an instrument for promoting investment in Lethargium and sets a
fixed price for purchases of Lethargium. Thus providing electricity to manufacturer of AMS at
reduced tariff below the market price for electricity.76 The scheme covers (i) the production costs,
and (ii) reasonable profits.77 Generally, no producer participating in the market would have such
certainty in recovering production cost coupled reasonable profit over such a long period of time.
These are payments which Lethargium would not be able to obtain in the market. Therefore,
Lethargium minerals obtain “advantages” and are hence, “conferred a benefit”.
[2.] The subsidies are “contingent upon the use of domestic over imported goods”.
57. Article 3.1(b) of the SCM Agreement prohibits subsidies contingent upon the use of
domestic over imported goods.78 Article 3.2 further prohibits a country from granting or
maintaining such subsidies. The SME Scheme falls under the category of such subsidies.
from the United States, WTO Doc. WT/DS414/R (adopted June 13, 2012).
73
Appellate Body Report, Canada-Measures Affecting the Export of Civilian Aircraft, ¶ 139-166, WTO Doc.
WT/DS70/AB/R (adopted Aug. 14, 2000).
74
75
76
Mendonca M, Jacobs, D. & B. Sovacool Et Al, Powering The Green Economy: The Feed-in Tariff Handbook,
21 (Earthscan, 2010).
77
Panel Report, Canada-Certain Measures Affecting the Renewable Energy Generation Sector and Canada -
Measures Relating to the Feed-In Tariff Program, ¶ 9.23, WTO Doc. WT/DS412/R, and WT/DS426/R (adopted
Dec. 19, 2012).
78
SCM Agreement 1994, art. 3.
[13]
(i) The SME Scheme is prohibited by Art. 3.1(b), SCM.
58. Under Article 3.1(b), de facto as well as de jure subsidies contingent upon the use of
domestic are covered.
59. The word ‘contingent’ under Article 3 has been interpreted by the AB to mean
“conditional” or “dependent for its existence on something else”.79 The SME Scheme requires that
for the manufacture of all AMS part by using the mineral Lethargium “must” be utilized in order
to achieve the subsidy for that project. Such subsidies create incentives for use of Siesta goods
over of other origins in producing devices. If manufacturer do not meet requirement of the
scheme, then subsidy will not provide.80
60. Therefore, it is humbly contended that such incentives, in and of themselves, render the
SME Scheme subsidies contingent upon the use of domestic over imported goods, and hence, is
inconsistent with Art. 3.1(b).
(ii)The subsidy is “specific” under Art. 2.3, SCM
61. Article 1.2 of the SCM Agreement states that: “a subsidy as defined in Paragraph 1
shall be subject to the provisions of Part II or shall be subject to the provisions of Part III or V
only if such a subsidy is specific in accordance with the provisions of Art. 2”.81 The subsidy is
specific as Art. 2.3 of SCM Agreement states that any subsidy falling under the provisions of
Article 3 shall be deemed to be specific.82
62. The subsidies provided by the SME Scheme and related subsidies are prohibited
subsidies under Article 3.1(b) of the SCM Agreement and, therefore, are deemed to be specific
pursuant to Article 2.3 of the SCM Agreement.
[B].THE SME SCHEME VIOLATES ART. 3 OF THE SCM AGREEMENT.
63. Article 3.2 of the SCM Agreement prescribes that a member shall neither grant nor
maintain subsidies referred to in Article 3.1 of the SCM Agreement. Thus, in granting and
maintaining prohibited subsidies inconsistent with Article 3.1 of the SCM 1994, Siesta is in
79
WT/DS70/AB/R (adopted Aug. 14, 2000); Appellate Body Report, United States-Tax Treatment For Foreign
Sales Corporations, ¶ 111, WTO Doc. WT/DS108/AB/RW (adopted Jan. 14, 2002).
80
The Green Energy and Green Economy Act of 2009, the Minister's 2009 FIT Direction, and every version of
the FIT and microFIT Rules and FIT and microFIT Contracts.
81
SCM Agreement 1994, art. 1.2.
82
[14]
violation of its obligations under Article 3.2 of the SCM Agreement.83 Therefore, it is a subsidy
prohibited under the SCM Agreement.
IV. SIESTA ACTED INCONSISTENTLY WITH ARTICLE 2.1 OF THE TRIMS

