Advertisement

The Impact of WTO Case Law on the Use of Local Content Requirements

  • Umberto Celli JuniorEmail author
Chapter

Abstract

The WTO agreements, to wit the Agreement on Subsidies and Countervailing Measures (SCM) and the Trade-Related Investment Measures (TRIMs) (applicable in conjunction with the General Agreement on Tariffs and Trade (GATT 1994)), contain prohibitions on the use by WTO Members (Members) of local content requirements (LCRs). LCRs are types of measures that condition the grant of a benefit, by means of subsidies or other kinds of incentives, on the use of domestic products and services. Although the SCM is more explicit as to the prohibition on the use of LCRs, WTO case law is mostly concerned with the analysis of the legality of LCRs in light of Article III.4 of GATT 1994 and Articles 2.1 and 2.2 of TRIMs. In this respect, both the Panel and the Appellate Body (AB) have coherently and consistently found LCRs to be in violation of those provisions. Findings and rulings by the Panel and the AB in Canada Renewable Energy (DS 412, DS 416) and Indian Solar Cells (DS 456), which further restricted the policy space of Members to adopt LCRs, and findings by the Panel in Brazil—Certain Measures Concerning Taxation and Charge (DS472/497) confirmed a jurisprudence constante or unequivocal jurisprudential trends in this regard. This paper sustains that such unequivocal jurisprudential trends are in line with the new global trading system, which requires new tools of industrial or incentive policies that are consentaneous with an economy ever more integrated into the global value chains in which discriminatory measures of LCRs are likely to lose relevance and purpose increasingly.

References

  1. Bohanes J (2015) WTO dispute settlement and industrial policy. E15 Initiative - International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum. Geneva, p 2. www.e15initiative.org. Accessed 2 March 2016
  2. Cimino C, Hufbauer GC, Schoot J (2014) A proposed code to discipline local content requirements. Policy Brief. 14-6. Peterson Institute for International Economics, Washington, pp 1–2Google Scholar
  3. Hestermeyer HP, Nielsen L (2014) The legality of local content measures under the WTO. J World Trade 48(3):567–568Google Scholar
  4. Hufbauer GC, Schoot J, Cimino C, Vieiro M, Wada E (2013) Local content requirements: report on a global problem. Peterson Institute for International Economics, Washington, p 3Google Scholar
  5. Jackson JH (2002) The World trading system, 2nd edn. Cambridge University Press, Cambridge, p 214Google Scholar
  6. Mavroidis PC (2013) Trade in goods. Oxford University Press, Oxford, p 308Google Scholar
  7. Muchlinsky P (2008) Policy issues. In: Muchlinsky P, Ortino F, Schreuer C (eds) The Oxford handbook of international investment law. Oxford University Press, Oxford, pp 31–32CrossRefGoogle Scholar
  8. Pauwelyn J (2014) Rational design or accidental evolution? The emergence of international investment law. In: Douglas Z, Pauwelyn J, Viñuales JE (eds) The foundations of international investment law –bringing theory into practice. Oxford University Press, Oxford, p 12Google Scholar
  9. Randoo I (2015) Industrial policies in a changing World: what prospects for low-income countries. E15 Initiative – International Centre for Trade and Development (ICTSD) and World Economic Forum. Geneva, p 6Google Scholar
  10. Stephenson S (2013) Addressing local content requirements in a sustainable energy trade agreement. International Centre for Trade and Sustainable Development (ICTSD), Geneva, p 14. https://www.ictsd.org/downloads/2013/06/addressing-local-content-requirements_opt.pdf. Accessed 2 Jan 2016Google Scholar
  11. Van Den Bossche P, Zdouc W (2013) The law and policy of the World Trade Organization, 3rd edn. Cambridge University Press, Cambridge, p 352Google Scholar
  12. Weiss F (2008) Trade and investment (Chap. 6). In: Muchlinsky P, Ortino F, Schreuer C (eds) The Oxford handbook of international investment law. Oxford University Press, Oxford, pp 187–192Google Scholar

Case Law

  1. Brazil – Certain Measures Concerning Taxation and Charge, DS472/497, Panel’s Reports circulated on August 30, 2017Google Scholar
  2. Canada – Administration of Foreign Investment Review Act (DS L/5504 – 30S/140), Panel Report adopted on February 7, 1984Google Scholar
  3. Canada – Certain Measures Affecting the Automotive Industry (Canada – Autos), DS139, DS124, AB Report adopted on June 19, 2000Google Scholar
  4. Canada – Certain Measures Affecting the Renewable Energy Generation Sector and Canada Measures Relating to the Feed-In Tariff Programme (Canada Feed – In Tariff Programme), WT/DS412/AB/R, DS426/AB/R, circulated on May 6, 2013Google Scholar
  5. China – Measures Affecting Imports of Automobile Parts, DS339, DS340, DS342, Panel and AB reports adopted on January 12, 2009Google Scholar
  6. India – Certain Measures Relating to Solar Cells and Solar Modules, DS456, Panel and AB Reports adopted on October 14, 2016Google Scholar
  7. India – Measures Affecting the Automotive Sector and India – Measures Affecting Trade and Investment in the Motor Vehicle Sector, DS146, DS175, Panels Reports adopted on April 5, 2002Google Scholar
  8. Indonesia – Certain Measures Affecting the Automobile Industry (Indonesia Autos), DS54, DS55, DS59, DS64, report of the Panel adopted on July 23, 1998Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Department of Public LawUniversity of São Paulo, Ribeirão Preto Law SchoolRibeirão PretoBrazil

Personalised recommendations