AGREEMENT.
64. The SME Scheme comprises trade-related investment measures inconsistent with the
provisions of Art. III of the GATT 1994, and is therefore in violation of Article 2.1 of the Trade-
Related Investment Measures84 Agreement. Art. 2.1 of the TRIMs Agreement is breached by
establishing, a) the existence of an investment measure related to trade in goods; and b)
inconsistency of that measure with Article III of the GATT 1994.
[A.] THE DCR MEASURES ARE INCONSISTENT WITH ARTICLE 2.1 OF THE TRIMS.
(i) DCR measures are “investment measures”.
65. The Panel in Canada – Renewable Energy / Feed-In Tariff Program, found that
measures constituted “investment measures”, if they had the objective of encouraging the
production of renewable energy generation equipment. The Panel noted that the SME Scheme
encouraged investment in renewable energy generation.85 Similarly, it states that an important
objective of the GoS is to promote domestic manufacturing. 86 Therefore, the measures are
“investment measures”.
(ii) DCR measures are “trade related”.
66. The Panel in Indonesia-Autos87, reasoned that domestic content requirements are
“necessarily ‘trade-related’ because such requirements, always favor the use of domestic
products over imported products, and therefore affect trade”. 88 In the present matter, the SME
Scheme measures impose DCRs. Hence incentivizing the use of domestic goods over imported
83
84
Agreement on Trade-Related Investment Measures, Apr. 15, 1994, [hereinafter TRIMs Agreement].
85
Panel Report, Canada-Certain Measures Affecting the Renewable Energy Generation Sector and Canada-
Measures Relating to The Feed-In Tariff Program, ¶ 9.23, WTO Doc. WT/DS412/R, and WT/DS426/R
(adopted Dec. 19, 2012).
86
87
Panel Report, Indonesia-Certain Measures Affecting the Automobile Industry, WTO Doc. WT/DS54/R,
WT/DS55/R, WT/DS59/R, WT/DS64/R (adopted July 2, 1998).
88
Panel Report, Indonesia-Certain Measures Affecting the Automobile Industry, WTO Doc. WT/DS54/R,
WT/DS55/R, WT/DS59/R, WT/DS64/R (adopted July 2, 1998).
[15]
goods. Therefore, the measures are “related to trade in goods.”
(iii) DCR measures are inconsistent with Art. III of the GATT 1994.
67. It is submitted that the DCRs have already been demonstrated to be inconsistent with
Art. III of the GATT 1994. Therefore, the SME Scheme measures are inconsistent with Art. 2.1
Of the TRIMs Agreement. This conclusion is further confirmed by the Illustrative List contained
in the Annex89 to the TRIMs Agreement.
68. The Panel in Canada-Renewable Energy / Feed-In Tariff Program has held that where a
measure has the characteristics described in Paragraph 1(a) it will be in violation of Art. III: 4,
and thereby also Article 2.1 of the TRIMs Agreement. 90 It is humbly submitted that the DCR of
the SMES is a trade related investment measure for reasons discussed in IV [1] (i) & (ii). That is,
the tariff imposes a minimum required domestic content level on AMS part compelling them to
purchase and use renewable energy generation equipment produced in Siesta. To this extent, the
domestic requirement for SMES is not unlike the one challenged in Canada-Renewable
Energy/FIT Program and hence a “trade related investment measure”.
69. It is submitted that the SME Scheme has already been demonstrated to be inconsistent
with Art. III of the GATT 1994. Hence, the scheme is inconsistent with Article 2.1 of the TRIMs
Agreement. Further, the SMES falls within the scope of Article 2.1. Of TRIMs and Para 1(a) of
the Illustrative List as explained in Section 1.1.3. Therefore, the measures are inconsistent with
Article 2.1. Of TRIMs.
V. THE MEASURES AMOUNTS TO VIOLATION OF ART. 2.2 OF TBT AGREEMENT.

70. Article 2.2 of TBT provides that members shall not adopt any technical regulations
which create unnecessary obstacles to international trade. 91 The Health Directive issued by Siesta
is inconsistent with this provision as [1] it amounts to a technical regulation, [2] it does not pursue
a legitimate objective, and [3] the regulation is more trade restrictive than necessary to fulfill the
legitimate objective.
[1] THAT THE MEASURE AMOUNTS TO A TECHNICAL REGULATION.

89
TRIMs 1994, Annex. 1(a).
90
Appellate Body Reports, Canada-Certain Measures Affecting the Renewable Energy Generation Sector /
Canada-Measures Relating to the Feed-in Tariff Program, ¶ 5.24, WTO Doc. WT/DS412/AB/R,
WT/DS426/AB/R, (adopted May 24, 2013).
91
TBT Agreement 1995, art. 2.2.
[16]
71. In order to qualify as a technical regulation, a document must lay down compliance with
one or more characteristics for an identifiable product or group of products as a mandatory
requirement.92 In EC-Sardines, the Appellate Body emphasized that product characteristics,
whether positive or negative, include not only “features and qualities intrinsic to the product”, but
also those that are related to it, such as means of identification. 93 Therefore, a technical regulation
regulates or imposes certain binding features or attributes on specific products.94
72. It submitted that the Health Directive identifies Procrastium and Lethargium as the
relevant products. Thus, it can be reasonably concluded that the Health Directive is a technical
regulation within the definition provided in Annex 1.1 of TBT.
[2] THAT THE OBJECTIVE OF THE TECHNICAL REGULATIONS IS NOT LEGITIMATE.
73. A legitimate objective refers to an aim or target that is either lawful, justifiable or
proper.95 The objective of a technical regulation can be determined by considering the text
of the statute, legislative history, and other evidence regarding the structure and operation of the
measure.96
74. In the present case, the respondent has stated that the objective of technical regulation is
to safeguard the health of workers and consumers from air pollution. Protection of human health
is a legitimate objective under Article 2.2 of TBT Agreement.97
75. However, it is submitted that the ulterior objective of the regulation is to promote the use
locally manufactured Lethargium by reducing the import from Procrasti Nation. Since there are
no known health warnings related to Procrastium which would ultimately lead to reduction in use
of the products and resultantly affecting imports. Thus, the regulation is not legitimate and
amounts to an unjustifiable discrimination or disguised restriction on international trade.
[3.] THAT THE MEASURES ARE MORE TRADE-RESTRICTIVE THAN NECESSARY TO FULFILL A
92
TBT Agreement 1995, Annex 1.1.
93
Appellate Body Report, European Communities-Measures Affecting Asbestos and Asbestos-Containing
Products, ¶ 69, WTO Doc. WT/DS135/AB/R (adopted Apr. 5, 2001); Panel Report, European Communities-
Trade Description of Sardines, ¶ 7.44, WT/DS231/R (adopted Oct. 23, 2002).
94
Appellate Body Report, European Communities-Measures Affecting Asbestos and Asbestos-Containing
Products, ¶ 69, WTO Doc. WT/DS135/AB/R (adopted Apr. 5, 2001).
95
Appellate Body Reports, United States-Certain Country of Origin Labelling (COOL) Requirements, ¶ 370,
WTO Doc. WT/DS384/AB/R / WT/DS386/AB/R (adopted July 23, 2012).
96
US-Tuna Appellate Body Report, ¶ 314.
97
Panel Report, United States-Standards for Reformulated and Conventional Gasoline, ¶ 6.20, WTO Doc.
WT/DS2/R, (adopted May, 20, 1996).
[17]
LEGITIMATE OBJECTIVE.
76. The assessment of necessity of a measure under the Article is based on the test
developed under Article XX of GATT 1994.98 It requires weighing and balancing of factors such
as a) the degree of contribution made by the measure at issue to the legitimate objective, b) the
trade-restrictiveness of the measure and c) the gravity of the consequences that would arise from
non-fulfillment of the objective pursued by the Member through the measure.99
(i) The technical regulation does not make any material contribution to the objective.
77. It is submitted that contribution exists when a genuine relationship of ends and means
exists between the objective pursued and the measure at issue, assessed in quantitative or in
qualitative terms.100 Such contribution must not be marginal or insignificant; rather, the measure
must be sufficient to make a material contribution to the achievement of its objective.101
78. There is no evidence suggesting that the measure has been successful in reducing the use
of Procrastium. But no such data refers to the achievement of the public health objective by the
measure elsewhere. Therefore, the technical regulations imposed by Siesta do not make any
material contribution to the objective as there is no genuine relationship between the objective
pursued and the measure undertaken.
(ii) The measure is “trade-restrictive”.
79. A measure is termed as trade-restrictive when it has “limiting effects on trade”.102 Within
such a less period of the Directive coming into force, the Procrastium investors’ already depleting
market share in the Siesta AMS industry, evidencing a limiting effect on trade. This is in addition
to the loss of profits due to increase in domestic content requirement. This evidences the trade-
98
Panel Report, United States-Measures Affecting the Production and Sale of Clove Cigarettes, ¶ 7.368, WTO
Doc. WT/DS406/R (adopted Apr. 24, 2012); Panel Reports, United States – Certain Country of Origin
Labelling (COOL) Requirements, ¶7.667, WTO Doc. WT/DS384/R / WT/DS386/R (July 23, 2012).
99
Korea-Beef Appellate Body Report, ¶ 164; Gabrielle Marceau, The New TBT Jurisprudence in US
- Clove Cigarettes, WTO US - Tuna II, and US-COOL, 8 ASIAN J. WTO & INT'L HEALTH L & POL'Y, 1, 11
(March 2013).
100
WT/DS332/AB/R, (adopted Dec. 17, 2007)
101
102
Appellate Body Reports, United States-Certain Country of Origin Labelling (COOL) Requirements, ¶ 370,
WTO Doc. WT/DS384/AB/R / WT/DS386/AB/R (adopted July 23, 2012).
[18]
restrictive effects of the measure.
(iii) No grave consequences occur from non-fulfillment of the objective.
80. Consideration of risks created by non-fulfillment involves a comparison of the

challenged measure with possible alternative measures in light of the nature of the risks at issue
and the gravity of the consequences that would arise from non-fulfillment of the legitimate
objective. In the present scenario, the only objective being fulfilled by the Directive is the
restrictions on imports of the products into the country.
81. This does not guarantee the reduction or cessation of manufacture of the products. Non-
fulfillment already exists in the measure at issue. Thus, it can be argued that no grave
consequence arises from non-fulfillment of the objective. Therefore, the measure is more trade-
restrictive than necessary to fulfill its legitimate objective.
[4.] LESS TRADE-RESTRICTIVE ALTERNATIVES ARE AVAILABLE.
82. Possible alternatives must be compared to determine whether a less trade restrictive
measure exist which provides an equivalent contribution, if not greater, to the achievement of the
objective pursued.103
83. It is submitted that there are less restrictive reasonable alternatives available for reducing
or eliminating exposure, or for protecting citizens from the risk of such exposure. For instance,
Siesta could educate workers as to sources of exposure of Procrastium minerals and how to avoid
them; prescribe safety standards to be necessarily adopted by producers of solar modules; require
details of standards used by manufacturer; and deal only with manufacturers that follow the
strictest environmental and occupational safety guidelines. Further, warnings could be issued to
consumers of the resultant effects of close contact with solar panels. Therefore, these alternative
measures are reasonably available and make equivalent contribution to the objective of protecting
health.
84. Thus, it can be concluded that the measure is more trade restrictive than necessary and it
violates the obligation of Siesta under Article 2.2 of the TBT Agreement.
103
Appellate Body Report, United States-Measures Concerning the Importation, Marketing & Sale of Tuna and
Tuna Products, ¶ 202, WTO Doc. WT/DS381/AB/R (adopted May 16, 2012).
[19]

[20]
PRAYER
Wherefore in light of the Issues Raised, Arguments Advanced and Authorities relied on, the
complainant requests this Panel to find that:
The SME Scheme of Siesta;
 Violates Art. III: 4 of GATT as it is a regulation which treats like imported products less
favorably,
 Violates Art. III: 5 of GATT as it mandates the use of a specified proportion of domestic
materials in the product, and is therefore against the principles of Art. III:1,
 Violates Art. 3.1(b) and 3.2 of the SCM Agreement because it appears a subsidy in the
form of financial contribution,
 Violates Art. 2.1 of TRIMS as it is a trade related investment measure,
 Article 2.2 of the TBT Agreement, because Siesta imposes technical regulations that
create unnecessary obstacles to trade and are more trade-restrictive than necessary to
fulfil a legitimate objective taking into account the risks that non-fulfilment would
create.
All of which is respectfully affirmed and submitted,
Counsel on behalf of the Complainant,

LX15.

[XIII]

LX15 Claimant

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Team Code - LX15

LEX ORBIS INTERNATIONAL TRADE LAW MOOT COURT COMPETITION 2019

BEFORE THE PANEL ESTABLISHED BY WTO/DSB

PROCRASTI NATION (COMPLAINANT)

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

31. PSE Public Sector Enterprise

37. SME Snore Murthy Electricity

38. SMES Snore Murthy Electricity Scheme

39. SPS Sanitary and Phytosanitary Measures

40. SSG Special Safeguard

41. TBT Agreement on Technical Barriers to Trade

42. TRIMs Trade Related Investment Measures

WTO APPELLATE BODY REPORTS

2. Appellate Body Report, Brazil-Measures Affecting Imports of Retreaded Tyres, ¶ 246,

3. Appellate Body Report, Canada-Certain Measures Affecting The Automotive Industry, ¶

4. Appellate Body Reports, Canada-Certain Measures Affecting the Renewable Energy

5. Appellate Body Report, Canada-Measures Affecting the Export of Civilian Aircraft, ¶

6. Appellate Body Reports, China-Measures Related to the Exportation of Various Raw

7. Appellate Body Report, European Communities-Measures Affecting Asbestos and

9. Appellate Body Report, European Communities-Trade Description of Sardines, ¶ 189,

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

3. Panel Report, Canada-Certain Measures Affecting The Renewable Energy Generation

4. Panel Report, China-Countervailing and Anti-Dumping Duties on Grain Oriented Flat-

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

8. Panel Report, Italian Discrimination against Imported Agricultural Machinery, ¶ 11,

9. Panel Report, Turkey-Measures Affecting the Importation of Rice, ¶ 7.214-7.216, WTO

6. G. Marceau & Jp Trachtman, WTO Dispute Settlement System (2003) 11

8. J.G. Merrills, International Dispute Settlement (5th ed., 2011) 8

10. John H. Jackson, Sovereignty, The WTO, And Challenging Fundamentals of

21. Won-Mog Choi, ‘Like Products’ In International Trade Law (2003) 19

2. Maria Anna Corvaglia, Public Procurement and Private Standards: Ensuring

3. John H. Jackson, National Treatment Obligations and Non-Tariff Barriers, Michigan

5. Sondre Torp Helmersen, Interpretation in International Law, 6 UCLJLJ 130 (2017)

6. D. Hammond et al., Impact of the Graphic Canadian Warning Labels on Adult

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

7. Ernst-Ulrich Petersmann, The WTO and Regional Trade Agreements as Competing

8. Government’s Role in the Electricity Sector, Organization of American States,

AGREEMENTS AND CONVENTIONS

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

PURSUANT TO ARTICLE 6 OF DISPUTE SETTLEMENT UNDERSTANDING, THIS PANEL HAS

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

WHETHER THE MEASURE IS EXEMPTED UNDER ARTICLE. XX OF GATT 1994.

WHETHER THE SME SCHEME VIOLATED THE SCM AGREEMENT 1994.

WHETHER THE MEASURES AMOUNT TO VIOLATION OF ARTICLE 2.2 OF TBT AGREEMENT

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

I. SIESTA SME SCHEME IS INCONSISTENT WITH ART. III of GATT 1994.

II. THE MEASURE IS NOT EXEMPTED UNDER ART. XX OF GATT 1994.

III. THE SME SCHEME VIOLATES THE SCM AGREEMENT 1994.

V. THE MEASURES AMOUNTS TO VIOLATION OF ART. 2.2 OF TBT AGREEMENT 1995.

WRITTEN SUBMISSION ON BEHALF OF CLAIMANT

[1.] THE PRODUCTS ARE “LIKE PRODUCTS”.

(i) The measure is a ‘requirement’ within the meaning of Art. III: 4.

(ii) It ‘affects’ the internal sale of products.

incentive for the use of domestic mineral over imported mineral.

[3.] THE SUBSIDY ACCORDS “LESS FAVORABLE TREATMENT” TO IMPORTED PRODUCTS.

(i) The regulation is a quantitative regulation.

(ii) Mandating domestic sourcing.

[2.] IT IS AN INTERNAL QUANTITATIVE REGULATION CONTRARY TO THE PRINCIPLES OF ART. III: 1.

(i) Quantitative regulation.

imported or exported,38 while regulation means actions or procedures implemented by